UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For The Quarterly Period Ended June 30, 1998
Commission file number 0-24710
CD RADIO INC.
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(Exact name of registrant as specified in its charter)
Delaware 52-1700207
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1180 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
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(Address of principal executive offices)
(Zip code)
212-899-5000
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year, if
changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common stock, $.001 par value 17,619,456 shares
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(Class) (Outstanding as of August 11, 1998)
<PAGE>
CD RADIO INC.
(A Development Stage Enterprise)
INDEX
Page
Part I - Financial Information
Consolidated Statements of Operations (unaudited) for the three 1
and six month periods ended June 30, 1998 and 1997 and for the
period May 17, 1990 (date of inception) to June 30, 1998
Consolidated Balance Sheets (unaudited) as of June 30, 1998 2
and December 31, 1997
Consolidated Statements of Cash Flows (unaudited) for the three 3
and six month periods ended June 30, 1998 and 1997 and for the
period May 17, 1990 (date of inception) to June 30, 1998
Notes to Consolidated Financial Statements (unaudited) 4
Management's Discussion and Analysis of Financial Condition and 6
Results of Operations
Part II - Other Information 14
Signatures 16
<PAGE>
CD RADIO INC. AND SUBSIDIARY
(A Development Stage Enterprise)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Cumulative
for the period
May 17, 1990
(date of
inception)
to June 30,
For the Three Months Ended June 30, For the Six Months Ended June 30, 1998
---------------------------------- -------------------------------- ------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Revenue $ - $ - $ - $ - $ -
Operating expenses:
Legal, consulting and
regulatory fees 949,000 1,009,000 1,928,000 1,246,000 12,413,000
Other general and administrative 1,929,000 566,000 3,267,000 847,000 14,372,000
Research and development 5,000 16,000 21,000 35,000 1,994,000
Special charges 25,682,000 - 25,682,000 - 27,682,000
------------- ------------- ------------- ------------- -------------
Total operating expenses 28,565,000 1,591,000 30,898,000 2,128,000 56,461,000
------------- ------------- ------------- ------------- -------------
Other income (expense):
Interest and investment income 1,585,000 1,237,000 3,903,000 1,298,000 8,305,000
Interest expense (3,159,000) - (8,982,000) (5,000) (11,094,000)
------------- ------------- ------------- ------------- -------------
(1,574,000) 1,237,000 (5,079,000) 1,293,000 (2,789,000)
------------- ------------- ------------- ------------- -------------
Income taxes (38,000) - (38,000) - (38,000)
------------- ------------- ------------- ------------- -------------
Net loss (30,177,000) (354,000) (36,015,000) (835,000) (59,288,000)
------------- ------------- ------------- ------------- -------------
Preferred stock dividend (4,438,000) - (9,219,000) - (11,557,000)
Preferred stock deemed dividend - (43,313,000) - (43,313,000) (51,975,000)
Accretion of dividends in connection with the
issuance of warrants on preferred stock (2,097,000) - (6,372,000) - (6,372,000)
------------- ------------- ------------- ------------- -------------
Net loss applicable to common stockholders $ (36,712,000) $ (43,667,000) $ (51,606,000) $ (44,148,000) $(129,192,000)
============= ============= ============= ============= =============
Per common shares:
Net Loss $ (1.79) $ (0.03) $ (2.18) $ (0.08)
Preferred stock dividend requirements (0.26) (4.20) (0.56) (4.20)
Accretion of dividends in connection with the
issuance of warrants on preferred stock (0.13) - (0.39) -
------------- ------------- ------------- -------------
Net loss applicable to common stockholders (basic
and diluted) $ (2.18) $ (4.23) $ (3.13) $ (4.28)
------------- ------------- ------------- -------------
Weighted average common shares
outstanding (basic and diluted) 16,826,000 10,313,000 16,493,000 10,307,000
============= ============= ============= =============
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
1
<PAGE>
CD RADIO INC. AND SUBSIDIARY
(A Development Stage Enterprise)
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
ASSETS 1998 1997
-------------------- ------------------
(unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 64,741,000 $ 900,000
Marketable securities, at market 65,884,000 169,482,000
Prepaid expense and other 1,602,000 928,000
-------------------- ------------------
Total current assets 132,227,000 171,310,000
-------------------- ------------------
Property and equipment, at cost:
Satellite construction in process 63,807,000 49,400,000
Launch construction in process 9,000,000 10,885,000
Broadcast studio in process 95,000 -
Technical equipment 254,000 254,000
Office equipment and other 149,000 96,000
Demonstration equipment 39,000 39,000
-------------------- ------------------
73,344,000 60,674,000
Less accumulated depreciation (264,000) (243,000)
-------------------- ------------------
73,080,000 60,431,000
-------------------- ------------------
Other assets:
FCC license 83,346,000 83,346,000
Debt issue cost, net 8,519,000 8,617,000
Deposits 727,000 104,000
-------------------- ------------------
Total other assets 92,592,000 92,067,000
-------------------- ------------------
Total assets $297,899,000 $323,808,000
-------------------- ------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 2,554,000 $ 401,000
Other - 15,000
-------------------- ------------------
Total current liabilities 2,554,000 416,000
Notes payable and accrued interest 138,369,000 131,387,000
Dividends payable 10,458,000 2,338,000
-------------------- ------------------
Total liabilities 151,381,000 134,141,000
-------------------- ------------------
Commitments and contingencies
10.5% Series C Convertible Preferred Stock,
no par value: 2,025,000 shares authorized,
1,568,561 and 1,846,799 shares issued and outstanding
at June 30, 1998 and December 31, 1997,
respectively (liquidation preferences of
$156,856,100 and $184,679,900), at net carrying value 93,629,000 110,237,000
Stockholders' equity:
Preferred stock, $0.001 par value, 50,000,000 shares
authorized; 8,000,000 shares designated as 5% Delayed
Convertible Preferred Stock; none issued or outstanding - -
Common stock, $0.001 par value; 200,000,000 shares
authorized; and 17,608,456 and 16,048,691 shares issued
and outstanding as of June 30, 1998 and December 31, 1997,
respectively 18,000 16,000
Additional paid-in capital 112,159,000 102,687,000
Deficit accumulated during the development stage (59,288,000) (23,273,000)
-------------------- ------------------
Total stockholders' equity 52,889,000 79,430,000
-------------------- ------------------
Total liabilities and stockholders' equity $ 297,899,000 $ 323,808,000
=================== =================
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
2
<PAGE>
CD RADIO INC. AND SUBSIDIARY
(A Development Stage Enterprise)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Cumulative for
the period
May 17, 1990
(date of
inception)
For the Six Months Ended June 30, to June 30, 1998
--------------------------------- ----------------
1998 1997
---- ----
<S> <C> <C> <C>
Cash flows from development stage activities:
Net loss $(36,015,000) $ (835,000) $(59,288,000)
Adjustments to reconcile net loss to net cash provided by
(used in) development stage activities:
Depreciation expense 21,000 20,000 275,000
Amortization of debt issue costs 98,000 - 171,000
(Gain) loss on marketable securities 310,000 - (314,000)
Special charges 23,557,000 - 25,557,000
Accretion of note payable charged as interest expense 11,335,000 - 13,203,000
Sales (purchases) of marketable securities, net 103,288,000 - (65,570,000)
Compensation expense in connection with issuance of
stock options - - 2,164,000
Common stock issued for services rendered - - 902,000
Common stock options granted for services rendered - - 120,000
Increase (decrease) in cash and cash equivalents resulting
from changes in assets and liabilities:
Prepaid expense and other (675,000) (438,000) (1,603,000)
Due to related party - - 351,000
Deposits and other assets (623,000) - (927,000)
Accounts payable and accrued expenses 2,135,000 56,000 2,611,000
Accrued interest and other liabilities - (10,000) 14,000
------------ ------------ ------------
Net cash provided by (used in) development stage
activities 103,431,000 (1,207,000) (82,334,000)
------------ ------------ ------------
Cash flows form investing activities:
Purchase of FCC license - (16,669,000) (83,346,000)
Payments for satellite construction (14,407,000) (6,500,000) (63,707,000)
Designated cash - (66,677,000) -
Payments for launch services (25,071,000) (3,420,000) (31,363,000)
Capital expenditures (148,000) (5,000) (547,000)
Acquisition of Sky-Highway Radio Corp. - - (2,000,000)
------------ ------------ ------------
Net cash used in investing activities (39,626,000) (93,271,000) (180,963,000)
------------ ------------ ------------
Cash flows from financing activities:
Proceeds from issuance of common stock, net - - 85,379,000
Proceeds from issuance of 5% Preferred Stock, net - 120,052,000 120,518,000
Proceeds from exercise of stock options 36,000 26,000 247,000
Proceeds from exercise of stock warrants - - 4,589,000
Proceeds from issuance of promissory note and Units - - 116,535,000
Proceeds from issuance of promissory notes to related
parties - - 2,965,000
Repayment of promissory note - - (200,000)
Repayment of promissory notes to related parties - - (2,435,000)
Loan from officer - - 440,000
------------ ------------ ------------
Net cash provided by financing activities 36,000 120,078,000 328,038,000
------------ ------------ ------------
Net increase in cash and cash equivalents 63,841,000 25,600,000 64,741,000
Cash and cash equivalents at the beginning of period 900,000 4,584,000 -
------------ ------------ ------------
Cash and cash equivalents at the end of period $ 64,741,000 $ 30,184,000 $ 64,741,000
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
3
<PAGE>
CD RADIO INC. AND SUBSIDIARY
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements
June 30, 1998
(Unaudited)
General
The accompanying consolidated financial statements do not include all
of the information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles.
In the opinion of management, all adjustments (consisting only of normal,
recurring adjustments) considered necessary to fairly reflect the Company's
consolidated financial position and consolidated results of operations have been
included. These financial statements should be read in connection with the
Company's consolidated financial statements and the notes thereto for the fiscal
year ended December 31, 1997 included in the Company's Annual Report on Form
10-K as filed with the Securities and Exchange Commission (the "SEC").
Net Loss Per Share
Net loss per common share is based on the weighted average number of
common shares outstanding during such periods. Options and warrants granted by
the Company have not been included in the calculation of net loss per share
because such items were antidilutive. Since December 15, 1997, the Company is
required to report earnings (loss) per share in accordance with Statement of
Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS No. 128").
As long as the Company continues to experience net losses, there will be no
impact on the Company's net loss per share from adoption of SFAS No. 128.
Earnings per share for all periods presented conform to SFAS No. 128.
Comprehensive Income
In 1997, the Financial Accounting Standards Board ("the FASB") issued
SFAS No. 130, "Reporting Comprehensive Income." SFAS No. 130 requires additional
reporting with respect to certain changes in assets and liabilities that
previously were included in stockholders' equity. The Company has no
comprehensive income items to report for the current presentation.
Recent Accounting Pronouncements
The FASB has issued SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information," which requires financial and descriptive
information with respect to operating segments of an entity based on the way
management disaggregates the entity for internal operating decisions. There is
no impact to the Company's June 30, 1998 financial statements from the adoption
of this standard.
4
<PAGE>
Marketable Securities
Marketable securities consist of fixed income securities and are stated
at market value. Marketable securities are defined as trading securities under
the provision of SFAS No. 115, "Accounting for Certain Investments in Debt and
Equity Securities" and unrealized holding gains and losses are reflected in
earnings. Unrealized holding gains were $11,000 and $624,000 at June 30, 1998
and December 31, 1997, respectively.
Special Charges
During the quarter ended June 30, 1998, the Company decided to enhance
its satellite delivery system to include a third in-orbit satellite and to
terminate certain launch and orbit related contracts. The Company recorded
special charges totaling approximately $25.7 million related primarily to the
termination of such contracts.
Reclassifications
Certain amounts in the prior period's financial statements have been
reclassified to conform to the current period presentation.
5
<PAGE>
CD RADIO INC. AND SUBSIDIARY
(A Development Stage Enterprise)
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Special Note Regarding Forward-Looking Statements
In connection with the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995 (the "Reform Act"), the Company is hereby
providing cautionary statements identifying important factors that could cause
the Company's actual results to differ materially from those projected in
forward-looking statements (as such term is defined in the Reform Act) made in
this report. Any statements that express, or involve discussions as to,
expectations, beliefs, plans, objectives, assumptions or future events or
performance (often, but not always, through the use of words or phrases such as
"will likely result," "are expected to," "will continue," "is anticipated,"
"estimated," "intends," "plans," "projection" and "outlook") are not historical
facts and may be forward-looking and, accordingly, such statements involve
estimates, assumptions and uncertainties that could cause actual results to
differ materially from those expressed in the forward-looking statements.
Accordingly, any such statements are qualified in their entirety by reference
to, and are accompanied by, the factors discussed in this report and under the
caption "Special Note Regarding Forward-Looking Statements" in the Company's
Annual Report on Form 10-K for the year ended December 31, 1997. Among the key
factors that have a direct bearing on the Company's future results of operations
are the potential risk of delay in implementing the Company's business plan;
increased costs of construction and launch of necessary satellites; dependence
on satellite construction and launch contractors; risk of launch failure;
unproven market for the Company's proposed service; unproven applications of
existing technology; and the Company's need for substantial additional
financing.
Overview
The Company was organized in May 1990 and is in its development stage.
The Company's principal activities to date have included technology development,
obtaining regulatory approval for the CD Radio broadcasts, commencement of
construction of four satellites, acquisition of content for its programming,
market research, recruitment of its senior management team and securing
financing for working capital and capital expenditures. The Company does not
expect to generate any revenues from operations until 2000 at the earliest, and
expects that positive cashflow from operations will not be generated until late
2000 at the earliest. In addition, the Company will require substantial
additional capital to complete development and commence commercial operations of
CD Radio. There can be no assurance that CD Radio will ever commence operations,
that the Company will attain any particular level of revenues or that the
Company will achieve profitability.
6
<PAGE>
Upon commencing commercial operations, the Company expects its primary
source of revenues to be monthly subscription fees. The Company currently
anticipates that its subscription fee will be approximately $9.95 per month to
receive CD Radio broadcasts, with a one time, modest activation fee per
subscriber. In addition, the Company expects to derive additional revenues from
providers of sports, news and talk programming for providing national
distribution of their programming to CD Radio subscribers or from directly
selling or bartering advertising time on the Company's sports, news and talk
channels. To receive CD Radio, subscribers will need to purchase a new
generation of radios capable of receiving S-band as well as AM and FM signals
("S-band radios") or a plug and play adapter card (a "radio card") that will
enable consumers to receive CD Radio in their cars by inserting the radio card
into existing cassette and CD players together with the associated miniature
satellite dish antenna. The Company does not intend to manufacture these
products and thus will not receive any revenues from their sale. Although the
Company holds patents covering certain technology to be used in the radio cards,
S-band radios and miniature satellite dish antennas, the Company expects to
license its technology to its manufacturers at no charge.
The Company expects that the operating expenses associated with
commercial operations will consist primarily of marketing, sales, programming,
maintenance of the satellite and broadcasting system and general and
administrative costs. Costs to acquire programming are expected to include
payments to build and maintain an extensive music library and royalty payments
for broadcasting music (calculated based on a percentage of revenues).
Marketing, sales, general and administrative costs are expected to consist
primarily of advertising costs, salaries of employees, rent and other
administrative expenses. The Company expects that the number of its employees
will increase from 29, as of August 3, 1998, to approximately 140 by the time it
commences commercial operations.
In addition to funding initial operating losses, the Company will
require funds for working capital, interest and financing costs on borrowings
and capital expenditures. The Company's interest expense will increase
significantly as a result of the issuance in November 1997 of Units (the
"Units") consisting of the Company's 15% Senior Secured Discount Notes due 2007
(the "Senior Notes") and warrants (the "Warrants") to purchase additional Senior
Notes and additional debt which will be incurred in the future. However, a
substantial portion of this indebtedness will not require cash payments of
interest and principal for some time.
Results of Operations
Three Months Ended June 30, 1998 Compared with Three Months Ended June
30, 1997
The Company recorded net losses of $30,177,000 and $354,000 for the
three months ended June 30, 1998 and 1997, respectively. The Company's total
operating expenses were $28,565,000 and $1,591,000 for the three months ended
June 30, 1998 and 1997, respectively. In the 1998 quarter, the Company decided
to enhance its satellite delivery system to include a third in-orbit satellite
7
<PAGE>
and to terminate certain launch and orbit related contracts. The Company
recorded special charges totaling approximately $25.7 million related primarily
to the termination of such contracts. Excluding these special charges, the
Company recorded a net loss of $4,495,000 and operating expenses of $2,883,000
for the three months ended June 30, 1998.
Legal, consulting and regulatory fees decreased to $949,000 in the
quarter ended June 30, 1998 from $1,009,000 in the quarter ended June 30, 1997.
In the 1998 quarter, the Company was working to finalize its new satellite
construction and launch contract and its chip set manufacturing agreement, while
during the 1997 quarter, the Company was working to obtain its FCC license and
to finalize its original satellite construction and launch contracts. The major
components of these fees in the 1998 quarter were legal (41%), consulting (55%)
and regulatory (4%), while in the 1997 quarter the major components were legal
(55%), consulting (40%) and regulatory (5%).
Research and development costs were $5,000 and $16,000 for the three
months ended June 30, 1998 and 1997, respectively. This level of research and
development cost is the result of the Company completing the majority of such
activities in 1994.
Other general and administrative expenses increased for the three
months ended June 30, 1998 to $1,929,000 from $566,000 for the three months
ended June 30, 1997. General and administrative costs have increased as the
Company continues to expand its management team and the workforce necessary to
develop and commence the broadcast of CD Radio. The major components of other
general and administrative costs in the 1998 quarter were salaries and
employment related costs (51%) and rent and occupancy costs (26%), while in the
1997 quarter the major components were salaries and employment related costs
(54%) and rent and occupancy costs (22%). The remaining portion of other general
and administrative costs (24% in the 1998 quarter and 23% in the 1997 quarter)
consists of other costs such as insurance, travel, depreciation and supplies,
with no amount exceeding 10% of the total.
Interest income increased to $1,585,000 for the three months ended June
30, 1998, from $1,237,000 in the three months ended June 30, 1997 as a result of
a higher average amount of funds invested during the 1998 second quarter. The
increase in the investment balance was due to the completion of the offering of
the Units in November 1997 and the sale to Loral Space & Communications, Ltd.
("Loral") of $25 million of Common Stock in August 1997.
Interest expense, net of capitalized interest, was $3,159,000 for the
three months ended June 30, 1998 and was $0 in the 1997 period. This increase
was due to interest expense accruing on the Senior Notes issued in November
1997. No cash interest on the Senior Notes will be paid until June 2003.
Six Months Ended June 30, 1998 Compared with Six Months Ended June 30,
1997
The Company recorded net losses of $36,015,000 and $835,000 for the six
months ended June 30, 1998 and 1997, respectively. The Company's total operating
expenses were $30,898,000 and $2,128,000 for the six months ended June 30, 1998
and
8
<PAGE>
1997, respectively. Excluding the special charges totaling $25.7 million
recorded in the 1998 second quarter, the Company recorded a net loss of
$10,333,000 and operating expenses of $5,216,000 for the six months ended June
30, 1998.
Legal, consulting and regulatory fees increased to $1,928,000 in the
six months ended June 30, 1998 from $1,246,000 in the six months ended June 30,
1997. The increase in the level of expenditures was the result of greater
consulting expenses due to the accelerated execution of the Company's business
plan. Consulting fees were generated primarily in connection with the technical
aspects of the Company's business plan, such as satellite construction, chip set
design and terrestrial repeater network build-out. The major components of
legal, consulting and regulatory fees in the 1998 period were legal (35%),
consulting (63%) and regulatory (2%), while in the 1997 quarter the major
components were legal (52%), consulting (44%) and regulatory (4%).
Research and development costs were $21,000 and $35,000 for the six
months ended June 30, 1998 and 1997, respectively. This level of research and
development cost is the result of the Company completing the majority of such
activities in 1994.
Other general and administrative expenses increased for the six months
ended June 30, 1998 to $3,267,000 from $847,000 for the six months ended June
30, 1997. General and administrative activities have grown as the Company
continues to expand its management team and the workforce necessary to develop
and commence the broadcast of CD Radio. The major components of other general
and administrative costs in the 1998 period were salaries and employment related
costs (51%) and rent and occupancy costs (21%), while in the 1997 period the
major components were salaries and employment related costs (53%) and rent and
occupancy costs (25%). The remaining portion of other general and administrative
costs (28% in the 1998 period and 22% in the 1997 period) consists of other
costs such as insurance, travel, depreciation and supplies, with no amount
exceeding 10% of the total.
Interest income increased to $3,903,000 for the six months ended June
30, 1998, from $1,298,000 in the six months ended June 30, 1997 as a result of a
higher average amount of funds invested during the 1998 period. The increase in
the investment balance was due to the completion of the offering of the Units in
November 1997 and the sale to Loral of $25 million of Common Stock in August
1997.
Interest expense, net of capitalized interest, increased to $8,982,000
for the six months ended June 30, 1998, from $5,000 in the 1997 period. This
increase was due to interest expense accruing on the Senior Notes, which were
issued after the end of the 1997 period. No cash interest on the Senior Notes
will be paid until June 2003.
Liquidity and Capital Resources
At June 30, 1998, the Company had working capital of approximately
$129,673,000 compared with $170,894,000 at December 31, 1997. The decrease in
working capital was primarily the result of payments for satellite and launch
vehicle construction, the termination of the launch services agreement with
Arianespace S.A. and
9
<PAGE>
operating expenses exceeding interest income during the period. The cash and
cash equivalents on hand were primarily obtained from the offerings of Common
Stock and the Units completed in November 1997, as well as the sale to Loral
of $25 million of Common Stock in August 1997.
Funding Requirements
The Company is a development stage company and as such will continue to
require substantial amounts of continued outside financing to acquire and
develop its assets and commence commercial operations. The Company estimates
that it will require approximately $964 million to develop and commence
commercial operation of CD Radio by the second quarter of 2000. Of this amount,
the Company has raised approximately $494 million and has entered into an
agreement with Bank of America National Trust and Savings Association ("Bank of
America") to attempt to arrange for the Company an additional $106 million,
leaving anticipated additional cash needs of approximately $364 million to fund
its operations through the first quarter of 2000. The Company anticipates
additional cash requirements of approximately $140 million to fund its
operations through the first full year of commercial operations. The Company
expects to finance the remainder of its funding requirements through the
issuance of debt or equity securities, or a combination thereof.
In April 1997, the Company was the winning bidder in a FCC auction for
one of two FCC Licenses with a winning bid of $83.3 million, of which $16.7
million was paid as a deposit. The Company paid the balance due the FCC in
October 1997 and was awarded the FCC License on October 10, 1997.
To build and launch the satellites necessary for the operations of CD
Radio, on July 28, 1998, the Company entered into an amended and restated
contract (the "Loral Satellite Contract") with Space Systems/Loral, Inc.
("SS/L"). The Loral Satellite Contract provides for SS/L to construct, launch
and deliver three satellites in-orbit and checked-out, to construct for the
Company a fourth satellite for use as a ground spare and to become the Company's
launch services provider. The Company is committed to make aggregate payments of
approximately $717 million under the Loral Satellite Contract. As of June 30,
1998, the Company had made aggregate payments of $70 million to SS/L. Under the
Loral Satellite Contract, with the exception of a payment made to SS/L in March
1993, payments are made in installments commencing in April 1997 and ending in
October 2000. Approximately half of these payments are contingent upon SS/L
meeting specified milestones in the manufacture of the satellites.
In the event of a satellite or launch failure, the Company will be
required to pay SS/L the full-deferred amount for the affected satellite no
later than 120 days after the date of the failure. If the Company should elect
to put one of the first three satellites into ground storage, rather than having
it shipped to the launch site, the full-deferred amount for the affected
satellite will become due within 60 days of such election.
The Company also will require funds for working capital, interest on
borrowings, acquisition of programming, financing costs and operating expenses
until
10
<PAGE>
some time after the commencement of commercial operations of CD Radio. The
Company's interest expense will increase significantly as a result of its
financing plan; however, a substantial portion of its planned indebtedness will
not require cash payments of interest and principal for some time. The Senior
Notes do not require cash payments until June 2003. The Company believes that
its working capital at June 30, 1998 is sufficient to fund planned operations
and construction of its satellite system through the fourth quarter of 1998.
Sources of Funding
To date the Company has funded its capital needs through the issuance
of debt and equity securities. As of June 30, 1998, the Company had received a
total of $222 million in equity capital. A significant portion of the Company's
equity capital was received in 1997 as a result of the Company's issuance of
5,400,000 shares of 5% Preferred Stock and 4,955,488 shares of Common Stock
resulting in net proceeds of $121 million and $71 million, respectively. A total
of 1,905,488 shares of Common Stock were sold to Loral in August 1997 and
3,050,000 shares of Common Stock were sold to the public in November 1997. In
November 1997, the Company also exchanged (the "Exchange Offer") 1,846,799
shares of its newly issued 10 1/2% Series C Convertible Preferred Stock ("Series
C Preferred Stock") for all of the previously outstanding shares of 5% Preferred
Stock. The Company received no proceeds from the Exchange Offer.
In November 1997, the Company received net proceeds of $116 million
from the issuance of 12,910 Units, each Unit consisting of $20,000 aggregate
principal amount at maturity of Senior Notes and a Warrant to purchase
additional Senior Notes with an aggregate principal amount at maturity of
$3,000. All Warrants were exercised in 1997. The aggregate value at maturity of
the Senior Notes originally issued and the Senior Notes resulting from the
exercise of Warrants is $258 million and $38 million, respectively. The Senior
Notes mature on November 15, 2007 with the first cash interest payment due in
June 2003. The Indenture under which the Senior Notes were issued (the "Senior
Notes Indenture") contains certain limitations on the Company's ability to incur
additional indebtedness. The Senior Notes are secured by a pledge of the stock
of Satellite CD Radio, Inc., the subsidiary of the Company that holds the
Company's FCC License.
The Company has entered into a credit agreement (the "Tranche A
Facility") with Bank of America pursuant to which Bank of America will provide
the Company a term loan facility in an aggregate principal amount of up to $115
million (the term loans thereunder, the "Tranche A Loans"). The proceeds of the
Tranche A Loans will be used by the Company to fund a portion of the progress
payments required to be made by the Company under the Loral Satellite Contract
for the purchase of launch services and to pay interest, fees and other expenses
related to the Tranche A Facility. The Tranche A Loans are due on September 30,
1999 and bear interest, at the option of the Company, at either (i) the London
Interbank Offered Rate plus 1.75% or (ii) the higher of (a) the rate publicly
announced by Bank of America as its reference rate and (b) 0.50% per annum above
the Federal Funds Rate then in effect. The Tranche A Loans are secured by the
grant of a security interest by the Company in the portion of the Loral
Satellite Contract relating to launch services. The Tranche A Facility also
contains covenants relating to
11
<PAGE>
financial information, the conduct of business of the Company, payments under
the Loral Satellite Contract, maintenance of governmental and other approvals,
maintenance of existence and qualifications, maintenance of books and records,
maintenance of property and insurance, compliance with laws and notice of
defaults. In addition, the Tranche A Facility requires the Company to maintain a
minimum consolidated net worth of $125 million at all times prior to December
31, 1998 and $75 million thereafter.
In connection with the Tranche A Facility, Loral has agreed with Bank
of America that at maturity of the Tranche A Loans (including maturity as a
result of an acceleration), upon the occurrence of a bankruptcy of the Company
or upon the occurrence of an event of default by Loral under its agreement with
Bank of America, Loral will repurchase from Bank of America and the other
lenders the Tranche A Loans at a price equal to the principal amount of the
Tranche A Loans plus accrued and unpaid interest. In exchange for providing such
credit support, the Company will pay Loral a fee equal to 1.25% per annum of the
outstanding amount of the Tranche A Loans from time to time.
The Company has also entered into an agreement with Bank of America
pursuant to which Bank of America has agreed to attempt to arrange a syndicate
of lenders to provide a term loan facility (the "Tranche B Facility") in the
aggregate principal amount of $225 million (the term loans thereunder, the
"Tranche B Loans"). It is anticipated that a portion of the proceeds of the
Tranche B Loans would be used on or prior to September 30, 1999 to repay amounts
outstanding under the Tranche A Facility and for other general corporate
purposes. Bank of America has not committed to provide the Tranche B Loans and
there are no assurances that such Tranche B Loans will be arranged or the terms
of any such Tranche B Loans. Consummation of the Tranche B Facility as set forth
in such agreement would also require the consent of the holders of certain
outstanding indebtedness of the Company.
SS/L has agreed that payment of $50 million of the amount related to
the construction of the satellites under the Loral Satellite Contract will be
payable in six installments of $8.33 million to be made in June 2002, September
2002, December 2002, June 2003, September 2003 and November 2003. These deferred
amounts will bear interest at 10% per annum and all interest on these deferred
amounts will accrue until December 2001, at which time interest (including
interest on previously accrued interest) will be payable quarterly in arrears in
cash. As collateral security for these deferred payments, the Company has agreed
to grant Loral a security interest in its terrestrial repeater network.
12
<PAGE>
The Company expects it will require an additional $364 million in
financing through the first quarter of 2000. However, there can be no assurance
that the Company's actual cash requirements will not increase. Potential sources
of additional financing include the sale of debt or equity securities in the
public or private markets. There can be no assurance that the Company will be
able to obtain additional financing on favorable terms, or at all, or that it
will be able to do so in a timely fashion. The Senior Notes Indenture and the
Tranche A Facility contain, and documents governing any indebtedness incurred in
the future are expected to contain, provisions limiting the ability of the
Company to incur additional indebtedness. The issuance by the Company of
additional equity securities could cause substantial dilution of the interest in
the Company of the Company's current stockholders. If additional financing were
not available on a timely basis, the Company would be required to delay
satellite and/or launch vehicle construction in order to conserve cash to fund
continued operations, which would cause delays in the commencement of operations
and increased costs.
The amount and timing of the Company's actual cash requirements will
depend upon numerous factors, including costs associated with the construction
and deployment of its satellite system and the rate of growth of its business
subsequent to commencing service, costs of financing and the possibility of
unanticipated costs. Additional funds would be required in the event of delay,
cost overruns, unanticipated expenses, launch failure, launch services or
satellite system change orders, or any shortfalls in estimated levels of
operating cash flow.
13
<PAGE>
Part II
Other Information
Item 2. Changes in Securities
On April 20, 1998, the Company filed a Certificate of Increase under
Section 151(g) of the Delaware General Corporation Law which had the effect of
increasing the number of shares of Series C Preferred Stock that the Company is
authorized to issue from 2,000,000 to 2,025,000.
Item 4. Submission of Matters to a Vote of Security Holders
At the Company's annual meeting of stockholders held on April 20, 1998,
the persons whose names are set forth below were elected as directors. The
relevant voting information for each person is sent forth opposite such person's
name:
Votes Cast
For Withheld
David Margolese.................... 13,521,450 7,115
Robert D. Briskman................. 13,520,391 8,175
Lawrence F. Gilberti............... 13,520,491 8,075
Joseph V. Vittoria................. 15,520,421 8,145
Ralph V. Whitworth................. 13,521,421 7,145
In addition to the election of directors, the following matters were
acted upon:
(a) The reappointment of Coopers & Lybrand LLP as independent
auditors for the fiscal year ending December 31, 1998 was ratified by a vote of
13,479,755 shares in favor, 33,620 shares against, and 15,191 shares abstained.
(b) Amendments to the CD Radio 1994 Stock Option Plan and the
CD Radio 1994 Directors' Nonqualified Stock Option Plan were approved by a vote
of 8,679,847 shares in favor, 107,126 shares against, 35,211 shares abstained,
and 4,706,382 broker nonvotes.
Item 5. Other Information
Rule 14a-4(c)(1) under the Securities Exchange Act of 1934 provides
that a proxy may give discretionary authority to vote on any matter (including a
stockholder proposal) that may come before an annual meeting of stockholders if
the registrant (that is, the Company) had less than 45-days notice of such
proposal prior to mailing of the proxy statement relating to such meeting even
though such proxy statement contains no discussion of the matter to be voted on.
The Company intends to utilize this authority at the next annual meeting of
stockholders. Based on the mailing date of the proxy statement for the last
annual meeting of stockholders, the notice contemplated by Rule 14a-4(c)(1) will
need to be given not later than February 10, 1999.
14
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) See the Exhibit Index for a list of exhibit filed
herewith.
(b) The Company filed a Current Report on Form 8-K, dated May
28, 1998, describing the enhancement of its broadcast system as a result of the
addition of a third in-orbit satellite.
15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
CD RADIO INC.
By: /s/ John T. McClain
-----------------------
John T. McClain
Vice President and Controller
(Chief Accounting Officer)
August 14, 1998
16
<PAGE>
Exhibits
Exhibit Description
- ------- -----------
3.1 Amended and Restated Certificate of Incorporation (incorporated by
reference to Exhibit 3.1 to the Company's Registration Statement
on Form S-1 (File No. 33-74782) (the "S-1 Registration
Statement")).
3.2 Amended and Restated By-Laws (incorporated by reference to Exhibit
3.2 to the S-1 Registration Statement).
3.5.1 Certificate of Designations, Preferences and Relative,
Participating, Optional and Other Special Rights of 10 1/2% Series
C Convertible Preferred Stock (the "Series C Certificate of
Designations") (incorporated by reference to Exhibit 4.1 to the
Company's Registration Statement on Form S-4 (File No. 333-34761)
(the "S-4 Registration Statement")).
3.5.2 Certificate of Correction of the Series C Certificate of
Designations (incorporated by reference to Exhibit 3.5.2 to the
Company's Annual Report on Form 10-K for the year ended December
31, 1997 (the "1997 Form 10-K")).
3.5.3 Certificate of Increase of 10-1/2% Series C Convertible Preferred
Stock. (incorporated by reference to Exhibit 3.5.3 to the
Company's Form 10-Q for the period ended March 31, 1998).
4.1 Form of Certificate for Shares of Common Stock (incorporated by
reference to Exhibit 4.3 to the S-1 Registration Statement).
4.2 Form of Certificate for Shares of 10 1/2% Series C Convertible
Preferred Stock (incorporated by reference to Exhibit 4.4 to the
S-4 Registration Statement).
4.3 Rights Agreement dated as of October 22, 1997, between the Company
and Continental Stock Transfer & Trust Company, as Rights Agent
(incorporated by reference to Exhibit 1 to Form 8-A).
4.4 Form of Right Certificate (incorporated by reference to Exhibit B
to Exhibit 1 to Form 8-A).
4.6 Form of Note (incorporated by reference to Exhibit 4.2 to the
Units Registration Statement).
4.7 Pledge Agreement, dated as of November 26, 1997, between the
Company, as Pledgor, and IBJ Schroder Bank & Trust Company, as
Collateral Agent (incorporated by reference to Exhibit 4.5 to the
Units Registration Statement).
4.8 Form of Warrant (incorporated by reference to Exhibit 4.4 to the
Units Registration Statement).
17
<PAGE>
Exhibit Description
- ------- -----------
4.9 Form of Preferred Stock Warrant Agreement, dated as of April
9, 1997, between the Company and each Warrantholder thereof
(incorporated by reference to Exhibit 4.11 to the 1997 Form 10-K).
4.10 Form of Common Stock Purchase Warrant granted by the Company to
Everest Capital Master Fund, L.P. and to The Ravich Revocable
Trust of 1989 (incorporated by reference to Exhibit 4.12 to the
1997 Form 10-K).
10.1.1 Lease Agreement, dated October 20, 1992, between 22nd & K Street
Office Building Limited Partnership and the Company (incorporated
by reference to Exhibit 10.3 to the S-1 Registration Statement).
10.1.2 Lease Agreement, dated as of March 31, 1998, between Rock-McGraw,
Inc. and the Company (filed herewith).
10.2.1 Engagement Letter Agreement, dated November 18, 1992, between the
Company and Batchelder & Partners, Inc. (incorporated by reference
to Exhibit 10.4 to the S-1 Registration Statement).
10.2.2 Engagement Termination Letter Agreement, dated December 4, 1997,
between the Company and Batchelder & Partners, Inc. (incorporated
by reference to Exhibit 10.2.2 to the 1997 Form 10-K).
*10.3.1 Proprietary Information and Non-Competition Agreement, dated
February 9, 1993, for Robert D. Briskman (incorporated by
reference to Exhibit 10.8.1 to the S-1 Registration Statement).
*10.3.2 Amendment No. 1 to Proprietary Information and Non Competition
Agreement between the Company and Robert D. Briskman (incorporated
by reference to Exhibit 10.8.2 to the S-1 Registration Statement).
+10.4 Amended and Restated Contract, dated as of June 30, 1998, between
the Company and Space Systems/Loral, Inc. (filed herewith).
10.5 Assignment of Technology Agreement, dated April 15, 1993, between
Robert D. Briskman and the Company (incorporated by reference to
Exhibit 10.10 to the S-1 Registration Statement).
*10.6.1 Amended and Restated Option Agreement between the Company and
Robert D. Briskman (incorporated by reference to Exhibit 10.13 to
the S-1 Registration Statement).
*10.6.2 Stock Option Agreement, dated as of October 15, 1997, between the
Company and Robert D. Briskman. (incorporated by reference to
Exhibit 10.6.2 to the 1997 Form 10-K).
18
<PAGE>
Exhibit Description
- ------- -----------
*10.7.1 Employment and Noncompetition Agreement between the Company and
David Margolese (incorporated by reference to Exhibit 10.18.1 to
the S-1 Registration Statement).
*10.7.2 First Amendment to Employment Agreement between the Company and
David Margolese (incorporated by reference to Exhibit 10.18.2 to
the S-1 Registration Statement).
*10.8.1 Employment and Noncompetition Agreement between the Company and
Robert D. Briskman (incorporated by reference to Exhibit 10.19.1
to the S-1 Registration Statement).
*10.8.2 First Amendment to Employment Agreement between the Company and
Robert D. Briskman (incorporated by reference to Exhibit 10.19.2
to the S-1 Registration Statement).
*10.8.3 Second Amendment to Employment Agreement between the Company and
Robert D. Briskman (incorporated by reference to Exhibit 10.12.3
to the Company's Annual Report on Form 10-K for the year ended
December 31, 1996 (the "1996 Form 10-K")).
*10.9 Employment and Noncompetition Agreement, dated as of July 10,
1997, between the Company and Andrew J. Greenebaum (incorporated
by reference to Exhibit 10.10 to the Company's Quarterly Report on
Form 10-Q for the period ended September 30, 1997).
*10.10 Employment and Noncompetition Agreement, dated as of April 16,
1997, between the Company and Joseph S. Capobianco (incorporated
by reference to Exhibit 10.17 to the Company's Quarterly Report on
Form 10-Q/A for the period ended March 31, 1997).
*10.11.1 Employment and Noncompetition Agreement, dated as of April 28,
1997, between the Company and Keno V. Thomas (incorporated by
reference to Exhibit 10.18 to the Company's Quarterly Report on
Form 10-Q/A for the period ended March 31, 1997).
*10.11.2 Separation Agreement, dated as of July 6, 1998, between the
Company and Keno V. Thomas (filed herewith).
*10.12 Employment and Noncompetition Agreement, dated as of May 18, 1998,
between the Company and Patrick L. Donnelly (filed herewith).
10.13 Registration Agreement, dated January 2, 1994, between the Company
and M.A. Rothblatt and B.A. Rothblatt (incorporated by reference
to Exhibit 10.20 to the S-1 Registration Statement).
*10.14 1994 Stock Option Plan (incorporated by reference to Exhibit 10.21
to the S-1 Registration Statement).
19
<PAGE>
Exhibit Description
- ------- -----------
*10.15 Amended and Restated 1994 Directors' Nonqualified Stock Option
Plan (incorporated by reference to Exhibit 10.22 to the Company's
Annual Report on Form 10-K for the year ended December 31, 1995).
10.16.1 Option Agreement, dated as of October 21, 1992, between the
Company and Batchelder & Partners, Inc. (incorporated by reference
to Exhibit 10.24 to the S-1 Registration Statement).
10.16.2 Form of Option Agreement, dated as of December 29, 1997, between
the Company and each Optionee (filed herewith).
10.17 Settlement Agreement, dated as of April 1, 1994, among the
Company, M.A. Rothblatt, B.A. Rothblatt and Marcor, Inc.
(incorporated by reference to Exhibit 10.27 to the S-1
Registration Statement).
*10.18 1995 Stock Compensation Plan (incorporated by reference to Exhibit
10.37 to the Company's Annual Report on Form 10-K for the year
ended December 31, 1995).
10.19.1 Preferred Stock Investment Agreement dated October 23, 1996
between the Company and certain investors (incorporated by
reference to Exhibit 10.24 to the 1996 Form 10-K).
10.19.2 First Amendment to Preferred Stock Investment Agreement dated
March 7, 1997 between the Company and certain investors
(incorporated by reference to Exhibit 10.24.1 to the 1996 Form
10-K).
10.19.3 Second Amendment to Preferred Stock Investment Agreement dated
March 14, 1997 between the Company and certain investors
(incorporated by reference to Exhibit 10.24.2 to the 1996 Form
10-K).
10.20 Stock Purchase Agreement, dated as of August 5, 1997, between the
Company, David Margolese and Loral Space & Communications Ltd.
(incorporated by reference to Exhibit 99.1 to the Company's
Current Report on Form 8-K, filed on August 19, 1997).
10.21 Letter, dated May 29, 1998, terminating Launch Services Agreement
dated July 22, 1997 between the Company and Arianespace S.A.;
Arianespace Customer Loan Agreements dated July 22, 1997 for
Launches #1 and #2 between the Company and Arianespace Finance
S.A.; and the Multiparty Agreements dated July 22, 1997 for
Launches #1 and #2 among the Company, Arianespace S.A. and
Arianespace Finance S.A. (filed herewith).
10.22 Credit Agreement, dated as of June 30, 1998, among the Company,
the financial institutions from time to time parties thereto and
Bank of America National Trust and Savings Association, as
Administrative Agent (filed herewith).
20
<PAGE>
Exhibit Description
- ------- -----------
10.23 Pledge Agreement, dated as of June 30, 1998, made by the Company
in favor of Bank of America National Trust and Savings
Association, as Administrative Agent (filed herewith).
10.24 Summary Term Sheet/Commitment, dated June 15, 1997, among the
Company and Everest Capital International, Ltd., Everest Capital
Fund, L.P. and The Ravich Revocable Trust of 1989 (incorporated by
reference to Exhibit 99.1 to the Company's Current Report on Form
8-K, filed on July 8, 1997).
10.25.1 Engagement Letter Agreement, dated June 14, 1997, between the
Company and Libra Investments, Inc. (incorporated by reference to
Exhibit 10.26.1 to the 1997 Form 10-K).
10.25.2 Engagement Termination Letter Agreement, dated August 6, 1997,
between the Company and Libra Investments, Inc. (incorporated by
reference to Exhibit 10.26.2 to the 1997 Form 10-K).
10.26 Engagement Letter Agreement dated October 8, 1997, between the
Company and Merrill Lynch, Pierce, Fenner & Smith Incorporated
(incorporated by reference to Exhibit 10.27 to the 1997 Form
10-K).
+10.27 Radio License Agreement, dated January 21, 1998 between the
Company and Bloomberg Communications Inc. (incorporated by
reference to Exhibit 10.28 to the Company's Quarterly Report on
Form 10-Q for the period ended March 31, 1998).
+10.28 Agreement, dated April 24, 1998, between Lucent Technologies Inc.
and the Company (filed herewith).
27.1 Financial Data Schedule.
- -----------------------
* This document has been identified as a management contract or compensatory
plan or arrangement.
+ Portions of these exhibits, which are incorporated by reference, have been
omitted pursuant to an Application for Confidential treatment filed by the
Company with the Securities and Exchange Commission pursuant to Rule 406 of the
Securities Act of 1933, as amended.
21
Lease, dated March 31, 1998, between ROCK-McGRAW, INC., a New York
corporation, having an office at 1221 Avenue of the Americas, New York, N.Y.
10020-1095 (the "Landlord"), and CD RADIO INC., a Delaware corporation, having
an office at 1001 22nd Street, N.W., Sixth Floor, Washington, D.C. 20037 (the
"Tenant"),
Witnesseth:
ARTICLE ONE
(1.)Demise of Premises, Term and Rent
1.1.1. The Landlord does hereby lease and demise to the Tenant, and the Tenant
does hereby hire and take from the Landlord, subject and subordinate to the
Qualified Encumbrances (as defined in Section 1.7 below), and upon and subject
to the provisions of this Lease, for the term hereinafter stated, the spaces
substantially as shown hatched on the diagrams attached hereto as Exhibit A-1
and designated as `A' on the 36th Floor (herein sometimes called the "36th Floor
Space"), Exhibit A-2 and designated as `A' on the 37th Floor (herein sometimes
called the "37th Floor Space"; the 36th Floor Space and the 37th Floor Space
being herein sometimes collectively called the "Office Space"), Exhibit A-3 and
designated as `A' on the roof (herein sometimes called the "Penthouse Space"),
and Exhibit A-5 and designated as `A' on the C4 level (herein sometimes called
the "Basement Space"), the Office Space being measured from the underside of the
ceiling slab to the underside of the floor slab, of the building known as 1221
Avenue of the Americas (the "Building"), situated upon a plot of land (the
"Land") in the Borough of Manhattan, New York, N.Y., together with all fixtures,
equipment, improvements, installations and appurtenances which at the
commencement of, or during the term of, this Lease are thereto attached (except
items not deemed to be included therein and removable by the Tenant as provided
in Article Four below), which spaces, fixtures, equipment, improvements,
installations and appurtenances are herein sometimes collectively called the
"Premises".
1.1.2. The Landlord does hereby grant to the Tenant non-exclusive licenses, and
the Tenant does hereby take such licenses from the Landlord, subject and
subordinate to the Qualified Encumbrances, and upon and subject to the
provisions of Article Thirty-four, Article
<PAGE>
Thirty-five or Article Thirty-six of this Lease, as applicable, for the term
hereinafter stated, of the spaces (herein sometimes collectively called the
"Licensed Spaces") substantially as shown hatched on the diagrams attached
hereto as Exhibit A-3 and designated as `B' on the Building's penthouse roof and
more particularly described in Section 35.1 below (herein sometimes called the
"Penthouse Roof Space"), Exhibit A-3 and designated as `C' on the main Building
roof and more particularly described in Section 36.1 below (herein sometimes
called the "Auxiliary Chiller Space"), and Exhibit A-4 and designated as `A' on
the roof of the eighth (8th) floor setback and more particularly described in
Section 34.1 below (herein sometimes called the "Emergency Generator Space"), of
the Building, together with non-exclusive licenses of portions of those certain
shaft spaces in the Building, as more particularly described (and defined) as
the Emergency Electric Riser and the Emergency Fuel Pipe Area in Article
Thirty-four of this Lease, the Satellite Riser Area in Article Thirty-five of
this Lease and the Chilled Water Riser Area in Article Thirty-six of this Lease.
1.1.3. The Landlord and McGraw-Hill (as hereinafter defined) are parties to a
lease dated as of March 27, 1998 relating to certain space on the 50th Floor of
the Building (the "McGraw-Hill Lease"). Section 25.8(b) of the McGraw-Hill Lease
provides that, subject to certain conditions, as set forth in the McGraw-Hill
Lease and as hereinafter set forth, McGraw-Hill will permit any CD Radio Entity
(as hereinafter defined) access to the roof of the Building after Business Hours
in Emergency Situations (as hereinafter defined), through the hatched area on
the 50th Floor of the Building specified on the diagram attached hereto as
Exhibit A-6 (the "Emergency Access Route") for passage from the passenger
elevator cars on the 50th Floor to the fire stair referenced in such Exhibit
A-6. Accordingly, based on such permission granted by McGraw-Hill, the Tenant
agrees that a CD Radio Entity will only utilize the Emergency Access Route for
access to the roof of the Building if, and only if, an Emergency Situation shall
exist which requires such CD Radio Entity to gain immediate access after
Business Hours to the roof without any delay. Subject to Section 20.5 below, and
in connection with and ancillary to the permission granted by McGraw-Hill for CD
Radio Entities to use the Emergency Access Route for access to the roof of the
Building, the Landlord will supply, during non-Business Hours in Emergency
Situations, elevator service to the 50th floor elevator lobby serving the "A"
bank of passenger elevators. The use of the Emergency Access Route and such
elevator service by CD Radio Entities shall be upon and subject to the Qualified
Encumbrances, the applicable provisions of this Lease and such reasonable
regulations and restrictions as the Landlord may, from time to time, deem
necessary to establish (provided, that the Landlord shall give the Tenant five
(5) business days prior written notice before any such additional regulations
and restrictions shall become appliable to the Tenant), and in accordance with
the following terms and conditions: (a) before being permitted to gain such
access through the Emergency Access Route, such CD Radio Entity must call
McGraw-Hill's security personnel at 5124202 (or if no answer is received, at
5124749 or such other numbers as shall be designated by McGraw-Hill from time to
time) and must call Building security at the front desk of the Building, to
report such Emergency Situation and the requirement that such CD Radio Entity
gain access to the roof through the Emergency Access Route; (b) only such CD
Radio Entity's personnel who are qualified persons capable of addressing the
particular Emergency Situation at issue ("Qualified Personnel") shall be
permitted to gain access through the
<PAGE>
Emergency Access Route; (c) such Qualified Personnel shall be accompanied by a
representative of McGraw-Hill, if such representative is available (and if such
representative is not available, by a representative of the Landlord, if
available) who shall escort such Qualified Personnel to and from the applicable
passenger elevator on the 50th floor of the Building to the roof of the
Building; provided, however, that such Qualified Personnel need not be
accompanied by a representative of McGraw-Hill or the Landlord if such
representatives are not available after such CD Radio Entity exercises
reasonable efforts to notify such representatives to accompany such Qualified
Personnel (it being agreed that if any representative is unavailable to
immediately accompany such Qualified Personnel upon its notification (or good
faith effort to notify), such inability shall be deemed to constitute its
unavailability); (d) the Tenant shall indemnify, defend and hold harmless
McGraw-Hill from and against any and all claims, judgments, damages, costs and
liabilities (including, without limitation, reasonable attorneys' fees) arising
from, or in connection with the access provided to the CD Radio Entity through
the Emergency Access Route; (e) the Tenant shall specifically carry insurance
relating to such access through the Emergency Access Route and shall name
McGraw-Hill and the Landlord as additional insureds under such policy; and (f)
such access shall be for Qualified Personnel only and no equipment (other than
normal hand tools) shall be moved through the Emergency Access Route. For
purposes of this Section 1.1.3, the term "Emergency Situation" shall mean, and
an "Emergency Situation" shall be deemed to have occurred if, (i) any portion of
the Satellite Transmission System or the Auxiliary Chiller System which is
located in or on the Penthouse Space, the Penthouse Roof Space or the Auxiliary
Chiller Space shall malfunction, fail to properly operate at times other than
Business Hours and Qualified Personnel must gain immediate access to the roof
without delay after such Business Hours such that awaiting to gain access
through the Standard Roof Access Area (i.e. waiting for a freight elevator
personnel to be able to bring such Qualified Personnel to the 50th floor) is
unacceptable to the CD Radio Entity in its good faith reasonable discretion or
would endanger the Tenant's equipment in question or the CD Radio Entity's
business. "CD Radio Entity" shall mean (i) the Tenant and its successors by
merger, consolidation or acquisition or (ii) any subtenant or assignee of an
entity referred to in subclause (i) above who is an affiliate of such entity
referred to in subclause (i) above.
1.1.4. The Landlord does hereby grant to the Tenant a non-exclusive easement
from the 50th floor freight elevator lobby to the main roof of the Building,
substantially as shown hatched on the diagram attached hereto as Exhibit A-7 and
designated as the "Standard Roof Access Easement Area" (the "Standard Roof
Access Easement Area"), for access to the Penthouse Space, the Penthouse Roof
Space and the Auxiliary Chiller Space (such non-exclusive easement is herein
sometimes called the "Standard Roof Access Easement"), and the Tenant does
hereby accept the Standard Roof Access Easement from the Landlord, subject and
subordinate to the Qualified Encumbrances, for the term of this Lease, or for
such shorter period as the Lease of the Penthouse Space or the license of the
Penthouse Roof Space or the Auxiliary Chiller Space shall remain in effect. The
Tenant's use of the Standard Roof Access Easement Area shall be upon and subject
to the applicable provisions of this Lease and such reasonable regulations and
restrictions as the Landlord may, from time to time, deem necessary to establish
(provided, that the Landlord shall give the Tenant five (5) business days prior
written notice before any such additional regulations and restrictions
<PAGE>
shall become applicable to the Tenant), including, but not limited to, the
requirements that (a) the Tenant give reasonable prior notice (which may be
oral) to the Landlord before any use of the Standard Roof Access Easement Area,
except in the case of an emergency, in which event the Tenant shall give such
notice as is reasonable in the circumstances, (b) only the Tenant's contractors
who have been consented to by the Landlord, and the Tenant's properly identified
employees, agents and representatives shall be permitted access to the Standard
Roof Access Easement Area, and (c) except in the case of an emergency, such
contractors, employees, agents and representatives shall, at the Landlord's
option and at no cost to the Tenant, be accompanied by employees of the
Landlord, provided that such requirement shall not interfere with or delay the
Tenant's access to the Penthouse Space, the Penthouse Roof Space or the
Auxiliary Chiller Space (except to a de minimis extent).
1.2. The term of this Lease shall commence (subject to the provisions of Article
Two, including, without limitation, the provisions of Section 2.4.1 below) on
the date on which the Landlord delivers to the Tenant (a) vacant possession
of the Office Space with all of the Landlord's work constituting Term
Commencement Conditions (as hereinafter defined) with respect to the Office
Space substantially completed and all other Term Commencement Conditions with
respect to the Office Space satisfied, and (b) vacant possession of the
Penthouse Space, or on such earlier date as the Tenant shall occupy the Premises
with the consent of the Landlord (the date for the commencement of the term of
this Lease being herein called the "term commencement date"), and shall end on
the last day of the calendar month in which shall occur the date which is
fifteen (15) years and ten (10) months after the term commencement date, or on
such earlier date upon which the term may expire or be terminated pursuant to
any of the conditions of limitation or other provisions of this Lease or
pursuant to law. Commencing on the term commencement date, the Landlord shall
also permit the Tenant to enter upon, and commence to use, (x) the Licensed
Spaces for the uses provided in Article Thirty-four, Article Thirty-five or
Article Thirty-six, as applicable, (y) the Emergency Access Route, for the uses
provided in, and subject to, Section 1.1.3 above and (z) the Standard Access
Easement Area, for the uses provided in, and subject to, Section 1.1.4 above. As
used in this Lease, "Term Commencement Conditions" shall mean, collectively,
those certain conditions set forth on Exhibit B annexed hereto and made a part
hereof. Anything in this Section 1.2 to the contrary notwithstanding, the Tenant
shall not be obligated to accept possession of the Premises prior to September
15, 1998.
1.3.1. The Premises shall be used for the following, but no other purposes,
namely executive, clerical, general and administrative offices, including
activities incidental thereto, and a radio and/or video broadcast studio,
including the production and live broadcast of radio and/or video programming
and the broadcast of pre-recorded programming and activities incidental thereto,
and any other lawful purpose consistent with a firstclass office building
located in midtown Manhattan; provided, however, that the Basement Space shall
be used only for the purposes permitted pursuant to, and in accordance with, the
provisions of Article Thirty-four below.
1.3.2 Each of the Licensed Spaces shall be used solely for the purpose set forth
in Article Thirty-four, Article Thirty-five or Article Thirty-six, as
applicable, and for no other purpose.
<PAGE>
1.4.1. The rent reserved under this Lease for the term of this Lease shall
consist of (a) fixed rent, at the following rate(s), namely the sum of:
(i) with respect to the Office Space, (A) $3,989,781.00 ($44.50 per
rentable square foot) per annum ($332,481.75 per month) during the
period commencing on the term commencement date and ending on the
day immediately preceding the First Rent Step-Up Date (as
hereinafter defined), (B) $4,258,755.00 ($47.50 per rentable square
foot) per annum ($354,896.25 per month) during the period commencing
on the first day of the calendar month following the month in which
occurs the date which is five (5) years and ten (10) months
following the term commencement date (the "First Rent Step-Up Date")
and ending on the day immediately preceding the fifth (5th)
anniversary of the First Rent Step-Up Date and (C) $4,527,729.00
($50.50 per rentable square foot) per annum ($377,310.75 per month)
thereafter;
(ii) with respect to the Penthouse Space, (A) $18,000.00 ($30.00 per
rentable square foot) per annum ($1,500.00 per month) during the
term of this Lease; and
(iii) with respect to the Basement Space, $5,400.00 ($25.00 per usable square
foot) per annum ($450.00 per month) during the term of this Lease.
which fixed rent shall be payable in equal monthly installments in advance on
the first day of each and every calendar month of the term of this Lease for
which fixed rent is reserved as aforesaid (except that, if the term commencement
date shall be other than the first day of a calendar month, the first monthly
installment of fixed rent, apportioned for the part month in question, shall be
payable on the term commencement date), plus (b) the additional rent payable as
provided in this Lease.
1.4.2. The license fees reserved under this Lease for the term of this Lease
shall be at the following rate(s), namely the sum of:
(a) with respect to the Penthouse Roof Space, $219,240.00 ($30.00 per
usable square foot) per annum ($18,270.00 per month) during the entire
initial term of this Lease;
(b) with respect to the Auxiliary Chiller Space, $25,500.00 ($30.00 per
usable square foot) per annum ($2,125.00 per month) during the entire
initial term of this Lease; and
(c) with respect to the Emergency Generator Space, $8,750.00 ($25.00 per
usable square foot) per annum ($729.17 per month) during the entire
initial term of this Lease,
which license fees rent shall be payable in equal monthly installments in
advance on the first day of each and every calendar month of the term of this
Lease for which license fees are reserved as aforesaid (except that, if the term
commencement date shall be other than the
<PAGE>
first day of a calendar month, the first monthly installment of license fees,
apportioned for the part month in question, shall be payable on the term
commencement date).
1.4.3 All fixed rent, additional rent and license fees shall be paid to the
Landlord, at its office as set forth above, or at such other place or places in
New York, New York as the Landlord shall designate to the Tenant, in lawful
money of the United States of America.
1.5. The Tenant shall pay the fixed rent, license fees and additional rent
(collectively "Rent") as and when the same shall become due and payable as
provided in this Lease, without demand therefor, and without any setoff or
deduction whatsoever except as may otherwise be expressly provided for in this
Lease, and keep, observe and perform, and permit no violation of, each and every
provision contained in this Lease on the part of the Tenant to be kept, observed
and performed.
1.6. In determining the rentable area and, where applicable, the useable
area of the Building or any portion thereof (other than the Penthouse Roof
Space, the Auxiliary Chiller Space and the Emergency Generator Space) pursuant
to any provision of this Lease, the rentable area or useable area thereof or
such portion, as the case may be, shall be the rentable area or useable area
thereof in square feet determined in accordance with the Recommended Method of
Floor Measurement for Office Buildings approved by The Real Estate Board of New
York, Inc., which became effective on January 1, 1987, assuming a 20% loss
factor from rentable to useable. The Landlord represents that the rentable area
of the Office Space has been so determined and, based on such representation,
the Landlord and the Tenant agree that, as of the date hereof, (a) the rentable
area of the 36th Floor Space is 44,723 rentable square feet and (b) the rentable
area of the 37th Floor Space is 44,935 rentable square feet. In addition, the
Landlord and the Tenant agree that, for the purposes of this Lease, (1) the
rentable area of the Penthouse Space is 600 rentable square feet, (2) the
useable area of the Penthouse Roof Space is 7,308 useable square feet, (3) the
useable area of the Auxiliary Chiller Space is 850 useable square feet, (4) the
usable area of the Emergency Generator Space is 350 usable square feet and (5)
the usable area of the Basement Space is 216 usable square feet.
1.7. The term "Qualified Encumbrances" means (a) matters of record
affecting the Premises, the Licensed Spaces, the Emergency Access Route, the
Standard Roof Access Easement, the Building or the Land on the date of this
Lease or hereafter approved by the Tenant, which approval shall not be
unreasonably withheld, (b) the underlying mortgages and underlying leases to
which this Lease is subordinate pursuant to Article Thirteen, provided that the
Tenant receives subordination, non-disturbance and attornment agreements with
respect thereto in accordance with the provisions of Section 13.1 below, (c) any
declaration of restrictions or other document in respect of the transfer or use
of development rights, (d) any declaration or other document which subjects all
or any portion of the Land and/or the Building to a condominium regime, provided
that such condominium regime does not (i) decrease (except to a de minimis
extent) the Tenant's rights and/or the Landlord's obligations under this Lease
or (ii) increase (except to a de minimis extent) the Tenant's obligations and/or
the Landlord's rights under this Lease, and (e) any future preservation or
similar easement, declaration or agreement containing covenants, restrictions or
agreements
<PAGE>
in respect of the maintenance of the Building and/or the Land as a landmark site
with or held by a governmental agency or an entity designated or accepted by a
governmental agency (each, a "Preservation Agreement").
ARTICLE TWO
(2.)Completion and Occupancy
2.1. The Tenant has examined and shall accept the Premises and each of the
Licensed Spaces in its existing condition and state of repair and understands
that no work is to be performed by the Landlord in connection therewith except
the work the Landlord is required to perform with respect to the Office Space in
order to satisfy the Term Commencement Conditions. The Landlord, either through
its own employees or through a contractor or contractors to be engaged by it for
such purpose, will proceed with due dispatch, subject to delay caused by events
of Force Majeure (as defined in Section 2.4.3 below), Tenant Delay (as
hereinafter defined) and the failure of any present occupant of the Premises to
vacate and surrender the same, to do all of the work during regular working
hours and will exercise all reasonable efforts to complete all of such work not
later than October 1, 1998. If the Landlord is required by this Lease to do any
such work without expense to the Tenant and the cost of such work is increased
due to any Tenant Delay, the Tenant shall pay to the Landlord an amount equal to
such increase in cost. Any dispute regarding whether the Landlord has satisfied
the Term Commencement Conditions shall be resolved by the expedited dispute
resolution procedure set forth in Section 25.13 below.
2.2. Unless otherwise specifically provided in this Lease, if the
Premises, or any portion thereof, shall not be available for occupancy by the
Tenant on October 1, 1998 (or on such earlier or later date which the Landlord
shall have notified the Tenant (pursuant to the provisions of Section 2.4.1
below) would be the term commencement date) for any reason, including, without
limitation, (a) noncompletion by the Landlord of such work as it shall be
required by the terms of this Lease to do in connection with the layout or
finish of the Premises, and (b) any current occupant of the Premises remaining
in occupancy (including, without limitation, any unavailability resulting from
the exercise by The McGraw-Hill Companies, Inc. ("McGraw-Hill") of any right to
delay the expiration of the term of its lease with respect to any portion of the
Premises), then, except as provided in Section 2.4.2 and Section 2.4.3 below,
this Lease shall not be affected thereby, but, in such case, the term
commencement date shall be postponed until the date when such space shall be
available for occupancy by the Tenant, provided, that, subject to the provisions
of the immediately succeeding sentence, if, and on the condition that, the
Landlord shall have given notice to the Tenant of any Tenant Delay (as
hereinafter defined) within a reasonable period following Landlord's first
becoming aware of such Tenant Delay, there shall be no such postponement of the
term commencement date for any delay in the availability of the Premises for
occupancy by the Tenant which shall be due to any act or omission of the Tenant,
any affiliate thereof or their respective agents, officers, partners, directors,
contractors, employees, licensees or invitees ("Tenant Delay"); it being
understood that the Tenant shall have no claim against the Landlord, and the
Landlord shall have no liability to the Tenant, by reason of any such
postponement of the term commencement date. For
<PAGE>
purpose of this Lease, if any period of Tenant Delay reasonably could have been
shortened as a result of the Landlord's having given notice to the Tenant of
such Tenant Delay promptly following Landlord's first becoming aware of such
Tenant Delay, then such period of Tenant Delay shall be deemed to be so
shortened. No part of the Premises shall be deemed unavailable for possession by
the Tenant, nor shall any work which the Landlord is obligated to perform in
such part of the Premises be deemed incomplete for the purpose of any adjustment
of fixed rent payable under this Lease, solely due to the noncompletion of
details of construction, decoration or mechanical adjustments which are minor in
character and the noncompletion of which does not materially interfere with the
Tenant's use of such part of the Premises. Subject to the foregoing, the parties
to this Lease expressly provide that, if the Premises shall not be available for
possession by the Tenant on October 1, 1998 (or on such earlier or later date
which Landlord shall have notified the Tenant (pursuant to the provisions of
Section 2.4.1 below) would be the term commencement date), the Tenant, except
with the consent of the Landlord, shall not be entitled to possession of the
Premises until the same is delivered to the Tenant by the Landlord and, subject
to the provisions of Section 2.4.1 and Section 2.4.2 below, there shall be no
abatement of rent by reason thereof, and the Tenant shall not have any claim
against the Landlord nor, subject to the provisions of Section 2.4.3 below, any
right to rescind this Lease, and the Landlord shall have no liability to the
Tenant, by reason thereof. The foregoing Section 2.2 shall constitute "an
express provision to the contrary" as such phrase is used in Section 223-a of
the Real Property Law of the State of New York and shall constitute a waiver of
the Tenant's rights pursuant to such Section 223-a and any other law of like
import now or hereafter in force.
2.3. Without limiting the generality of the provisions of Section 2.1
above, the Tenant by entering into occupancy of any part of the Premises shall
be conclusively deemed to have agreed that the Landlord, up to the time of such
occupancy, had performed all of its obligations under this Lease with respect to
such part and that such part was in satisfactory condition as of the date of
such occupancy, except for (a) latent defects in the base Building (which the
Landlord shall be obligated to cure with reasonable promptness after receipt of
notice from the Tenant) and (b) other defects and minor details of construction,
decoration and mechanical adjustment ("Punch-List Work") referred to in
Section 2.2 above, which are brought to the Landlord's attention within
thirty (30) days after the date on which the Landlord notifies the Tenant that
all of the Landlord's work constituting Term Commencement Conditions, if any,
with respect to such part of the Premises has been substantially completed. If
the Tenant shall fail to notify the Landlord in writing of any defect in, or the
non-performance or the incomplete performance of, any work constituting Term
Commencement Conditions within such thirty (30) day period, the Tenant shall be
conclusively deemed to have agreed that such work was performed in satisfactory
fashion, except for latent defects. The Landlord shall use reasonable efforts to
complete all Punch-List Work in an expeditious manner and, in any event within
thirty (30) days after the Landlord's receipt of the Tenant's notice thereof,
subject to delays in the performance thereof caused by events of Force Majeure
and Tenant Delay.
2.4.1. If the Landlord determines that the term commencement date will not
occur on October 1, 1998 (or on any earlier or later date which the Landlord
theretofore may have notified the Tenant pursuant to this Section 2.4.1 would be
the term commencement date),
<PAGE>
then the Landlord shall so notify the Tenant and shall, contemporaneously or
thereafter, notify the Tenant, at least seven (7) days prior thereto, of the
date on which the Landlord anticipates that the term commencement date will
occur. If the term commencement date occurs prior to the date set forth in such
notice from the Landlord specifying an anticipated term commencement date other
than October 1, 1998, then the fixed rent payable hereunder shall be abated in
an amount equal to one (1) day's fixed rent for each day that the actual term
commencement date occurs prior to such anticipated term commencement date, up to
a maximum of seven (7) days; provided, however, that if (a) the anticipated term
commencement date is a date prior to October 1, 1998, and (b) the actual term
commencement date occurs on or prior to October 1, 1998, then the Tenant shall
not be entitled to any abatement of fixed rent under this Section 2.4.1 for any
period from and after October 1, 1998.
2.4.2. If the term commencement date is delayed beyond November 1, 1998
(as such date may be extended by any delays due to Tenant Delay or events of
Force Majeure; it being understood, however, that, for the purposes of this
Section 2.4.2, no such period of extension due to events of Force Majeure shall
exceed sixty (60) days), the fixed rent payable hereunder shall be abated in an
amount equal to (y) one (1) day's fixed rent for each day that the term
commencement date is delayed beyond November 1, 1998 (as such date may be
extended by any delays due to Tenant Delay or events of Force Majeure) and
(z) one and one-half (1 1/2) days' fixed rent for each day that the term
commencement date is delayed beyond January 1, 1999 (as such date may be
extended by any delays due to Tenant Delay or events of Force Majeure).
2.4.3. If the term commencement date is delayed beyond April 1, 1999 (as
such date may be extended by any delays due to Tenant Delay or events of Force
Majeure; it being understood that, for the purposes of this Section 2.4.3, no
such period of extension due to events of Force Majeure shall exceed sixty (60)
days), the Tenant shall have the option to cancel this Lease by delivering
thirty (30) days prior written notice to the Landlord of its exercise of such
option at any time prior to the delivery of Premises by the Landlord to the
Tenant, in which event (subject to the concluding sentence of this Section
2.4.3) this Lease shall be deemed cancelled and of no force or effect upon the
date which is thirty-one (31) days after the receipt by the Landlord of such
notice and neither the Landlord nor the Tenant shall have any liability to the
other under this Lease except that the Landlord shall return to the Tenant any
Deposit L/C(s) then in the Landlord's possession within five (5) business days
after receipt of written demand therefor from the Tenant. Anything in this
Section 2.4.3 to the contrary notwithstanding, if the Landlord delivers the
Premises to the Tenant by the date which is thirty (30) days after the receipt
by the Landlord of such notice, the Tenant's exercise of such cancellation
option shall be deemed void and of no force or effect.
2.4.4. As used in this Lease, the term "Force Majeure" shall mean any
delays resulting from any causes beyond the Landlord's or the Tenant's, as the
case may be, reasonable control (other than the Landlord's or the Tenant's
financial condition), including, without limitation, governmental regulation,
governmental restriction, strike, labor dispute, riot, acts of God, war, fire or
other casualty and other like circumstances. For purposes of this Lease, Force
Majeure delays shall be deemed to exist only if the Landlord or the Tenant
<PAGE>
(as the case may be) promptly notifies the other party in writing of such delay
and, after such initial notification promptly after request of the other party,
the Landlord or the Tenant (as the case may be) notifies the other party of the
status of such delay. Each party shall use all reasonable efforts to mitigate
the delay caused by any event of Force Majeure to the extent reasonably
practicable, but without the necessity of employing overtime labor unless such
party elects to do so within its sole discretion or unless the other party
elects to pay for such overtime labor. Anything in this Lease to the contrary
notwithstanding, the holding over or other remaining in occupancy of the
Premises, or any portion thereof, by McGraw-Hill shall constitute an event of
Force Majeure if, and only if, such holding over or other remaining in occupancy
of the Premises, or any portion thereof, by McGraw-Hill is due to any delay
resulting from any causes beyond McGraw-Hill's reasonable control (other than
McGraw-Hill's financial condition), including, without limitation, governmental
regulation, governmental restriction, strike, labor dispute, riot, acts of God,
war, fire or other casualty and other like circumstances (it being understood
that in no event shall the Landlord be required to commence any action or
proceeding to remove McGraw-Hill from any portion of the Premises in order to
mitigate any delay caused by such event of Force Majeure).
ARTICLE THREE
(3.)Use of Premises
3.1. The Tenant shall not, except with the prior consent of the Landlord,
use, or suffer or permit the use of, the Premises or any part thereof for any
purpose other than the uses permitted in Article One, provided, that (a) the
portions, if any, of the Premises which are toilets or utility areas shall be
used by the Tenant only for the purposes for which they are designed and (b) the
portions, if any, of the Premises which are storage areas shall be used only for
storage purposes.
3.2. The Tenant shall not use, or suffer or permit the use of, the
Premises or any part thereof in any manner or for any purpose or do, bring or
keep anything, or suffer or permit anything to be done, brought or kept, therein
(including, without limitation, the installation or operation of any electrical,
electronic or other equipment) which (a) would violate any provision of this
Lease or is unlawful or in contravention of the Certificate of Occupancy for the
Building, or (b) in the reasonable judgment of the Landlord may in any way
impair or interfere in any material respect with any of the Building services or
the proper and economic heating, air conditioning, cleaning or other servicing
of the Building or the Premises or impair or interfere with the use of any of
the other areas of the Building by, or occasion discomfort, inconvenience or
annoyance to, any other tenant of the Building or impair the appearance of the
Building. The Tenant shall not use, or suffer or permit the use of, the Premises
or any part thereof in any manner, or do, or suffer or permit the doing of,
anything therein or in connection with the Tenant's business or advertising
which, in the reasonable judgment of the Landlord, may be prejudicial to the
business of the Landlord or the reputation of the Landlord or the Building or
reflect unfavorably on the Landlord or the Building or confuse or mislead the
public as to any connection or relationship between the Landlord and the Tenant;
provided, however, that nothing in this Section 3.2 or elsewhere in this Lease
shall be construed to give the Landlord any rights regarding the content of the
<PAGE>
programming broadcast from the Premises; provided further, however, that, with
respect to the content of the programming broadcast from the Premises, the
Tenant shall be and remain liable for, and shall indemnify, and save harmless,
the Indemnitees from and against, all liability (statutory or otherwise),
losses, claims, suits, demands, damages, judgments, costs, interest and expenses
(including reasonable counsel fees and disbursements incurred in the defense
thereof) to which any Indemnitee may be subject or suffer directly relating to,
or directly arising out of, the content of any programming broadcast from the
Premises, except to the extent that any of such liability, losses, claims,
suits, demands, damages, judgments, costs, interest or expenses directly relates
to, or directly arises out of, a risk of a nature and in a degree which is
attendant to the use of office space in the Building for executive, clerical,
general and administrative offices, and for which the Tenant is not otherwise
liable under this Lease.
3.3. Unless otherwise specifically provided in this Lease, the Tenant will
not use, or suffer or permit the use of, the Premises or any part thereof for
any of the following purposes, whether or not incidental to the Tenant's
business, namely: (a) manufacturing of any kind, (b) the sale of any item
whatsoever (provided, however, that nothing contained in this clause (b) shall
prohibit the Tenant from consummating sale(s) transactions at the Premises for
delivery of goods from a remote location), (c) an auction of any kind, (d) the
hosting of so-called "studio audiences", or (e) the preparation, dispensing or
consumption of food or beverages, except, (i) that parts of the Premises may be
used as pantries and lunchrooms for employees of the Tenant and for the
installation and operation of food and beverage vending machines, and the Tenant
may avail itself of the use of catering service in the Premises, upon the
condition in each case that (A) no cooking or other preparation of food (other
than the reheating of food by microwave or the preparation of beverages) shall
be done in the Premises, (B) no food or beverages will be kept or served in the
Premises in a manner or under any conditions which shall be the occasion for
fumes or odors being emitted from, or detectable outside of, the Premises,
(C) such parts of the Premises shall be at all times maintained by the Tenant in
a clean and sanitary condition and free of refuse (including use of
extermination services whenever required), and (D) the Tenant will keep the
plumbing and sanitary systems and installations serving such parts of the
Premises to the points they connect with the main vertical risers and stacks of
the Building in a good state of repair and operating condition, and (ii) if the
cafeteria currently operated by McGraw-Hill on the C-1 level of the Building, or
any replacement of such cafeteria operated for the benefit of all tenants of the
Building (in either case, the "Building Cafeteria"), ceases to operate, or if
the Tenant is denied access thereto (other than a temporary denial of access
resulting from the performance of alterations to the Building Cafeteria or a
fire or other casualty, or a denial of access resulting from Tenant's failure or
refusal to enter into the standard license or user agreement for the Building
Cafeteria on terms that are not less favorable than the terms generally made
available to all tenants in the Building of comparable size (other than
McGraw-Hill or Rockefeller Group, Inc.), or pay the license or user fee
thereunder), then, anything in Section 3.3(e)(1)(A) above to the contrary
notwithstanding, in connection with, and incidental to, the Tenant's use of the
Premises for the purposes permitted under Section 1.3.1 above, and at the
Tenant's sole cost and expense, a portion of the Premises, not exceeding 10,000
rentable square feet in area may be used for the installation and operation of a
cafeteria (including a kitchen) for the preparation and dispensing of food for,
and the
<PAGE>
consumption of food by, the Tenant's employees who have offices in the Building
and their invitees (but not other tenants in the Building or the general
public), provided, and upon the express conditions that, (A) in connection with
the installation and operation of such cafeteria, the Tenant shall comply with
all applicable Requirements and the provisions of this Lease (including, without
limitation, the provisions of Section 6.1(e) below) and with all other
reasonable requirements and regulations that the Landlord may adopt from time to
time, (B) the Tenant shall obtain, at the Tenant's sole cost and expense, any
and all required permits, licenses and certificates for such incidental use
(including, without limitation, any amendment to the Building certificate of
occupancy necessitated by such incidental use), and (C) the Tenant shall pay for
any necessary extermination, for the installation of all flues, vents, grease
traps and Ansul systems and other similar equipment as Landlord shall reasonably
require and for all cleaning of such space (it being understood that Landlord's
provision of cleaning services pursuant to Section 20.1(e) below shall not apply
to the use of the Premises, or any portion thereof, for such cafeteria use). In
addition, if the Landlord or any designee of the Landlord operates the Building
Cafeteria, then, subject to the execution by Tenant of the standard license or
user agreement for the Building Cafeteria on terms that are not less favorable
than the terms generally made available to all tenants in the Building of
comparable size, and the payment of the applicable license or user fee
thereunder, the Tenant shall be permitted access thereto on a non-exclusive
basis with other tenants of the Building.
3.4. If any governmental license, permit or certificate shall be required
for the proper and lawful conduct of any business or other activity carried on
in the Premises or in or from any of the Licensed Spaces (including, without
limitation, (a) any license, permit or certificate required to be obtained from
the Federal Communications Commission for the conduct of the Tenant's business
or for the operation of the Satellite Transmission System, and (b) any amendment
to the certificate of occupancy for the Building necessitated by (i) the use of
the Office Space, or any portion thereof, as a studio for the broadcasting of
live and/or pre-recorded radio programming and/or the recording of radio
programming for future broadcasting, (ii) the use of the Premises, or any
portion thereof, for radio broadcasting and/or the providing of radio broadcast
services or (iii) the installation, use, operation or maintenance of the
Satellite Transmission System, the Emergency Generator System or the Auxiliary
Chillers) and, if the failure to secure such license, permit or certificate
would, in any way, adversely affect the Landlord, the Tenant shall, at the
Tenant's sole cost and expense, promptly procure and thereafter maintain such
license, permit or certificate, submit the same to the Landlord for inspection,
and comply with the terms and conditions thereof, and in no event shall Tenant
conduct any such business or other activity at the Premises until a validly
issued license, permit or certificate therefor has been duly obtained. Anything
in this Section 3.4 to the contrary notwithstanding, it shall be the Landlord's
obligation to maintain the certificate of occupancy for the Building with
respect to use of the Office Space as executive, clerical, general and
administrative offices. With respect to any application for any governmental
license, permit or certificate required to be obtained hereunder by Tenant, upon
the request of the Tenant, the Landlord, at the Tenant's sole cost and expense,
shall (y) join in the application therefor and shall sign such application
reasonably promptly after request by the Tenant, provided and on the express
conditions that the provisions of the applicable Requirement require the
Landlord to join in
<PAGE>
such application and such application relates to (1) the performance by the
Tenant of Alterations in accordance with the terms of this Lease or (2) the
ability of the Tenant to use the Premises for the purposes permitted under this
Lease, or (3) such application is otherwise reasonably acceptable to the
Landlord and (z) otherwise cooperate with the Tenant in obtaining such license,
permit or certificate. In addition, if the existence of any violation of any
Requirement by reason of any act or omission of the Landlord which is curable by
the Landlord (and which is not due, in part, to any act or omission of any
Tenant Party), prevents the Tenant from obtaining any governmental license,
permit or certificate (including, without limitation, a temporary permit,
approval or certificate) required for the legal use by the Tenant of the
Premises for the purposes permitted in this Article Three, and the Tenant does
not use the Premises, and if such violation is not cured by the Landlord for a
period of ten (10) business days after the Landlord's receipt of notice thereof
from the Tenant, then, the fixed rent payable hereunder shall be abated in an
amount equal to one (1) day's fixed rent for each day after the expiration of
such ten (10) business day period that the Landlord fails to cure such
violation, and the conditions described in subclauses (A) and (B) of this
Section 3.4 remain in effect.
3.5. Neither the Tenant nor any occupant of the Premises shall use the
words "Rockefeller" or "Center", or any combination or simulation thereof, for
any purpose whatsoever, including (but not limited to) as or for any corporate,
firm or trade name, trademark or designation or description of merchandise or
services, except that the foregoing shall not prevent the use, in a conventional
manner and without emphasis or display, of the words "Rockefeller Center" as
part of the Tenant's business address. Neither the Tenant nor any occupant of
the Premises shall use the name of the Building or the name of the entity for
which the Building is named or any part or abbreviation (including initials) of
either such name except that the foregoing shall not prevent the use of the name
of the Building or any part thereof, in a conventional manner and without
emphasis or display, as a part of the Tenant's or such occupant's business
address or by reference in the ordinary course of its business.
ARTICLE FOUR
(4.)Fixtures
4.1. All fixtures, equipment, improvements and installations ("Fixtures")
attached to, or built into, the Premises or the Licensed Spaces at the
commencement of or during the term of this Lease, whether or not installed at
the expense of the Tenant or by the Tenant, shall be and remain part of the
Premises or the Licensed Spaces, as the case may be, and be deemed the property
of the Landlord; provided, however, that the Tenant may remove or replace such
Fixtures. All electric, plumbing, heating, sprinkling, dumbwaiter, elevator,
fixtures and outlets, venetian blinds, partitions, railings, gates, doors,
vaults, stairs, paneling (including display cases and cupboards recessed in
paneling), molding, shelving, radiator enclosures, floors, and ventilating,
silencing, air conditioning and cooling equipment shall be deemed to be included
in Fixtures, whether or not attached to or built into the Premises or the
Licensed Spaces. Notwithstanding the provisions of the first sentence of this
Section 4.1, Tenant shall (a) close up any slab penetration in the Premises or
the Building
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created by and for the benefit of the Tenant (or any party claiming by or
through the Tenant), (b) remove from the Building (i) any raised floors, safes,
vault areas, stairways, lead-lined rooms, conveyors, pneumatic tubes, internal
elevators, and mechanical and electrical rooms and telephone switchrooms and the
equipment therein installed by or for the benefit of the Tenant (or any party
claiming by or through the Tenant), (ii) the Emergency Generator System,
(iii) the Satellite Transmission System (including, without limitation, rooftop
steel dunnage installed to support the portion thereof located on the Penthouse
Roof Space) and (iv) all other Fixtures of a nature or type not ordinarily
installed in premises used for executive, clerical, general and administrative
offices (including, without limitation, supplemental air conditioning equipment,
exclusive of electrical conduit and duct work) which have been furnished and
installed in any part of the Premises, whether or not attached to or built in
the Premises ("Extraordinary Fixtures"), except those Extraordinary Fixtures
which, pursuant to the provisions of Section 6.2(a) of this Lease, the Tenant
shall not be required to remove from the Building at the end of the term of this
Lease, and (c) not remove venetian blinds, radiator enclosures, elevators and
any components of the Building systems. All such closing and removal shall be
performed, at the Tenant's sole cost and expense, not later than the expiration
or termination of the Lease and the removal of Fixtures by the Tenant during the
term of this Lease shall be performed subject to the provisions of this Lease,
including, without limitation, Section 6.1(e). The Tenant shall repair any
damage to the Premises arising from such closing and removal described in the
preceding sentence. The reasonable cost of repairing any damage to the Premises
or the Building arising from such closing and removal described in the preceding
sentences shall be paid by the Tenant upon demand. If any Fixture which as
aforesaid may or is required to be removed by the Tenant is not so removed
within the time specified therefor in this Section 4.1, then the Landlord may at
its election deem that the same has been abandoned by the Tenant to the
Landlord, and the Tenant, upon demand, shall pay to the Landlord the reasonable
cost and expense of removing the same or the reasonable cost of repairing damage
arising from such removal. Anything in this Section 4.1 or elsewhere in this
Lease to the contrary notwithstanding, (y) the Landlord may, by notice to the
Tenant, prohibit the closing of any slab penetration not theretofore closed and
the removal of any or all items the Tenant is required to remove pursuant to
this Section 4.1 but has not theretofore removed and (z) the Tenant may (subject
to the immediately preceding clause (y)), but shall have no obligation to,
remove or pay for the removal of any Salvageable Fixture(s) (as hereinafter
defined) if either (i) the Landlord shall fail to notify the Tenant on or before
the date which is six (6) months following the expiration or earlier termination
of this Lease that the Landlord has elected to require the removal of such
Salvageable Fixture(s) or (ii) the Landlord shall enter into a lease with
another tenant who or which desires to utilize such Salvageable Fixture(s),
provided, however, that, if the Landlord's notice to the Tenant that such
removal will be required shall be timely given, but shall be given after the
expiration or earlier termination of the term of this Lease, then, the Landlord
shall perform such removal and all reasonable costs and expenses incurred by the
Landlord in connection the performance by it of such work shall be paid by the
Tenant to the Landlord upon demand, provided, however, that, if such work is
performed by the Landlord in conjunction with any other work at the Premises,
the Tenant's obligation hereunder shall be limited to the amount by which the
cost of the removal of the Salvageable Fixtures(s) materially increases (i.e.,
by more than $50,000.00) the total cost, when performed together, of the
performance of such other work and the
<PAGE>
removal of such Salvageable Fixtures(s). In order to determine such increased
cost, the Landlord shall obtain, from reputable independent contractors selected
by Landlord, not less than three (3) bids for such work, each of which shall
specify, in addition to the total cost of performing all of the work, the cost
of performing the work without the removal of the Salvageable Fixture(s). As
used in this Lease, the term "Salvageable Fixtures" means (1) slab cuts,
(2) internal staircases, (3) supplemental air conditioning equipment (excluding
duct-work), (4) the Emergency Generator System, (5) the Auxiliary Chiller
System, (6) the Satellite Transmission System (including, without limitation,
the steel dunnage installed to support the portion thereof located on the
Penthouse Roof Space) and (7) any Fixtures which, at the time the Landlord
designates the same as "Extraordinary Fixtures" (in accordance with the
procedure set forth in Section 6.2(a) below) the Landlord also designates the
same as "Salvageable Fixtures". Anything in this Section 4.1 or elsewhere in
this Lease to the contrary notwithstanding, the Tenant shall be permitted to
remove that portion of the Satellite Transmission System (that the Tenant is
required under this Lease to remove) from the Penthouse Space and the Penthouse
Roof Space within the forty-five (45) day period following the expiration or
sooner termination of this Lease; provided, that the Tenant maintains on deposit
with the Landlord one or more Deposit L/Cs in accordance with Article Twenty-six
below and provisions of this Section 4.1 applicable to the repair of damage to
the Building arising from such removal and of Section 6.1(j) shall survive the
expiration or sooner termination of this Lease.
4.2. All the perimeter walls of the Premises, any balconies, terraces or
roofs adjacent to the Premises (including any flagpoles or other installations
on said walls, balconies, terraces or roofs), and any space adjacent to the
Premises used for shafts, stairways, stacks, pipes, conduits, ducts, mail
chutes, conveyors, electric or other utilities, sinks, fans or other Building
facilities, and the use thereof, as well as access thereto through the Premises
(in accordance with the provisions of Section 6.1(c) below) for the purposes of
such use and the operation, improvement, replacement, addition, repair,
maintenance or decoration thereof, are expressly reserved to the Landlord.
ARTICLE FIVE
(5.)Electric Current and Water
5.1. As an incident to this Lease, the Landlord shall furnish to the
Tenant:
(a) through the existing transmission facilities (including existing
taps, disconnects and transformers) installed by the Landlord in the
Building, alternating electric current to the electric closets and
panels provided by the Landlord and serving the Office Space and the
Penthouse Space in such reasonable quantity as may be required by
the Tenant for the Tenant's ordinary use of the Premises for the
purposes herein specified, but such quantity shall not exceed, in
the aggregate, six (6) watts of demand power per usable square foot
of space in the Office Space, and two (2) watts of demand power per
usable square foot of space in the Penthouse Space (each exclusive
of the quantity of alternating electric current required to support
base Building systems). Subject to the provisions of this Lease,
including,
<PAGE>
without limitation, Section 6.1(e) below, the Tenant may distribute
such six (6) watts of alternating electric current within the Office
Space, and such two (2) watts of alternating electric current within
the Penthouse Space, in such manner as the Tenant may elect;
(b) alternating electric current to the Basement Space, the
Penthouse Roof Space, the Auxiliary Chiller Space and the Emergency
Generator Space, as applicable, in accordance with Section 5.4
below; and
(c) additional alternating electric current to the Office Space from
a 1,200 ampere supply switch to be designated by the Landlord in the
base Building switchgear room on the 38th Floor of the Building, in
such reasonable quantity as may be required by the Tenant for the
Tenant's ordinary use of the Office Space for the purposes herein
specified, provided, that (i) such quantity shall be limited to no
more than 1,000 amperes (the "Additional Electric Amount"), which
Additional Electric Amount shall be designated by the Tenant in a
notice delivered to the Landlord together with the Tenant's
Preliminary Drawings (as defined in Section 6.2(a) below) for the
Initial Tenant Alterations (the "Additional Electric Amount Load
Letter"), and (ii) the Tenant, at the Tenant's sole cost and
expense, in compliance with all applicable Requirements, and subject
to all of the provisions of this Lease (including, without
limitation, Section 6.1(e) and Section 11.1) shall, (A) provide and
install all risers, conduit, switches, fuses, (including, without
limitation, a fuse located in such switchgear room limiting the
amount of alternating electric current available to the Tenant
pursuant to this Section 5.1(c) to the Additional Electric Amount)
feeders, and/or appurtenances which, in the Landlord's sole (but
good faith) judgment, are necessary to bring the Additional Electric
Amount from such switchgear room, through a portion of shaft space
to be designated by the Landlord in reasonable accordance with the
diagram attached hereto as Exhibit A-8, to the electric closet
serving the Office Space located on the 37th Floor of the Building.
Anything in this Section 5.1(c) to the contrary notwithstanding, if
the Tenant fails to deliver the Fused Amount Load Letter to the
Landlord together with the Tenant's Preliminary Drawings for the
Initial Tenant Alterations, the Landlord shall have no obligation to
furnish such additional electric current to the Office Space as
described in this Section 5.1(c).
5.2.1. The alternating electric current to be provided to the Office
Space and the Penthouse Space pursuant to Section 5.1(a) and Section 5.1(c)
above, and any alternating electric current to be provided to the Basement
Space, the Penthouse Roof Space, the Auxiliary Chiller Space or the Emergency
Generator Space, as the case may be, pursuant to Section 5.1(b) above, shall be
measured by an electronic meter or meters and meter equipment (including meter
pans and other appurtenant equipment, if applicable) measuring for each such
space only electric current furnished to each such space. Such meter(s) and
meter equipment for the delivery of alternating electric current to the Office
Space and the Penthouse Space pursuant to Section 5.1(a) above shall be provided
by the Landlord at a
<PAGE>
reasonable expense to the Tenant, and installed, in conjunction with the Initial
Tenant Alterations to the Office Space and the Penthouse Space, by the Landlord
(or, upon written notice from the Tenant to the Landlord and subject to the
provisions of Section 6.1(e) below and all Requirements, by the Tenant) at the
Tenant's expense, in such quantity as the Landlord shall reasonably determine
and at such location or locations within the Office Space and the Penthouse
Space as the Landlord shall reasonably determine in consultation with the
Tenant. Such meter(s) and meter equipment for the delivery of alternating
electric current to the Office Space pursuant to Section 5.1(c) above and for
the Basement Space, the Penthouse Roof Space, the Auxiliary Chiller Space or the
Emergency Generator Space, as the case may be, shall be provided by the Landlord
at a reasonable expense to the Tenant, and installed, prior to the Landlord
providing alternating electric current to the Office Space pursuant to Section
5.1(c) above and to each such other space, by the Landlord (or, upon written
notice from the Tenant to the Landlord and subject to the provisions of
Section 6.1(e) below and all Requirements, by the Tenant) at the Tenant's
expense, in such quantity as the Landlord shall reasonably determine and at such
location or locations within the Office Space pursuant to Section 5.1(c) above
and to each such other space as the Landlord shall reasonably determine in
consultation with the Tenant. The Tenant shall pay as additional rent to the
Landlord, upon demand by the Landlord, at the end of each billing period (the
"Applicable Billing Period") of the electric utility service provider then
supplying such alternating electric current to the Building (and, if there shall
be more than one (1) such electric utility service provider, the electric
utility service provider which supplies to the Building the alternating electric
current furnished to the Office Space and the Penthouse Space by the Landlord),
an amount which shall be the sum of (a) 105% of (i) the product obtained by
multiplying the actual number of kilowatt hours of electric current consumed by
the Tenant in such Applicable Billing Period by a fraction having as its
numerator the amount charged to the Landlord for the Building by said electric
utility service provider (net of all rebates, discounts and other monetary
benefits received by the Landlord for the Building from said electric utility
service provider which are for the benefit of the Building as a whole and not
for the particular benefit of one or more tenants (including Tenant) or
occupants of the Building) for the total number of kilowatt hours billable to
the Landlord for electricity used in the Building in such billing period and as
its denominator said total number of kilowatt hours, less (ii) the BIR Amount
(as defined in Section 5.2.2. below) for such Applicable Billing Period), and
(b) any taxes applicable to the amount determined pursuant to the foregoing
clause (a). Anything in the foregoing provisions of Section 5.1(a) or elsewhere
in this Lease to the contrary notwithstanding, until such meter(s) for the
Office Space and the Penthouse Space are installed and operable, the Tenant
shall pay to Landlord as additional rent, for alternating electric current
supplied to the Office Space and the Penthouse Space, a sum at the rate of (A)
$0.75 per rentable square foot of the Office Space and the Penthouse Space per
annum from the term commencement date until the date which is sixty (60) days
after the term commencement date, (B) $1.50 per rentable square foot of the
Office Space and the Penthouse Space per annum from the day which is sixty-one
(61) days after the term commencement date until the day immediately preceding
the date on which the Tenant shall substantially complete the construction of
the Initial Tenant Alterations (the "Electric Conversion Date") and (C) $3.50
per rentable square foot of the Office Space and the Penthouse Space per annum
thereafter, payable in equal monthly installments in advance on the first day of
each and every calendar month of the term of this
<PAGE>
Lease (except that (x) if the term commencement date shall be other than the
first day of a calendar month, the first monthly installment of additional rent
for alternating electric current for such space, apportioned for the part month
in question, shall be payable on the term commencement date and (y) if the date
upon which such meter(s) become operable is other than the last day of a
calendar month, the last monthly installment of additional rent for alternating
electric current shall be apportioned for the part of the month in question and
the Landlord shall, at the Tenant's election, (i) refund to the Tenant the
amount of any overpayment or (ii) apply any overpayment toward the next payment
of additional rent due pursuant to this Section 5.2.1). At any time, and from
time to time after the Electric Conversion Date and prior to the installation of
the meter(s), at the Landlord's election, a reputable, independent electrical
consultant selected by the Landlord and reasonably acceptable to the Tenant
shall make a survey of the electric lighting and connected power load in the
Premises and the Licensed Spaces to determine the average monthly electric
current consumption therein; provided, that for the purposes of such survey,
such independent electrical consultant shall assume that the Tenant uses an
average of seventy-five percent (75%) of the total available connected power
load in the Premises and the Licensed Spaces. The cost of each such survey shall
be borne by the Tenant. The Landlord shall give the Tenant written notice of the
findings of such survey and any increase or decrease in the rate at which the
Tenant is required to pay for electricity (and, therefore, the amount of any
increase or decrease in the fixed rent payable under this Lease) pursuant to the
foregoing electric inclusion provision of this Lease; provided, however, that,
notwithstanding anything to the contrary in this Section 5.2.1, no adjustment of
the electric inclusion amount shall be made which reduces the fixed rent below
the amount thereof set forth in Section 1.4 above. The findings of the
independent electrical consultant shall be conclusive and binding upon the
parties. Any increase or decrease in the electric inclusion amount shall be
effective as of the date the change (if any) of connected power load or electric
consumption occurred (as determined by the independent electrical consultant)
or, if no such change shall have occurred, as of the date of the electrical
survey. In the event of any such increase, (1) the initial unpaid amount of each
such increase shall be paid by the Tenant to the Landlord within ten (10)
business days after the final determination of the new electric inclusion amount
as determined above, and (2) thereafter, the increase shall be added to the
fixed rent payable monthly on the first day of every month during the term of
this Lease, in advance. In the event of any such decrease, (I) the Landlord
shall credit to the Tenant, against the next Rents coming due hereunder, the
amount of any overpayment, and (II) thereafter, the decrease shall be subtracted
from the fixed rent payable monthly under this Lease; provided, however, that
the fixed rent shall in no event be reduced below the amount of fixed rent set
forth in Section 1.4 above. If, during the term of this Lease, more than one (1)
electric utility service provider is supplying alternating electric current to
the Building (each such electric utility service provider other than the
electric utility service provider through which the Landlord is then furnishing
alternating electric current to the Premises (and, if applicable, any of the
Licensed Spaces) is herein called an "Alternate Electricity Provider"), and if,
in the Landlord's reasonable judgement, there is available space in the Building
(taking into consideration the current and anticipated future needs of all
tenants in the Building and of the Building itself) to accommodate all risers,
conduits, feeders and other equipment necessary for an Alternate Electricity
Provider to provide alternating electric current to the Landlord for the purpose
of the Landlord's furnishing the
<PAGE>
same to the Tenant in accordance with Section 5.1(a) above, then, with
reasonable promptness following receipt of written request therefor from the
Tenant (which request the Tenant shall not make more than one (1) time in any
twelve (12) month period, the Landlord shall cause the Alternate Electricity
Provider designated by the Tenant to supply the Landlord with alternating
electric current in such quantity through such equipment and at such point(s) of
connections so as to permit the Landlord to furnish alternating electric current
to the Premises (and, if applicable, any of the Licensed Spaces) in accordance
with this Article Five. The Tenant shall be responsible for, and shall pay to
the Landlord upon demand, all reasonable costs incurred by the Landlord in
connection with any such replacement of any current electric utility service
provider with any Alternate Electricity Provider (including, without limitation,
the reasonable cost of installing all necessary risers, conduits, feeders, taps,
disconnects, transformers, panels and meters and other equipment and the
reasonable cost of Building space necessary to accommodate such equipment),
except that, if such equipment provides electric capacity which is in excess of
that which is required to service the Premises and any applicable Licensed Space
(as determined by an independent electrical consultant selected by the Landlord,
whose fee shall be shared equally by the Landlord and the Tenant) at the time
such equipment is installed and if (Y) such excess capacity was installed at the
request of the Tenant, such costs shall be paid solely by the Tenant and, until
the expiration or sooner termination of the term of this Lease, such excess
capacity shall be reserved for the use of the Tenant in such manner as the
Tenant, in its sole discretion (but subject to the other provisions of this
Lease applicable to the Tenant's use of electric current) shall determine,
provided, and on the express condition that, the Tenant shall not sell any such
excess capacity to, or otherwise permit the use of such excess capacity by, any
other person or entity (except for a subtenant of the Tenant), whether or not a
tenant in the Building, or (Z) such excess capacity was not installed at the
request of the Tenant, such costs shall be equitably apportioned between the
Tenant and the Landlord and such excess capacity shall be the sole property of
the Landlord to use as the Landlord, in its sole discretion, shall determine,
including, without limitation, to provide access to the Alternate Electricity
Provider to other tenants in the Building.
5.2.2. As part of the IDA Transaction (as defined in Article Thirty-Seven
below), the Tenant is entitled to receive electric energy made available to the
Premises (whether through the Landlord or otherwise) by The Consolidated Edison
Company ("Con Ed") at a reduced rate pursuant to Con Ed's so-called Business
Incentive Rate Program (the "BIR Program"). The Landlord, at the Tenant's sole
cost and expense, shall cooperate with the Tenant's efforts to obtain electric
energy at such reduced rate; such cooperation to include, without limitation,
the execution and delivery by the Landlord of any applications required to apply
for the BIR Program, and all such other documents and instruments as shall
reasonably be required by the Tenant, Con Ed or the IDA (as defined in Article
Thirty-Seven below) in connection therewith; provided, however, that the effect
of such applications, documents or instruments shall in no event be to (a)
decrease (except to a de minimis extent) the Landlord's rights under this Lease,
(b) increase (except to a de minimis extent) the Landlord's obligations under
this Lease or (c) adversely affect the current or future supply of electric
current to the Building or the rates at which such non-BIR Program electric
current may be purchased. In addition, to the extent that the same is required
as a condition to the Tenant's right to participate in the BIR Program, the
Landlord shall permit the IDA
<PAGE>
and Con Ed, and persons authorized by either of them, to enter the part of the
Building in which the submeters serving the Premises are located from time to
time during Business Hours on reasonable advance notice for the purpose of
reading and/or inspecting such submeters. The dollar amount by which the
Landlord's electrical bills are reduced by Con Ed (whether such reduction be by
way of rebate, discount or other monetary benefit) for any Applicable Billing
Period as a result of the Tenant's participation in the BIR Program is referred
to herein as the "BIR Amount". The Tenant shall cause Con Ed to append to the
Landlord's electric bills an appropriate notation, or deliver a statement to the
Landlord contemporaneously with such bills, to the effect that such reduction in
the amount of the BIR Amount is given solely in respect of electric energy
consumed by, and is solely for the benefit of, the Tenant. The BIR Amount set
forth by Con Ed on the Landlord's electrical bills, or in such statement (if
applicable), shall be dispositive as between the Landlord and the Tenant of such
BIR Amount. Anything in this Section 5.2.2 or elsewhere in this Lease to the
contrary notwithstanding, the Landlord shall have the right at any time, in the
Landlord's sole discretion, to discontinue using Con Ed as its electric service
provider for the Building.
5.2.3. If any tenant or other occupant of the Building shall claim (each
such claim being referred to herein as an "Other Tenant Electric Claim") for any
given period (the "Applicable Claim Period") that it is entitled to a reduction
in (a) any electricity payment payable with respect to the electricity provided
to its premises (whether by way of electric rent inclusion, direct meter or
submeter) or (b) its payment on account of the Cost of Operation and Maintenance
or any similar escalation payment, in either case, which such tenant or occupant
would otherwise be obligated to pay, where the basis for such claimed reduction
is that the BIR Program benefits (even though intended for the exclusive benefit
of the Tenant) allegedly reduced the total energy costs for the entire Building
by the BIR Amount during such Applicable Claim Period (such alleged reduction in
the total energy costs for the entire Building (including, without limitation,
any alleged reduction in the Cost of Operation and Maintenance for such
Applicable Claim Period) being referred to herein as the "BIR Reductions"), then
the Landlord shall promptly notify the Tenant of such Other Tenant Electric
Claim, including the exact amount (if known) of the reduction being claimed by
such tenant (the "Claimed Amount") and the basis for such claim (to the extent
known by the Landlord after using reasonable efforts to ascertain the same), and
shall deliver to the Tenant copies of any documents, leases, bills and other
pertinent information in its possession relating to such Other Tenant Electric
Claim. Within thirty (30) days of the Landlord's notice to the Tenant of any
Other Tenant Electric Claim (together with the information set forth above), the
Tenant shall notify the Landlord whether (y) it intends to dispute such Other
Tenant Electric Claim (or the amount thereof that the Tenant wishes to dispute)
or (z) pay to the Landlord, as additional rent, the amount of such Claimed
Amount for the Applicable Claim Period. If the Tenant shall elect to dispute any
Other Tenant Electric Claim (or any portion thereof), then the Tenant shall be
permitted to litigate, arbitrate, negotiate and settle such dispute for and in
the name of the Landlord, and the Landlord shall execute and deliver such
complaints, pleadings, documents, agreements and correspondence as the Tenant
may reasonably require in connection therewith, provided that the Tenant shall
(A) bear the entire cost of such dispute and any settlement of any such Other
Tenant Electric Claim (including, without limitation, all attorneys' fees,
disbursements and
<PAGE>
costs of litigation) and (B) indemnify, defend and hold harmless the Indemnitees
from and against all liability (statutory or otherwise), loss, claims, suits,
demands, damages, judgments, costs, interest and expenses (including reasonable
counsel fees and disbursements incurred in the defense thereof) to which any
Indemnitee may be subject or suffer relating to, or arising out of the Other
Tenant Electric Claims, as well as the Claimed Amount, provided, however, that
such indemnification obligation under this subclause (B) with respect to any
Other Tenant Electric Claim for any given Applicable Claim Period shall be
limited to an amount equal to the BIR Amount with respect to the Applicable
Claim Period. If the Tenant shall elect to pay any Other Tenant Electric Claim
pursuant to clause (z) above, the Tenant shall pay the Landlord, as additional
rent, the Claimed Amount; provided, however, that, if the Tenant does not
dispute any Claimed Amount for any Applicable Claim Period, the aggregate of all
such payments with respect to any Applicable Claim Period shall not exceed the
BIR Amount which the Tenant has received the benefit of hereunder with respect
to such Applicable Claim Period. If the Tenant fails to elect to either pay or
dispute any Claimed Amount within such thirty (30) day period, then the Tenant
shall be deemed to have elected to pay such Claimed Amount. Subject to the
Tenant's right to dispute any Other Tenant Electric Claim and the Landlord's
obligations hereunder with respect to any such dispute, the Tenant agrees that
(Y) the Landlord shall have no obligation to challenge or commence or prosecute
any action or proceeding against any tenant or occupant of the Building who
shall make any Other Tenant Electric Claim, and (Z) the Tenant shall not assert
an independent claim against the Landlord or any such tenant or occupant,
directly or indirectly (including, without limitation, any claim by way of
subrogation), as a result of any claim by such tenant or occupant for a
reduction in any electricity payment payable with respect to the electricity
provided to its premises and/or a reduction in its payment on account of the
Cost of Operation and Maintenance, as aforesaid.
5.2.4. Anything in this Lease to the contrary notwithstanding, if the
Landlord shall implement an economic incentive package with respect to
electricity for the benefit of another tenant or other occupant of the Building
(and if such benefit is passed on to such other tenant or occupant) and, as a
result thereof, the energy costs for the Building shall be reduced or abated, in
whole or in part, with respect to all or any portion of the Building, then for
purposes of calculating the payment required to be made by the Tenant in respect
of electricity pursuant to this Lease, the energy costs for the Building shall
be the amount which would have been payable without regard to such reduction or
abatement. In addition, any economic incentive package with respect to
electricity for the benefit of any tenant (including the Tenant) of the Building
shall not be construed to reduce electric charges allocable to the non-demisable
portions of the Building for purposes of calculating the Cost of Operation and
Maintenance.
5.3. If required by any Requirement, the Landlord shall, upon not less
than thirty (30) days' prior notice, but in no event prior to such time as the
Tenant may obtain alternating electric current directly from an electrical
utility service provider then serving the Building, discontinue the furnishing
of alternating electric current to the Premises or any part thereof. In such
event, the Tenant shall contract for the supplying of such alternating electric
current to the Premises with an electrical utility service provider then
supplying
<PAGE>
alternating electric current to the Building; and the Landlord shall permit its
wires, risers, conduits and feeders, switchboards and appurtenances serving the
Premises, to the extent safely capable, to be used for the purpose of supplying
such alternating electric current and the Landlord shall be responsible for the
costs and expenses associated with any such conversion, excluding any increase
in rates charged to the Tenant by any such electric utility service provider
occasioned by reason of such conversion.
5.4. If the Tenant shall require electric current for use in (Y) the
Office Space and/or the Penthouse Space in excess of such reasonable quantity
required to be furnished as provided in Section 5.1(a) above, or (Z) the
Basement Space, the Penthouse Roof Space, the Auxiliary Chiller Space or the
Emergency Generator Space, as the case may be, and provided that (a) the
Landlord is not prohibited from furnishing additional electric current to any
such space by any applicable Requirement, (b) the supply of the additional
electric current required by the Tenant is permitted and, to the extent not then
available in the Building, will be made available by the electric utility
service provider furnishing electric current to the Building, and (c) in the
Landlord's reasonable judgment (taking into consideration the current and
anticipated future needs of all tenants of the Building and of the Building
itself) such electric current is not required to be reserved for other uses, the
Landlord shall make such excess load available to the Tenant at no additional
charge, except for the increased additional rent to be charged the Tenant, in
accordance with Section 5.2.1 hereof, for such additional alternating electric
current furnished to any such space by reason of the Tenant's increased usage.
In addition to the foregoing charges, if, in the Landlord's reasonable judgment,
such additional electric current cannot be furnished unless additional risers,
conduit, feeders, switchboards and/or appurtenances are installed in the
Building, the Landlord, upon request of the Tenant, will proceed with reasonable
diligence to install such additional risers, conduits, feeders, switchboards
and/or appurtenances, provided the same and the use thereof shall be permitted
by all laws, ordinances, rules, orders and regulations of all governmental and
quasi-governmental authorities and of all insurance bodies, at any time duly
issued and in force, applicable to the Land, the Building or the Premises or any
part thereof, to the Tenant's use thereof or to the Tenant's observance of any
provision of this Lease (collectively, "Requirements") and shall not cause
damage or injury to the Building or the Premises or cause or create a dangerous
or hazardous condition or entail excessive or unreasonable alterations or
repairs or interfere with or disturb other tenants or occupants of the Building,
and the Tenant shall pay, upon demand, all reasonable costs and expenses
incurred by the Landlord in connection with such installation (and shall
maintain on deposit with the Landlord such security for the payment by the
Tenant of all such costs and expenses as the Landlord shall from time to time
reasonably request), except that to the extent such equipment provides electric
capacity which is in excess of that which is required to provide the additional
electric current requested by the Tenant (as determined by an independent
electrical consultant selected by the Landlord, whose fee shall be shared
equally by the Landlord and the Tenant), such costs shall be equitably
apportioned between the Tenant and the Landlord and such excess capacity shall
be the sole property of the Landlord to use as the Landlord, in its sole
discretion, shall determine, including, without limitation, to provide electric
service to other tenants in the Building; provided, that the Tenant may, at its
expense, install such additional risers, feeders, switchboards and/or
appurtenances (and all work and actions in connection therewith shall be subject
to the provisions of this Lease,
<PAGE>
including, without limitation, Section 6.1(e) below). The Tenant shall purchase
and install all lamps, starters and ballasts (including replacements thereof)
used in the lighting fixtures in the Premises.
5.5. Water will be furnished by the Landlord for normal use in the
pantries and lunchrooms, lavatory and toilet facilities, and drinking fountains
if any, in the Office Space. If the Tenant otherwise uses (i.e., the quantity of
water used by the Tenant exceeds, by more than a de minimis amount, normal use
for the purposes specified, or water is used for purposes other than the
purposes specified, in the first sentence of this Section 5.5) water furnished
to the Office Space by the Landlord ("Extra Water"), the Tenant shall pay
(i) the cost of supplying, installing and maintaining a meter to measure Extra
Water, (ii) the reasonable charges of the Landlord for Extra Water and for any
required pumping and heating thereof, and (iii) any taxes, sewer rent or other
charges which may be imposed by any government or agency thereof based upon the
quantity of Extra Water so used by the Tenant or the charge therefor.
5.6. The Landlord shall in no way be liable for any failure, inadequacy or
defect in the character or supply of electric current or water furnished
pursuant to this Article Five, except for actual damage suffered by the Tenant
by reason of any such failure, inadequacy or defect caused by the negligence or
wilful misconduct of the Landlord or its employees, contractors or agents
acting, respectively, within the scope of their employment, contract or agency
(each, a "Landlord Party") .
ARTICLE SIX
(6.)Various Covenants
6.1. The Tenant shall:
(a) take good care of the Premises and the Licensed Spaces, keep
clean the portions of the Premises and the Licensed Spaces which the
Landlord is not required by this Lease to clean, and pay the cost of
making good any injury, damage or breakage (including, without
limitation, the cost of removing stains from floors and walls) done
by the Tenant, any other occupant of the Premises or user of the
Licensed Spaces (other than the Landlord), any affiliate thereof, or
any of their respective employees, officers, directors, partners,
contractors, agents, licensees or invitees (each, a "Tenant Party"),
other than any damage with respect to which the Tenant is released
from liability pursuant to Section 9.3;
(b) observe and comply with the rules and regulations annexed to,
and made a part of, this Lease and such other and further reasonable
rules and regulations as the Landlord hereafter at any time may make
and communicate to the Tenant and which, in the reasonable judgment
of the Landlord, shall be necessary or desirable for the reputation,
safety, care or appearance of the Building, or the preservation of
good order therein, or the operation or
<PAGE>
maintenance of the Building, or the equipment thereof, or the
comfort of tenants or others in the Building; provided, however,
that in the case of any conflict between the provisions of this
Lease and any such rule or regulation, the provisions of this Lease
shall control, and provided further that the Landlord shall not
enforce any rule or regulation against the Tenant which it is not
generally then enforcing against all other office tenants in the
Building;
(c) permit the Landlord, any landlord under any of the underlying
leases, any mortgagee under any of the underlying mortgages and any
other party designated by the Landlord, and their respective
representatives (including, without limitation, their respective
employees, agents and contractors), to enter the Premises and/or
enter upon the Licensed Spaces (i) during Business Hours, upon
reasonable prior notice to the Tenant for the purposes of
inspection, and (ii) at any time that will not unreasonably
interfere with the normal conduct of the Tenant's business (except
in the event of an emergency, in which event they may enter at any
time), or otherwise at any time after Business Hours, upon
reasonable prior notice to the Tenant (except in the event of an
emergency, in which event the Landlord shall use reasonable efforts
to give the Tenant such notice as the circumstances reasonably
permit), for the purpose of complying with any Requirement or
exercising any right reserved to the Landlord under Article Eight or
elsewhere by this Lease (it being understood that the parties
specified in this subsection are third-party beneficiaries of the
covenants specified in this subsection in the event of the
Landlord's breach of any obligation the Landlord may have to any
such party to exercise a right of access on such party's behalf);
provided, however, that (A) except in the event of an emergency, and
provided the same does not unreasonably delay access to the
Premises, the Landlord, such parties and their representatives
shall, at the election of the Tenant, be accompanied by a
representative of the Tenant, (B) the Tenant may, from time to time
on reasonable prior written notice to the Landlord, designate areas
within the Premises that contain sensitive broadcasting,
communications or computer equipment as "secured areas", as to which
the Landlord, such parties and their representatives, except in the
event of an emergency, shall not be permitted access (it being
understood by the Tenant that, notwithstanding anything to the
contrary in this Lease, if, and for as long as, any portion of the
Premises is designated as a secured area the Landlord shall have no
obligation to provide cleaning services, or any other services
requiring access, to such portion of the Premises) and (C) the
Tenant may, from time to time on reasonable prior written notice to
the Landlord, designate (1) areas within the Premises that are to be
used for the conduct of live broadcasting as "live broadcasting
areas" and (2) times during the day when the Tenant is conducting
live broadcasting as "live broadcasting hours", during which hours
the Landlord, such parties and their representatives, except in the
event of an emergency, shall not be permitted access to the live
broadcasting areas (it being understood by the Tenant that,
<PAGE>
notwithstanding anything to the contrary in this Lease, if, and for
as long as, any portion of the Premises is designated as a "live
broadcasting area" the Landlord shall have no obligation to provide
cleaning services, or any other services requiring access, to such
portion of the Premises during live broadcasting hours and, if live
broadcasting hours prevent the Landlord from providing any such
service(s) at the times the same are customarily provided to tenants
in the Building, the Tenant shall have the option either to waive
the Landlord's obligation to provide such services or to contract
with Landlord or Landlord's designee for such services and, in the
latter case, the Tenant shall pay to the Landlord as additional rent
hereunder upon demand by the Landlord all overtime and all other
increased costs incurred by the Landlord in providing such
services);
(d) make no claim against the Landlord or any landlord under any of
the underlying leases for any injury or damage to the Tenant or to
any other person or for any damage to, or loss (by theft or
otherwise) of, or loss of use of, any property of the Tenant or of
any other person, irrespective of the cause of such injury, damage
or loss, unless caused by the negligence or wilful misconduct of a
Landlord Party in the operation or maintenance of the Premises or
the Building, it being understood that no property other than such
as might normally be brought upon or kept in the Premises as an
incident to the reasonable use of the Premises for the purposes
specified in this Lease will be brought upon or kept in the
Premises;
(e) without the prior consent of the Landlord, be permitted to make
any alteration, addition, improvement, repair or replacement (an
"Alteration") in the nature of decorative changes (such as painting,
floor coverings, wallcoverings and furniture rearrangement) in, to,
or about the Premises provided that, (i) the same does not affect
any beam, girder, column, bearing wall, bearing partition, exterior
wall or other structural element of the Building, or the air
conditioning, ventilating, heating, steam, electric, water or other
system of the Building, and (ii) the workmanship and material used
in making any such Alteration shall be at least equal to the
standard therefor, if any, adopted by the Landlord for the Building;
make no other Alteration, in, to, or about, the Premises or any of
the Licensed Spaces, and do no work in such connection, without in
each case the prior review and consent of the Landlord to the final
working drawings and specifications for such Alteration (subject to,
and in accordance with, the provisions of Section 6.2 below), and
then only by workmen and contractors of the Landlord or by workmen
and contractors of the Tenant reasonably acceptable to the Landlord
[it being agreed by the parties to this Lease that if, after the
Tenant shall have given a written Notice to the Landlord requesting
the Landlord's consent to any such contractor, which Notice
requirement shall be satisfied by the Tenant delivering such written
Notice to Rockefeller Center Management Corporation, 1221 Avenue of
the Americas, New York, New York 10020-1095 Attention: Senior Vice
President - Operations, with a copy to
<PAGE>
Rockefeller Center Management Corporation, 1221 Avenue of the
Americas, New York, New York 10020-1095 Attention: Secretary, the
Landlord shall not consent to such contractor, then the Landlord
shall so notify the Tenant (which notice shall set forth with
reasonable specificity the reasons for the Landlord's withholding
its consent) within five (5) business days after the Landlord's
receipt of the Tenant's request therefor, except that the Landlord
shall not be in default in the performance of its obligations under
Section 6.1(e) unless and until the Tenant shall have notified the
Landlord in writing of the Landlord's failure to so notify the
Tenant within such five (5) business day period, which notice shall
prominently include in bold type the following:
"THIS IS A SECOND REQUEST FOR CONSENT TO A
PROPOSED CONTRACTOR PURSUANT TO SECTION
6.1(e) OF THE LEASE. THE LANDLORD'S
RESPONSE IS REQUIRED TO BE GIVEN NOT LATER
THAN THREE (3) BUSINESS DAYS AFTER RECEIPT
OF THIS SECOND REQUEST OR THE LANDLORD'S
CONSENT TO THE PROPOSED CONTRACTOR WILL BE
DEEMED GIVEN"
and the Landlord shall fail to so notify the Tenant within a further
period of three (3) business days after the Landlord's receipt of
such second notice, in which event the Tenant's sole remedy for the
Landlord's default in so notifying the Tenant shall be that the
contractor with respect to which the Landlord's consent is sought
shall be deemed consented to by the Landlord], and in a manner and
upon terms and conditions and at times, reasonably approved by the
Landlord (it being understood that the performance by the Tenant at
any time during Business Hours of Alterations that have otherwise
been approved by the Landlord, other than Alterations requiring the
performance of work that is not customarily performed during
Business Hours (e.g., core drilling) and Alterations requiring the
performance of work which the Landlord reasonably determines would
unreasonably interfere with the normal conduct of other tenants'
business or with the normal operation of the Building, shall be
deemed to be reasonably approved by the Landlord), and make no
contract for, nor employ, any labor in connection with the
maintenance, cleaning or other servicing of the Premises without
like consent, which consents and approvals shall not be unreasonably
withheld or delayed; notwithstanding anything in this Lease to the
contrary, make all changes (once approved by the Landlord), whether
or not structural and whether or not in the Premises and the
Licensed Spaces, required by any Requirement as a result of any
Alteration; pay as and when the same become due and payable all
charges incurred by Tenant in connection with any Alteration(s) and
pay or reimburse to the Landlord the
<PAGE>
Landlord's reasonable out-of-pocket charges payable or paid to
unrelated third parties for making such reviews and inspections as
the Landlord may reasonably deem necessary or desirable in
connection with the consideration of the granting of, and compliance
with, any such consent (provided, however, that the Tenant shall not
be obligated to reimburse the Landlord for any such out-of-pocket
charges incurred in connection with any of Initial Tenant
Alterations to the Office Space which are of a nature or type
ordinarily installed in premises used for executive, clerical,
general and administrative offices or which do not otherwise affect
any beam, girder, column, bearing wall, bearing partition, exterior
wall or other structural element of the Building, or the air
conditioning, ventilating, heating, steam, electric, water or other
system of the Building); if any notice or claim of any lien be given
or filed by or against the Building or the Land for any work, labor
or services performed, or for any materials, products or equipment
used, furnished or manufactured for use, therein or thereon or in
connection with the performance of any Alteration, promptly, but in
all events within thirty (30) days after receiving notice thereof,
discharge or remove the same by payment, bonding or otherwise;
notwithstanding any such consent or approval, not permit the use of
any contractors, workmen, labor, material or equipment in the
performance of any thereof if the use thereof, in the Landlord's
reasonable judgment, will disturb harmony ("Labor Harmony") with any
trade engaged in performing any other work, labor or service in or
about the Building or contribute to any labor dispute; permit no
such work to be undertaken in connection with any Alteration unless
insurance protecting the Tenant and each of the Tenant's
consultants, contractors and subcontractors, and the Indemnitees (as
defined in Section 6.1(j) below), against liability for worker's
compensation and for bodily injuries and death, as well as for
property damage arising our of or in connection with the performance
and completion of such Alteration, shall be procured and maintained
in full force and effect throughout the prosecution thereof, at the
sole cost and expense of the Tenant and/or its consultants,
contractors and subcontractors (all such insurance to be
commercially reasonable as to form, amounts and insurers and
reasonably acceptable to the Landlord) and the Tenant shall furnish
to the Landlord certificates of such insurance prior to the
commencement of such work; and deliver, within thirty (30) days
after completion of any Alteration that is not purely decorative in
nature, as-built plans and specifications of the Premises and the
Licensed Spaces reflecting the Alteration prepared on an Autocad (or
similar compatible) Computer Assisted Drafting and Design ("CADD")
System using naming conventions issued by the American Institute of
Architects ("AIA") in June 1990 (or such other naming convention as
may be adopted) and magnetic computer media of such "as-built"
drawings and specifications, translated into DXF format or other
format selected by the AIA;
(f) not violate, or permit the violation of, any condition imposed
by the standard fire insurance policy issued for office buildings in
the Borough of Manhattan, New York, N. Y., and not do, suffer or
permit anything to be done, or keep, suffer or permit anything to be
kept, in the Premises or any of the Licensed
<PAGE>
Spaces, which, in the Landlord's reasonable judgment constitutes a
threat to life, health or safety or materially and adversely affects
the Building, or which would increase the fire or other casualty
insurance rate on the Building or property therein (unless the
Tenant pays the amount of any such increase to the Landlord upon
demand), or which would result in insurance companies of good
standing refusing to insure the Building or any such property in
amounts and against risks as reasonably determined by the Landlord;
(g) upon prior notice to the Tenant, permit the Landlord to show the
Premises (other than secured areas, or live broadcasting areas
during live broadcasting hours) at reasonable times during Business
Hours (as hereinafter defined) to any lessee, or any prospective
purchaser, lessee, mortgagee or assignee of any mortgage or
underlying lease, of the Building and/or the Land or of the
Landlord's interest therein, and their representatives, and during
the 12 months preceding the expiration of this Lease with respect to
any part of the Premises (other than secured areas, or live
broadcasting areas during live broadcasting hours) similarly show
such part to any person contemplating the leasing of all or a
portion of the same;
(h) at the expiration or any earlier termination of this Lease with
respect to any part of the Premises or any part of the Licensed
Spaces, terminate its occupancy and/or use (as applicable) of, and
quit and surrender to the Landlord, such part of the Premises and
such part of the Licensed Spaces broom-clean and without the Tenant
having committed intentional waste therein (except for (1) ordinary
wear and tear, and (2) provided that the Tenant shall pay to the
Landlord all net insurance proceeds received by the Tenant (other
than proceeds of insurance covering the Tenant's personal property,
trade fixtures and other property, if any, which remains the
property of the Tenant and may, or is required to, be removed from
the Premises or any of the Licensed Spaces by the Tenant at the end
of the term of this Lease), and assign to the Landlord the right to
receive all uncollected insurance proceeds payable as a result
thereof, loss or damage by fire or other casualty which shall not
have been occasioned by the fault of any Tenant Party or with
respect to which the Tenant is released from liability pursuant to
Section 9.3); provided, however, that the Tenant shall have no
obligation to restore such part of the Premises or the Licensed
Spaces to the condition existing as of the commencement of the term
of this Lease, or to remove any Alteration to the Premises or the
Licensed Spaces, except (i) as set forth in Section 4.1 above and
(ii) as otherwise specifically set forth in this Lease;
(i) and the Landlord shall, at any time and from time to time upon
not less than twenty (20) days' prior notice from the Landlord or
the Tenant, whichever is the requesting party, execute, acknowledge
and deliver to the requesting party a statement of the
non-requesting party (or if the non-requesting party is a
corporation or a partnership, an appropriate officer or partner, as
the case may be, of such party) certifying that this Lease is
unmodified and in full force and
<PAGE>
effect (or if there have been modifications, that the same is in
full force and effect as modified and stating the modifications),
and the dates to which the Rent has been paid in advance, if any,
stating whether or not to the best knowledge of the signer of such
certificate the requesting party is in default in the keeping,
observance or performance of any provision contained in this Lease
and, if so, specifying each such default, and such other information
as the requesting party may reasonably request, it being intended
that any such statement may be relied upon by any landlord under any
underlying lease (as defined in Article Thirteen hereof) or any
lessee or mortgagee, or any prospective purchaser, lessee, mortgagee
or assignee of any underlying mortgage (as defined in
Article Thirteen hereof); provided, however, that neither party
shall have any liability by reason of any such statement made by
such party being untrue (except if such statement was made
negligently or in bad faith), but such statement shall,
nevertheless, serve to estop the party that made the same from
contradicting the contents thereof;
(j) indemnify, and save harmless, the Landlord, and its agents and
partners and its and their respective contractors, licensees,
invitees, servants, officers, directors, agents and employees, any
mortgagee under any underlying mortgage and any landlord under any
of the underlying leases (the "Indemnitees") from and against all
liability (statutory or otherwise), claims, suits, demands, damages,
judgments, costs, interest and expenses (including reasonable
counsel fees and disbursements incurred in the defense thereof) to
which any Indemnitee may (except to the extent arising out of the
negligence of any Indemnitee or willful misconduct of any
Indemnitee) be subject or suffer whether by reason of, or by reason
of any claim for, any injury to, or death of, any person or persons
or damage to property (including any loss of use thereof) or
otherwise arising from or in connection with the (i) use of, or from
any work or thing whatsoever done in, any part of the Premises or at
or from any Licensed Space, the Emergency Access Route or the
Standard Access Easement Area (other than by an Indemnitee) or
(ii) the negligence or wilful misconduct of the Tenant or any Tenant
Party in the Building, during the term of this Lease or during the
period of time, if any, prior to the commencement of such term that
the Tenant may have been given access to such part for the purpose
of doing work or otherwise, or as a result of any Tenant Party
performing any such work or otherwise that subjects any Indemnitee
to any Requirement to which such Indemnitee would not otherwise be
subject, or arising from any condition of the Premises, the Licensed
Spaces, the Emergency Access Route, the Standard Roof Access
Easement Area, the Satellite Transmission System, the Auxiliary
Chiller System or the Emergency Generator System due to, or
resulting from, any default by the Tenant in the keeping, observance
or performance of any provision contained in this Lease or from any
act or negligence of any Tenant Party, provided, however, that
insofar as the foregoing indemnity applies to damage to the
Landlord's property, the same shall be subject to the provisions of
Section 9.3 below; and
<PAGE>
(k) maintain, at all times during the term of this Lease and during
any other times the Tenant is granted access to the Premises or the
Licensed Spaces, a policy or policies of commercial general
liability insurance (including, without limitation, insurance of the
Tenant's contractual liability under this Lease and such insurance
as the Landlord reasonably may require with respect to the Emergency
Access Route, the Standard Roof Access Easement Area, the Satellite
Transmission System, the Auxiliary Chiller System and the Emergency
Generator System) with the premiums fully paid on or before the due
date, issued by a reputable insurance company licensed to do
business in the State of New York, having a minimum rating A-/X by
A.M. Best & Company or such other financial rating as the Landlord
may at any time consider appropriate, and reasonably acceptable to
the Landlord. Such insurance shall afford minimum limits as the
Landlord may reasonably designate from time to time, but in no event
less than $3,000,000 per occurrence with a $5,000,000 aggregate in
respect of injury or death to any number of persons and not less
than $3,000,000 for damage to or loss of use of property in any one
occurrence. Each such policy shall provide that it cannot be
cancelled without 30 days' prior notice to the Landlord and shall
name the Indemnitees and such other designees (including, without
limitation, McGraw-Hill with respect to the Emergency Access Route)
as the Landlord may from time to time designate as additional
insureds thereunder. The Tenant shall furnish original certificates
of such insurance to the Landlord prior to the term commencement
date (or any date on which the Tenant is granted earlier access) and
thereafter not more than thirty (30) days after the inception of
each such policy and any renewals or replacements thereof (except
with respect to any assignee or sublessee of the Tenant in which
case such original, renewal or replacement certificates shall be
provided to the Landlord thirty (30) days prior to the term
comencement date or expiration of a prior policy, as the case may
be).
6.2. The provisions of this Section 6.2 shall apply to any proposed Alteration
(including, without limitation, the Initial Tenant Alterations) in any portion
of the Premises or any of the Licensed Spaces for which the prior review and
consent of the Landlord is required pursuant to Section 6.1(e) above and Article
Thirty-one below. All working drawings and specifications, whether preliminary
(as described in Section 6.2(a) below), final (as described in Section 6.2(b)
below) or resubmissions (as described in Section 6.2(c) below) shall be prepared
by a competent architect licensed in the State of New York (in consultation with
a competent engineer licensed in the State of New York where required by the
nature of the work), reasonably acceptable to the Landlord (any such architect
is sometimes referred to herein as an "Acceptable Architect"), who shall be
engaged by the Tenant and who, at the Tenant's expense, shall furnish all
architectural and engineering services necessary for the preparation of said
working drawings and specifications and in connection with securing the
Landlord's consent thereto and with the securing by the Tenant of such approvals
as by reason of the nature of the work shown on said working drawings and
specifications, may be required from the Department of Buildings of the City of
New York and any governmental and quasi-governmental authorities.
<PAGE>
(a) If the Tenant desires to perform any proposed Alteration governed by
this Section 6.2, the Tenant shall submit to the Landlord (which
submission requirement shall be satisfied by the Tenant delivering such
submission to Rockefeller Center Management Corporation, 1221 Avenue of
the Americas, New York, New York 10020-1095 Attention: Senior Vice
President - Operations, with a copy to Rockefeller Center Management
Corporation, 1221 Avenue of the Americas, New York, New York 10020-1095
Attention: Secretary) preliminary architectural and mechanical working
drawings and specifications (i.e., working drawings and specifications
which are at least seventy-five percent (75%) complete) for the proposed
Alterations ("Preliminary Drawings"). The Landlord shall notify the Tenant
of any comments that the Landlord may have with respect to such
Preliminary Drawings within ten (10) business days after receipt by such
Senior Vice President - Operations and Secretary of Rockefeller Center
Management Corporation of such submission of Preliminary Drawings, except
that the Landlord shall not be in default of its obligations under this
Section 6.2(a) unless and until the Tenant shall have notified such Senior
Vice President - Operations and Secretary in writing of the Landlord's
failure to so notify the Tenant within such ten (10) business day period,
which notice shall prominently include in bold type the following:
"THIS IS A SECOND REQUEST FOR THE LANDLORD
TO NOTIFY THE TENANT IN ACCORDANCE WITH
SECTION 6.2(a) OF THE LEASE OF ANY
COMMENTS THAT THE LANDLORD MAY HAVE WITH
RESPECT TO PRELIMINARY WORKING DRAWINGS
AND SPECIFICATIONS SUBMITTED BY THE TENANT
RELATING TO A PROPOSED ALTERATION TO BE
PERFORMED BY THE TENANT. THE LANDLORD'S
RESPONSE IS REQUIRED TO BE GIVEN NOT LATER
THAN FIVE (5) DAYS AFTER RECEIPT OF THIS
REQUEST OR THE TENANT SHALL BE ENTITLED TO
EXERCISE THE REMEDIES SET FORTH IN SECTION
6.2(a) OF THE LEASE"
and the Landlord shall fail to so notify the Tenant within a further
period of five (5) days after receipt by such Senior Vice President -
Operations and Secretary of such second request, in which case the
Tenant's sole remedies for the Landlord's default under this Section
6.2(a) shall be that (y) the Tenant shall be entitled to submit the final
working drawings and specifications with respect to the proposed
Alteration immediately or at any time after the occurrence of such default
and (z) the period of five (5) business days provided in Section 6.2(c)
below shall be reduced to three (3) business days and the provisions of
Section 6.2(c) shall be applied accordingly; provided, however, that if
the Landlord shall fail to complete its review of the Preliminary Drawings
and notify the Tenant of its comments with respect thereto within such
periods of ten (10) business days and five (5) days by reason of Force
Majeure or Tenant Delay, then the periods within which the Landlord must
so notify the Tenant shall be automatically extended by the period of such
Force Majeure or Tenant Delay.
<PAGE>
(b) After receipt of the Landlord's comments with respect to any
preliminary working drawings and specifications, the Tenant shall submit
to the Landlord (which submission requirement shall be satisfied by the
Tenant delivering such submission to Rockefeller Center Management
Corporation, 1221 Avenue of the Americas, New York, New York 10020-1095
Attention: Senior Vice President - Operations, with a copy to Rockefeller
Center Management Corporation, 1221 Avenue of the Americas, New York, New
York 10020-1095 Attention: Secretary) final working drawings and
specifications (i.e., working drawings and specifications that are one
hundred percent (100%) complete) for the proposed Alteration, which final
working drawings and specifications shall (i) be sufficiently detailed so
as to permit the Landlord to assess such proposed Alteration and whether
the same is consistent with the design, construction and equipment of the
Building and in conformity with the Building's structural elements and
Building systems and in compliance with all Requirements, and (ii)
provided that such comments were timely made, address the Landlord's
comments with respect to the preliminary working drawings and
specifications. If, after the Tenant shall have submitted to such Senior
Vice President - Operations and Secretary of Rockefeller Center Management
Corporation such final working drawings and specifications and all other
information reasonably required by the Landlord to assess any proposed
Alteration, the Landlord shall not consent to such proposed Alteration,
then the Landlord shall so notify the Tenant (which notice shall set forth
with reasonable specificity the reasons for the Landlord's withholding its
consent) within fifteen (15) business days after the Landlord's receipt of
such final working drawings and specifications, except that the Landlord
shall not be in default in the performance of its obligations under this
Section 6.2(b) unless and until the Tenant shall have notified such Senior
Vice President - Operations and Secretary in writing of the Landlord's
failure to so notify the Tenant within such fifteen (15) business day
period, which notice shall prominently include in bold type the following:
"THIS IS A SECOND REQUEST FOR CONSENT TO A
PROPOSED ALTERATION. THE LANDLORD'S
RESPONSE IS REQUIRED TO BE GIVEN NOT LATER
THAN FIVE (5) DAYS AFTER RECEIPT OF THIS
SECOND REQUEST OR THE LANDLORD'S CONSENT
TO THE PROPOSED ALTERATION WILL BE DEEMED
GIVEN"
and the Landlord shall fail to so notify the Tenant within a further
period of five (5) days after receipt by such Senior Vice President -
Operations and Secretary of such second notice, in which event the
Tenant's sole remedy for the Landlord's default under this Section 6.2(b)
shall be that the Alteration with respect to which the Landlord's consent
is sought shall be deemed consented to; provided, however, that if the
Landlord shall fail to so notify the Tenant within such periods of fifteen
(15) business days and five (5) days by reason of Force Majeure or Tenant
Delay, then the periods within which
<PAGE>
the Landlord must so notify the Tenant shall be automatically extended by
the period of such Force Majeure or Tenant Delay; it being further
understood that any dispute as to the reasonableness of the Landlord's
withholding of any such consent shall be resolved by the expedited dispute
resolution procedure set forth in Section 25.13 below. All final working
drawings and specifications submitted by the Tenant for the Landlord's
approval pursuant to this Section 6.2(b) shall be accompanied by a
separate written Notice from the Tenant to the Landlord (which Notice
requirement shall be satisfied by the Tenant delivering such written
Notice to Rockefeller Center Management Corporation, 1221 Avenue of the
Americas, New York, New York 10020-1095 Attention: Senior Vice President -
Operations, with a copy to Rockefeller Center Management Corporation, 1221
Avenue of the Americas, New York, New York 10020-1095 Attention:
Secretary), which Notice shall state that the accompanying final working
drawings and specifications are being delivered for the Landlord's
approval and shall prominently set forth in bold type the following:
"UNLESS THE LANDLORD NOTIFIES THE TENANT,
TOGETHER WITH ITS APPROVAL OF THE ATTACHED
FINAL WORKING DRAWINGS AND SPECIFICATIONS,
WHICH OF THE `EXTRAORDINARY FIXTURES'
SHOWN THEREON MUST BE REMOVED PURSUANT TO
SECTION 4.1 OF THE LEASE AT THE END OF THE
TERM OF THE LEASE, THE LANDLORD WILL BE
DEEMED TO HAVE WAIVED THE RIGHT TO REQUIRE
THE TENANT TO REMOVE ANY SUCH
`EXTRAORDINARY FIXTURES'; AND UNLESS THE
LANDLORD NOTIFIES THE TENANT WHICH OF THE
`EXTRAORDINARY FIXTURES' SHOWN THEREON ARE
SALVAGEABLE FIXTURES, THE LANDLORD WILL BE
PRECLUDED FROM DESIGNATING SUCH
`EXTRAORDINARY FIXTURES' AS SALVAGEABLE
FIXTURES."
If the Tenant shall fail to include such a Notice with any submission of
final working drawings and specifications at the time the same are
submitted to the Landlord, the Landlord shall have the right to require
the Tenant to remove any or all of the Extraordinary Fixtures shown on
such working drawings and specifications from the Building, and to
designate any such Extraordinary Fixtures as Salvageable Fixtures, at the
end of the term of this Lease. If the Tenant shall include such a Notice
with its final working drawings and specifications, then (i) the Tenant
shall be required to remove only those Extraordinary Fixtures which the
Landlord notifies the Tenant in the Landlord's approval of such working
drawings and specifications must be removed at the end of the term of this
Lease and (ii) the Landlord shall be precluded from designating as
Salvageable Fixtures any Extraordinary Fixtures which the Landlord fails
to designate as Salvageable Fixtures in the Landlord's approval of such
final working drawings and specifications.
<PAGE>
(c) After receipt of any notice from the Landlord that the Landlord does
not consent to any proposed Alteration which is the subject of final
working drawings and specifications submitted to the Landlord in
accordance with Section 6.2(b) above (or resubmitted working drawings and
specifications submitted to the Landlord in accordance with this Section
6.2(c)), the Tenant shall (i) revise such final working drawings and
specifications relative to the aspects of the proposed Alteration to which
the Landlord shall have objected and resubmit such final working drawings
and specifications to the Landlord (which submission requirement shall be
satisfied by the Tenant delivering such submission to Rockefeller Center
Management Corporation, 1221 Avenue of the Americas, New York, New York
10020-1095 Attention: Senior Vice President - Operations, with a copy to
Rockefeller Center Management Corporation, 1221 Avenue of the Americas,
New York, New York 10020-1095 Attention: Secretary). If the Landlord shall
not consent to the proposed Alteration which is the subject of such
resubmitted final working drawings and specifications, then the Landlord
shall so notify the Tenant (which notice shall set forth with reasonable
specificity all of the aspects of the proposed Alteration to which the
Landlord continues to object and the reasons therefor) within five (5)
business days after receipt by such Senior Vice President - Operations and
Secretary of such resubmitted final working drawings and specifications,
except that the Landlord shall not be in default in the performance of its
obligations under this Section 6.2(b) unless and until the Tenant shall
have notified such Senior Vice President - Operations and Secretary in
writing of the Landlord's failure to so notify the Tenant within such
five (5) business day period, which notice shall prominently include in
bold type the following:
"THIS IS A SECOND REQUEST FOR CONSENT TO A
PROPOSED ALTERATION. THE LANDLORD'S
RESPONSE IS REQUIRED TO BE GIVEN NOT LATER
THAN THREE (3) BUSINESS DAYS AFTER RECEIPT
OF THIS SECOND REQUEST OR THE LANDLORD'S
CONSENT TO THE PROPOSED ALTERATION WILL BE
DEEMED GIVEN"
and the Landlord shall fail to so notify the Tenant within a further
period of three (3) business days after receipt by such Senior Vice
President - Operations and Secretary of such second request, in which
event the Tenant's sole remedy for the Landlord's default under this
Section 6.2(b) shall be that the Alteration with respect to which the
Landlord's consent is sought shall be deemed consented to; provided,
however, that if the Landlord shall fail to so notify the Tenant within
such period of five (5) business days and three (3) business days by
reason of Force Majeure or Tenant Delay, then the periods within which the
Landlord must so notify the Tenant shall be automatically extended by the
period of such Force Majeure or Tenant Delay; it being further understood
that any dispute as to the reasonableness of the Landlord's withholding of
<PAGE>
any such consent shall be resolved by the expedited dispute resolution
procedure set forth in Section 25.13 below.
(d) Working drawings and specifications for each proposed Alteration, as
finally consented, or deemed consented to pursuant to Section 6.2(b) or
Section 6.2(c) above, are herein called "Working Drawings."
ARTICLE SEVEN
(7.)Assignment, Mortgaging, Subletting, etc.
7.1. Except as otherwise permitted in this Article Seven, the Tenant
covenants, for the Tenant and its successors, assigns and legal representatives,
that, without the prior written consent of the Landlord in each instance,
neither this Lease nor the term and estate hereby granted, nor any part hereof
or thereof, nor any of the licenses hereby granted will be assigned, mortgaged,
pledged, encumbered or otherwise transferred (it being agreed that (y) issuance
by the Tenant of stock and/or the transfer of already-issued stock/partnership
interests, in one or more transactions so as to (i) transfer (directly or
indirectly) control of the Tenant or (ii) transfer 50% or more of an interest in
the Tenant, other than through over-the-counter or national securities exchange
transactions, or (z) sale or transfer of 25% or more of the assets of the Tenant
in one or more transactions, other than in the ordinary course of business,
shall, in any of the events described in the foregoing clauses (y) and (z), be
deemed an assignment of this Lease), and that neither the Premises nor the
Licensed Spaces, nor any part of the Premises or any of the Licensed Spaces,
will be encumbered in any manner by reason of any act or omission on the part of
the Tenant, or will be used or occupied, or permitted to be used or occupied, or
utilized for desk space, for mailing privileges or as a concession, by anyone
other than the Tenant; provided, however, that (a) an assignment or transfer of
this Lease and the term and estate hereby granted, together with the licenses
hereby granted, to any corporation or other entity into which the Tenant is
merged or with which the Tenant is consolidated (such corporation or other
entity being hereinafter in this Article called the "Assignee") without the
prior consent of the Landlord shall not be deemed to be prohibited hereby if,
and upon the express conditions that, (i) the primary purpose for such merger or
consolidation is other than the transfer of this Lease, (ii) the surviving
entity has a net worth at least equal to that of the Tenant's on the date hereof
or the date of merger or consolidation, whichever is greater, and (iii) within
thirty (30) days following the merger or consolidation, the Assignee shall have
executed and delivered to the Landlord an agreement in form and substance
reasonably satisfactory to the Landlord whereby the Assignee shall agree to be
personally bound by and upon all the provisions set forth in this Lease on the
part of the Tenant to be kept, observed or performed, and whereby the Assignee
shall expressly agree that the provisions of this Article shall, notwithstanding
such assignment or transfer, continue to be binding upon it with respect to all
future assignments and transfers, and (b) the Landlord will consent to the
Tenant assigning, subletting or otherwise permitting the Premises to be used and
occupied for the purposes specified in, and subject to the provisions of, this
Lease, by any subsidiary or affiliate of the Tenant, but only for so long as the
occupant remains a subsidiary or affiliate of the Tenant, provided that (i) the
Tenant provides reasonable evidence of the relationship of the subsidiary or
affiliate to the Tenant, (ii) in the Landlord's reasonable judgment the
subsidiary or affiliate
<PAGE>
is of a character and engaged in a business such as in keeping with the
standards in those respects for the Building and its occupancy and (iii) it
being understood that an entity shall only be a subsidiary of the Tenant if the
Tenant owns, directly or indirectly, more than 50% of the stock, partnership or
other ownership interests in the entity, and shall only be an affiliate of the
Tenant if under common ownership, that is, direct or indirect ownership by an
entity holding more than 50% of the stock, partnership or other ownership
interests in both the Tenant and such affiliate.
7.2.1. Subject to Section 7.1 above, the Tenant covenants, for the Tenant
and its successors, assigns and legal representatives, that neither the Premises
nor any part thereof, will be sublet, and that neither the Licensed Spaces nor
any part thereof, will be sublicensed, without the prior written consent of the
Landlord in each instance. The Landlord will not unreasonably withhold or delay
its consent to any proposed subletting of the Premises on the terms and
conditions set forth in a notice (a "Tenant's Notice") thereof from the Tenant
to the Landlord (it being understood that any dispute as to the reasonableness
of the Landlord's withholding of any such consent to a proposed subletting shall
be resolved by the expedited dispute resolution procedure set forth in Section
25.13 below); provided, however, that the Landlord shall not in any event be
obligated to consent to any such proposed subletting unless:
(a) the sublessee under any such subletting shall be such person,
firm or corporation as in the Landlord's reasonable judgment is of a
character and engaged in a business such as is in keeping with the
standards in those respects for the Building and its occupancy and
shall not be (i) a government or a governmental authority or a
subdivision or an agency of any government or any governmental
authority or (ii) a tenant, subtenant or occupant in the Building if
the Landlord then has, or will have within the next three (3)
months, space available in the Building with a comparable amount of
floor area for a comparable term as the floor area and the term set
forth in the Tenant's notice to the Landlord regarding such proposed
subletting;
(b) the Tenant, for itself and for all other Tenant Parties, shall
agree in writing (i) not to advertise, and to keep confidential, the
economic terms of any proposed sublease, (ii) not to disclose, and
to keep confidential, all such economic terms with respect to an
executed sublease and (iii) to use reasonable efforts to require the
sublessee and all real estate broker(s), if any, to agree in writing
to the foregoing provisions of this Section 7.2.1(b);
(c) after the demising of the premises to be sublet, the remaining
portion of the Office Space on the floor on which the sublet
premises are located will constitute, in the Landlord's reasonable
judgment, one or more commercially reasonable rental units;
(d) such subletting would not result in any floor of the Office
Space being occupied by more than four (4) tenants (including the
Tenant);
<PAGE>
(e) the Tenant and the sublessee shall agree in writing that the
sublessee will not, without the prior consent of the Landlord (which
consent Landlord shall not unreasonably withhold or delay) assign
the sublease or under-sublet the space so sublet or any part
thereof; and
(f) such consent shall be evidenced by the delivery of, and shall be
subject to the covenants, agreements, terms, provisions and
conditions of, a "Consent to Sublease" duly executed by the
Landlord, the Tenant and the sublessee (in substantially the form
annexed hereto as Exhibit C), for which the Tenant shall pay to the
Landlord a reasonable processing charge (not to exceed $500 in each
instance).
Anything in this Lease to the contrary notwithstanding, the Landlord shall not
in any event be obligated to consent to (x) any proposed subletting of the
Basement Space, (y) any proposed subletting that includes a sublicense of a
portion of the Penthouse Roof Space or (z) any proposed sublicensing of the
Licensed Spaces, unless such space is sublet or sublicensed, as applicable, to a
party which contemporaneously sublets, pursuant to this Article Seven, at least
twenty-five percent (25%) of the rentable square foot area on one (1) floor of
the Office Space.
7.2.2. If the Tenant proposes to sublease all or any part of the Premises, the
Tenant shall deliver a Tenant's Notice setting forth (a) the name of the
proposed sublessee, (b) such information regarding the proposed sublessee as
shall be in the Tenant's possession, (c) the space(s) proposed to be sublet to
the proposed sublessee (including any space(s) with respect to which the Tenant
proposes to grant such proposed sublessee an expansion option or right), and
(d) the material terms and conditions of the proposed subletting.
Notwithstanding anything in Section 7.2.1 above or this Section 7.2.2 to the
contrary, if, after the Landlord shall have received all of the information
regarding a proposed sublessee and sublease required to be delivered to the
Landlord pursuant to Section 7.2.1 and this Section 7.2.2, the Landlord shall
not consent to such proposed sublease, then the Landlord shall so notify the
Tenant (which notice shall set forth with reasonable specificity the reason(s)
for the Landlord's withholding its consent) within fifteen (15) business days
after the Landlord's receipt of the last of such information, except that the
Landlord shall not be in default in the performance of its obligations under
this Section 7.2.2 unless and until the Tenant shall have notified the Landlord
in writing (which Notice requirement shall be satisfied by the Tenant delivering
such written Notice to Rockefeller Center Management Corporation, 1221 Avenue of
the Americas, New York, New York 10020-1095 Attention: Senior Vice President -
Marketing, with a copy to Rockefeller Center Management Corporation, 1221 Avenue
of the Americas, New York, New York 10020-1095 Attention: Secretary) of the
Landlord's failure to so notify the Tenant within the applicable period referred
to above, which notice shall prominently include in bold type the following:
"THIS IS A SECOND REQUEST FOR CONSENT TO A
PROPOSED SUBLEASE UNDER SECTION 7.2.2 OF
THE LEASE. THE LANDLORD'S RESPONSE IS
REQUIRED TO BE GIVEN NOT LATER THAN THREE
(3)
<PAGE>
BUSINESS DAYS AFTER RECEIPT OF THIS
REQUEST OR THE LANDLORD'S CONSENT TO THE
PROPOSED SUBLEASE WILL BE DEEMED GIVEN"
and the Landlord shall have failed to so notify the Tenant within a further
period of three (3) business days after receipt of such notice by such Senior
Vice President - Marketing and Secretary in which event the Tenant's sole remedy
for the Landlord's default under this Section 7.2.2 shall be that the proposed
sublease with respect to which the Landlord's consent is sought shall be deemed
consented to by the Landlord; provided, however, if the Landlord is deemed to
have consented to a proposed sublease, the Tenant and the sublessee thereunder
shall nevertheless be obligated to comply with the provisions of Section 7.2.3
below. Any reference in this Lease to subleases to which the Landlord shall have
consented (or similar reference) shall be understood to include any subleases to
which the Landlord shall be deemed to have consented under this Section 7.2.2.
7.2.3. All of the covenants, agreements, terms, provisions and conditions
of any such "Consent to Sublease" so executed by the Landlord, the Tenant and
the sublessee shall be deemed to be covenants, agreements, terms, provisions and
conditions of this Lease and the violation by the Tenant or the sublessee of any
covenant, agreement, term, provision or condition of such "Consent to Sublease"
shall entitle the Landlord to all the rights and remedies provided for in this
Lease or by law in the case of any violation of a covenant, agreement, term,
provision or condition of this Lease, subject to any applicable notice and cure
periods provided for in this Lease.
7.2.4. If the aggregate amounts payable as rent (including as rent,
without limitation, all amounts payable on account of changes in Real Estate
Taxes, operating costs, maintenance costs, labor rates, indexes or other formula
contained in the sublease; collectively "Sublease Rent") with respect to any
period during which there shall be in effect a sublease of any part of the
Premises made by the Tenant, shall be in excess of the Tenant's Basic Cost (as
hereinafter defined) for such part of the Premises, then, promptly after the
collection by the Tenant of the Sublease Rent payable under such sublease, the
Tenant will pay to the Landlord, as additional rent hereunder, an amount equal
to the Sublease Profit Percentage (as hereinafter defined) of the excess (if
any) of such Sublease Rent so collected over the Tenant's Basic Cost for such
part of the Premises through the date of such collection (with respect to any
such sublease, such excess amount is sometimes referred to herein as "Sublease
Profits"); provided, however, that any excess of Tenant's Basic Costs over any
Sublease Rent shall be carried forward and applied against the next Sublease
Rent collected. The term "Tenant's Basic Cost," as used herein with respect to
any period for which any part of the Premises is sublet, shall mean the sum of
(i) the amount payable by the Tenant to the Landlord as fixed rent at the
Applicable Rental Rate (as hereinafter defined) for such period with respect to
such part of the Premises, (ii) the amount payable by the Tenant to the Landlord
for such period with respect to such part of the Premises pursuant to Article
Twenty-four hereof, (iii) the amount of any reasonable brokerage commissions,
reasonable takeover obligations and reasonable legal fees paid by the Tenant to
unaffiliated third parties and not reimbursed by the subtenant or the Landlord,
to the extent not previously applied against collections of Sublease Rent,
(iv) the amount, if any, of any reasonable costs incurred by the Tenant in
making changes in the layout and finish of such part
<PAGE>
of the Premises at the request of the subtenant and paid by the Tenant to
unaffiliated third parties, or reasonable subtenant work allowances in lieu
thereof, but only to the extent that such costs are not reimbursed by such
subtenant or the Landlord, to the extent not previously applied against
collections of Sublease Rent, (v) the amount, if any, payable by the Tenant to
the Landlord in connection with the Landlord's review and consent to such
sublease, but only to the extent that such costs are not reimbursed by such
subtenant or the Landlord, to the extent not previously applied against
collections of Sublease Rent and (vi) the amount of any reasonable rent
abatement (i.e., any so-called "free rent") provided by the Tenant to such
subtenant to the extent not previously applied against collections of Sublease
Rent. The term "Applicable Rental Rate" as used in this Article shall be deemed
to mean, with respect to each space constituting a part of the Premises, an
amount equal to (Y) the then applicable fixed rent per annum per rentable square
foot, of such space set forth in Section 1.4 above and (Z) $7.11 per annum per
rentable square foot; or, if the term of this Lease is extended and renewed
pursuant to Article Thirty-two below, the term "Applicable Rental Rate" during
each Renewal Term (as defined in Section 32.2 below) shall be deemed to mean,
with respect to each space constituting a part of the Premises, the applicable
fixed rent per annum per rentable square foot of such space payable during such
Renewal Term. Anything in this Section 7.2.4 to the contrary notwithstanding,
the Tenant shall not be obligated to pay to the Landlord the Sublease Profits,
if any, which are received by the Tenant in respect of any period prior to the
seventh (7th) anniversary of the term commencement date for the subletting of up
to an aggregate of 25,000 rentable square feet of the 37th Floor Space;
provided, however, that, if the Tenant shall receive any such Sublease Profits
with respect to subleases of the 37th Floor Space covering in excess of 25,000
rentable square feet, for the purposes of determining which Sublease Profits are
covered by the preceding provisions of this sentence, the rentable square foot
area covered by such subleases and the Sublease Profits derived therefrom shall
be treated on a "first in, first out" basis. The term "Sublease Profit
Percentage," as used herein, shall mean (a) fifty percent (50%), with respect to
subleases of the Office Space in effect at the time in question covering, in the
aggregate, up to and including fifty percent (50%) of the rentable square foot
area of the Office Space, and (b) 75%, with respect to any sublease(s) in effect
at the time in question covering any portion of the Office Space in excess of
fifty percent (50%) of the rentable square foot area of the Office Space.
7.2.5. If the Tenant has sublet the Premises or any part thereof, the
Tenant shall deliver to the Landlord a statement within 60 days after the end of
each calendar year in which any part of the term of this Lease occurs specifying
as to such calendar year, and within 60 days after the expiration or earlier
termination of the term of this Lease specifying with respect to the elapsed
portion of the calendar year in which such expiration or termination occurs
(a) each sublease in effect during the period covered by such statement and as
to each sublease a computation in reasonable detail showing whether or not
anything is payable by the Tenant to the Landlord pursuant to this Article Seven
with respect to such sublease for the period covered by such statement; and
(b) whether or not anything is payable by the Tenant to the Landlord pursuant to
this Article Seven with respect to any payments received from a sublessee during
such period but which relate to an earlier period and showing in reasonable
detail the computation of the amount so payable.
<PAGE>
7.2.6. Each sublease of the Premises or a portion thereof shall be subject
and subordinate to this Lease and the rights of the Landlord under this Lease;
provided, however, that, upon receipt of a written request therefor from the
Tenant prior to the commencement of any sublease (a) to which the Landlord has
consented under Section 7.2.1 above, (b) the term of which is not less than
three (3) years or such lesser period as shall then constitute all or
substantially all of the balance of the term of this Lease, and (c) which covers
at least one (1) full floor of the Premises, the Landlord shall enter into a
subordination, non-disturbance and attornment agreement in the form attached
hereto as Exhibit E-5 with the subtenant under such sublease. Any violation of
any provision of this Lease, whether by act or omission, by any sublessee shall
be deemed a violation of such provision by the Tenant, it being the intention of
the parties that the Tenant shall assume and be liable to the Landlord for any
and all acts and omissions of all sublessees if such act or omission, if made by
the Tenant, would be a violation of any provision of this Lease. No sublease
shall provide for a term which extends beyond the day prior to the then
expiration date of this Lease. In the event of the Tenant's default in the
payment of any fixed rent and/or additional rent under this Lease beyond any
applicable period of grace, the Landlord may collect rent from any sublessee so
long as such default shall continue, and the Landlord may apply the same to the
curing of any such default under this Lease in any order of priority the
Landlord may select, any unapplied balance thereof to be applied by the Landlord
against subsequent installments of Rent, but the Landlord's collection of rent
from a sublessee shall not constitute a recognition by the Landlord of
attornment by such sublessee nor a waiver by the Landlord of any default by the
Tenant.
7.3. The Landlord will, at the request of the Tenant, maintain listings on
the Building directory of the names of the Tenant and the names of any officers
or employees of the Tenant and other permitted occupants (including Office Space
Occupants (as defined in Section 7.5 below)); provided, however, that the number
of names so listed shall be in the same proportion to the capacity of the
building directory as the aggregate number of square feet of rentable area of
the Office Space is to the aggregate number of square feet of rentable area of
the Building. Without implying any right to do so, the listing of any name other
than that of the Tenant, whether on the doors or windows of the Premises, on the
Building directory, or otherwise, shall not, in and of itself, operate to vest
any right or interest in this Lease or in the Premises or be deemed to be the
consent of the Landlord referred to in Section 7.1 or Section 7.2.1 above.
7.4. Without in any way suggesting permission for the Tenant to assign the
Lease, if the Lease is nonetheless assigned by the order of a court or otherwise
but not as permitted by Section 7.1 above, the Tenant shall pay to the Landlord
50% of any consideration received by the Tenant for the assignment, net of
brokerage commissions and legal fees incurred by the Tenant and paid to
unaffiliated third parties in connection therewith and not reimbursed by the
assignee. The amounts to be paid to the Landlord under this Section shall be
deemed to be deferred rent payable only out of amounts collected by the Tenant
in connection with an assignment and shall be deemed forgiven if no assignment
occurs.
7.5. The Tenant may, without the Landlord's consent, but upon not less
than ten (10) days' prior notice to the Landlord, permit any individuals who are
employees of business partners of the Tenant (collectively, "Office Space
Occupants") to occupy offices within the Office Premises, if, and upon the
express conditions that (a) each Office Space Occupant shall
<PAGE>
be of good reputation and engaged in an activity which (i) relates to the
production of the Tenant's broadcast programming, (ii) is in keeping with the
standards of the Building and (iii) is a Permitted Use, (b) the offices occupied
by such Office Space Occupants shall not constitute, in the aggregate, more than
twenty percent (20%) of the rentable square foot area of the Office Premises,
(c) each such office shall be part of, and not separately demised from, the
remainder of the Office Premises occupied by the Tenant, (d) no Office Space
Occupant shall be permitted to have a separate entrance to the Office Premises
and (e) no Office Space Occupant shall be permitted to have any signage outside
of the Office Premises. Each such occupancy shall be subject and subordinate to
this Lease and to the matters to which this Lease is or shall be subordinate,
and, in the event of termination, re-entry or dispossess by the Landlord under
this Lease, such occupancy shall immediately terminate. Occupancy by an Office
Space Occupant shall not be deemed to vest in such Office Space Occupant any
right or interest in this Lease or the Premises, nor shall it relieve, release,
impair or discharge any of the Tenant's obligations hereunder. Each notice of an
Office Space Occupant required pursuant to this Section 7.5 shall include (y)
the name(s) and the nature of the business or occupation of such Office Space
Occupant and (z) the terms of such Office Space Occupant's occupancy. Each such
occupancy shall be terminable on not more than thirty (30) days notice (which
right of termination the Tenant shall exercise upon reasonable demand of the
Landlord).
7.6. The Tenant has advised the Landlord that, in order for the Tenant to
enjoy the Benefit (as defined in Section 3.7.1. below) consisting of sales and
use tax exemptions on materials to be incorporated into Alterations made to the
Premises, it is necessary for the Tenant to sublet the Premises to the IDA (as
defined in Section 3.7.1. below) and to sub-sublet the Premises back from the
IDA. In connection therewith, the Tenant has requested that the Landlord
cooperate with the Tenant by (a) consenting to a sublease of the Premises from
the Tenant to the IDA (the "Tenant/IDA Sublease") and (b) consenting to a
sub-sublease of the Premises back from the IDA to the Tenant (the "IDA/Tenant
Sub-Sublease"; and, together with the Tenant/IDA Sublease, collectively, the
"IDA Subleases"). Anything in this Lease to the contrary notwithstanding, the
Landlord hereby consents to the Tenant entering into the IDA Subleases; provided
and upon the express conditions that, upon any termination of the IDA/Tenant
Sub-Sublease, the Tenant/IDA Sublease shall immediately and without further act
be deemed to have terminated, and in no event shall the IDA ever be permitted
(i) to occupy the Premises or any portion thereof or (ii) to assign this Lease
or further sublet the Premises or any portion thereof to any person or entity
(other than to the Tenant and/or a subsidiary or affiliate of the Tenant as
contemplated by the IDA Transaction). In addition, each IDA Sublease shall (y)
expressly specify and provide that (and the consent of the Landlord contained
herein is expressly conditioned upon) such sublease and sub-sublease are subject
and subordinate to this Lease and the matters to which this Lease is subject and
subordinate, and (z) have a scheduled expiration date no later than one day
prior to the scheduled expiration date of this Lease and shall terminate
automatically upon any earlier termination of this Lease. The Tenant shall,
within thirty (30) days of entering into the IDA Subleases provide the Landlord
with written notice of the date of the IDA Subleases, the commencement and
expiration dates of the term thereof and the portions of the Premises affected
thereby. In addition, to the extent not prohibited by the express provisions of
the IDA Subleases, the Tenant shall also provide the Landlord with true and
correct copies of same within such thirty (30) day period. Any sublease pursuant
to this Section 7.6 shall be entered into solely for the purposes of
implementing a
<PAGE>
tax/economic incentive package for the Tenant. No IDA Sublease (A) shall release
the Tenant from any liability or obligation of the Tenant under this Lease or
any supplemental indenture or other amendment or modification hereto and (B)
shall impose any additional obligation or liability on the Landlord, for which
the Landlord is not otherwise indemnified from, or reimbursed for by, the Tenant
under this Lease.
ARTICLE EIGHT
(8.)Changes or Alterations by Landlord
8.1. The Landlord reserves the right, upon prior notice to the Tenant in
accordance with Section 6.1(c) above, to make such changes, alterations,
additions, improvements, repairs or replacements in or to the Building
(including the Premises) and the fixtures and equipment thereof, as well as in
or to the street entrances, halls, passages, elevators, escalators and stairways
and other parts of the Building, and to erect, maintain and use pipes, ducts and
conduits in and through the Premises, all as it may reasonably deem necessary or
desirable; provided that the exercise of such rights shall not result in an
unreasonable obstruction of the means of access to the Premises or unreasonable
interference with the use of the Premises and provided, further, that no such
change, alteration, addition, improvement, repair or replacement shall be made
in the Premises (a) below the hung ceiling of the Premises, (b) above the hung
ceiling of the Premises in any area designated as "sensitive" by the Tenant,
unless (i) there is, in Landlord's reasonable judgment, no practical alternative
that would not increase (except in a de minimis amount) the Landlord's cost of
making such change, alteration, addition, improvement, repair or replacement or
(ii) there is a practical alternative, but the same will increase the cost of
making such change, alteration, addition, improvement, repair or replacement and
the Tenant shall elect not to pay any such increased cost or (c) which would
reduce the floor area of the Premises (except to a de minimis extent), except,
in each case, with the prior consent of the Tenant, and except for any such
change, alteration, addition, improvement, repair or replacement which is
required in order to comply with any applicable Requirement, and, in the case of
any change, alteration, addition, improvement, repair or replacement made with
the consent of Tenant or required in order to comply with any Requirement that
permanently reduces the floor area of the Premises (more than a de minimis
amount), the fixed rent shall be reduced proportionally to reflect such
reduction. Upon the completion of any such work, the Landlord shall, with
reasonable promptness, restore the areas of the Premises affected by such work
as nearly as is reasonably possible to the condition they were in immediately
prior to the commencement of such work. Nothing in this Section or in
Article Six shall be deemed to relieve the Tenant of any duty, obligation or
liability to make any repair, replacement or improvement or comply with any
Requirement.
8.2. The Landlord reserves the right to change the name or address of the
Building at any time. Neither this Lease nor any use by the Tenant shall give
the Tenant any right or easement to the use of any door or any passage
connecting the Building with any subway or any other building or to the use of
any public conveniences, and the use of such doors, passages and conveniences
may be regulated or discontinued at any time by the Landlord, provided that the
Tenant shall have reasonable access to the Premises at all times.
<PAGE>
8.3. The Landlord will, subject to, and except as otherwise provided in,
the other covenants, agreements, terms, provisions and conditions of this Lease,
with reasonable dispatch and in a manner and at such times as shall not
unreasonably interfere with the use of the Premises nor unreasonably obstruct
the means of access to the Premises, make as and when required, all repairs,
structural or otherwise, interior or exterior to the Building (but excluding
anything which constitutes subdivision, layout and finish of spaces in the
Building rented to, or available for renting to, tenants) as may be necessary to
restore the same to a state of good working order, condition and repair and to a
standard in keeping with the reputation of the Building as a first-class office
building located in midtown Manhattan.
ARTICLE NINE
(9.)Damage by Fire, etc.
9.1. If any part of the Premises shall be damaged by fire or other perils,
the Tenant shall give prompt notice thereof to the Landlord; and the Landlord
shall proceed with reasonable diligence, subject to adjustment and collection of
any insurance proceeds and the provisions of any Qualified Encumbrance, to
repair such damage to the extent required by this Article Nine, at the
Landlord's expense. If any part of the Premises shall be rendered untenantable
by reason of such damage (including untenantability due to lack of access
thereto), the annual fixed rent payable under this Lease, to the extent that
such fixed rent relates to such part of the Premises, and subject to the
provisions of Section 24.4 hereof, shall be abated for the period from the date
of such damage until such time as the Landlord shall complete the repairs
required by this Article Nine; provided that such abatement shall be made only
to the extent that it is in excess of the annual rate of any existing abatement
of fixed rent under Section 20.6 or under Section 30.3 below. The Landlord shall
not be liable for any inconvenience or annoyance to the Tenant or injury to the
business of the Tenant resulting in any way from such damage or the repair
thereof, provided, however, that, to the extent reasonably practicable, the
Landlord will use reasonable efforts to attempt to minimize any such
inconvenience or annoyance. The Tenant understands that the Landlord will not
carry insurance of any kind on (a) the Tenant's goods, furniture or furnishings,
(b) on any Fixtures removable by the Tenant as provided in this Lease, (c) on
Tenant improvements or betterments or (d) on any property in the care, custody
and control of the Tenant, and that the Landlord shall not be obligated to
repair any damage thereto or replace the same; it being understood that,
notwithstanding anything set forth in this Article Nine or elsewhere in this
Lease to the contrary, the Landlord's repair obligation under this Article Nine
shall be limited to such repairs as are required to restore the Premises to
"core and shell condition" with reasonable access thereto.
9.2. If substantial alteration or reconstruction of the Building (i.e., if
the estimated cost of alteration and reconstruction equals or exceeds
thirty-three percent (33%) of the replacement cost of the Building immediately
prior to such damage) shall, in the reasonable determination of the Landlord
(which determination, if requested by the Tenant, shall be verified by an
independent architect or engineer selected by the Landlord and reasonably
acceptable to the Tenant, the cost of which shall be paid by the Tenant unless
the Landlord's determination is not found to be substantially correct), be
required as a result of damage by fire or other perils affecting thirty-three
percent (33%) or more of the rentable area of the Building
<PAGE>
(whether or not the Premises shall have been damaged by such fire or other
casualty), then this Lease and the term and estate hereby granted may be
terminated by the Landlord by a notice, given within sixty (60) days of such
damage specifying a date for such termination; provided, however, that the
Landlord shall not so terminate this Lease and the term and estate hereby
granted unless the Landlord shall terminate leases (including this Lease)
covering not less than fifty percent (50%) of the rentable area of the Building.
In addition, if a substantial part of the Premises is rendered untenantable as a
result of such damage by fire or other peril, within sixty (60) days after the
occurrence of such damage Landlord shall make a reasonable determination (which
determination, if requested by the Tenant, shall be verified by an independent
architect or engineer selected by the Landlord and reasonably acceptable to the
Tenant, the cost of which shall be paid by the Tenant unless the Landlord's
determination is not found to be substantially correct) of the estimated date by
which such portion of the Premises can be made tenantable. If it is finally
determined by the Landlord or pursuant to the verification procedure set forth
above that such part of the Premises cannot be made tenantable within a period
of one (1) year after the occurrence of such fire or other peril, then the
Landlord shall notify the Tenant of the same within sixty (60) days of such
damage and this Lease and the term and estate hereby granted may be terminated
by the Landlord or the Tenant by a notice specifying a date, not less than
ninety (90) days after such final determination. In the event of the giving of
notice of termination, this Lease and the term and estate hereby granted shall
expire as of the date specified in such notice with the same effect as if such
date were the date initially specified in this Lease as the expiration date, and
the fixed rent payable under this Lease shall be apportioned as of such date of
termination, subject to abatement, if any, as and to the extent above provided.
In addition, if the repairs required to be made by the Landlord under this
Article Nine are not substantially completed by the Landlord within twelve (12)
months after the occurrence of such fire or other peril (as such
twelve (12) month period shall be extended by delays caused by events of Force
Majeure), then this Lease and the term and estate hereby granted may be
terminated by the Tenant by the Tenant's giving to the Landlord, within sixty
(60) days after the end of such twelve (12) month period (as such twelve (12)
month period shall be extended by delays caused by events of Force Majeure;
provided that no such extension due to delays caused by events of Force Majeure
shall exceed ninety (90) days), notice specifying a date, not more than
ninety (90) days after the giving of such notice, for such termination, in which
case the provisions previously stated in this Section 9.2 governing a
termination of this Lease shall apply; provided, however, that if the Tenant
shall not exercise such termination right within such sixty (60) day period, the
Tenant's right to terminate this Lease shall be postponed for successive periods
of sixty (60) days, and if such repairs are not substantially completed within
any such period of sixty (60) days, then this Lease and the term and estate
hereby granted may be terminated by the Tenant by its giving to the Landlord,
within thirty (30) days after the end of such sixty (60) day period (as such
sixty (60) day period may be extended by any delays caused by events of Force
Majeure), notice specifying a date, not more than ninety (90) days after the
giving of such notice, for such termination, in which case the provision
previously stated in this Section 9.2 governing a termination of this Lease
shall apply.
9.3. Nothing in this Lease shall relieve the Tenant from any liability to
the Landlord or to its insurers in connection with any damage to the Premises or
the Building by fire or other peril if the Tenant shall be legally liable in
such respect, except that the Landlord and the
<PAGE>
Tenant hereby release each other with respect to any liability which the
released party might otherwise have to the releasing party for any damage to the
Building or the Premises or the contents thereof by fire or other peril
occurring during the term of this Lease to the extent of the proceeds received
under a policy or policies of insurance permitting such release. Each party will
use best efforts to cause its property and/or other applicable insurance policy
to include a provision permitting such a release of liability; provided, that if
such a provision is (a) not obtainable from such insurer, the insured party
shall use reasonable efforts to cause the other party to be added as an
additional insured on such policy, provided, however, that if there is an
additional expense therefor, the insured party shall so notify the other party
and, unless the other party pays such additional expense within ten (10) days
thereafter, the insured party's release provided for above in this Section 9.3
shall be of no further force or effect until such time as the other party pays
such additional expense or the insured party's insurance carrier notifies the
insured party that no additional cost is required under the policy in question,
or (b) obtainable from such insurer only at an additional expense, the insured
party shall notify the other party and, unless the other party pays such
additional expense within ten (10) days thereafter, the insured party shall
thereafter be free of its waiver of subrogation so long as an additional cost is
required under the policy in question.
9.4. This Lease shall be considered an express agreement governing any
case of damage to or destruction of, or any part of, the Building or the
Premises by fire or other peril, and Section 227 of the Real Property Law of the
State of New York providing for such a contingency in the absence of express
agreement, and any other law of like import now or hereafter in force, shall
have no application in such case.
ARTICLE TEN
(10.)Condemnation
10.1. If all of the Premises shall be lawfully condemned or taken in any
manner for any public or quasi-public use, this Lease and the term and estate
hereby granted shall forthwith cease and terminate as of the date of vesting of
title in such condemnation or taking. If only a part of the Premises shall be so
condemned or taken, then the term and estate hereby granted with respect to such
part of the Premises shall forthwith cease and terminate as of the date of
vesting of title in such condemnation or taking and the annual fixed rent
payable under this Lease, to the extent that such fixed rent relates to such
part of the Premises, shall be abated for the period from the date of such
vesting of title to the date specified in this Lease for the expiration of the
full term of this Lease with respect to such part of the Premises, but only to
the extent that such abatement is in excess of the annual rate of any other
existing abatement of fixed rent under Section 20.6 or under Section 30.3 below.
If only a part of the Building shall be so condemned or taken, then (a) if
substantial alteration or reconstruction of the Building or the Premises shall,
in the opinion of the Landlord, be necessary or desirable as a result of such
condemnation or taking, this Lease and the term and estate hereby granted may be
terminated by the Landlord within ninety (90) days following the date on which
the Landlord shall have received notice of such vesting of title, by a notice to
the Tenant specifying a date, not less than ninety (90) days after the
Landlord's notice, for such termination, or (b) if such condemnation or taking
shall be of a substantial part of the Premises or of a substantial
<PAGE>
part of the means of access thereto, this Lease and the term and estate hereby
granted may be terminated by the Tenant, within ninety (90) days following the
date upon which the Tenant shall have received notice of such vesting of title,
by a notice to the Landlord specifying a date, not less than ninety (90) days
after the Tenant's notice, for such termination, or (c) if neither the Landlord
nor the Tenant elects to terminate this Lease, this Lease shall not be affected
by such condemnation or taking, except that this Lease and the term and estate
hereby granted with respect to the part of the Premises so condemned or taken
shall expire on the date of the vesting of title to such part and except that
the fixed rent payable under this Lease shall be abated to the extent, if any,
hereinabove provided in this Article. If only a part of the Premises shall be so
condemned or taken and this Lease and the term and estate hereby granted with
respect to the remaining portion of the Premises are not terminated, the
Landlord will proceed with reasonable diligence, subject to the provisions of
any Qualified Encumbrance and without requiring the Landlord to expend more than
it collects as an award therefor, to restore the remaining portion of the
Premises as nearly as practicable to the same condition as it was in prior to
such condemntion or taking.
10.2. The termination of this Lease and the term and estate hereby granted
in any of the cases specified in this Article shall be with the same effect as
if the date of such termination were the date originally specified for the
expiration of the full term of this Lease, and the fixed rent payable under this
Lease shall be apportioned as of such date of termination.
10.3. If there is any condemnation or taking of all or a part of the
Building, the Landlord shall be entitled to receive the entire award in the
condemnation proceeding, including any award made for the value of the estate
vested by this Lease in the Tenant, and the Tenant hereby expressly assigns to
the Landlord any and all right, title and interest of the Tenant now or
hereafter arising in or to any such award or any part thereof, and the Tenant
shall be entitled to receive no part of such award; provided, that the Tenant
shall not be precluded from intervening for the Tenant's own interest in any
such condemnation proceeding to claim or receive from the condemning authority
any compensation to which the Tenant may otherwise lawfully be entitled in such
case in respect of property removable by the Tenant under Article Four or for
moving expenses, but only to the extent such compensation does not reduce the
award otherwise payable to the Landlord.
10.4. If the whole or any part of the Premises, or of the Tenant's
leasehold estate, shall be taken in condemnation proceedings or by any right of
eminent domain for temporary use or occupancy, the foregoing provisions of this
Article Ten shall not apply and the Tenant shall continue to pay, in the manner
and at the times herein specified, the full amount of the rent and other charges
payable by the Tenant under this Lease, and, except only to the extent that the
Tenant may be prevented from so doing pursuant to the terms of the order of the
condemning authority, the Tenant shall perform and observe all of the other
provisions of this Lease upon the part of the Tenant to be performed and
observed, as though such taking had not occurred. In the event of any taking
referred to in this Section 10.4, the Landlord shall be entitled to receive any
portion of the condemnation proceeds paid as compensation for the cost of
restoration of the Building and the Tenant shall be entitled to receive the
balance of the condemnation proceeds paid for such taking, whether paid by way
of damages, rent or otherwise, unless such period of temporary use or occupancy
shall extend beyond the expiration
<PAGE>
or termination of this Lease, in which case the balance of the condemnation
proceeds shall be apportioned between the Landlord and the Tenant as of the date
of the expiration or termination of this Lease. The Landlord shall, upon the
expiration of any such period of temporary use or occupancy, restore the
Building, as nearly as may be reasonably possible within the balance of the term
of the Lease, to the condition in which the same was immediately prior to such
taking, subject to the provisions of any Qualified Encumbrance and without
requiring the Landlord to expend more than it collects as an award therefor.
ARTICLE ELEVEN
(11.)Compliance with Laws
11.1. The Tenant shall comply with all Requirements applicable to the
Premises or any part thereof, and the Licensed Space or any part thereof, due to
the Tenant's manner of use thereof or to the Tenant's observance of any
provision of this Lease, except that the Tenant shall not be under any
obligation to comply with any Requirement requiring any structural alteration of
or in connection with the Premises solely by reason of the use thereof for any
of the purposes permitted in Article One and not by reason of (a) a condition
which has been created by, or at the instance of, any Tenant Party, (b) a breach
by any Tenant Party of any provision of this Lease or (c) a Requirement having
as a primary purpose the benefit of disabled persons. Without limiting the
generality of Section 11.1(c) above, the Landlord and the Tenant agree that the
Tenant's obligations thereunder shall include (y) the relocation of the elevator
call buttons on each floor of the Premises constituting a part of the Office
Space (the "Call Button Work") and (z) providing handicapped accessible
bathrooms on each floor of the Premises constituting a part of the Office Space
by either (i) renovating the bathrooms on each floor of the Premises
constituting a part of the Office Space or (ii) installing a unisex bathroom on
each floor of the Premises, so that after such renovation or installation, as
the case may be, each such bathroom, and the Office Space, complies with all
Requirements of the type referred to in clause (c) of this Section 11.1
(collectively, the "Bathroom Work"). Where any structural alteration of or in
connection with the Premises is required by any such Requirement, and, by reason
of the express exception specified above, the Tenant is not under any obligation
to make such alteration, then the Landlord will make such alteration if the cost
of making the same is not in excess of fifty million dollars ($50,000,000) or,
if such cost is in excess of fifty million dollars ($50,000,000), the Landlord
shall have the option of making such alteration or of terminating this Lease and
the term and estate hereby granted by giving to the Tenant not less than one (1)
year's prior notice (unless sooner required by such Requirement) of such
termination; provided, that, if within fifteen (15) days after the giving of
notice of termination the Tenant shall request the Landlord to make such
alteration, then such notice of termination shall be ineffective; the Landlord
shall proceed with reasonable diligence to make such alteration and the Tenant
shall pay to the Landlord all costs and expenses incurred by the Landlord in
connection therewith in excess of said fifty million dollars ($50,000,000) to
the extent that such excess alteration costs amortized over their useful life
(the term "useful life" shall be the meaning attributed to such term in
accordance with generally accepted accounting principles, but in no event shall
such useful life exceed ten (10) years) fall within the remaining term of this
Lease). Upon the request of the Landlord, the Tenant shall maintain on deposit
with the Landlord as an addition to the Required Amount (as defined below in
Section 26.3),
<PAGE>
such security for the payment of such costs and expenses in excess of said fifty
million dollars ($50,000,000) as the Landlord shall from time to time request.
For purpose of this Article, providing and installing of sprinklers shall be
deemed to be a non-structural alteration. If because of any Requirement the
Tenant is required to make any alteration of or in connection with the Premises
along with other tenants in the Building, the Tenant shall only be required to
contribute towards or perform its proportionate share of any such alteration as
reasonably determined by the Landlord.
11.2. If a notice of termination shall be given by the Landlord under this
Article and such notice shall not become ineffective as above provided, this
Lease and the term and estate hereby granted shall terminate on the date
specified in such notice with the same effect as if such date were the date
originally specified for the expiration of this Lease, and the fixed rent
payable under this Lease shall be apportioned as of such date of termination.
ARTICLE TWELVE
(12.)Accidents to Sanitary and other Systems
12.1. The Tenant shall give to the Landlord prompt notice of any damage
to, or defective condition in, any part or appurtenance of the Building's
sanitary, electrical, heating, air conditioning, ventilating or other systems
serving, located in, or passing through, the Premises of which the Tenant
becomes aware. Any such damage or defective condition shall be remedied by the
Landlord with reasonable diligence, except to the extent the Tenant is
specifically obligated to remedy same under the terms of this Lease. Without
limiting the generality of the immediately preceding sentence, the Tenant shall
be obligated to remedy all damage and defective conditions (other than any
damage with respect to which the Tenant is relieved from liability pursuant to
Section 9.3 above) (a) caused by the negligence or wilful misconduct of any
Tenant Party or (b) relating to, or in any manner arising out of, the
installation of any Fixture by or at the request of Tenant or in connection with
the initial build-out of the Premises; and, in the case of both clause (a) or
clause (b) above, the Tenant shall reimburse to the Landlord upon demand all
reasonable costs paid or incurred by the Landlord to remedy such damage or
defective conditions. The Tenant shall not be entitled to claim any damages
against the Landlord arising from any such damage or defective condition, except
to the extent that the same shall have been caused by the negligence or wilful
misconduct of any Landlord Party and the same shall not have been remedied by
the Landlord with reasonable diligence after notice from the Tenant to the
Landlord; nor shall the Tenant be entitled to claim any damages against any
other party (including, without limitation, any third party vendor or other
supplier of services to the Landlord) arising from any such damage or defective
condition, except to the extent that the same shall have been caused by the
negligence or wilful misconduct of such party and the same shall not have been
remedied by such party with reasonable diligence after notice thereof from the
Tenant to the Landlord; nor shall the Tenant be entitled to claim any eviction
by reason of any such damage or defective condition unless such damage or
defective condition shall have been caused by the negligence or willful
misconduct of any Landlord Party and the Landlord shall not have cured the same
within a reasonable time after notice from the Tenant to the Landlord. Nothing
in this Section 12.1 is
<PAGE>
intended to limit or affect any abatement of rent to which the Tenant is
entitled pursuant to any other provision of this Lease.
ARTICLE THIRTEEN
(13.)Subordination
13.1. This Lease and the term and estate hereby granted are and shall be
subject and subordinate to the lien of each mortgage which may now or at any
time hereafter affect the Premises, the Building and/or the Land, or the
Landlord's interest therein (collectively, the "underlying mortgages"), provided
that, and for so long as (a) (i) either Emigrant Savings Bank ("Emigrant") or
The Chase Manhattan Bank, N.A. ("Chase"), whichever is the holder of the
underlying mortgage in effect as of the date which is ten (10) days after the
date of this Lease, shall have entered into a subordination, non-disturbance and
attornment agreement in a form substantially similar to the form annexed hereto
as Exhibit E-1 (the "Emigrant SNDA"), if Emigrant is then the holder of the
underlying mortgage, or the form annexed hereto as Exhibit E-2 (the "Chase
SNDA"), if Chase is then the holder of the present underlying mortgage, and
(ii) the holder of any such future underlying mortgage(s) shall have entered
into a subordination, non-disturbance and attornment agreement (a "Mortgagee
SNDA") with the Tenant in substantially the form of the Chase SNDA, if Chase is
the holder of any such future underlying mortgage(s), and, otherwise, in the
form annexed hereto as Exhibit E-3, and (b) The Emigrant SNDA, the Chase SNDA
and/or such Mortgagee SNDA continues to be in full force and effect unless the
related underlying mortgage has either been satisfied and released of record or
refinanced and become subject to a subsequent Mortgagee SNDA. This lease shall
also be subject and subordinate to any future ground or net lease of the Land
and/or the Building (collectively the "underlying leases"), provided that, and
for so long as (y) the lessor under any such present or future underlying lease
shall have entered into a subordination, non-disturbance and attornment
agreement (a "Lessor SNDA") with the Tenant in substantially the form annexed
hereto as Exhibit E-4 and (z) such Lessor SNDA continues to be in full force and
effect.
13.2. Intentionally omitted.
13.3. The Tenant shall, from time to time, upon request by the Landlord,
promptly execute and deliver (a) an Emigrant SNDA to Emigrant or a Chase SNDA to
Chase, as the case may be, as the holder of the underlying mortgage in effect as
of the date which is ten (10) days after the date of this Lease (as such
underlying mortgage may be renewed, modified, supplemented, amended, spread,
consolidated, replaced, substituted for, added to or extended), (b) a Mortgagee
SNDA to the holder of any future underlying mortgage and (c) a Lessor SNDA to
the lessor under any present or future underlying lease. The Landlord shall,
from time to time, upon request by the Tenant, request that any holder of any
future underlying mortgage deliver an executed Mortgagee SNDA and any lessor
under any future underlying lease deliver an executed Lessor SNDA to the Tenant
for its signature; and the Tenant shall promptly execute and deliver any such
Mortgagee SNDA or Lessor SNDA delivered to the Tenant. If the Landlord shall,
for any reason, fail to obtain any requested Mortgagee SNDA or Lessor SNDA, as
the case may be, and deliver the same to the Tenant for its signature, then,
notwithstanding
<PAGE>
anything in this Article Thirteen to the contrary, and as the Tenant's sole
recourse and remedy in such event, this Lease shall not be subject and
subordinate to such future underlying mortgage or such future underlying lease,
as the case may be.
ARTICLE FOURTEEN
(14.)Notices
14.1. Any notice, consent, approval, request, communication, bill, demand
or statement (collectively, "Notices") under this Lease by either party to the
other party shall be in writing and shall be deemed to have been duly given when
(a) delivered personally or by overnight mail service to such other party and a
receipt has been obtained (provided, that the inability to obtain such receipt
after reasonable efforts shall not affect the effectiveness of such delivery) or
(b) upon receipt after being mailed in a postpaid envelope (registered or
certified, return receipt requested) addressed to such other party, which
address for the Landlord shall be as above set forth and for the Tenant shall be
the Premises, or 1001 22nd Street, N.W., Sixth Floor, Washington, D.C. 20037 if
mailed prior to the date upon which the Tenant occupies the Premises for the
conduct of its business, in either case, to the attention: General Counsel, with
a copy to Chief Financial Officer, or if the address of such other party for
notices shall have been duly changed as hereinafter provided, if so mailed to
such other party at such changed address. Either party may at any time change
the address for Notices by a Notice stating the change and setting forth the
changed address. If the term "Tenant" as used in this Lease refers to more than
one person, any Notice to any one of such persons shall be deemed to have been
duly given to the Tenant. If and to the extent requested by the Landlord, the
Tenant shall give copies of all Notices to the Landlord to holders of underlying
mortgages and underlying leases of which the Tenant has notice.
ARTICLE FIFTEEN
(15.)Conditions of Limitation
15.1. This Lease and the term and estate hereby granted are subject to the
limitation that:
(a)if the Tenant shall default in the payment of any Rent and any
such default shall continue for ten (10) days after notice,
(b)if the Tenant shall default in observing any provision of
Sections 3.1, 3.2, 3.3 or of subsections (e) (other than the
provisions relating to Labor Harmony and labor disputes) or (f) of
Section 6.1 or of Section 6.2 and such default shall continue and
shall not be remedied by the Tenant within five (5) business days
after notice,
(c) if the Tenant shall default in the observing of any provision of
subsection (e) of Section 6.1 pertaining to Labor Harmony and labor
disputes, and if the
<PAGE>
same shall continue and not be remedied by the Tenant within two (2)
business days after a notice,
(d) if the Tenant shall default in observing the provisions of
Section 13.2 of this Lease and if such default shall continue and
not be remedied by the Tenant within ten (10) business days after
notice,
(e) if the Tenant shall default in observing any provision of this
Lease (other than a default of the character referred to in
subsections (a), (b) and (c) of this Section 15.1), and if such
default shall continue and shall not be remedied by the Tenant
within thirty (30) days after notice or, if such default cannot for
causes beyond the Tenant's control, with due diligence be cured
within said period of thirty (30) days, if the Tenant (i) shall not,
promptly upon the giving of such notice, give the Landlord notice of
the Tenant's intention to duly institute all steps necessary to
remedy such default, (ii) shall not duly institute and thereafter
diligently prosecute to completion all steps necessary to remedy the
same, or (iii) shall not remedy the same within a reasonable time
after the date of the giving of said notice by the Landlord,
(f) if any event shall occur or any contingency shall arise whereby
this Lease or the estate hereby granted or the unexpired balance of
the full term of this Lease would, by operation of law or otherwise,
devolve upon or pass to any person, firm or corporation other than
the Tenant (except as permitted under Article Seven) and such event
is not cured (with the result that this Lease and the term and
estate hereby granted shall again be vested solely in the Tenant)
within thirty (30) days after notice, or
(g) when and to the extent permitted by law, if a petition in
bankruptcy shall be filed by or against the Tenant and the same is
not stayed or vacated within sixty (60) days (or if stayed but not
ultimately vacated after lifting of such stay), or if the Tenant
shall make a general assignment for the benefit of its creditors, or
the Tenant shall receive the benefit of any insolvency or
reorganization act, or if a receiver or trustee is appointed for any
portion of the Tenant's property and such appointment is not vacated
within sixty (60) days, or if an execution or attachment shall be
issued under which the Premises shall be taken or occupied by anyone
other than the Tenant,
then in any of said cases the Landlord may give to the Tenant a notice of
intention to end the term of this Lease, and, if such notice is given, this
Lease and the term and estate hereby granted (whether or not the term shall
theretofore have commenced) shall terminate upon the expiration of three (3)
days from the date the notice is deemed given with the same effect as if the
last of said three (3) days were the date originally specified as the expiration
of the full term of this Lease, but the Tenant shall remain liable for damages
as provided in this Lease or pursuant to law. If this Lease shall have been
assigned, the term "Tenant", as used in subsections (a) to (g), inclusive, of
this Section 15.1, shall be deemed to include the assignee and the assignor or
either of them under any such assignment unless the Landlord shall, in
<PAGE>
connection with such assignment, release the assignor from any further liability
under this Lease, in which event the term "Tenant", as used in said subsections,
shall not include the assignor so released.
ARTICLE SIXTEEN
(16.)Re-entry by Landlord
16.1. If this Lease shall terminate under Article Fifteen, the Landlord or
the Landlord's agents and servants may immediately or at any time thereafter
re-enter the Premises, or any part thereof in the name of the whole, either by
summary dispossess proceedings or by any suitable action or proceeding at law or
by force or otherwise, without being liable to indictment, prosecution or
damages therefor, and may repossess the same, and may remove any persons
therefrom, to the end that the Landlord may have, hold and enjoy the Premises
again as and of its first estate and interest therein. The words "re-enter",
"re-entry", and "re-entering" as used in this Lease are not restricted to their
technical legal meanings.
16.2. If this Lease shall terminate under the provisions of
Article Fifteen or if the Landlord undertakes any summary dispossess or other
proceeding or action or other measure for the enforcement of its right of
re-entry (any such termination of this Lease or undertaking by the Landlord
being a "Default Termination"), the Tenant shall thereupon pay to the Landlord
the Rent up to the time of such Default Termination, and shall likewise pay to
the Landlord all such damages which, by reason of such Default Termination,
shall be payable by the Tenant as provided in this Lease or pursuant to law.
Also in the event of a Default Termination the Landlord shall be entitled to
retain all moneys, if any, paid by the Tenant to the Landlord, whether as
advance rent or as security for rent, but such moneys shall be credited by the
Landlord against any Rent due from the Tenant at the time of such Default
Termination or, at the Landlord's option, against any damages payable by the
Tenant as provided in this Lease or pursuant to law.
16.3. In the event of a breach or threatened breach on the part of either
party to this Lease of any of its obligations hereunder, the other party shall
also have the right of injunction. The specified remedies to which the Landlord
may resort under this Lease are cumulative and are not intended to be exclusive
of any other remedies or means of redress to which the Landlord may lawfully be
entitled at any time, and the Landlord may invoke any remedy allowed at law or
in equity as if specific remedies were not provided for in this Lease.
ARTICLE SEVENTEEN
(17.)Damages
17.1. If there is a Default Termination of this Lease, the Tenant will pay
to the Landlord as damages, at the election of the Landlord, either:
(a) a sum which, at the time of such Default Termination, represents
the then present value (such computation to be made by using the
then prevailing rate of
<PAGE>
most recently issued bonds or notes issued by the United States
Treasury having a maturity closest to but not exceeding the period
commencing with the day following the date of such Default
Termination and ending with the date originally specified as the
expiration date of this Lease (the "Remaining Period")) of the
excess, if any, of (1) the aggregate of the fixed rent and the
additional rent under Article Twenty-four (if any) which, had this
Lease not so terminated, would have been payable under this Lease by
the Tenant for the Remaining Period over (2) the aggregate fair
market rental value of the Premises for the same period, or
(b) sums equal to the aggregate of the fixed rent and the additional
rent under Article Twenty-four (if any) which would have been
payable by the Tenant had this Lease not terminated by such Default
Termination, payable upon the due dates therefor specified in this
Lease following such Default Termination and until the date
originally specified as the expiration of this Lease; provided, that
if the Landlord shall relet all or any part of the Premises for all
or any part of the Remaining Period (the Landlord having no
obligation to so relet the Premises), the Landlord shall credit the
Tenant with the net rents received by the Landlord from such
reletting, such net rents to be determined by first deducting from
the gross rents as and when received by the Landlord from such
reletting the expenses incurred by the Landlord in terminating this
Lease and re-entering the Premises and of securing possession
thereof, as well as the expenses of reletting, including altering
and preparing the Premises for new tenants, brokers' commissions,
and all other expenses properly chargeable against the Premises and
the rental therefrom in connection with such reletting, it being
understood that any such reletting may be for a period equal to or
shorter or longer than said period; provided, further, that (i) in
no event shall the Tenant be entitled to receive any excess of such
net rents over the sums payable by the Tenant to the Landlord, (ii)
in no event shall the Tenant be entitled, in any suit for the
collection of damages pursuant to this subsubsection (b), to a
credit in respect of any net rents from a reletting except to the
extent that such net rents are actually received by the Landlord
prior to the commencement of such suit, and (iii) if the Premises or
any part thereof should be relet in combination with other space,
then proper apportionment on a square foot rentable area basis shall
be made of the rent received from such reletting and of the expenses
of reletting.
17.2. For the purposes of this Article, the amount of additional rent
which would have been payable by the Tenant under Article Twenty-four shall, for
each Computation Year (as defined in Article Twenty-four) ending after such
Default Termination, be deemed to be an amount equal to the amount of additional
rent payable by the Tenant for the Computation Year immediately preceding the
Computation Year in which such Default Termination occurs or if the Default
Termination occurs prior to the end of the first Computation Year, then the
Landlord's reasonable estimate of what additional rent would have been had the
Lease commenced one year earlier, and in either case deemed increased each year
by the percentage increase in additional rent for the immediately preceding
Computation Year over the additional rent for the twelve-month period prior
thereto or, if the Lease term did not occur throughout
<PAGE>
such prior years, Landlord's reasonable estimate of what such increase would
have been had the term occurred during such years. Suit or suits for the
recovery of any damages payable by the Tenant, or any installments thereof, may
be brought by the Landlord from time to time at its election, and nothing in
this Lease shall be deemed to require the Landlord to postpone suit until the
date when the term of this Lease would have expired but for such Default
Termination.
17.3. Subject to Section 25.12, nothing in this Lease shall be construed
as limiting or precluding the recovery by the Landlord against the Tenant of any
sums or damages to which, in addition to the damages specified above, the
Landlord may lawfully be entitled by reason of any default under this Lease on
the part of the Tenant.
ARTICLE EIGHTEEN
(18.)Waivers by Tenant
18.1. The Tenant, for itself and all other Tenant Parties, and on behalf
of any and all persons, firms, entities and corporations claiming through or
under any Tenant Party, including, without limitation, creditors of all kinds,
does hereby waive and surrender all right and privilege which they or any of
them might have under or by reason of any present or future law to redeem the
Premises or to have a continuance of this Lease for the full term hereby demised
after the Tenant is dispossessed or ejected therefrom by process of law or under
the terms of this Lease or after the expiration or termination of this Lease as
provided in this Lease or pursuant to law. The Tenant also waives (a) the right
of the Tenant to trial by jury in any summary dispossess or other proceeding
that may hereafter be instituted by the Landlord against the Tenant with respect
to the Premises or in any action that may be brought to recover rent, damages or
other sums payable under this Lease, and (b) the provisions of any law relating
to notice and/or delay in levy of execution in case of an eviction or dispossess
of a tenant for nonpayment of rent, and of any other law of like import now or
hereafter in effect. If the Landlord commences any such summary dispossess
proceeding, the Tenant will not interpose any counterclaim of whatever nature or
description in such proceeding, other than a compulsory counterclaim.
ARTICLE NINETEEN
(19.)Tenant's Removal
19.1. Any personal property which shall remain in any part of the Premises
or any of the Licensed Spaces after the expiration or termination of the term of
this Lease with respect to such part shall be deemed to have been abandoned, and
either may be retained by the Landlord as its property or may be disposed of in
such manner as the Landlord may see fit at the Tenant's cost; provided, that the
Tenant will, upon request of the Landlord, remove from the Building any such
personal property by the later of the expiration or termination of this Lease or
thirty (30) days after the Landlord's request.
ARTICLE TWENTY
<PAGE>
(20.)Elevators, Cleaning, Services, etc.
20.1. The Landlord will (a) supply passenger elevator service to each
floor, above the street floor of the Building, which is served by the Building's
passenger elevators and on which the Office Space, or any portion thereof, is
located, utilizing (i) all of the passenger elevators serving the floors on
which the Office Space is located during Business Hours (as hereinafter
defined), subject to Section 8.1 above, provided, however, that, unless the
Landlord shall reasonably determine that it is commercially reasonable to do
otherwise, during Business Hours (A) the Landlord shall use reasonable efforts
to avoid taking more than one (1) passenger elevator in each elevator bank
serving the Office Space out of service at any one time to perform upgrades,
repairs and/or maintenance of such elevators and (B) if the Landlord shall take
more than one (1) such passenger elevator out of service at any one time to
perform such upgrades, repairs and/or maintenance, the Landlord shall not do so
during peak hours (i.e., 8:00 a.m. to 10:00 a.m., noon to 2:00 p.m. and
5:00 p.m. to 6:00 p.m.), and (ii) not less than two (2) of said elevators during
hours other than Business Hours, (b) supply an elevator for the transmission of
freight to said floor or floors during Business Hours, (c) supply a freight
elevator for access to the C-4 level of the Building and the 50th Floor of the
Building (the Tenant acknowledging that access to the roof of the Building is
not available from any elevator, but only by stairs from the 50th floor) during
Business Hours, subject to such reasonable regulations and restrictions as the
Landlord may, from time to time, deem necessary to establish, including, but not
limited to, the requirements that (i) only the Tenant's contractors who have
been consented to by the Landlord, and the Tenant's properly identified
employees, agents and representatives shall be permitted access to the C-4 level
of the Building or the 50th Floor of the Building and (ii) except in the case of
emergency, such contractors, employees, agents and representatives shall, at the
Landlord's option, be accompanied by employees of the Landlord, provided that
such requirement shall not interfere with or delay such access to the C-4 level
of the Building or the 50th Floor of the Building (except to a de minimis
extent), (d) subject to any applicable policies or regulations adopted by any
utility or governmental authority, supply during Business Hours in the heating
season heat for the warming of the Office Space and the public portions of the
Building, (e) subject to any applicable policies or regulations adopted by any
utility or governmental authority, supply during Business Hours air conditioning
(including cooling during the cooling season in accordance with the provisions
of Section 20.2.1 below) and ventilation to all portions of the Office Space, if
any, which are served by the Building's air conditioning and ventilation
systems, and (f) clean the Office Space in accordance with the specification
attached as Exhibit G hereto, except any such portion of the Office Space
primarily used for preparing, dispensing or consumption of food or beverages or
as an exhibition area or classroom or for storage, shipping room, mail room or
similar purposes, or which is a private toilet (it being agreed that any unisex
bathrooms installed as part of the Bathroom Work pursuant to Section 11.1 above
are not private toilets) or shower, or which is a shop or is used for a trading
floor or for operation of computer, data processing, reproduction, duplicating
or similar equipment (unless, in the case of any of the foregoing such use does
not require cleaning that is in excess of, or of a nature that is different
from, that which would be required by ordinary office use), or which is
designated as a "secured area" by the Tenant, or (subject to Section 6.1(c))
which is designated as a "live broadcasting area" by the Tenant. Unless
otherwise provided in this Lease, the following terms shall have the meanings
indicated: "Business Hours" shall mean the hours of 8:00 A.M. to 6:00 P.M. of
days other than
<PAGE>
Saturdays, Sundays and Holidays (as hereinafter defined); and "Holidays" shall
mean (y) New Year's Day, President's Day, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day and (z) any other days which are
hereafter designated as federal holidays, provided the same are adopted as
building holidays in other similar first-class office buildings located in
midtown Manhattan.
20.2.1. Notwithstanding anything to the contrary contained in this Lease,
the air conditioning to be provided to the Office Space from the Building's
interior shaft and perimeter system shall be such as to provide, in the
aggregate, the number of cubic feet per minute per floor as set forth opposite
such floor on Exhibit F-1 and (a) with respect to the air conditioning provided
from the Building's interior shaft, at a supply air temperature of 58 degrees
Fahrenheit (plus or minus 2 degrees Fahrenheit) measured at the shaft on each
floor in the Office Space when the inside dry bulb temperature is 76 degrees
Fahrenheit or higher and such as to maintain during the summer season a relative
humidity of 50% (plus or minus 5%) and (b) with respect to the air conditioning
to be provided to the Office Space from the Building's perimeter system,
substantially in accordance with the specification attached hereto as
Exhibit F2. No representation is made by the Landlord with respect to the supply
air temperature measured at the perimeter of the Office Space, or the adequacy
or fitness of such air conditioning or ventilation to achieve or maintain
temperatures that may be required for the comfortable occupancy of the Office
Space, or that may be required for, or because of, the operation of any
computer, data processing, radio broadcasting or other equipment of the Tenant,
or otherwise; and where air conditioning or ventilation is required for any such
purpose, the Landlord assumes no responsibility, and shall have no liability,
for any loss or damage however sustained in connection therewith.
20.2.2. The Tenant acknowledges that the supply air temperature at the
Building's interior shaft, as set forth in Section 20.2.1. above, may rise or
fall from the 58 degrees Fahrenheit (plus or minus 2 degrees Fahrenheit)
temperature set forth above. Accordingly, such supply air temperature may, at
the Landlord's option and typically preceding or following Business Hours, be
increased during period of warm-up and reduced during periods of cool-down.
20.2.3. The air circulated through the ducts of the air conditioning
system of the Building serving the Office Space (including the perimeter system
of the Office Space) shall consist of an average amount of fresh air equal to 20
cubic feet per minute per person based on an occupancy level of one person per
100 square feet of usable area. Duct traverse readings shall be taken before or
after construction in the presence of the Tenant's representative to verify the
delivery of the proper air quality and temperature. If conditions warrant, the
readings taken before construction shall include the insertion of an appropriate
external resistance so that the static pressure delivered to the Office Space is
measured at 1.0 inches.
20.2.4.(a) The Landlord agrees that, subject to the terms and conditions
of this Lease (including, but not limited to, the provisions of
Section 6.1(e)) and all applicable Requirements, the Tenant, at the
Tenant's sole cost and expense, may install in the Office Space a
supplemental air conditioning system or systems having, in the
aggregate, a maximum cooling capacity of one hundred twenty
<PAGE>
(120) tons, and, in connection therewith, one (1) valved chilled
water tap (supply and return) on each floor of the Office Space on
which any such system is located, at a location approved by the
Landlord. If the Tenant shall install such a supplemental air
conditioning system or systems, the Landlord shall, subject to the
provisions of Section 36.6, Section 20.2.4(b) and Section 20.2.4(c)
below, provide to the Tenant up to one hundred twenty (120) tons of
chilled water for the operation of the Tenant's supplemental air
conditioning system or systems.
(b) The Tenant shall pay for all chilled water used by and/or
reserved and available for use by the Tenant, at the Landlord's
standard published charges for the supply of chilled water, which
charge is currently Eight Hundred Fifty and 00/100 Dollars ($850.00)
per ton per annum. Such charge is subject to increases prior to the
commencement date and during the term of this Lease to reflect
increases in the costs incurred by the Landlord in the production of
chilled water, as reasonably determined by Landlord. The Tenant
shall pay the charge for chilled water in equal monthly installments
in advance, on the first day of each and every calendar month during
the term of this Lease. The chilled water required to be supplied by
the Landlord pursuant to this Section 20.2.4 shall be available at
all times (24 hours per day, 7 days per week) and shall have a
supply temperature of 48 degrees Fahrenheit (plus or minus 2
degrees). The "( T" resulting from the operation of the Tenant's
supplemental air conditioning system(s) shall not be more than 10
degrees Fahrenheit.
(c) Anything in Section 20.2.4(a) or Section 20.2.4(b) to the
contrary notwithstanding, if, as of the date which is six (6) months
following the date upon which the Tenant first occupies the Premises
for the normal conduct of its business, the Tenant has not installed
a supplemental air conditioning system or systems in the Premises,
or if the supplemental air conditioning system or systems then
installed require less than one hundred twenty (120) tons of chilled
water, the Tenant shall be deemed to have waived its rights to
receive any chilled water in excess of the amounts then being used
by the Tenant and such additional amounts that the Tenant, as of
such date, can demonstrate to the Landlord's reasonable satisfaction
that the Tenant will require for its use during the remaining term
of this Lease, and the Landlord, shall have no further obligation to
reserve and/or to make available to the Tenant any chilled water in
excess of such amounts.
(d) Subject to Section 5.6 above, the Landlord shall provide to the
Tenant a supply of water which is reasonably required for
humidification of the Tenant's supplemental air conditioning
system(s), provided, and on the express conditions that (i) the
Tenant shall have given the Landlord written notice requesting such
humidification water together with the Tenant's Preliminary Plans
for the Initial Tenant Alterations (it being expressly agreed by the
Tenant that if the Tenant fails to deliver such notice together with
the Tenant's Preliminary Drawings for the Initial Tenant
Alterations, the Landlord shall have
<PAGE>
no obligation to furnish such humidification water pursuant to this
Section 20.2.4(d)), (ii) if the Tenant timely delivers the Landlord
the notice referenced in subclause (i) above, the Landlord's
obligation to provide such humidification water shall continue if,
and for so long as, the Tenant installs and operates such
supplemental air conditioning system(s) and (iii) the Tenant, at the
Tenant's sole cost and expense, shall, subject to Section 6.1(e) and
all other applicable provisions of this Lease, provide and install
all pipes, risers, connections and/or appurtenances which are
necessary to bring such humidification water to such supplemental
air conditioning system(s) from the Building's cold water riser on
the 37th Floor of the Building. The Tenant shall pay for such
humidification water, as additional rent hereunder in twelve (12)
equal monthly installments together with payments of fixed rent due
hereunder, an annual flat rate, as is reasonably determined by the
Landlord and of which the Landlord gives written notice to the
Tenant within a reasonable period of time after timely receipt by
the Landlord of the Tenant's request for such humidification water.
20.3. The Landlord shall, when and to the extent reasonably requested by
the Tenant, furnish additional passenger and freight elevators, heating, air
conditioning, ventilating and/or cleaning services (including cleaning services
to (Y) any "secured area" (subject to being granted access thereto) or "live
broadcasting area" on an after-hours, overtime basis and (Z) any other portion
of the Premises in addition to the Office Space) upon such reasonable terms and
conditions as shall be determined by the Landlord, including the payment by the
Tenant of the Landlord's reasonable charge therefor; provided, however, that,
upon the Tenant's request therefor made at least three (3) business days in
advance (but subject to any prior reservations made by other tenants and
occupants of the Building), the Landlord will furnish to the Tenant, at no
charge to the Tenant, (a) the exclusive use of one (1) freight elevator for the
Tenant's initial move-in to each of the 36th Floor Space and the 37th Floor
Space on two (2) consecutive weekends for each floor (during the period from
8:00 a.m. to 11:59 p.m. on both Saturday and Sunday) and (b) the exclusive use
of one (1) freight elevator for the Tenant's move-out from each of the 36th
Floor Space and the 37th Floor Space on one (1) weekend for each floor (during
the period from 8:00 a.m. to 11:59 p.m. on both Saturday and Sunday), provided,
however, that nothing in this Section 20.3 shall be construed to grant to the
Tenant the right to the exclusive use, or the use at no charge to the Tenant, of
more than one (1) freight elevator on any given day. The Tenant will also pay
the Landlord's reasonable charge for (y) any additional cleaning of the Office
Space required because of the carelessness or indifference of any Tenant Party
or because of the particular nature of any Tenant Party business (as
distinguished from customary office use), and (z) the removal of any refuse and
rubbish of any Tenant Party from the Premises and the Building, except the
removal from the Office Space of wastepaper and similar discarded material
placed by the Tenant in wastepaper baskets and left for emptying as an incident
to the Landlord's normal cleaning of the Office Space. If the cost to the
Landlord for cleaning the Office Space shall be increased due to the use of any
part of the Office Space during hours other than Business Hours or due to there
being installed in the Office Space, at the request of or by any Tenant Party,
any materials or finish other than those which are of the standard adopted by
the Landlord for the Building, the Tenant shall pay to the Landlord an amount
equal to such reasonable increase in cost; provided, however, that the Tenant,
upon not less than three (3) business days prior written notice to the Landlord,
shall
<PAGE>
be permitted to use its own contractors or employees to clean such non-standard
items, and the Landlord shall provide such contractors with necessary access to
the Office Space, provided, and upon the express conditions that (a) such use
shall be in compliance with and shall not violate any Requirements, (b) the
Tenant shall have obtained the Landlord's prior consent to such contractors or
employees, provided that such consent not to be unreasonably withheld or
delayed, and (c) the same will not in the Landlord's reasonable determination,
cause any disruption of labor harmony in the Building. The Tenant may
participate in any paper recycling plan available to it and nothing contained
herein shall require that the Tenant use or participate in any recycling plan
sponsored or approved by the Landlord unless dictated by any Requirement and
provided that such recycling plan does not impose any material additional burden
upon the Landlord or the Building or the Land. As used in this Section 20.3, the
Landlord's "reasonable charges" shall be the charges set forth in the Landlord's
"1998 Tenant Sales Rate Schedule" (a copy of which has previously been furnished
to the Tenant), as the same may be increased from time to time by the Landlord,
provided that such increases shall be reasonably related to increases in the
Landlord's actual cost of providing such services to tenants in the Building.
20.4. All or any of the elevators in the Building may, at the option of
the Landlord, be manual or automatic elevators, and the Landlord shall be under
no obligation to furnish an elevator operator or starter for any automatic
elevator, but if the Landlord shall furnish any elevator operator or starter for
any automatic elevator, the Landlord may discontinue furnishing such elevator
operator or starter.
20.5. The Landlord reserves the right, without liability to the Tenant
(subject to the provisions of Section 20.6 below) and without constituting any
claim of constructive eviction, to stop or interrupt any heating, elevator,
escalator, lighting, ventilating, air conditioning, power, water, cleaning or
other service and to interrupt the use of any Building facilities, at such times
as may be necessary and for as long as may reasonably be required by reason of
accidents, strikes, the making of repairs, alterations or improvements,
inability to secure a proper supply of fuel, steam, water, electricity, labor or
supplies, or by reason of any other cause beyond the reasonable control of the
Landlord; provided, that the Landlord shall use reasonable efforts to coordinate
with the Tenant regarding the scheduling of any such stoppage or interruption
for the purpose of making any discretionary or non-emergency repairs,
alterations or improvements and make the same at such times and in such manner
as shall not unreasonably interfere with the Tenant's use of the Premises.
20.6. Anything in Section 20.5 above or elsewhere in this Lease to the
contrary notwithstanding, if any Essential Service (as hereinafter defined)
which the Landlord is required to provide to the Tenant under this Lease is
interrupted for a period of ten (10) consecutive business days, other than any
interruption caused by any act or omission of any Tenant Party (in which event
there shall be no abatement of fixed rent as provided for in this Section 20.6),
and if, as a result thereof (a) all or substantially all of the Premises is
rendered untenantable or otherwise cannot be used for the reasonable conduct of
the Tenant's business, the Tenant shall be entitled to an abatement of the fixed
rent for each day after the expiration of such ten (10) business day period that
all or substantially all of the Premises shall remain untenantable or otherwise
cannot be used for the reasonable conduct of the Tenant's business, or (b) (i)
at least
<PAGE>
5,000 rentable square feet of the Office Space (but less than all or
substantially all of the Office Space) or (ii) any part of the Premises that is
essential for the normal conduct of the Tenant's business in the Office Space,
(without regard to the size of such part of the Premises), is rendered
untenantable or otherwise cannot be used for the reasonable conduct of the
Tenant's business for ten (10) consecutive business days by reason of any
interruption of an Essential Service, other than any interruption caused by an
act or omission of any Tenant Party (in which event there shall be no abatement
of fixed rent as provided for in this Section 20.6), the Tenant shall be
entitled to a partial abatement of fixed per square foot rent for each day after
the expiration of such ten (10) business day period that such portion of the
Premises shall remain untenantable or otherwise cannot be used for the
reasonable conduct of the Tenant's business, such abatement to be an amount
equal to the product of the fixed rental rate applicable with respect to such
portion of the Premises, the number of rentable square feet in such portion of
the Premises and a fraction, the numerator of which is one (1) and the
denominator of which is three hundred sixty-five (365). The abatements provided
for in this Section 20.6 shall be the Tenant's sole remedy in the event of any
interruption of any Essential Service which the Landlord is required to provide
to the Tenant under this Lease. The term "Essential Service" as used in this
Lease shall mean electric current, heat, air conditioning and ventilation, water
for lavatory purposes and any fire suppression sprinkler system and at least
two (2) elevators serving the Office Space and elevator access to the 50th Floor
of the Building.
20.7. Anything in this Lease to the contrary notwithstanding, the Landlord
agrees that the Tenant shall have access to the Building and the Premises, and
that the Landlord will provide staffing in the Building's lobby, 24 hours per
day, 7 days per week, subject to events of Force Majeure and applicable
Requirements.
20.8. The Building's toilet exhaust system shall be such as to provide
during Business Hours exhaust capacity of at least 2 cubic feet per minute per
square foot of the existing toilet facilities in the Office Space, and such
toilet facilities in the Office Space as the same may be renovated and/or
installed in accordance with Section 11.1 above.
20.9. Anything in this Lease to the contrary notwithstanding, the Landlord
shall not be required to provide any services to the Basement Space, the
Penthouse Space or the Licensed Spaces, except as specifically provided for such
spaces in Section 5.1(b) and Article Thirty-four, Article Thirty-five and
Article Thirty-six of this Lease.
20.10. Provided, and for so long as, the Tenant uses at least one hundred
(100) tons of chilled water pursuant to Section 20.2.4 above, the Landlord, at
no additional charge to the Tenant, shall make the Building's licensed operating
engineer available, on a non-exclusive basis, for consultation in connection
with the operation and maintenance of the Auxiliary Chiller System and the
Emergency Generator System. Anything in this Lease to the contrary
notwithstanding, in no event shall the Landlord, such engineer or any of the
other Indemnitees be responsible for (a) complying with, nor shall the Landlord,
such engineer or any of the other Indemnitees be subject to any liability for
the Tenant's failure to comply with, any Requirement applicable to the Auxiliary
Chiller System or the Emergency Generator System or the installation, operation
or maintenance (or, upon the expiration or sooner termination of this Lease, the
removal) of the Auxiliary Chiller System or the Emergency Generator System, or
(b)
<PAGE>
the installation, operation or maintenance of the Auxiliary Chiller System or
the Emergency Generator System, or for any liability or damage incurred or
suffered by the Tenant in connection with or arising out of the Tenant's
installation, operation or maintenance (or, upon the expiration or sooner
termination of this Lease, the removal) of the Auxiliary Chiller System or the
Emergency Generator System; and the Tenant shall make no claim against the
Landlord or any Landlord Party (including, without limitation, such engineer)
for any direct, consequential or other loss or damage suffered or incurred by
the Tenant in connection with the installation operation or maintenance (or,
upon the expiration or sooner termination of this Lease, the removal) of the
Auxiliary Chiller System or the Emergency Generator System, however caused,
provided, however, that the foregoing is not intended to relieve such engineer
from any liability for his or her willful misconduct in connection with the
operation and maintenance of the Auxiliary Chiller System or the Emergency
Generator System. The Tenant shall indemnify and save harmless the Indemnitees
(including, without limitation, such engineer), and defend the Indemnitees (with
counsel reasonably acceptable to the Indemnitees), from and against any and all
liability (including, but not limited to, statutory liability), loss, damage
interest, judgments and liens, and any and all costs and expenses (including,
but not limited to, counsel fees and disbursements), in any way arising out of
or incurred in connection with, any and all claims, demands, suits, actions
and/or proceedings which shall be made or brought against the Indemnitees in
connection with or arising out of, anything done or omitted to be done with
respect to the Auxiliary Chiller System or the Emergency Generator System,
except to the extent caused by the willful misconduct of such engineer. The
Indemnitees agree to give the Tenant prompt written notice of all claims,
demands, suits, actions and/or proceedings for which the Indemnitees are
indemnified hereunder brought or threatened against the Indemnitees, but any
failure or delay in giving any such notice shall not affect the Tenant's
indemnification obligation hereunder unless the Tenant's ability to defend
against such claim is materially adversely affected by such failure or delay.
The provisions of this Section 20.10 shall survive the expiration or earlier
termination of this Lease. The foregoing provisions of this Section 20.10 are
subject to the provisions of Section 9.3 and Section 25.12 of this Lease.
ARTICLE TWENTY-ONE
(21.)Lease Contains All Agreements-No Waivers
21.1. This Lease contains all of the understandings relating to the
leasing of the Premises and the Landlord's obligations in connection therewith
and neither the Landlord nor any agent or representative of the Landlord has
made or is making, and the Tenant in executing and delivering this Lease is not
relying upon, any warranties, representations, promises or statements
whatsoever, except to the extent expressly set forth in this Lease. All
understandings and agreements, if any, heretofore had between the parties are
merged in this Lease, which alone fully and completely expresses the agreement
of the parties.
21.2. The failure of either party to insist in any instance upon the
strict keeping, observance or performance of any provision of this Lease or to
exercise any election in this Lease shall not be construed as a waiver or
relinquishment for the future of such provision, but the same shall continue and
remain in full force and effect. No waiver or modification by either party of
any provision of this Lease shall be deemed to have been made unless expressed
in
<PAGE>
writing and signed by the party to be charged. No surrender of possession of the
Premises or of any part thereof or of any remainder of the term of this Lease
shall release the Tenant from any of its obligations under this Lease unless
accepted by the Landlord in writing. The receipt and retention by the Landlord
of Rent from anyone other than the Tenant shall not be deemed a waiver of the
breach by the Tenant of any provision in this Lease, or the acceptance of such
other person as a tenant, or a release of the Tenant from its further observance
of the provisions of this Lease. The receipt and retention by the Landlord of
Rent with knowledge of the breach of any provision of this Lease shall not be
deemed a waiver of such breach.
ARTICLE TWENTY-TWO
(22.)Parties Bound; Exculpation
22.1. The provisions of this Lease shall bind and benefit the respective
successors, assigns and legal representatives of the parties to this Lease,
except that (1) no violation of the provisions of Article Seven shall operate to
vest any rights in any successor, assignee or legal representative of the Tenant
and (2) the provisions of this Article shall not be construed as modifying the
conditions of limitation contained in Article Fifteen. The obligations of the
Landlord under this Lease shall not, however, be binding upon the Landlord
herein named (or any subsequent transferor of its interest in the Building or
the Premises) with respect to the period (i) subsequent to the transfer of its
interest in the Building or the Premises (a lease of the entire interest being
deemed such a transfer), except for obligations of the Landlord that accrued
prior to the date of such transfer (provided that such obligations shall not be
binding on the Landlord herein named (or any such subsequent transferor) if the
transferee of the Landlord herein named (or the transferee of any such
subsequent transferor) assumes such obligations in writing and a copy of such
assumption agreement is delivered to the Tenant within a reasonable period of
time thereafter), or (ii) subsequent to the expiration or earlier termination of
the term of any underlying lease to which this Lease and the term and estate
hereby granted may be subject and subordinate and wherein the lessor thereunder
has agreed to recognize this Lease in case the term of said underlying lease
expires or terminates prior to the expiration or termination of the term of this
Lease if the Landlord would not then be entitled to terminate this Lease
pursuant to said Article Fifteen or to exercise any dispossess remedy provided
for in this Lease or by law; and in any such event those covenants shall,
subject to Article Thirteen, thereafter be binding upon the transferee of such
interest in the Building or the Premises or the lessor under said underlying
lease, as the case may be, until the next such transfer of such interest.
22.2. The Tenant shall look solely to the Landlord's interest in the Land
and the Building (and the proceeds thereof, including, without limitation, sale
proceeds thereof and any undistributed proceeds thereof resulting from any
financing or refinancing of the Building (it being expressly agreed by the
Tenant that the Tenant shall have no recourse to any financing or refinancing
proceeds paid to the shareholders, partners, members or other owners of any
equity interests in the Landlord, whether by distribution, dividend or
otherwise) or any proceeds thereof resulting from any casualty to or
condemnation of the Building) for the satisfaction of any monetary claim under
this Lease, or for the collection of any judgment (or other judicial process)
based thereon, and no other property or assets of the Landlord (or any
affiliate,
<PAGE>
shareholder, director, officer, employee, partner, agent, representative, or
beneficiary of the Landlord, disclosed or undisclosed) shall be subject to levy,
execution or other enforcement procedure for the satisfaction of such claim or
judgment (or other judicial process). If a final, non-appealable judgment is
entered in favor of the Tenant against the Landlord based on any monetary claim
under this Lease, and if such judgment is not paid to the Tenant within thirty
(30) days after demand therefor, the Tenant shall be entitled to offset the
amount of such judgment against the next accruing fixed rent.
ARTICLE TWENTY-THREE
(23.)Curing Tenant's Defaults-Additional Rents
23.1. If the Tenant shall default in the observance of any provision of
this Lease, the Landlord, without thereby waiving such default, may perform the
same for the account and at the expense (which shall be reasonable, taking into
account the circumstances giving rise to the necessity to cure the Tenant's
default) of the Tenant (a) immediately or at any time thereafter and without
notice in the case of emergency (except that the Landlord shall provide notice
of such emergency to the Tenant as soon as reasonably practicable under the
circumstances but in no event shall the Landlord's failure to do so affect its
right to effect a cure of the Tenant's default) or in case such default
unreasonably interferes with the use by any other tenant of any space in the
Building or with the efficient operation of the Building or will result in a
violation of any Requirement applicable to the Land, the Building or the
Premises or any part thereof, to the Tenant's use thereof or to the Tenant's
observance of any provision of this Lease, or in a cancellation of an insurance
policy maintained by the Landlord, and (b) in any other case if such default
continues after thirty (30) days from the date of the giving by the Landlord of
notice of the Landlord's intention so to perform the same, provided, however,
that if the Tenant's default constitutes a default under any underlying lease or
underlying mortgage and the lessor or mortgagee thereof notifies the Landlord of
such default, then if the cure period afforded the Tenant extends beyond the
tenth (10th) day preceding the end of the cure period permitted to the Landlord
under the underlying lease or underlying mortgage, the Landlord may so notify
the Tenant, in which event the Landlord's right to cure the Tenant's default
will commence upon such tenth (10th) day. All costs and expenses incurred by the
Landlord in connection with any such performance by it for the account of the
Tenant and all costs and expenses, including reasonable counsel fees and
disbursements incurred by the Landlor in any action or proceeding (including any
summary dispossess proceeding) brought by the Landlord to enforce any obligation
of the Tenant under this Lease and/or right of the Landlord in or to the
Premises, shall be paid by the Tenant to the Landlord upon demand. Except as
expressly provided to the contrary in this Lease, all costs and expenses which,
pursuant to this Lease (including the rules and regulations referred to in this
Lease) are incurred by the Landlord and payable to it by the Tenant and all
charges, amounts and sums payable to the Landlord by the Tenant for any
property, material, labor, utility or other services which, pursuant to this
Lease or at the request and for the account of the Tenant, are provided,
furnished or rendered by the Landlord shall become due and payable by the Tenant
to the Landlord on the later of (i) thirty (30) days after receipt by the Tenant
of a bill from the Landlord or (ii) three (3) business days prior to the date
due to a third-party vendor. If any cost, expense, charge, amount or sum
referred to in this Section or elsewhere in this Lease is not paid when due as
provided
<PAGE>
in this Lease, the same shall become due by the Tenant as additional rent under
this Lease. If any Rent or damages payable under this Lease is not paid within
ten (10) days after the date (the "Due Date") when due, the same shall bear
interest at the rate per annum (except as specifically set forth below in this
Section 23.1) equal to the Prime Rate (as hereinafter defined) plus (x) two (2)
percentage points, during the period from the Due Date until the earlier to
occur of (i) the date that is thirty (30) days after the Due Date and (ii) the
date that such amount is paid, (y) four (4) percentage points during the period
from the thirty-first (31st) day after the Due Date until the earlier to occur
of (i) the date that is sixty (60) days after the Due Date and (ii) the date
that such amount is paid and (z) six (6) percentage points during the period
from the sixty-first (61st) day after the Due Date until the date that such
amount is paid (but in no event shall the interest payable under clause (x), (y)
or (z) above be in excess of that permitted by law), and the amount of such
interest shall be deemed additional rent under this Lease. If there is a
nonpayment by the Tenant of any such additional rent and/or any other additional
rent becoming due under this Lease, the Landlord, in addition to any other right
or remedy, shall have the same rights and remedies as in the case of default by
the Tenant in the payment of the fixed rent. If the Tenant is in arrears in
payment of Rent beyond any applicable notice and grace period provided for under
this Lease, the Tenant waives the Tenant's right, if any, to designate the items
against which any payments made by the Tenant are to be credited, and the
Landlord may apply any payments made by the Tenant to any items the Landlord
sees fit, irrespective of and notwithstanding any designation or request by the
Tenant as to the items against which any such payments shall be credited. The
Landlord reserves the right, without liability to the Tenant and without
constituting any claim of constructive eviction, to suspend furnishing or
rendering to the Tenant any property, material, labor, utility or other service,
wherever the Landlord is obligated to furnish or render the same at the expense
of the Tenant, in the event that (but only so long as) the Tenant is in arrears
in paying the Landlord therefor at the expiration of five (5) business days
after the Landlord shall have given to the Tenant notice demanding the payment
of such arrears; provided, however, that if (but only so long as) the Tenant is
disputing in good faith Tenant's obligation to pay all of such arrears, has paid
to the Landlord all amounts due for services which are not in dispute, and is
diligently prosecuting the resolution of such dispute, then the Landlord shall
not exercise such right to suspend services; provided further, however, that if
it is determined that the Tenant owes the Landlord all or any portion of the
amount in arrears, or if the Tenant ceases to dispute in good faith its
obligation to pay all or any portion of the amount in arrears, the Tenant shall
pay to the Landlord, upon demand (and with interest thereon a rate per annum
equal to the Prime Rate plus two (2) percentage points (but in no event in
excess of that permitted by law) from the date such amount was due to the date
such amount (with interest) is paid to the Landlord) any amount that is so
determined to be owed to the Landlord and any amount which the Tenant no longer
disputes in good faith; provided further, however, that, if it is determined
that the Landlord improperly billed the Tenant for a service and that the Tenant
has remitted payment to the Landlord for all or any portion of such improperly
billed amount, then the Landlord shall pay to the Tenant, upon demand, the
amount that is so determined to have been overpaid by the Tenant. As used in
this Lease, the term "Prime Rate" shall mean, for any period of time during the
term of this Lease, the then published prime interest rate for unsecured loans
charged by The Chase Manhattan Bank, (or Citibank if The Chase Manhattan Bank,
shall not then have an announced prime rate) on loans of 90 days.
<PAGE>
ARTICLE TWENTY-FOUR
(24.)Adjustments for Changes in Landlord's Costs and Expenses
24.1. If for any Computation Year, the R.E. Tax Share of the Real Estate
Taxes shall be greater than Base Real Estate Taxes, or 108% of the O.E. Share of
the Cost of Operation and Maintenance shall be greater than 108% of the Base
COM, then the Tenant shall pay to the Landlord, as additional rent, an amount
equal to the product obtained by multiplying such excess or excesses by the
Tenant's Area. In no event shall any payment by the Tenant in respect of (a)
Real Estate Taxes be due with respect to any period ending on or before June 30,
1999 and (b) the Cost of Operation and Maintenance be due with respect to any
period ending on or before December 31, 1999.
24.2. In order to provide for current payments on account of the
additional rent which may be payable to the Landlord pursuant to Section 24.1
for any Computation Year, the Tenant agrees to make such payments on account of
said additional rent for and during such Computation Year, as the case may be,
as follows:
(a) With respect to Real Estate Taxes, the Tenant shall pay its
share thereof in two semiannual installments in advance on the
twentieth (20th) day of June and December, each equal to the product
of the Tenant's Area, multiplied by one-half of the excess of the
R.E. Tax Share of the Real Estate Taxes for the Tax Year in which
the Landlord's corresponding tax payment falls over the Base Real
Estate Taxes, it being understood that if the tax bill for the
following Tax Year is not received in time to bill the June 20
payment, the Landlord may reasonably estimate the payment due on
June 20 based on the Landlord's reasonable estimate of the Real
Estate Taxes for such following Tax Year. If, upon issuance of the
tax bill for such following Tax Year (or upon such earlier date as
the Landlord shall have knowledge of the actual amount of such Real
Estate Taxes as finally determined by the applicable taxing
authorities), such estimated amount results in an underpayment, the
Tenant shall pay to the Landlord the amount of the underpayment. If,
upon issuance of the tax bill for such following Tax Year (or upon
such earlier date as the Landlord shall have knowledge of the actual
amount of such Real Estate Taxes as finally determined by the
applicable taxing authorities), such estimated amount results in an
overpayment, the Landlord shall, at the Tenant's election, either
pay to the Tenant an amount equal to the overpayment or permit the
Tenant a credit for such amount against future rent payments. If
there shall be any increase in Real Estate Taxes for any Tax Year,
whether during or after such Tax Year, or if there shall be any
decrease in the Real Estate Taxes for any Tax Year, whether during
or after such Tax Year, the Tenant shall pay its share of any
increase, or, to the extent the decrease does not reduce the R.E.
Tax Share of Real Estate Taxes below the Base Real Estate Taxes,
receive its share of any decrease, substantially in the same manner
as provided in the preceding two sentences. If during the term of
the Lease, eal Estate Taxes are required to be paid (to the
appropriate taxing authorities), on any other date or dates than as
presently required, then the Tenant's payments toward Real Estate
Taxes shall be
<PAGE>
correspondingly accelerated or revised so that such payments are due
at least ten (10) days prior to the date payments are due to the
taxing authorities. Upon the receipt by the Landlord of a written
request therefor from the Tenant within three (3) years after the
end of the applicable Tax Year, the Landlord shall provide to the
Tenant a copy of any tax bill for the Building requested by the
Tenant and in the Landlord's possession.
(b) With respect to Cost of Operation and Maintenance, the Tenant
shall pay an amount each month equal to the product of the Tenant's
Area multiplied by 1/12th of the excess of 108% of the O.E. Share of
the Cost of Operation and Maintenance for such Computation Year as
reasonably estimated by the Landlord (which estimate of the Cost of
Operation and Maintenance for such Computation Year shall not exceed
105% (or such higher percentage which the Landlord can reasonably
document) of the Cost of Operation and Maintenance for the
immediately preceding Computation Year) over 108% of the Base COM,
the installment for each calendar month to be due and payable upon
the receipt from the Landlord of a bill for the same. If, as finally
determined, the amount of additional rent payable by the Tenant to
the Landlord pursuant to this Subsection for such Computation Year
shall be greater than (resulting in an underpayment) or be less than
(resulting in an overpayment) the aggregate of all the installments
so paid on account to the Landlord by the Tenant for such
Computation Year, then, promptly after the receipt of the bill for
such Computation Year and, in performance of its obligations under
Section 24.1, the Tenant shall, in case of such an underpayment, pay
to the Landlord within thirty (30) days an amount equal to such
underpayment, or the Landlord shall, in case of such an overpayment,
at the Tenant's election, either pay to the Tenant within thirty
(30) days an amount equal to such overpayment or permit the Tenant a
credit for such amount against future rent payments.
24.3. As used in this Article:
(a) "Computation Year" shall mean each calendar year in which occurs
any part of the term of this Lease and, in the case of a Default
Termination of this Lease, in which would have occurred any part of
the full term of this Lease except for such Default Termination.
(b) "Tax Year" shall mean the twelve (12) month period commencing
July 1 of each year, or such other twelve (12) month period as may
be duly adopted as the fiscal year for real estate tax purposes in
The City of New York.
(c) "Tenant's Area" shall mean the number of square feet in the
rentable area of the Office Space, the Basement Space and the
Penthouse Space, as agreed upon by the parties and set forth in
Section 1.6 hereof.
(d) "R.E. Tax Share" shall mean a fraction whose numerator is one
and whose denominator is the number of square feet of the rentable
area of the Building.
<PAGE>
(e) "O.E. Share" shall mean a fraction whose numerator is one and
whose denominator is the number of square feet in the rentable area
of the Building. The parties agree that the Building currently
contains 2,497,153 rentable square feet for purposes of this
Article.
(f) "Real Estate Taxes" shall mean the taxes and assessments imposed
upon the Building, including without limitation assessments made as
a result of the Building or part thereof being within a business
improvement district, (other than any interest or penalties imposed
in connection therewith) and all expenses, including fees and
disbursements of counsel and experts, reasonably incurred by, or
reimbursable by, the Landlord in connection with any application for
a reduction in the assessed valuation for the Building or for a
judicial review thereof. Except as hereinafter provided, Real Estate
Taxes shall not be deemed to include (i) any taxes on the income of
the holder of an underlying mortgage and any taxes on the income of
the lessor under any underlying lease, (ii) any corporation,
unincorporated business or franchise taxes, (iii) any estate gift,
succession or inheritance taxes, (iv) any capital gains, mortgage
recording or transfer taxes, (v) any taxes or assessments
attributable to any sign attached to, or located on, the Building or
the Land or (vi) any similar taxes imposed on the Landlord, the
holder of any underlying mortgage or the lessor under any underlying
lease; provided, however, that if, due to a future change in the
method of taxation any tax of the type referred to in the foregoing
clauses (i)-(vi), or any other tax, shall be levied against the
Landlord in substitution in whole or in part for, or in lieu of, any
tax assessment, lien, or imposition which would otherwise constitute
a Real Estate Tax, such tax shall be deemed to be a Real Estate Tax
for the purposes of this Lease. Where the Real Estate Taxes are not
separately levied upon the Building and the Land but are included in
a blanket levy imposed upon or with respect to the Building and or
the Land as well as others or portions thereof, the amount of Real
Estate Taxes for the purposes of this Lease shall be determined by
allocation as follows: the amount of Real Estate Taxes for the
Building shall be deemed to be that amount which, in relation to the
total amount of said taxes for all buildings or portions thereof
included in said blanket levy, is in the same proportion as the
total rentable area of the Building bears to the total rentable area
of all the included buildings or portions thereof, and the amount of
Real Estate Taxes for the Land shall be deemed to be that amount
which, in relation to the total amount of said taxes for all land
included in said blanket levy, is in the same proportion as the
rentable area of the Building bears to the aggregate rentable area
of all buildings or portions thereof situated on said included
lands.
(g) "Cost of Operation and Maintenance" shall mean the actual cost
incurred by the Landlord or its affiliates in accordance with sound
management and accounting principles and practices generally
accepted (consistently applied) with respect to the ownership,
operation, maintenance and repair of the Building and the curbs and
sidewalks adjoining the same, including, without limitation,
<PAGE>
the cost incurred for air conditioning; mechanical ventilation;
heating; interior and exterior cleaning; rubbish removal; window
washing (interior and exterior, including inside partitions);
elevators; escalators; hand tools and other moveable equipment to
the extent same are not required to be capitalized in accordance
with good accounting practice; porter and matron service; electric
current, steam, water and other utilities; association fees and
dues; protection and security service; repairs; maintenance;
compliance with any Preservation Agreement to the extent same are
not required to be capitalized in accordance with good accounting
practice; fire, extended coverage, boiler, sprinkler, apparatus,
rental income, public liability and property damage insurance;
supplies; wages, salaries, disability benefits, pensions,
hospitalization, retirement plans and group insurance respecting
service and maintenance employees, building superintendents,
concierges, managers, their assistants and clerical staffs, and
persons engaged in supervision of the foregoing; uniforms and
working clothes for such employees and the cleaning thereof;
expenses imposed pursuant to any collective bargaining agreement
with respect to such employees; payroll, social security,
unemployment and other similar taxes with respect to such employees;
sales, use and other similar taxes; vault charges, except to the
extent the related vault space is leased to a third party; franchise
fees payable to New York City in connection with the concourse
levels of Rockefeller Center; water rates; sewer rents; charges of
any independent contractor who does any work with respect to the
operation, maintenance and repai of the Building and the curbs and
sidewalks adjoining the same; legal, accounting and other
professional fees; decorations; and the annual depreciation or
amortization over the useful life thereof of costs, including
reasonable financing costs, incurred for any equipment, device or
other capital improvement made or acquired which is either intended
as a laborsaving measure or to effect other economies in the
operation of the Building and said curbs and sidewalks (but only to
the extent that the annual benefits anticipated to be realized
therefrom are reasonably anticipated to exceed the annual amount to
be amortized) or which is required by any Requirement enacted after
the date hereof; provided, that the term "Cost of Operation and
Maintenance" shall not include (1) Real Estate Taxes, special
assessments, franchise, transfer, gains, inheritance, estate,
succession, gift, corporation, unincorporated business or gross
receipts taxes or taxes imposed upon or measured by the income or
profits of the Landlord, (2) except for depreciation and
amortization specifically provided for in this subsection, the cost
of any item, including, without limitation, any improvement, repair,
alteration, change, addition (including, without limitation, any
additions to, or additional stories on, the Building or its plazas,
or additional buildings or other structures adjoining the Building,
or connecting the Building to other structures adjoining the
Building), or replacement, which is, or should in accordance with
good accounting practice be, capitalized on the books of the
Landlord, including, without limitation, rental payments for any
equipment which, in accordance with good accounting practice, is
considered to be of a capital nature, (3) the cost of any
electricity furnished to the Premises or any other space in the
Building demised or
<PAGE>
available for lease to other tenants, (4) the cost of any work or
service performed for any tenant of space in the Building (including
the Tenant) at such tenant's cost and expense or in excess of
Building Standard, or work done prior to initial occupancy, and any
other contribution by the Landlord to the cost of tenant
improvements, or the cost of any work or service performed for any
tenant of space in the Building of a type which is not provided to
the Tenant (or which is provided to the Tenant, but at a separate or
additional charge), (5) any costs incurred with respect to any
theater or garage located in the Building, (6) advertising,
entertainment and promotional expenses, (7) all leasing commissions
and expenses of procuring tenants, including, without limitation,
lease concessions and take-over or take-back obligations, (8)
depreciation and amortization (except as otherwise provided above),
(9) interest on and amortization of det, (10) any ground rent or any
other payments payable under any lease to which this Lease is
subject, (11) any fines, late charges, interest and penalties on any
taxes, debt service and ground rent, (12) wages, fringe benefits and
salaries of employees over the rank of senior vice
president-operating (provided that the Landlord shall reasonably
apportion, if applicable, the wages, fringe benefits and salary of
such senior vice president-operating among or between the buildings
for which he or she is responsible and the amount apportioned to
buildings other than the Building shall not be included in the Cost
of Operation and Maintenance), (13) costs and expenses of lease
enforcement, including legal fees, (14) intentionally omitted, (15)
expenses resulting from any violation by the Landlord of the terms
of any lease of space in the Building or of any ground or underlying
lease or mortgage to which this Lease is subordinate, (16) amounts
received by the Landlord (through proceeds of insurance or
otherwise) to the extent they are compensation for sums previously
included in operating expenses, (17) amounts paid to any affiliate
of the Landlord for services and/or materials which is in excess of
the fair market price (it being understood that, upon the request of
the Tenant, the Landlord shall notify the Tenant of any contract for
services and/or materials between the Landlord and any such
affiliate), (18) costs incurred with respect to a sale or transfer
of all or any portion of the Building or any interest therein or in
any person or entity of whatever tier owning an interest therein,
(19) financing and refinancing costs, (20) intentionally omitted,
(21) costs for which the Landlord receives compensation through the
proceeds of insurance or for which the Landlord would have been
compensated by insurance had it carried the coverage required under
the Lease or for which the Landlord receives compensation from any
other source, (22) intentionally omitted, (23) legal fees, expenses
and disbursements incurred in connecton with leasing, sales,
financing or refinancing or disputes with tenants, (24) amounts
otherwise includable in the Cost of Operation and Maintenance but
reimbursed to the Landlord directly by the Tenant or other tenants
(other than through provisions similar to this Article Twenty-four),
(25) to the extent any costs includable in the Cost of Operation and
Maintenance are incurred with respect to both the Building and other
properties (including, without limitations, salaries, fringe
benefits and other compensation of the Landlord's personnel who
provide services to both the
<PAGE>
Building and other properties), there shall be excluded from the
Cost of Operation and Maintenance a fair and reasonable percentage
thereof which is properly allocable to such other properties, (26)
the cost of any judgment, settlement, or arbitration award resulting
from any liability of the Landlord (other than a liability for
amounts otherwise includable in the Cost of Operation and
Maintenance hereunder) and all expenses incurred in connection
therewith, (27) the cost of acquiring or replacing any separate
electrical meter the Landlord may provide to any of the tenants in
the Building, (28) costs relating to withdrawal liability or
unfunded pension liability under the Multi-Employer Pension Plan Act
or similar law, (29) the cost of installing, operating and
maintaining any specialty facility such as an observatory,
broadcasting facilities, luncheon club, athletic or recreational
club, child care or similar facility, cafeteria or dining facility
or conference center, (30) any compensation paid to clerks,
attendants or other persons in commercial concessions operated by
the Landlord, (31) costs of acquiring, leasing, restoring,
displaying, insuring or protecting (a) sculptures, (b) paintings and
(c) other objects of art located within or outside the Building,
except for the cost of routine maintenance of such objects in the
public areas in the Building, (32) expenditures for repairing and/or
replacing any defect in any work performed by the Landlord pursuant
to the provisions of this Lease, (33) costs incurred to remedy
violations of Requirements (including, without limitation, the
Americans with Disabilities Act or New York City local law 58/87)
that arise by reason of the Landlord's failure to construct,
maintain or opeate the Building or any part thereof in compliance
with such Requirements, other than such costs incurred in order to
achieve compliance with new Requirements (including any changes in
any Requirements) enacted after the date hereof which may be
amortized as provided in the definition of Cost of Operation and
Maintenance, (34) expenses allocable directly and solely to the
retail space of the Building (including, without limitation, plate
glass insurance), (35) intentionally omitted, (36) costs incurred in
connection with the acquisition or sale of air rights, transferable
development rights, easements or other real property interests, (37)
any insurance costs that are not customary for first-class office
buildings located in Manhattan and any increased insurance costs
reimbursed directly to the Landlord by a tenant, including, without
limitation, the Tenant, pursuant to their respective leases, (38)
costs incurred by the Landlord which result from a tenant's (other
than the Tenant) breach of a lease or the Landlord's tortious or
negligent conduct, (39) the cost of repairs or replacements or
restorations by reason of fire or other casualty or condemnation,
(40) costs and expenses incurred by the Landlord in connection with
any obligation of the Landlord to indemnify any tenant of the
Building (including the Tenant) pursuant to its lease or otherwise,
(41) the cost paid or incurred in connection with the removal,
replacement, enclosure, enclosure, encapsulation or other treatment
of any substances in the Building which constitute hazardous
substances as of the date of this Lease, (42) all costs incurred by
the Landlord in respect of modifications or upgrades to the
Landlord's computer hardware or software systems required for the
proper functioning of the Landlord's computer systems for, or with
<PAGE>
respect to, the year 2000 and thereafter, (43) the cost of
electricity and overtime heating, ventilating and air conditioning
furnished to any rentable space in the Building, whether or not
leased to tenants, and (44) costs(including, without limitation, any
taxes or assessments) incurred in connection with any sign attached
to, or located on, the Land or the Building. If during any period
for which the Cost of Operation and Maintenance is being computed,
including the Computation Years used to calculate the Base COM, the
Landlord is not for all or any part of such period furnishing any
particular work or service (the cost of which if performed by the
Landlord would constitute a Cost of Operation and Maintenance) to a
portion of the Building due to the fact that such portion is not
leased to a tenant or that the Landlord is not obligated to perform
such work or service in such portion, then the amount of the Cost of
Operation and Maintenance for such period shall be deemed, for the
purposes of this Article, to be increased by an amount equal to the
additional Cost of Operation and Maintenance which would reasonably
have been incurred during such period by the Landlord if it had
furnished such work or service. The Landlord, upon request by the
Tenant, shall specifically identify all amounts which are "grossed
up" in each Computation Year pursuant to the immediately preceding
sentence and, upon request, provide the Tenant with reasonable
back-up for such gross-up.
(h) "Base Real Estate Taxes" shall mean the R.E. Tax Share of the
Real Estate Taxes for the Tax Year commencing on July 1, 1998 and
ending on June 30, 1999.
(i) "Base COM" shall mean the O.E. Share of the Cost of Operation
and Maintenance for the Computation Year commencing on January 1,
1999 and ending on December 31, 1999.
24.4. If the term commencement date shall be a day other than a January 1
or the date fixed for the expiration of the full term of this Lease shall be a
day other than December 31, or if there is any abatement of the fixed rent
payable under this Lease or any termination of this Lease (other than a Default
Termination), or if there is any increase or decrease in the Tenant's Area, then
in each such event in applying the provisions of this Article Twenty-four with
respect to any Tax Year or Computation Year in which such event occurred,
appropriate adjustments shall be made (which, in the case of any such abatement
of fixed rent, shall include an abatement of additional rent payable pursuant to
this Article Twenty-four) to reflect the result of such event on a basis
consistent with the principles underlying the provisions of this Article, taking
into consideration (a) the portion of such Tax Year or Computation Year, as the
case may be, which shall have elapsed prior to or after such event, (b) the
rentable area of the Office Space affected thereby, and (c) the duration of such
event.
24.5. The Tenant shall not (and hereby waives any and all rights it may
now or hereafter have to) institute or maintain any action, proceeding or
application in any court or
<PAGE>
other body having the power to fix or review assessed valuations, for the
purpose of reducing the Real Estate Taxes.
24.6. In the event the Landlord fails to bill the Tenant for Tenant's
share of Real Estate Taxes or Cost of Operation and Maintenance by the time such
amounts would otherwise be due and payable hereunder, the Tenant shall pay the
amount most recently billed for the item in question, subject to subsequent
adjustment to reflect the correct amount due.
24.7. When requested by the Tenant within nine (9) months following the
receipt by it of any Escalation Statement, the Landlord, in substantiation of
its determination of the amounts set forth in said Escalation Statement, will
furnish to the Tenant such additional information as reasonably may be required
by the Tenant for such purpose, and, as may be reasonably necessary for the
verification of such information, will permit the pertinent records of the
Landlord (i.e., the records relating to the particular items of Cost of
Operation and Maintenance under review by the Tenant the year in question and
the two (2) prior years (including, if applicable, the two (2) prior years
preceding the earliest year being utilized to determine the Base COM)) to be
examined and copied by an officer of the Tenant or by the Tenant's Audit
Representative (as hereinafter defined), as the Tenant may designate (subject
however, to the execution of a confidentiality agreement by the Tenant and its
Audit Representative in form reasonably acceptable to the Landlord); it being
expressly understood that the Landlord shall be under no duty to preserve any
such records, or any data or material related thereto, beyond such time as shall
be its customary practice with respect thereto (which at the present time is
three (3) years). For purposes of this Article Twenty-four: (a) "Escalation
Statement" shall mean a final statement setting forth the amount payable by the
Tenant or the Landlord, as the case may be, for a specified Computation Year
pursuant to this Article Twenty-four; and (b) "Audit Representative" shall mean
an independent and reputable, certified public accounting firm, which firm is
not being compensated by the Tenant for its services on a contingency or success
fee basis, and which shall employ only certified public accountants who are
full-time, regular employees of such firm in connection with such verification.
ARTICLE TWENTY-FIVE
(25.)Miscellaneous
25.1. If upon the request of the Tenant the Landlord shall consent to the
omission or removal of any part of, or the insertion of any door (other than to
a public corridor) or other opening in, any wall separating the Premises from
other space adjoining the Premises, then (a) the Tenant shall be deemed to have
assumed responsibility for all risks (including, without limitation, damage to,
or loss or theft of, property) incident to the use of said door or other opening
or the existence thereof, and shall indemnify and save the Indemnitees harmless
from and against any claim, demand or action for, or on account of, any such
loss, theft or damage, and (b) upon the expiration or termination of this Lease
or any lease of said adjoining space, the Landlord may enter the Premises and
close up such door or other opening by erecting a wall to match the wall
separating the Premises from said adjoining space, and the Tenant shall pay the
reasonable cost thereof and, subject to Section 6.1(c) above, such work may be
done during Business Hours and while the Tenant is in occupancy of the Premises
and the Tenant shall not
<PAGE>
be entitled to any abatement of fixed rent or other compensation on account
thereof; provided, that nothing shall be deemed to vest the Tenant with any
right or interest in, or with respect to, said adjoining space, or the use
thereof, and the Tenant hereby expressly waives any right to be made a party to,
or to be served with process or other notice under or in connection with, any
proceeding which may hereafter be instituted by the Landlord for the recovery of
the possession of said adjoining space.
25.2. Without incurring any liability to the Tenant and upon notice to the
Tenant as soon as may be reasonably practicable under the circumstances (whether
prior to or thereafter), the Landlord may permit access to the Premises or any
of the Licensed Spaces and open the same, whether or not the Tenant shall be
present, upon demand of any receiver, trustee, assignee for the benefit of
creditors, sheriff, marshal or court officer entitled to, or reasonably
purporting to be entitled to, such access for the purpose of taking possession
of, or removing, the Tenant's property or for any other purpose (but this
provision and any action by the Landlord hereunder shall not be deemed a
recognition by the Landlord that the person or official making such demand has
any right or interest in or to this Lease, or in or to the Premises or any of
the Licensed Spaces), or upon demand of any representative of the fire, police,
building, sanitation or other department of the city, state or federal
government.
25.3. If an excavation shall be made upon any land adjacent to the
Building, or shall be authorized to be made, the Tenant shall afford to the
person causing or authorized to cause such excavation a license to enter upon
the Premises for the purpose of doing such work as said person shall deem
necessary to preserve the Building from injury or damage, all without any claim
for damages or indemnity against the Landlord or diminution or abatement of
rent.
25.4. The headings of the Articles of this Lease are for convenience only
and are not to be considered in construing said Articles.
25.5. As used in this Section, the term "facility" means stores,
restaurants, cafeterias, rest rooms, and any other facility of a public nature
in the Building. The Tenant will not discriminate by segregation or otherwise
against any person or persons because of race, creed, color, sex (except as
appropriate in the case of rest rooms) or national origin in furnishing, or by
refusing to furnish, to such person or persons the use of any facility in the
Premises, including any and all services, privileges, accommodations, and
activities provided thereby. The Tenant's noncompliance with the provisions of
this Section shall constitute a material breach of this Lease. In the event of
such noncompliance, the Landlord may take appropriate action to enforce
compliance, may terminate this Lease in accordance with the provisions of this
Lease, or may pursue such other remedies as may be provided by law. In the event
of termination, the Tenant shall be liable to the Landlord for damages in
accordance with the provisions of this Lease.
25.6. If the Tenant holds-over in the Premises after the expiration or
termination of this Lease without the consent of the Landlord, the Tenant shall
pay as hold-over rental (a) for each of the first three (3) months of the
hold-over tenancy, an amount equal to 125% of the Rent which Tenant was
obligated to pay for the month immediately preceding the expiration or
termination of this Lease and (b) for each month after the first three (3)
months of the hold-over
<PAGE>
tenancy, an amount equal to the greater of (i) 150% of the fair market rental
value of the Premises for such month and (ii) 150% of the Rent which Tenant was
obligated to pay for the month immediately preceding the expiration or
termination of this Lease; provided, however, that, subject to the provisions of
Section 25.12 below, nothing in the foregoing provisions of this Section 25.6
shall be construed to limit or preclude any other rights or remedies available
to the Landlord at law or in equity by reason of such holding-over by the
Tenant, including, without limitation, the recovery by the Landlord against the
Tenant of any sums or damages to which, in addition to the damages specified
above, the Landlord may lawfully be entitled. No holding-over by the Tenant, nor
the payment to the Landlord of the amounts specified above, shall operate to
extend the term of this Lease.
25.7. Any obligation of the Landlord or the Tenant which by its nature or
under the circumstances can only be, or by the provisions of this Lease may be,
performed after the expiration or earlier termination of this Lease, and any
liability for a payment which shall have accrued to or with respect to any
period ending at the time of such expiration or termination, unless expressly
otherwise provided in this Lease, shall survive the expiration or earlier
termination of this Lease.
25.8. If any provision of this Lease or the application thereof to any
person or circumstance shall, to any extent, be invalid or unenforceable, the
remainder of this Lease, or the application of such provision to persons or
circumstances other than those as to which it is invalid or unenforceable, shall
not be affected thereby, and each provision of this Lease shall be valid and be
enforced to the fullest extent permitted by law.
25.9. It is the intention of the Landlord and the Tenant to create the
relationship of landlord and tenant, and no other relationship whatsoever, and
nothing herein shall be construed to make the Landlord and the Tenant partners
or joint venturers, or to render either party hereto liable for any of the debts
or obligations of the other party.
25.10. The Landlord and the Tenant acknowledge that (i) improvements
(including Fixtures) made or installed by the Tenant in the Premises do not
constitute consideration for the granting of this Lease to the Tenant and (ii)
there has been no adjustment in the fixed or additional rent payable under this
Lease on account of such improvements (including Fixtures).
25.11. If there is any payment required to be made by the Tenant under
this Lease for which no time period is stated within which the payment must be
made, or where this Lease requires any payment to be made "upon demand", such
payment shall be made within thirty (30) days after demand by the Landlord.
25.12. Notwithstanding anything contained in this Lease to the contrary,
in no event shall either the Landlord or the Tenant be liable to the other for
consequential damages.
25.13. Wherever this Lease specifically provides for a dispute to be
resolved in accordance with the expedited dispute resolution procedure set forth
in this Section 25.13, such dispute shall, at either party's option, be resolved
and finally determined by arbitration
<PAGE>
conducted in the City and County of New York in accordance with the rules of the
AAA (as defined in Section 33.4.1) and the following provisions of this Section
25.13:
(a) Within five (5) business days following the giving of any notice
by the Landlord or the Tenant stating that it wishes such dispute to
be so resolved, the parties shall attempt to agree on a single
arbitrator (the "Single Arbitrator"). The Single Arbitrator shall be
a qualified, disinterested and impartial person who shall have had
at least 10 years experience in New York City in a calling related
to the subject matter of the dispute. If the parties are unable to
agree on the Single Arbitrator within such five (5) business day
period, either party, upon notice to the other party, may request
the AAA to appoint the Single Arbitrator meeting the foregoing
requirements. If the AAA shall refuse to appoint the Single
Arbitrator or fail to do so within five (5) after the request, or if
there shall be no AAA in existence, either party hereto, on behalf
of both, may apply for the appointment of the Single Arbitrator to
the President of the Bar Association of the City of New York or, if
said President does not appoint the Single Arbitrator within
ten (10) days of such application, to the Supreme Court in the
County of New York, and the other party shall not raise any
objection as to said President's or the Court's full power and
jurisdiction to entertain the application and make such appointment.
(b) The Single Arbitrator shall be directed to reach a written
decision within ten (10) business days following his or her
appointment. The Landlord and the Tenant shall each have the right
to appear and be represented by counsel before the Single Arbitrator
and to submit such data and memoranda in support of their respective
positions in the matter in dispute as they may deem necessary or
appropriate in the circumstances. The Single Arbitrator, in
rendering his or her decision, shall not add to, subtract from or
otherwise modify the provisions of this Lease. The Single
Arbitrator's decision, determined as provided in this Section 25.13,
shall be conclusive and binding on the parties, shall constitute an
"award" by the Single Arbitrator within the meaning of AAA rules and
judgment may be entered thereon in any court of competent
jurisdiction.
(c) Each party shall pay its own counsel fees and expenses, if any,
in connection with any arbitration under this Section 25.13 (unless
the Single Arbitrator shall have awarded counsel fees and expenses
to the prevailing party upon a finding of bad faith by the other
party), and the parties shall share all other expenses and fees of
any such arbitration (unless the Single Arbitrator shall have
directed that one party pay such expenses and fees upon a finding of
bad faith by such party).
25.14. Whenever this Lease shall provide that Landlord or Tenant shall pay the
out-of-pocket costs of the other party, such out-of-pocket costs shall be
reasonable.
25.15. Anything in this Lease to the contrary notwithstanding, CD Radio, the
Tenant named herein, shall be permitted to install signage in the elevator
lobbies on each floor of the Office Space without the Landlord's prior written
consent, provided that such signage shall be
<PAGE>
consistent with the quality of the signage installed by multi-floor tenants in
the elevator lobbies on floors in the Building on which such tenants are the
sole occupants.
25.16. In the case of any conflict between the provisions of this Lease and the
exhibits attached hereto, the provisions of this Lease shall control.
ARTICLE TWENTY-SIX
(26.)Security
26.1. The Tenant has deposited, and shall maintain on deposit with
Landlord at all times during the term of this Lease, one or more clean,
unconditional, irrevocable letter(s) of credit (each a "Deposit L/C" and
collectively, the "Deposit L/Cs") having an aggregate value at all times equal
to or greater than the Required Amount (as defined in Section 26.3 below) as
security for the full and faithful keeping, observance and performance of all of
the covenants, agreements, terms, provisions and conditions of this Lease
required to be kept, observed or performed by the Tenant (expressly including,
without being limited to, the payment as and when due of the fixed rent,
additional rent, percentage rent, if any, and any other sums or damages payable
by the Tenant under this Lease) and the payment of any and all other damages for
which the Tenant shall be liable by reason of any act or omission contrary to
any of said covenants, agreements, terms, provisions or conditions. Every
Deposit L/C shall be issued by a bank which is a member of the New York Clearing
House Association with offices for banking purposes in the City of New York,
having a net equity or combined capital and surplus of not less than One Billion
and 00/100 Dollars ($1,000,000,000.00), and which bank is reasonably acceptable
to the Landlord and every Deposit L/C shall be substantially in the form of the
letter of credit attached hereto as Exhibit D and made a part hereof. If any
Deposit L/C provides that the amount drawable thereunder shall cease to be
available on a date prior to the date which is six (6) months after the
expiration of the Term of this Lease, or if the issuing bank shall give written
notice to the Landlord that it will not extend such Deposit L/C for an
additional twelve (12) months beyond the then current expiry date, the Tenant
shall, at least thirty (30) days prior to the date specified in such Deposit L/C
as being the date on which such drawable amount will cease to be available, or
the then current expiry date, as the case may be, either furnish to the Landlord
a renewal or extension of such Deposit L/C or a new Deposit L/C. Failure to
comply with the provisions of the preceding sentence prior to the commencement
of any such thirty (30) day period, shall constitute a default under this Lease
and the Landlord may, at any time during such thirty (30) day period, draw upon
such Deposit L/Cs and retain as a cash deposit hereunder the amount so drawn. If
at any time the Tenant shall be in default in the payment as aforesaid of any
fixed rent, additional rent and/or any other sums or damages or shall otherwise
be in default in the keeping, observance or performance of any of the covenants,
agreements, terms, provisions or conditions of this Lease beyond the applicable
notice and grace periods set forth in this Lease, then the Landlord, at the
Landlord's election, may draw upon the Deposit L/Cs to the extent required for
the payment of the fixed rent, additional rent, other sums or damages in respect
of which the Tenant is so in default and/or, if the Tenant is otherwise in
default in the keeping, observing or performing as aforesaid of any of the
covenants, agreements, terms, provisions or conditions of this Lease, the
Landlord may draw upon the Deposit L/Cs to the extent required for the payment
of such costs and expenses
<PAGE>
as the Landlord shall incur in curing any such default without relieving the
Tenant of its obligation to the extentthe funds available under the Deposit L/Cs
are inadequate. If the Landlord shall so draw upon any Deposit L/C, the Tenant
shall, upon demand, immediately deposit with the Landlord a new Deposit L/C in
an amount equal to the amount so drawn. If, at any time after the payment by the
Tenant to the Landlord of any amounts required to be paid by the Tenant under
this Lease, the Landlord is required to return or repay to the Tenant, for any
reason in connection with the bankruptcy or insolvency of the Tenant, any fixed
rent or additional rent, or any other sums paid by the Tenant to the Landlord
under this Lease, then, at the Landlord's election, the Deposit L/Cs may be
drawn upon and the proceeds thereof applied by the Landlord to offset all or any
portion of the amounts so returned or repaid. If the Tenant shall fully and
faithfully pay, perform and observe all of the covenants and obligations to be
paid, performed and/or observed on the part of the Tenant under this Lease, all
of the Deposit L/Cs shall be returned to the Tenant in accordance with the
provisions of Section 26.2(d) below after the expiration of the term of this
Lease and delivery to the Landlord of possession of the Premises and the
Licensed Spaces in accordance with the provisions of Section 6.1(h) of this
Lease and payment by the Tenant of its obligations under Section 4.1 above, if
any, to remove the Salvageable Fixtures designated by the Landlord from the
Premises and/or the Licensed Spaces. The provisions of this Article Twenty-six
relating to periods after the expiration or earlier termination of this Lease
shall survive the expiration or earlier termination of this Lease.
26.2. (a) The term "Required Amount" as used in this Article Twenty-six
shall mean $6,250,000, for the period from the date hereof until the third (3rd)
anniversary of the term commencement date, thereafter, reducing as follows:
(i) In each year during the term of this Lease, from and
after the third (3rd) anniversary of the term
commencement date, that the Tenant's Gross Revenues (as
hereinafter defined) equal or exceed $200,000,000 but
are less than $350,000,000, the Required Amount shall be
reduced by $1,000,000, but in no event shall the
Required Amount ever be less than $2,000,000.
(ii) If, in any year during the term of this Lease from and
after the third (3rd) anniversary of the term
commencement date, the Tenant's Gross Revenues equal or
exceed $350,000,000, the Required Amount shall be
reduced to $2,000,000.
(iii) From and after the date which is thirty (30) days after
the later to occur of the expiration of the term of this
Lease and the date upon which the Tenant shall have
delivered to the Landlord possession of the Premises and
the Licensed Spaces in accordance with the provisions of
Section 6.1(h) of this Lease, the Required Amount shall
be reduced to $250,000.
(b) Anything in this Section 26.2 or elsewhere in this Lease to the
contrary notwithstanding, if, at any time during the term of this Lease (i) the
Tenant shall default in observing any provision of that certain indenture
agreement for 15% senior secured discount
<PAGE>
notes due December 1, 2007, dated as of November 26, 1997 and issued by CD Radio
Inc. to IBJ Schroder Bank and Trust Company (the "Indenture") or (ii) the
satellite radio broadcast license granted to the Tenant by the Federal
Communications Commission ("FCC") on October 10, 1997 is transferred by the
Tenant (other than to an Assignee), revoked by the FCC or otherwise limited or
invalidated, the reductions in the Required Amount provided for in Section
26.2(a) above shall cease until such time as the default under the Indenture is
cured and/or such license is fully reinstated or replaced by the FCC with
another satellite radio broadcast license of at least equal scope and utility .
(c) As used in this Article Twenty-six: (i) "Gross Revenues" shall
mean for any period, all revenues from the operations of the Tenant during such
period, determined in accordance GAAP, as verified in a sworn statement of the
chief financial officer of the Tenant, or as certified by an independent
certified public accountant reasonably acceptable to the Landlord, delivered to
the Landlord together with all supporting documentation reasonably requested by
the Landlord, provided, however, that in no event shall Gross Revenues include
(i) any gain arising from any writeup of assets, (ii) any loan proceeds,
(iii) proceeds or payments under insurance policies (other than proceeds or
payments for business interruption), (iv) gross receipts earned by licensees,
concessionaires or similar third parties except for any portion of such receipts
which are shared by the Tenant, (v) condemnation proceeds or sales proceeds in
lieu of and/or under threat of condemnation, (vi) refunds, rebates, discounts,
credits, etc. which are paid, retained or received by the Tenant, or (vii) any
other extraordinary items which are received by the Tenant other than in the
ordinary course of the Tenant's business; and (ii) "GAAP" shall mean generally
accepted accounting principles in the United States of America in effect from
time to time, applied on a consistent basis both as to classification of items
and amounts.
(d) If, as a result of any reduction in the Required Amount, the
Landlord is holding Deposit L/Cs in an aggregate amount that exceeds the
Required Amount, the Landlord shall return to the Tenant the Deposit L/Cs then
held by the Landlord in exchange for new Deposit L/Cs, so that thereafter the
Landlord shall hold Deposit L/Cs in an aggregate amount equal to the Required
Amount. If at any time the aggregate amount of the Deposit L/Cs then held by the
Landlord shall be less than the Required Amount, the Tenant shall forthwith
deposit with the Landlord one or more additional Deposit L/Cs in an aggregate
amount equal to the deficiency.
ARTICLE TWENTY-SEVEN
(27.)Brokerage Commission
27.1. Each party represents to the other that the only brokers with which
it has dealt in connection with this Lease are Rockefeller Center Management
Corporation and The Staubach Company of New York, LLC (collectively, the
"Brokers"). Each party shall indemnify and save harmless their respective
Indemnitees from and against all liability, claims, suits, demands, judgments,
costs, interest and expenses (including reasonable counsel fees and
disbursements incurred in the defense thereof) arising out of any claim for
commission or other compensation made by a broker claiming through the
indemnifying party (except, that Tenant
<PAGE>
shall not be liable for any claim made by the Brokers). The Landlord shall be
obligated to pay any commissions owing to the Brokers pursuant to a separate
agreement between Landlord and each of the Brokers.
ARTICLE TWENTY-EIGHT
(28.)Quiet Enjoyment
28.1. Provided that the Tenant is not in default under this Lease beyond
any applicable notice and grace period, the Landlord covenants that the Tenant
shall quietly enjoy the Premises without hindrance or molestation by the
Landlord or by any other person lawfully claiming the same, subject, however, to
the provisions of this Lease.
ARTICLE TWENTY-NINE
(29.)Hazardous Substances
29.1. The Tenant shall not (a) cause or permit to be brought onto the Land
or into the Building or the Premises any hazardous substances, (b) cause or
permit the storage or use of any hazardous substances in or about the Premises
or any part thereof, or (c) cause or permit the escape, disposal or release of
any hazardous substances in, on or in the vicinity of the Building or the Land;
provided, that nothing herein shall prohibit the Tenant's use of small
quantities of hazardous substances customarily used by tenants of office space
similar to the Premises in the ordinary course of office operations if such use
is in fact for such ordinary course of office operations and is in compliance
with all Requirements and the provisions of this Lease and otherwise in a safe
and secure manner.
29.2. "Hazardous substances" are (i) any "hazardous wastes" as defined by
the Resource, Conservation and Recovery Act of 1976 (42 U.S.C. Section 6901 et
seq.), as amended, and regulations promulgated thereunder; (ii) any "hazardous,
toxic or dangerous waste, substance or material" specifically defined as such in
(or for purposes of) the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 (42 U.S.C. Section 9601 et seq.), as amended, and
regulations promulgated thereunder; and (iii) any hazardous, toxic or dangerous
chemical, biological or other waste, substance or material as defined in any
so-called "superfund" or "superlien" law or any other federal, state or local
statute, law, ordinance, code, rule, regulation, order or decree regulating,
relating to or imposing liability or standards of conduct concerning such waste,
substance or material; including, without limiting the generality of the
foregoing, asbestos, radon, urea formaldehyde, polychlorinated biphenyls, and
petroleum products including gasoline, fuel oil, crude oil and various
constituents of such products. Without limiting the generality of Section 6.1(j)
hereof, the Tenant agrees that the covenants and warranties contained in this
Article are included within the matters as to which the Indemnities shall be
indemnified pursuant to said Section 6.1(j).
29.3. The covenants contained in this Article shall survive the expiration
or earlier termination of this Lease.
<PAGE>
ARTICLE THIRTY
(30.)Asbestos: Inspection and Removal
30.1. With respect to the Initial Tenant Alterations of each floor of the
Premises constituting a part of the Office Space (if the Landlord shall not
theretofore have delivered the same to the Tenant in satisfaction of the Term
Commencement Conditions), the Landlord shall, within one (1) business day after
the later to occur of (a) the date on which the Landlord shall have consented to
the final Working Drawings for the Initial Tenant Alterations of the Office
Space and (b) the date on which the Landlord satisfies the asbestos removal Term
Commencement Condition set forth in Paragraph 3 of Exhibit B attached hereto,
furnish to the Tenant an ACP-5 Form with respect to such Initial Alterations
sufficient to permit the Tenant to prosecute such Initial Tenant Alterations in
the Office Space as an "asbestos-free" project, provided that such final Working
Drawings shall not provide for any work to be performed behind any perimeter
induction units, within any perimeter walls or within any columns or shafts in
any part of the Premises or the core of the Building, including, without
limitation, pipe and conveyor shafts and minor areas of non-friable
asbestos-containing fireproofing at certain points on inaccessible structural
members. If the Landlord is unable to deliver an ACP-5 Form for the Initial
Tenant Alterations to the Office Space because such final Working Drawings
affect asbestos-containing areas outside of the Office Space, then the
provisions of Section 30.2.1 et seq. shall apply. The Tenant's submission of
such final Working Drawings in accordance with Section 31.1 and Section 6.2
shall prominently include in bold type the following notice:
"IF THE LANDLORD SHALL FAIL TO DELIVER THE
REQUIRED ACP5 FORM WITHIN THE TIME PERIOD
PROVIDED IN SECTION 30.1 OF THE LEASE, THE
TENANT MAY BE ENTITLED TO AN ABATEMENT OF
FIXED RENT"
If the Tenant's submission of such final Working Drawings shall include such a
notice and if the Landlord shall fail to deliver an ACP-5 Form with respect to
any such initial Alterations within the required time period, then, in addition
to any other abatements of fixed rent provided in this Lease, the fixed rent
payable hereunder with respect to the Office Space shall be abated in an amount
equal to one (1) day's fixed rent for each day after the expiration of such time
period that the Landlord fails to deliver the required ACP-5 Form. If the
Tenant's submission shall not include such a notice, then the Tenant shall not
be entitled to such abatement for any period prior to the day which is one (1)
business day after the date on which the Tenant shall subsequently give such a
notice.
30.2.1. Prior to the commencement of any demolition work or construction work
(other than construction of the Initial Tenant Alterations of the Office Space)
in any portion of the Premises or any of the Licensed Spaces, the Tenant, at its
sole cost and expense, shall cause a reputable New York City certified asbestos
investigator, selected by the Tenant and reasonably acceptable to the Landlord,
to conduct an inspection of the affected portion of the Premises (other than
behind any perimeter induction units, within any perimeter walls, or within any
columns or
<PAGE>
shafts) for the purpose of detecting the presence of asbestos therein and
determining whether any such asbestos is required to be removed therefrom or
remediated therein in connection with the demolition of any existing
improvements and/or the construction of any Alterations.
30.2.2. If the report with respect to any asbestos inspection conducted in
accordance with Section 30.2.1 above indicates no presence of asbestos, or that
no removal or remediation is required to be performed in connection with such
demolition and with the construction of the Tenant's proposed Alterations, the
Tenant, at its sole cost and expense (subject to the provisions of Section
30.5(a) below), shall obtain and furnish to the Landlord a properly executed
ACP-5 Form for the affected portion of the Premises to the effect that no
asbestos removal or remediation is required to be performed in a such space in
connection with such demolition or with the construction of the proposed
Alterations. If the report with respect to any asbestos inspection conducted in
accordance with Section 30.2.1 above indicates that asbestos removal or
remediation is required to be performed in such space, the Landlord, at the
Landlord's sole cost and expense with respect to any asbestos (other than
asbestos introduced into the Premises by any Tenant Party), in the Office Space
(other than behind any perimeter induction units, within any perimeter walls, or
within any columns or shafts), and at the Tenant's sole cost and expense with
respect to any asbestos in any other portion of the Premises or in any of the
Licensed Spaces indicated in such report, shall initiate an ACP-7 Form and shall
perform all required asbestos removal and/or remediation in compliance with all
Requirements. Except as mandated by Requirements, the Landlord shall not be
required to remove or remediate any asbestos located behind perimeter induction
units, within any perimeter walls, within any columns, or within any shaft area
in the core, including, without limitation, pipe and conveyor shafts and minor
areas of non-friable asbestos containing fireproofing at certain points on
inaccessible structural members and, except as mandated by Requirements, any
asbestos located in such areas may be encapsulated; provided, however, that all
other asbestos shall be removed. Promptly upon completion of any required
asbestos removal and/or remediation, the Landlord shall notify the Tenant and
shall deliver to the Tenant (a) a clean air certification issued by a licensed
independent testing laboratory (i.e., one that is not affiliated in any way with
the entity performing the asbestos removal work) certifying that the level of
airborne asbestos in the affected portion of the Premises and/or the Licensed
Spaces is at or below the maximum level permitted by applicable Requirements,
and (b) an ACP-5 Form sufficient to permit the Tenant to commence the proposed
demolition and Alterations as an "asbestos free" project. Within ten (10) days
after receipt of the Landlord's demand therefor, which shall state with
reasonable specificity how the Landlord calculated the same, the Tenant shall
pay to the Landlord, as additional rent, the Tenant's share of the cost of the
asbestos removal and/or remediation.
30.3. In connection with any required asbestos removal and/or remediation
required to be performed by the Landlord, at the Landlord's cost and expense, in
the Office Premises in accordance with the provisions of Section 30.2.1 and
Section 30.2.2 above, the fixed rent with respect to the portion of the Office
Space in which such removal and/or remediation work is performed shall be abated
one (1) day for each day during the period commencing on the earlier to occur of
(a) the date on which the Tenant reasonably determines that such portion of the
Office Space is untenantable by reason of the health hazard created by the
existence of such asbestos and the Tenant actually ceases to use and occupy such
portion of the Office Space, and (b) the date on which the Landlord commences
such removal and/or remediation work in the
<PAGE>
affected portion of the Office Space, and ending on the date on which the
Landlord shall obtain (or with the exercise of reasonable diligence in the
performance of such work would have obtained but for the occurrence of any delay
in the performance of such work which shall be due to any act or omission of the
Tenant or any Tenant Party) an ACP5 Form sufficient to permit the Tenant to
commence the demolition and/or construction of the affected portion of the
Office Space as an "asbestos free" project. The abatement provided for in this
Section 30.3 shall be the Tenant's sole remedy in the event that asbestos shall
be required to be removed and/or remediated in the Office Space; provided,
however, that the foregoing shall not limit the right of any person to assert a
claim against the Landlord for any injury arising from exposure to asbestos in
the Office Space, other than asbestos introduced into the Premises by any Tenant
Party.
ARTICLE THIRTY-ONE
(31.)Work by Tenant
31.1. Provided that the Tenant shall have obtained the Landlord's prior
written consent thereto, and shall otherwise have complied with the provisions
of this Lease (including, without limitation, Section 6.1(e) and Section 6.2),
the Tenant may perform such Alterations in the Premises and to the Licensed
Spaces as shall be desired by the Tenant (consistent with the design,
construction and equipment of the Building and in conformity with its standards)
to prepare the same for the Tenant's use and occupancy thereof and for the
conduct of the Tenant's business therein (such Alterations being herein called
the "Initial Tenant Alterations"). The Initial Tenant Alterations shall include,
but shall not be limited to: (a) the installation of a sprinkler fire
suppression system (including the main sprinkler loop and all branch work and
other distribution required by all Requirements) on each floor (including all
bathrooms and service areas) of the Premises constituting the Office Space, (b)
the Bathroom Work and (c) the Call Button Work. The Working Drawings for the
Initial Tenant Alterations shall be prepared by (i) HLW International LLP and
Edwards and Zuck, P.C., each of whom the Landlord hereby confirms is acceptable
to the Landlord, or (ii) another Acceptable Architect.
31.2. The workmen and the contractors performing the Initial Tenant
Alterations and the manner, terms and conditions upon which the same is
performed shall be reasonably satisfactory to and consented to by the Landlord.
The work shall at all times comply with (a) all Requirements and (b) with the
reasonable rules and regulations of the Landlord dated January, 1997 (a copy of
which has been delivered to the Tenant) pertaining to the performance thereof.
31.3. Within sixty (60) days after the substantial completion of the
Initial Tenant Alterations, the Tenant shall deliver to the Landlord (a) general
releases and waivers of lien from each contractor, subcontractor and materialman
who shall have performed work and/or furnished the materials for a price in
excess of $50,000 in the aggregate, (b) a certificate from the Tenant's
architect certifying that the work has been substantially completed in
accordance with all applicable rules and regulations, Requirements and the
Working Drawings, and (c) either (i) a detailed list of completed work and
copies of paid bills certified by an officer of the Tenant reasonably acceptable
to the Landlord and a certificate signed by the Tenant's general contractor
stating that all contractors, subcontractors and materialmen have been paid for
all
<PAGE>
work and materials furnished through such date, or (ii) an AIA Form G-702/703
certified by the Tenant's general contractor and reasonably acceptable to the
Landlord. Notwithstanding the foregoing, but in all events subject to the
Tenant's obligation to keep the Premises and the Building free of liens, the
Tenant shall not be required to deliver to the Landlord any general release or
waiver of lien, as required by the preceding sentence, if the Tenant shall be
disputing in good faith the payment which would otherwise entitle the Tenant to
such release or waiver, provided that the Tenant shall keep the Landlord advised
in a timely fashion of the status of any such dispute and the basis therefor and
the Tenant shall deliver to the Landlord the general release or waiver of lien
when any such dispute is settled.
31.4. The Landlord shall, at such time as the applicable Building systems
are operational, allow the Tenant (a) final connections to the Building Class
"E" system for the Tenant's new strobe control panel and (b) reasonably
sufficient capacity in the Building Class "E" system for connection of wiring
from the Tenant's new systems, equipment and devices to be installed and
maintained by the Tenant (such as a pre-action sprinkler system, area smoke
detectors, door release controls, etc.) and which such systems, equipment and
devices shall be monitored and/or controlled directly by the Building Class "E"
system. Additionally, at such time as the Building systems are operational, the
Landlord shall, at the Tenant's sole cost and expense, connect to such Building
Class "E" system the Tenant's sprinkler system flow and tamper switches and
shall thereafter maintain such switches, subject to ordinary wear and tear and
any damage caused by any Tenant Party.
31.5. Provided that the Tenant shall not have exercised its option
pursuant to Article Thirty-nine to add the Additional Penthouse Space to the
Premises prior to the Tenant's commencement of the Initial Tenant Alterations to
the Penthouse Space, the Tenant, at the Tenant's sole cost and expense, shall
provide and install a demising wall in the Penthouse Space as part of the
Initial Tenant Alterations, in a location to be designated by the Landlord (a)
reasonably in accordance with the diagram attached hereto as Exhibit A-3 and (b)
in accordance with the applicable provisions of this Lease (including, without
limitation, Section 6.1(e)).
ARTICLE THIRTY-TWO
(32.)[Intentionally Omitted]
ARTICLE THIRTY-THREE
(33.)Renewal Options
33.1. Subject to the Tenant's compliance with the Renewal Conditions (as
hereinafter defined), the Tenant may elect to extend and renew (a) the term of
this Lease with respect to (i) all of the Premises, or (ii) (A) either the 36th
Floor Space or the 37th Floor Space and (B) the Basement Space and the Penthouse
Space (whichever the Tenant shall elect is herein called the "Renewal
Premises"), and (b) the term of the licenses of the Licensed Spaces, in each
case, for one five-year period, as hereinafter provided, by giving written
notice thereof (the "Renewal Notice") to the Landlord not later than fifteen
(15) months prior to the expiration of the initial
<PAGE>
term of this Lease, as to which date time is of the essence. The Renewal Notice
shall include the Tenant's election of the space that will constitute the
Renewal Premises and a request that the Landlord deliver to the Tenant the
Landlord's binding estimate of the Fair Market Rental Value for the Renewal
Premises for the Renewal Term (as hereinafter defined) by the date which is
twelve (12) months prior to the expiration of the initial term of this Lease.
Upon and in the event of the giving of the Renewal Notice in a timely manner,
the term of this Lease and such licenses shall (unless (1) such term shall
sooner have expired or terminated pursuant to any of the conditions of
limitation or other provisions of this Lease or pursuant to law, (2) the Renewal
Conditions shall not have been complied with in all material respects and the
Landlord shall not have waived such non-compliance in writing or (3) the Tenant
delivers a Rescission Notice (as hereinafter defined) to the Landlord in a
timely manner in accordance with Section 33.3 below) be deemed extended and
renewed for a period of five (5) years (the "Renewal Term"), namely, the five
year period commencing on the day immediately following the Expiration Date and
ending on the fifth (5th) anniversary of the Expiration Date (subject to earlier
termination pursuant to any of the conditions of limitation or other provisions
of this Lease or pursuant to law), such extension and renewal to be subject to
and upon all of the terms and conditions of this Lease (including, without
limitation, Article Twentyfour hereof) and such licenses, except that during the
Renewal Term (u) the Premises shall be the Renewal Premises, (v) reference in
this Lease to the term hereof shall be deemed to include the Renewal Term,
(w) the annual fixed rent payable hereunder shall be the Fair Market Rental
Value (as hereinafter defined) for a lease commencing on the day immediately
following the Expiration Date and having a term of five (5) years, determined in
accordance with the provisions of this Article Thirty-three, (x) in applying the
provisions of Article Twentyfour of this Lease on and after the first day of the
Renewal Term, subparagraphs (h) and (i) of Section 24.3 shall be deemed to read,
respectively, (i) "`Base Real Estate Taxes' shall mean the R.E. Tax Share of the
Real Estate Taxes for the Tax Year (A) in which shall occur the Expiration Date,
if the Expiration Date occurs within the first six (6) months of such Tax Year,
or (B) immediately following the Tax Year in which shall occur the Expiration
Date, if the Expiration Date occurs within the last six (6) months of such Tax
Year", and (ii) "`Base COM' shall mean the O.E. Share of the Cost of Operation
and Maintenance for the Computation Year (A) in which shall occur the Expiration
Date, if the Expiration Date occurs within the first six (6) months of such
Computation Year or (B) immediately following the Computation Year in which
shall occur the Expiration Date, if the Expiration Date occurs within the last
six (6) months of such Computation Year", (y) the provisions of Section 30.1
shall not be applicable to the Renewal Term and (z) the Tenant shall have no
further right to extend or renew the term of this Lease or the licenses.
33.2. As used in this Article Thirty-three, the following terms shall have
the meanings indicated: (a) "Renewal Conditions" shall mean that, immediately
prior to (i) the date the Tenant delivers the Renewal Notice to the Landlord and
(ii) the commencement of the Renewal Term, (A) the Tenant shall not be in
default in the payment of any monetary obligation(s) under this Lease which,
individually or in the aggregate, exceed $50,000 ("Material Default"), for more
than five (5) days after notice, provided, however, that if a Material Default
is continuing at the time the Tenant would otherwise have been permitted to
exercise its option to renew and extend the term of this Lease for the Renewal
Term, and if such Material Default shall be fully cured prior to the Expiration
Date and within the five (5) day cure period provided above in
<PAGE>
this Section 33.2 and no other Material Default shall occur and continue beyond
the Expiration Date or beyond such five (5) day cure period, then the time by
which such option to renew and extend the term of this Lease for the Renewal
Term must be exercised shall be extended to a date which is three (3) business
days after the date on which cure of such continuing Material Default(s) is
effected and, with respect to any such exercise, time shall be of the essence,
and (B) the Tenant named herein (i.e., CD Radio Inc. or any permitted Assignee)
shall itself be in direct occupancy (i.e., exclusive of any subtenants other
than Tenant's affiliates or subsidiaries) of not less than (I) in the case of a
renewal of the term of this Lease with respect to all of the Premises, one (1)
full floor of the Office Space and using the same for the normal conduct of its
business or (II) in the case of a renewal of the term of this Lease with respect
to either the 36th Floor Space or the 37th Floor Space, fifty percent (50%) of
either the 36th Floor Space or the 37th Floor Space and using the same for the
normal conduct of its business as primarily a satellite radio broadcaster; and
(b) "Fair Market Rental Value" as used herein shall mean, for the Renewal Term,
the reasonable annual market fixed rental value for comparable office space
lease renewals (including comparable license arrangements) for comparable
buildings in midtown Manhattan for a lease renewal term of five (5) years,
taking into account all appropriate factors; provided, however, that the current
value of any Alterations in the Premises shall be taken into account only if
such Alterations were originally performed at the Landlord's expense or were
originally performed at the Tenant's expense and constituted part of the Initial
Tenant Alterations and, in the latter case, in an amount equal to the product of
the current value of all improvements that constituted the Initial Tenant
Improvements and a fraction, the numerator of which is $3,138,030.00 and the
denominator is the original cost of all of the Initial Tenant Alterations.
33.3. If the Tenant shall have duly delivered the Renewal Notice to the
Landlord, the Landlord shall, by no later than the date which is twelve (12)
months prior to the Expiration Date, notify the Tenant of the Landlord's binding
estimate of the Fair Market Rental Value for the Renewal Term. Thereafter, if
the Tenant desires to rescind its election to renew and extend the term of this
Lease, the Tenant must give written notice thereof (the "Rescission Notice") to
the Landlord within thirty (30) days after the Landlord gives notice of its
binding estimate, as to which date time is of the essence, and, upon the giving
of the Rescission Notice, the Tenant's election to renew and extend the term of
this Lease and the licenses shall be void and of no further force or effect and
the Tenant shall have no further right to extend or renew the term of this Lease
or the licenses. If the Tenant does not rescind its election to renew as
aforesaid, and does not dispute the amount of the Landlord's binding estimate
within thirty (30) days after the Landlord gives notice of its binding estimate,
the fixed rent for the Renewal Term shall be the amount of the Landlord's
binding estimate. If the Tenant disputes such amount, the Tenant shall notify
the Landlord of the Tenant's binding estimate of the Fair Market Rental Value (a
"Tenant's Binding Notice") within such thirty (30) days after the Landlord gives
notice of its binding estimate and, if the Landlord and the Tenant fail to reach
agreement on the Fair Market Rental Value within ten (10) business days
thereafter, the Fair Market Rental Value shall be determined by arbitration
pursuant to Sections 33.4.1, 33.4.2 and 33.4.3 below. Anything in this Article
Thirty-three to the contrary notwithstanding, if upon the giving of the
Rescission Notice as aforesaid, there is less than fifteen (15) months remaining
until the expiration of the term of this Lease, then the term of this Lease
shall be automatically extended and renewed for the period commencing on the day
immediately following the date which would otherwise have
<PAGE>
been the date of the expiration of the term of this Lease and ending on the last
day of the calendar month in which shall occur the date which is fifteen (15)
months after the date of the Tenant's giving of the Rescission Notice, such
extension and renewal to be subject to and upon all of the terms and conditions
of this Lease, except that (a) the Tenant shall have no further right to extend
or renew the term of this Lease, (b) the fixed rent for such period shall be the
amount of the Landlord's binding estimate, and (c) the modifications to the
definitions of "Base Real Estate Taxes" and "Base COM" provided for in Section
33.1 above with respect to the Renewal Term shall be applicable with respect to
such period.
33.4.1. If the Fair Market Rental Value is to be determined by
arbitration, the same shall be conducted in accordance with the rules of the
American Arbitration Association, or if the American Arbitration Association
shall no longer be in existence a successor or other organization selected by
the Landlord issuing similar rules for the conduct of arbitrations (as the case
may be, the "AAA"). The parties hereto shall attempt to agree on a single
arbitrator (the "Referee"). The Referee must be a real estate broker licensed by
the State of New York who is a member of the Real Estate Board of New York, Inc.
and a Senior Commercial Appraiser of the Appraisal Institute, and, in any event,
with at least ten (10) years of experience in appraising the fair market rental
value of leases of office space in major office buildings in the Borough of
Manhattan, in the City of New York. If the parties hereto cannot agree on the
appointment of the Referee within fifteen (15) days after the Tenant gives a
Tenant's Binding Notice, either party may request the AAA to appoint a Referee
meeting the foregoing requirements. If the AAA shall refuse to appoint such
Referee or fail to do so within ten (10) days after the request, or if there
shall be no AAA in existence, either party hereto, on behalf of both, may apply
for the appointment of the Referee to the President of the Bar Association of
the City of New York or, if said President does not appoint a Referee within
thirty (30) days of such application, to the Supreme Court in the County of New
York, and the other party shall not raise any objection as to said President's
or the Court's full power and jurisdiction to entertain the application and make
such appointment. Within five (5) days after the selection of the Referee, each
party shall submit to the Referee two copies of its binding estimate of the Fair
Market Rental Value (each a "Determination"), which shall be identical to such
party's binding estimate under Section 33.3 above. After submission of a
Determination to the Referee, the submitting party may not change its
Determination, but may, during the thirty (30) days following the expiration of
such five (5) days referred to above, submit to the Referee such evidence as the
submitting party may deem relevant. Within twenty (20) days following such
thirty (30) day period, the Referee shall select one of the estimates to be the
Fair Market Rental Value. The Referee, in rendering his or her decision, shall
not add to, subtract from or otherwise modify the provisions of this Lease or
either Determination. The Referee's decision, determined as provided in this
Article Thirty-three, shall be conclusive and binding on the parties, shall
constitute an "award" by the Referee within the meaning of AAA rules and
judgment may be entered thereon in any court of competent jurisdiction.
33.4.2. If either party fails to submit its Determination to the Referee
within the time period for doing so permitted under Section 33.4.1, time being
of the essence with respect thereto, such party shall be deemed to have
irrevocably waived its right to deliver a Determination and the Referee, without
holding a hearing, shall accept the Determination of the submitting party as the
Fair Market Rental Value. If either party timely submits a
<PAGE>
Determination, the Referee shall, promptly after its receipt of the second
Determination, deliver a copy of each party's Determination to the other party.
33.4.3. Each party shall pay its own fees and expenses relating to the
arbitration (including, without limitation, the fees and expenses of its counsel
and of experts and witnesses retained or called by it). Each party shall pay
onehalf of the fees and expenses of the AAA and of the Referee, provided, that
if either party fails to submit a Determination within the period provided
therefor, such nonsubmitting party shall pay all of such AAA and Referee fees
and expenses.
33.5. If the annual fixed rent for the Renewal Term shall not be
determined prior to the first day of the Renewal Term, the Tenant shall pay an
interim fixed rent for the period commencing on the first day of the Renewal
Term and ending on the last day of the month in which such annual fixed rent is
determined at an annual rate (including fixed rent and additional rent under
Article Twenty-four) equal to the annual rate that was in effect hereunder with
respect to the Renewal Premises on the day immediately preceding the first day
of the Renewal Term (without giving effect to any existing abatement of fixed
rent other than any abatement under Article Ten hereof). When the annual fixed
rent for the Renewal Term is finally determined, the fixed rent for such period
shall be recomputed upon the basis of such annual fixed rent so determined, and
if such recomputed fixed rent for such period is in excess of such interim fixed
rent so paid for such period, the Tenant shall promptly pay to the Landlord an
amount equal to such excess. Conversely, if such recomputed fixed rent for such
period is less than such interim fixed rent so paid for such period, the
Landlord shall, at the Tenant's election, either (i) apply such amount against
the next installments of fixed rent coming due under this Lease or (ii) promptly
refund to the Tenant the amount of such excess.
33.6. When the Fair Market Rental Value shall be agreed upon or
established as herein provided, the Landlord and the Tenant shall execute and
deliver a supplemental indenture to this Lease specifying the fixed rent payable
for the Renewal Term. The failure of either party to execute such an instrument
shall not affect the binding nature of the Fair Market Rental Value so agreed
upon or established.
ARTICLE THIRTY-FOUR
(34.)Emergency Generator System
34.1. Subject to the provisions of this Article Thirty-four, the Tenant is
hereby granted (a) (i) the right to install, operate and maintain in the
Basement Space a 2,400 gallon diesel fuel "ready tank" and (ii) a non-exclusive
license to install, operate and maintain in the Emergency Generator Space a 500
kilowatt, diesel powered, emergency electric power generator, together, in such
case, with all ancillary equipment, mountings, piping, duct work, venting,
conduit, wiring and support as shall reasonably be necessary for the
installation and operation of such generator and fuel tank (the generator and
the fuel tank, and all such ancillary equipment, mountings, piping, duct work,
venting, conduit, wiring and support (including, without limitation, the
Emergency Electric Riser and the Emergency Fuel Pipes) are herein collectively
called the "Emergency Generator System"), and (b) a non-exclusive license to
install, operate
<PAGE>
and maintain in a portion of the shaft space to be designated by the Landlord
reasonably in accordance with the diagrams attached hereto as (i) Exhibit A-8
and Exhibit A-4 (the "Emergency Electric Riser Area") from the Emergency
Generator Space to the electric closet serving the Office Space located on the
36th Floor of the Building and from such electric closet to the Penthouse Space
and the Auxiliary Chiller Space, an electric riser to bring electric power from
the Emergency Generator System to such electric closet and the Penthouse Space
and Auxiliary Chiller Space (the "Emergency Electric Riser") and (ii) Exhibit
A-9, Exhibit A-4 and Exhibit A-5 (the "Emergency Fuel Pipe Area") from the
Basement Space (A) to the Emergency Generator Space, a fuel supply and return
and a vent pipe as required to bring fuel from such fuel tank to such generator,
(B) to the Building's intake and discharge air shafts/plenums on the C-4 level
of the Building, a ventilation pathway reasonably sufficient to meet the
ventilation requirements of the Tenant's fuel tank, and (C) to a fuel oil fill
pipe in the truck lift machine room on the street level of the Building, and
vent, to bring fuel from the street to such fuel tank (collectively, the
"Emergency Fuel Pipes"). The Tenant shall not use the Emergency Generator Space,
the Basement Space or the Emergency Electric Riser Area for any other purpose.
34.2. The licenses and rights herein granted to the Tenant to use the
Basement Space, the Emergency Generator Space, the Emergency Electric Riser Area
and the Emergency Fuel Pipe Area for the installation, operation and maintenance
of the Emergency Generator System is subject to all of the provisions of this
Lease including, without limitation, Section 3.4, Section 6.1(e) and
Section 11.1. Without limiting the generality of the immediately preceding
sentence of this Section 34.2, the Tenant's use of the Basement Space, the
Emergency Generator Space, the Emergency Electric Riser Area and the Emergency
Fuel Pipe Area shall be subject to such additional reasonable rules and
regulations as the Landlord may from time to time establish and the following
additional conditions: (a) the Tenant shall be solely responsible for the
installation, maintenance, repair, security, operation and replacement of the
Emergency Generator System, (b) the Tenant shall not sell any electric power
generated by the Emergency Generator System to, or otherwise permit the use of
the Emergency Generator System by, any other person or entity (except for a
subtenant of the Tenant), whether or not a tenant in the Building, (c) the
Tenant shall provide noise and vibration abatement as required by the Landlord
and (d) the Tenant shall provide screening for the generator in the Emergency
Generator Space as reasonably required by Landlord.
34.3. The Tenant shall (a) be solely responsible for any damage caused as
a result of the use of the Emergency Generator System (except to the extent
caused by the Landlord or any of its agents or employees acting within the scope
of their employment), (b) promptly pay any tax, license, permit or other fees or
charges imposed pursuant to any Requirements relating to the construction,
installation, maintenance, repair, operation or use of the Emergency Generator
System, (c) at its sole cost and expense, promptly comply with all precautions
and safeguards required by Landlord's insurance company and all Requirements
with respect to the Emergency Generator System and (d) at its sole cost and
expense, make all necessary repairs or replacements to the Emergency Generator
System.
34.4. If necessary due to any Requirement, or otherwise if the same does
not interfere (except to a de minimis extent) with the conduct of Tenant's
business in the Office Space, then,
<PAGE>
at any time and from time to time following the Tenant's installation of the
Emergency Generator System, the Landlord may direct the Tenant to relocate the
Emergency Generator System, or any portion thereof, to a location designated by
the Landlord, and the Tenant shall promptly relocate the Emergency Generator
System. The cost and expense of such relocation of the Emergency Generator
System shall be borne by the Tenant if such relocation shall be necessary due to
any Requirement or due to any act or omission of the Tenant. If the relocation
shall be required for any other reason, the cost and expense of such relocation
shall be borne by the Landlord. In the event the Tenant shall fail to relocate
the Emergency Generator System, the Landlord may do so, and, to the extent that
the Tenant would have been obligated to bear the cost of such relocation, as set
forth above, the Tenant shall reimburse the Landlord on demand for any
reasonable costs and expenses incurred by the Landlord in connection therewith.
34.5. The Tenant acknowledges and agrees that the licenses and related
privileges granted the Tenant under this Article Thirty-four shall not, now or
at any time before or after the installation of the Emergency Generator System,
be deemed to grant the Tenant a leasehold or other real property interest in the
Building or any portion thereof in connection with the Licensed Spaces relating
to the Emergency Generator System. The licenses granted to the Tenant in this
Article Thirty-four shall automatically terminate and expire upon the expiration
or earlier termination of this Lease and the termination of such license shall
be self-operative and no further instrument shall be required to effect such
termination. The foregoing notwithstanding, upon request by the Landlord, the
Tenant promptly shall execute and deliver to Landlord, in recordable form, any
certificate or other document confirming the termination of the Tenant's right
to use the Emergency Generator Space, the Emergency Fuel Pipe Area and/or the
Emergency Electric Riser Area. The license granted to Tenant in this Article
Thirty-four shall not be assignable by Tenant separate and apart from this
Lease.
34.6. Anything in this Article Thirty-four to the contrary
notwithstanding, except as shall be required in the event of an electric power
failure to the Premises, (a) the Emergency Generator System shall not be
operated or tested during the hours of 6:00 a.m. to 11:59 p.m. on weekdays, (b)
the Tenant shall give the Landlord at least three (3) business days' prior
written notice of any proposed operation or testing of the Emergency Generator
System and shall coordinate the timing of such operation or testing with the
Landlord in order to minimize disturbance to other tenants of the Building and
(c) the Landlord, at its option, shall have the right to require that any such
operation or testing be performed on non-business days.
ARTICLE THIRTY-FIVE
(35.)Satellite Transmission System
35.1. Subject to the provisions of this Article Thirty-five, the Tenant is
hereby granted (a) a non-exclusive license in and to the Penthouse Roof Space,
and the right in the Penthouse Space, to install, operate and maintain up to
three (3) 5-meter satellite dishes (capable of X band transmission and S band
reception), together with all ancillary equipment (including, without
limitation, automatic tracking systems and several C/KU band TVRO receive-only
satellite dishes), mountings, steel dunnage, structural reinforcement, conduit,
wiring and supports as shall be necessary for the installation and operation of
such satellite dishes (such satellite
<PAGE>
dishes, together with such ancillary equipment, mountings, steel dunnage,
structural reinforcement, conduit (including the Satellite Equipment Conduits),
wiring and supports are herein collectively called the "Satellite Transmission
System") and (b) a non-exclusive license to install, operate and maintain in a
portion of the shaft space from the electric closet serving the Office Space
located on the 37th Floor of the Building to the Penthouse Space, which shaft
space is to be designated by the Landlord reasonably in accordance with the
diagram attached hereto as Exhibit A-8 (the "Satellite Riser Area") two (2)
3-inch power conduits and two (2) 4-inch telecommunications conduits (the
"Satellite Equipment Conduits"), for use in connection with the operation of the
Satellite Transmission System. The Tenant shall not use the Penthouse Space, the
Penthouse Roof Space or the Satellite Riser Area for any other purpose.
35.2. The rights and licenses herein granted to the Tenant to use the
Penthouse Space, the Penthouse Roof Space and the Satellite Riser Area for the
installation, operation and maintenance of the Satellite Transmission System are
subject to all of the provisions of this Lease, including, without limitation,
Section 3.4, Section 6.1(e), Section 6.1(j) and Section 11.1. Without limiting
the generality of the immediately preceding sentence of this Section 35.2, the
Tenant's use of the Penthouse Space, the Penthouse Roof Space and the Satellite
Riser Area shall be subject to such reasonable rules and regulations as the
Landlord may from time to time establish, and to the following additional
conditions: (a) the Satellite Transmission System shall not cause any material
interference with the operation of any equipment theretofore installed in or on
the Building or on or in any other building that is not cured by the Tenant, at
the Tenant's sole cost and expense, within two (2) business days; (b) the
Satellite Transmission System and the appearance of the portion thereof that is
located on the Penthouse Roof Space shall be consistent with the character of
similar installations on and in other first-class office buildings in midtown
Manhattan; (c) the Tenant shall be solely responsible for the installation,
maintenance, repair, security, operation and replacement of the Satellite
Transmission System (including, without limitation, the cost of utilities); (d)
other than the sale of programming time on the Tenant's radio broadcasts the
Tenant shall not sell, rent or transfer any portion of the Satellite
Transmission System or any related services to, or otherwise permit (whether or
not for a fee) the use of the Satellite Transmission System or any related
services by, any other person or entity (except for a subtenant of the Tenant),
whether or not a tenant in the Building and (e) the Tenant shall, to the extent
permitted under applicable Requirements, provide roof top fencing or screening,
reasonably acceptable to the Landlord, around the Satellite Transmission System.
Without limiting the generality of the immediately preceding sentence, all work
and actions in connection with Section 35.1 and this Section 35.2 shall be
deemed an Alteration and shall be subject to the provisions of Section 6.1(e)
above. The Tenant shall be responsible for all structural requirements,
maintenance, repair and security for the Satellite Transmission System.
35.3. (a) The Tenant shall not install the Satellite Transmission System,
or make, or permit to be made, any additions or other changes in or to the
Satellite Transmission System, the Penthouse Space, the Penthouse Roof Space or
the Satellite Riser Area without, in each instance, first obtaining (i) the
Landlord's prior written consent thereto (except that minor additions or changes
in or to the Satellite Transmission System, the Satellite Riser Area, the
Penthouse Space or the Penthouse Roof Space, which are incident to the normal
operation or
<PAGE>
maintenance thereof shall not require the Landlord's prior written consent but
may be performed only upon prior written notice to the Landlord) in accordance
with the applicable provisions of this Lease, and (ii) when required by
applicable Requirements, all required permits and approvals of any federal,
state or local governmental or quasi-governmental authority with respect to any
such additions or changes.
(b) Throughout the term of this Lease, and at the Tenant's sole cost
and expense, the Tenant shall (i) keep and maintain the Satellite Transmission
System, the Satellite Riser Area and the Tenant's installation therein, the
Penthouse Space and the Penthouse Roof Space in a safe condition and good order
and state of repair, (ii) comply with all Requirements applicable to the
installation, maintenance and operation of the Satellite Transmission System,
the Tenant's installation in the Satellite Riser Area and to the use and
maintenance of the Satellite Riser Area, the Penthouse Space and the Penthouse
Roof Space and (iii) comply with all precautions and safeguards required by the
Landlord's insurance company with respect to the Satellite Transmission System,
the Tenant's installation in the Satellite Riser Area and the use and
maintenance of the Satellite Riser Area, the Penthouse Space and the Penthouse
Roof Space. Without limiting the generality of the foregoing provisions of this
Section 35.3(b), the Tenant, at the Tenant's sole cost and expense, shall (A)
paint the antennae on the roof the Building white, or such other color as is
customary in other first class buildings in mid-town Manhattan (provided that
the Tenant shall be permitted to paint the Tenant's logo on such antennae) (B)
install and maintain such lightening rods, air terminals and/or similar
equipment as the Landlord may reasonably require, on or about the portion of the
Satellite Transmission System which is located on the roof of the Building, (C)
comply with all applicable Requirements (including those of the Federal
Communication Commission, or any successor thereto) relating to the
installation, operation and maintenance of the Satellite Transmission System,
and (D) obtain all permits and licenses required by any governmental or
quasi-governmental authority with respect to the installation, operation or
maintenance (and, upon the expiration or sooner termination of this Lease, the
removal) of the Satellite Transmission System, renew all such permits and
licenses as and when required by applicable Requirements and pay promptly as and
when due all taxes, license, permit and other fees or charges imposed in respect
thereof.
(c) Throughout the term of this Lease, the Tenant shall use and
operate the Satellite Transmission System and the devices and equipment used in
connection therewith in a manner that does not in any way constitute a health
hazard or danger to property. If the Landlord shall determine that the Satellite
Transmission System or any of the devices and equipment used in connection
therewith may constitute a health hazard or a danger to property the Tenant,
upon notice from the Landlord, shall immediately discontinue the use of the
Satellite Transmission System and/or such other devices and equipment.
Thereafter, the Tenant shall diligently undertake to determine, and shall
correct, at the Tenant's sole cost and expense, the cause of such hazard or
danger; and the Tenant shall not resume the use of the Satellite Transmission
System and/or such other devices and equipment until the Tenant has been
notified by the Landlord that adequate corrective steps have been taken to
remedy or prevent such hazard or danger as the case may be.
<PAGE>
35.4. If necessary due to any Requirement (other than a Requirement of
insurance bodies not having the force of law and subject to Section 6.1(f)
above), then, at any time and from time to time following the Tenant's
installation of the Satellite Transmission System, the Landlord, upon written
notice to the Tenant, may direct the Tenant to relocate the Satellite
Transmission System, or any portion thereof, to a location designated by the
Landlord, and the Tenant shall relocate the Satellite Transmission System with
reasonable promptness and, if necessary due to any such Requirements, cease
operation of the Satellite Transmission System (or such applicable portion)
until such relocation is completed. The cost and expense of such relocation of
the Satellite Transmission System shall be borne by the Tenant. If the
relocation shall be required for any other reason, the cost and expense of such
relocation shall be borne by the Landlord. In the event the Tenant shall fail to
relocate the Satellite Transmission System with reasonable promptness following
receipt of such notice from the Landlord, the Landlord may do so, and the
Tenant, as additional rent under this Lease, shall reimburse the Landlord on
demand for any reasonable costs and expenses incurred by the Landlord in
connection therewith.
35.5. In no event shall the Landlord or any of the other Indemnitees be
responsible for (a) complying with, nor shall the Landlord or any of the other
Indemnitees be subject to any liability for the Tenant's failure to comply with,
any Requirement applicable to the Satellite Transmission System, the Tenant's
installation in the Satellite Riser Area, the Penthouse Space or the Penthouse
Roof Space or the installation, operation or maintenance (or, upon the
expiration or sooner termination of this Lease, the removal) of the Satellite
Transmission System or the Tenant's installation in the Satellite Riser Area, or
the use of the Penthouse Space or the Penthouse Roof Space, (b) or in connection
with, the installation, operation or maintenance of the Satellite Transmission
System or the Tenant's installation in the Satellite Riser Space, or for any
liability or damage incurred or suffered by the Tenant in connection with or
arising out of the Tenant's installation, operation or maintenance (or, upon the
expiration or sooner termination of this Lease, the removal) of the Satellite
Transmission System or the Tenant's installation in the Satellite Riser Area, or
the use of the Penthouse Space or the Penthouse Roof Space or (c) any damage
that may be caused to the Tenant or the Satellite Transmission System (or any
other property of the Tenant) by any other tenant, occupant or licensee in the
Building; and the Tenant shall make no claim against the Landlord or any
Landlord Party for any direct, consequential or other loss or damage suffered or
incurred by the Tenant in connection with the installation operation or
maintenance (or, upon the expiration or sooner termination of this Lease, the
removal) of the Satellite Transmission System or the Tenant's installation in
the Satellite Riser Area, or the use of the Penthouse Space or the Penthouse
Roof Space, however caused, except to the extent caused by the negligence or
willful misconduct of the Landlord. The Tenant shall indemnify and save harmless
the Indemnitees, and defend te Indemnitees (with counsel reasonably acceptable
to the Indemnitees), from and against any and all liability (including, but not
limited to, statutory liability), loss, damage interest, judgments and liens,
and any and all costs and expenses (including, but not limited to, counsel fees
and disbursements), in any way arising out of or incurred in connection with,
any and all claims, demands, suits, actions and/or proceedings (including, but
not limited to suits and claims against the Indemnitees for infringement or
violation of any patent, trademark, copyright, trade secret, proprietary, or
other tangible or intangible property rights of any kind whatsoever as a result
of or arising out of the broadcast, rebroadcast, display or transmission
<PAGE>
of any images, programs, sports events, music or any other voice or data
transmissions in, to, through or from the Satellite Transmission System) which
shall be made or brought against the Indemnitees in connection with or arising
out of, anything done or omitted to be done with respect to the Satellite
Transmission System, the Satellite Riser Area and/or the Tenant's installation
therein, the Penthouse Space and/or the Penthouse Roof Space, except to the
extent caused by the negligence or willful misconduct of the Landlord. The
Indemnitees agree to give the Tenant prompt written notice of all claims,
demands, suits, actions and/or proceedings for which the Indemnitees are
indemnified hereunder brought or threatened against the Indemnitees, but any
failure or delay in giving any such notice shall not affect the Tenant's
indemnification obligation hereunder unless the Tenant's ability to defend
against such claim is materially adversely affected by such failure or delay.
The provisions of this Section 35.5 shall survive the expiration or earlier
termination of this Lease. The foregoing provisions of this Section 35.5 are
subject to the provisions of Section 9.3 and Section 25.12 of this Lease.
35.6. Anything in this Lease to the contrary notwithstanding, it is
expressly acknowledged and agreed by the Tenant that the Landlord has made no
representation or warranty to the Tenant (a) that the installation, operation or
maintenance of the Satellite Transmission System is permitted by applicable
Requirements or (b) that, once installed, the Satellite Transmission System will
be able to receive or transmit communication and/or radio broadcast signals
without interference or disturbance (whether or not by reason of the
installation or use of other similar or dissimilar equipment by others on the
roof of the Building or at or from any other location); and the Tenant agrees
that the Landlord shall have no obligation or liability to the Tenant if such
installation, operation and/or maintenance is now or hereafter prohibited by any
applicable Requirement or as a result of the inability, for any reason, of the
Satellite Transmission System to receive or transmit communication signals
without interference or disturbance.
35.7. The Landlord shall permit the Tenant's contractors who have been
consented to by the Landlord in accordance with Section 6.1(e) above, and the
Tenant's properly identified employees, agents and representatives, 24 hours a
day, 7 days a week access to the portions of the Building in which the Satellite
Transmission System is located, at and for such reasonable periods of time, in
such manner and by such means, as shall reasonably be required by the Tenant,
for the purpose of operating and maintaining the Satellite Transmission System,
subject always to such reasonable regulations and restrictions as the Landlord
may, from time to time, deem necessary to establish, including, but not limited
to, the requirement that, except in an emergency, such contractors, agents and
representatives be accompanied by employees of the Landlord, provided that such
requirement shall not interfere with or delay such access (except to a de
minimis extent).
35.8. The Landlord shall have the right at any time, without any liability
to the Tenant, to inspect and examine the Satellite Transmission System and all
devices and equipment installed in connection therewith and to inspect and
examine the Satellite Riser Area, the Penthouse Space and the Penthouse Roof
Space, and the Tenant shall cooperate with the Landlord in demonstrating or
testing the Satellite Transmission System and any such devices and equipment.
<PAGE>
35.9. The Tenant acknowledges and agrees that the licenses and related
privileges granted the Tenant under this Article Thirty-five shall not, now or
at any time before or after the installation of the Satellite Transmission
System, be deemed to grant to the Tenant a leasehold or other real property
interest in the Building or any portion thereof in connection with the Licensed
Spaces relating to the Satellite Transmission System. The licenses granted to
the Tenant in this Article Thirty-five shall automatically terminate and expire
upon the expiration or earlier termination of this Lease and the termination of
such license shall be self-operative and no further instrument shall be required
to effect such termination. The foregoing notwithstanding, upon request by the
Landlord, the Tenant promptly shall execute and deliver to Landlord, in
recordable form, any certificate or other document confirming the termination of
the Tenant's right to use the Penthouse Roof Space and/or the Satellite Riser
Area. The license granted to Tenant in this Article Thirty-five shall not be
assignable by Tenant separate and apart from this Lease.
ARTICLE THIRTY-SIX
(36.)Auxiliary Chiller System
36.1. Subject to the provisions of this Article Thirty-six, specifically,
including, without limitation, Section 36.6 below, the Tenant is hereby granted
(a) a non-exclusive license to install, operate and maintain in the Auxiliary
Chiller Space two 100-ton, air-cooled supplemental air conditioning chillers,
together with all ancillary equipment, mountings, piping, duct work, venting,
conduit, wiring and support as shall reasonably be necessary for the
installation and operation of such chillers (the chillers, and all such
ancillary equipment, mountings, piping, duct work, venting, conduit, wiring and
support (including, without limitation, the Chilled Water Lines) are herein
collectively called the ("Auxiliary Chiller System"), and (b) a non-exclusive
license to install, operate and maintain in a portion of the shaft space to be
designated by the Landlord reasonably in accordance with the diagram attached
hereto as Exhibit A-9 (the "Chilled Water Riser Area") from the Auxiliary
Chiller Space to the pump closet located (or to be located) on the 37th Floor of
the Building chilled water supply and return pipes (the "Chilled Water Lines")
to bring chilled water from the Auxiliary Chiller System to the chilled water
pumps.
36.2. The license herein granted to the Tenant to use the Auxiliary
Chiller Space and the Chilled Water Riser Area for the installation, operation
and maintenance of the Auxiliary Chiller System is subject to all of the
provisions of this Lease including, without limitation, Section 3.4,
Section 6.1(e) and Section 11.1. Without limiting the generality of the
immediately preceding sentence of this Section 36.2, the Tenant's use of the
Auxiliary Chiller Space and the Chilled Water Riser Area shall be subject to
such additional reasonable rules and regulations as the Landlord may from time
to time establish and the following additional conditions: (a) the Tenant shall
be solely responsible for the installation, maintenance, repair, security,
operation and replacement of the Auxiliary Chiller System, provided, however,
that the Landlord shall assist the Tenant, at no cost to the Tenant, in
instituting a regular program of repair and maintenance acceptable to the
Landlord, (b) the Tenant shall not sell any, chilled water generated by the
Auxiliary Chiller System to, or otherwise permit the use of the Auxiliary
Chiller System by, any other person or entity (except for a subtenant of the
Tenant), whether or not a tenant in the Building, (c) the Tenant shall provide
noise and vibration abatement as
<PAGE>
reasonably required by the Landlord and (d) the Tenant shall provide screening
for the Auxiliary Chiller Space as reasonably required by Landlord.
36.3. The Tenant shall (a) be solely responsible for any damage caused as
a result of the use of the Auxiliary Chiller System (except to the extent caused
by the Landlord or any of its agents or employees acting within the scope of
their employment), (b) promptly pay any tax, license, permit or other fees or
charges imposed pursuant to any Requirements relating to the construction,
installation, maintenance, repair, operation or use of the Auxiliary Chiller
System, (c) at its sole cost and expense, promptly comply with all precautions
and safeguards required by Landlord's insurance company and all Requirements
with respect to the Auxiliary Chiller System and (d) at its sole cost and
expense, make all necessary repairs or replacements to the Auxiliary Chiller
System.
36.4. If necessary due to any Requirement, or otherwise if the same does
not interfere (except to a de minimis extent) with the conduct of the Tenant's
business in the Office Space, then, at any time and from time to time following
the Tenant's installation of the Auxiliary Chiller System, the Landlord may
direct the Tenant to relocate the Auxiliary Chiller System, or any portion
thereof, to a location designated by the Landlord, and the Tenant shall promptly
relocate the Auxiliary Chiller System. The cost and expense of such relocation
of the Auxiliary Chiller System shall be borne by the Tenant if such relocation
shall be necessary due to any Requirement or due to any act or omission of the
Tenant. If the relocation shall be required for any other reason, the cost and
expense of such relocation shall be borne by the Landlord. In the event the
Tenant shall fail to relocate the Chilled Water Riser System, the Landlord may
do so, and, to the extent that the Tenant would have been obligated to bear the
cost of such relocation, as set forth above, the Tenant shall reimburse the
Landlord on demand for any reasonable costs and expenses incurred by the
Landlord in connection therewith.
36.5. The Tenant acknowledges and agrees that the licenses and related
privileges granted the Tenant under this Article Thirty-six shall not, now or at
any time before or after the installation of the Auxiliary Chiller System, be
deemed to grant the Tenant a leasehold or other real property interest in the
Building or any portion thereof in connection with the Licensed Spaces relating
to the Auxiliary Chiller System. The licenses granted to the Tenant in this
Article Thirty-six shall automatically terminate and expire upon the expiration
or earlier termination of this Lease and the termination of such license shall
be self-operative and no further instrument shall be required to effect such
termination. The foregoing notwithstanding, upon request by the Landlord, the
Tenant promptly shall execute and deliver to Landlord, in recordable form, any
certificate or other document confirming the termination of the Tenant's right
to use the Auxiliary Chiller Space and/or the Chilled Water Riser Area. The
license granted to Tenant in this Article Thirty-six shall not be assignable by
Tenant separate and apart from this Lease.
36.6. Anything in this Article Thirty-six, in Section 20.2.4, or elsewhere
in this Lease to the contrary notwithstanding, the Tenant's rights under this
Article Thirty-six and Section 20.2.4 above are subject to the Tenant's
exercising one (1) of the following options, which exercise shall be made by
written notice delivered to the Landlord together with the Tenant's
<PAGE>
submission to the Landlord of the Preliminary Plans for the Initial Tenant
Alterations, and time is of the essence with respect to the delivery of such
notice:
(a) to use the Auxiliary Chiller System, in acordance with this
Article Thirty-six, to provide all necessary cooling to the Tenant's
supplemental air conditioning system(s) serving the Office Space, in which event
the Tenant shall have no further rights, and the Landlord shall have no further
obligations, under Section 20.2.4 above with respect to the provision by the
Landlord of chilled water or humidification water; or
(b) to have the terms, conditions and limitations of Section 20.2.4
above apply with respect to all necessary cooling of the Tenant's supplemental
air conditioning system(s) serving the Office Space, in which event the Tenant
shall have no further rights, and the Landlord shall have no further
obligations, under this Article Thirty-six with respect to the Auxiliary Chiller
System; or
(c) (i) to have the terms, conditions and limitations of Section
36.1 through Section 36.5 of this Lease, inclusive, apply only with respect to
the necessary cooling of the Tenant's supplemental air conditioning system(s) in
the event that, and only for so long as, the Landlord fails to provide chilled
water to the Tenant's supplemental air conditioning system(s) serving the Office
Space in accordance with the terms, conditions and limitations of Section 20.2.4
above, and (ii) to have the terms, conditions and limitations of Section 20.2.4
above apply with respect to all other necessary cooling of the Tenant's
supplemental air conditioning system(s) serving the Office Space.
If the Tenant fails to exercise its option under this Section 36.6 at the time
it submits the Preliminary Plans for the Initial Tenant Alterations to the
Landlord, then the Tenant shall be deemed to have exercised the provisions of
Section 36.6(c) hereof.
ARTICLE THIRTY-SEVEN
(37.)IDA Transaction
37.1. The Tenant has advised the Landlord that The City of New York (the
"City"), acting through the New York City Industrial Development Agency (the
"IDA"), has agreed, subject to finalizing definitive documentation (including
the IDA Subleases), to provide the Tenant with certain discretionary economic
development benefits (collectively, the "Benefits") as an inducement to the
Tenant to relocate its operations to the City (the provision of such Benefits
and the consummation of the transaction between the IDA and the Tenant being
hereinafter collectively referred to as the "IDA Transaction").
37.2. The Landlord hereby agrees that the Landlord shall, at the
reasonable request of the Tenant and at Tenant's sole cost and expense, promptly
execute and deliver such further or additional instruments (in form and
substance reasonably acceptable to the Landlord) and take such further actions
as are reasonably necessary or appropriate to effectuate the IDA Transaction;
provided that no such instruments or actions shall operate to (a) release the
Tenant from, or in any way decrease, any liability or obligation of the Tenant
under this Lease, or (b)
<PAGE>
impose any additional or increased obligation or liability on the Landlord, for
which the Landlord is not otherwise indemnified from or reimbursed for by the
Tenant under this Lease.
ARTICLE THIRTY-EIGHT
(38.)Right of First Offer
38.1. Subject to the provisions of the last sentence of Section 38.2
below, from and after the third (3rd) anniversary of the term commencement date
(provided that this Lease shall then be in full force and effect and the term
and estate hereby granted shall not have expired or been terminated), the
Landlord will not enter into a lease with any other person, firm or corporation
covering the demise of any single full floor in the Building which is served by
the elevator bank that serves floors twenty-seven (27) through thirty-seven (37)
in the Building (any such space being herein called the "Extra Space") until a
period of ten (10) business days shall have elapsed after the Landlord shall
have notified the Tenant that the Extra Space is or will be (on a date not less
than sixty (60), or more than four hundred fifty-five (455), days after the date
of such notice) available for leasing. The Landlord's notice shall (a) include
an outline floor plan of the Extra Space, (b) specify the rentable area thereof,
(c) specify the date on which Landlord proposes that the Extra Space be added to
the Premises and (d) include the Landlord's binding estimate of the Fair Market
Rental Value (as hereinafter defined) for the Extra Space. Anything in this
Article Thirty-eight to the contrary notwithstanding, (y) the Tenant shall not
have any right to exercise the right of first offer provided for herein more
than two (2) times and, if the Landlord shall have previously notified the
Tenant of the availability of any space pursuant to this Section 38.1, whether
or not the Tenant shall have exercised the option granted pursuant to Section
38.2 below, the Landlord shall not thereafter have any obligation to notify the
Tenant that any space that might otherwise have constituted the Extra Space is
or will be available for leasing or to grant the Tenant an option to lease such
space, and (z) the Landlord shall have no obligation to notify the Tenant that
any space that might otherwise have constituted the Extra Space is or will be
available for leasing or to grant the Tenant an option to lease such space if
the Landlord renews or extends, in whole or in part, a lease covering such space
(including by way of entering into a new lease with a then-existing tenant under
a lease covering such space). The term "Fair Market Rental Value" as used in
this Article Thirty-eight with respect to any Extra Space shall mean the
reasonable annual market fixed rental value of comparable office space in
comparable buildings in midtown Manhattan for a lease term equal to the then
remaining term of this Lease, taking into account all appropriate factors.
38.2. If the Landlord so notifies the Tenant that the Extra Space is or
will be available for leasing, then, subject to the provisions of the last
sentence of this Section 38.2, the Tenant shall have the option to lease the
Extra Space upon all of the same terms and conditions contained in this Lease as
amended by the terms and conditions set forth in this Article Thirty-eight. The
Tenant shall exercise such option (if at all) only by written notice to the
Landlord (an "Expansion Notice") given within such period of ten (10) business
days after the Tenant's receipt of the Landlord's notice that the Extra Space is
or will be available for leasing, and time is of the essence with respect to the
Tenant's giving of such notice exercising such option with in such ten (10)
business day period. Anything in this Section 38.2 or elsewhere in this Lease to
the contrary notwithstanding, the Tenant's rights under this Article
Thirty-eight
<PAGE>
to lease the Extra Space are and shall be subject and subordinate to (a) any
rights in or to the Extra Space in effect on the date hereof of any existing
tenants in the Building under their leases, as the same may be amended or
modified from time to time, and (b) any rights in or to the Extra Space that the
Landlord shall have granted, or shall hereafter grant, to any tenant, subtenant
or occupant of the Building, or to any prospective tenant, subtenant or occupant
with which the Landlord is then in active negotiations, provided that such
tenant, subtenant or occupant or prospective tenant, subtenant or occupant then
leases, or is then in active negotiations to lease, 250,000 or more rentable
square feet of space in the Building or, if the Tenant then leases 250,000 or
more rentable square feet in the Building, such tenant, subtenant or occupant or
prospective tenant, subtenant or occupant leases, or is then in active
negotiations to lease, more rentable square feet in the Building, than is then
leased by the Tenant.
38.3. If the Tenant shall timely exercise the option to add the Extra
Space to the Premises, then, on and after the date specified in the Landlord's
notice as the date on which the Extra Space is to be incorporated in the
Premises (the "Extra Space Commencement Date") (a) the Extra Space shall be
incorporated into and form a part of the Premises, (b) the annual fixed rent
reserved under this Lease shall be increased by an amount which is equal to the
Fair Market Rental Value for the Extra Space, (c) in applying the provisions of
Article Twentyfour of this Lease to the Extra Space only, subparagraphs (h) and
(i) of Section 24.3 shall be deemed to read, respectively, (i) "`Base Real
Estate Taxes' shall mean the R.E. Tax Share of the Real Estate Taxes for the Tax
Year (A) in which shall occur the Extra Space Commencement Date, if the Extra
Space Commencement Date occurs within the first six (6) months of such Tax Year,
or (B) immediately following the Tax Year in which shall occur the Extra Space
Commencement Date, if the Extra Space Commencement Date occurs within the last
six (6) months of such Tax Year," and (ii) "`Base COM' shall mean the O.E. Share
of the Cost of Operation and Maintenance for the Computation Year (A) in which
shall occur the Extra Space Commencement Date, if the Extra Space Commencement
Date occurs within the first six (6) months of such Computation Year, or
(B) immediately following the Computation Year in which shall occur the Extra
Space Commencement Date, if the Extra Space Commencement Date occurs within the
last six (6) months of such Computation Year"; and (d) Section 24.3(c) shall be
amended so that the number of rentable square feet in the Extra Space shall be
added to the Tenant's Area.
38.4. If the Tenant does not dispute the Landlord's estimate of the Fair
Market Rental Value for the Extra Space within thirty (30) days after the
Tenant's receipt of the Landlord's notice that the Extra Space is or will be
available for leasing in accordance with Section 38.1 above, such estimate shall
become the Fixed Rent for the Extra Space. If the Tenant disputes the Landlord's
estimate, the Tenant shall so notify the Landlord of the Tenant's binding
estimate of the Fair Market Rental Value within such thirty (30) days after the
Tenant's receipt of the Landlord's notice and, if the Landlord and the Tenant
fail to reach agreement on the Fair Market Rental Value within ten (10) business
days thereafter, the Fair Market Rental Value shall be determined by arbitration
substantially in accordance with Sections 33.5.1, 33.5.2 and 33.5.3 hereof.
38.5. If the annual fixed rent for the Extra Space shall not be determined
prior to the date the Extra Space is incorporated in the Premises, the Tenant
shall pay an interim fixed rent
<PAGE>
for the period commencing on the date the Extra Space is incorporated in the
Premises and ending on the last day of the month in which such annual fixed rent
is determined at the average annual rate per square foot in effect for the
remainder of the Premises on the day preceding the date the Extra Space is
incorporated in the Premises (without giving effect to any existing abatement of
fixed rent in effect on such date, other than any abatement under Article Ten)
hereof. When the annual fixed rent for the Extra Space is determined, the fixed
rent for such period shall be recomputed upon the basis of such annual fixed
rent so determined and if such recomputed fixed rent for such period is in
excess of such interim fixed rent so paid for such period, the Tenant shall
promptly pay to the Landlord an amount equal to such excess. Conversely, if such
recomputed fixed rent for such period is less than such interim fixed rent so
paid for such period, the Landlord shall apply such amount against the next
installment or installments of fixed rent coming due under the Lease.
38.6. With reasonable promptness after the incorporation of the Extra
Space in the Premises and the final determination of the Rent payable with
regard to the Extra Space, the Landlord and the Tenant shall execute a
supplemental indenture to this Lease confirming the demising of the Extra Space
to the Tenant pursuant to this Article Thirty-eight.
ARTICLE THIRTYNINE
(39.)Additional Penthouse Space
39.1. The Landlord hereby grants to the Tenant the option to take under lease,
subject and subordinate to the Qualified Encumbrances, the space substantially
as shown cross-hatched on the diagram attached hereto as Exhibit A-3 and
designated as 'D' on the roof of the Building (herein called the "Additional
Penthouse Space") subject to all the same terms and conditions of this Lease
applicable to the Penthouse Space. The term with respect to the Additional
Penthouse Space shall commence, and the Additional Penthouse Space shall be
added to the Penthouse Space, on the date which is the earlier to occur of (a)
December 1, 1999 and (b) the date upon which the Tenant first occupies the
Premises for the conduct of its business, subject to Article Two of this Lease
(the "Additional Penthouse Space Term Commencement Date"). The Tenant may
exercise the option granted pursuant to this Section 39.1 (if at all) only by
notifying the Landlord, in writing, not later than October 1, 1999.
39.2. In the event the Tenant shall exercise such option in a timely manner,
then, on and after the Additional Penthouse Space Term Commencement Date (a) the
Additional Penthouse Space shall constitute a part of the Penthouse Space for
all purposes of this Lease, (b) the annual fixed rent reserved under this Lease
for the Penthouse Space pursuant to Section 1.4.1(a)(ii) above shall be
increased to $34,620.00 ($2,885.00 per month), and (c) the agreed upon rentable
area of the Penthouse Space set forth in Section 1.6 above shall be increased to
1,154 rentable square feet.
39.3. With reasonable promptness after the exercise of such option, the Landlord
and the Tenant shall execute a supplemental indenture to this Lease confirming
the demising of such Additional Penthouse Space to the Tenant pursuant to this
Article Thirty-nine. If the Tenant does not exercise its option with respect to
the Additional Penthouse Space within the time and in the
<PAGE>
manner specified in this Article Thirty-nine, then the Landlord shall have no
further obligation to demise the Additional Penthouse Space to the Tenant.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
AMENDED AND RESTATED
CONTRACT BETWEEN
CD RADIO INC.
AND
SPACE SYSTEMS/LORAL, INC.
FOR
ON-ORBIT DELIVERY OF
CD RADIO DARS SATELLITES*
This document contains data and information proprietary to SPACE SYSTEMS/LORAL
and CD RADIO. This data shall not be disclosed or disseminated, or reproduced in
whole or in part without the express prior written approval of SPACE
SYSTEMS/LORAL and CD RADIO, except to the extent permitted by Article 20.
* This agreement is subject to a confidential treatment request.
The confidential portions have been omitted from this Form
10-Q and have been replaced by asterisks (*). The confidential
portions have been filed separately with the Commission as
provided pursuant to Rule 24b-2 under the Securities Exchange Act of 1934.
<PAGE>
TABLE OF CONTENTS
Page
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Article 1. DEFINITIONS.....................................................2
Article 2. SCOPE OF WORK...................................................5
Article 3. DELIVERABLE ITEMS AND DELIVERY SCHEDULE.........................6
Article 4. PRICE...........................................................8
Article 5. PAYMENTS.......................................................10
Article 6. PURCHASER FURNISHED ITEMS......................................13
Article 7. LAUNCH SERVICES................................................14
Article 8. INSPECTION, INTERIM AND FINAL ACCEPTANCE.......................15
Article 9. CIP POINT, TITLE, AND RISK OF LOSS.............................16
Article 10. ACCESS TO WORK IN PROGRESS.....................................17
Article 11. TAXES AND DUTIES...............................................18
Article 12. IN-ORBIT CHECK-OUT FOR FM-1, FM-2 and FM-3.....................19
Article 13. SATISFACTORY OPERATION.........................................20
Article 14. ADDITIONAL SATELLITE OPTION....................................20
Article 15. SUCCESSFUL INJECTION...........................................21
Article 16. INSURANCE OPTION...............................................21
Article 17. U.S. GOVERNMENT LICENSES FOR FM-1, FM-2 OR FM-3................22
Article 18. FORCE MAJEURE..................................................23
Article 19. PURCHASER'S DELAY OF WORK......................................23
Article 20. RIGHTS IN DATA.................................................24
i
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restriction on the title page of this Contract.
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Page
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Article 21. PATENT INDEMNITY...............................................25
Article 22. INDEMNITY - PERSONAL INJURY/PROPERTY DAMAGE....................26
Article 23. RESERVED.......................................................27
Article 24. DEFAULT........................................................27
Article 25. WARRANTY.......................................................30
Article 26. DISPUTES AND ARBITRATION.......................................32
Article 27. CHANGES........................................................32
Article 28. MISCELLANEOUS PROVISIONS.......................................33
Article 29. RESERVED.......................................................34
Article 30. INTER-PARTY WAIVER OF LIABILITY................................34
Article 31. AUTHORITY OF THE PURCHASER'S REPRESENTATIVE....................34
Article 32. PUBLIC RELEASE OF INFORMATION..................................35
Article 33. FUNCTIONS NOT THE RESPONSIBILITY
OF THE CONTRACTOR..............................................35
Article 34. RESERVED.......................................................36
Article 35. SATELLITE GROUND STORAGE OPTION................................36
Article 36. NOTICES........................................................38
Article 37. ASSIGNMENT.....................................................40
Article 38. RESERVED.......................................................40
Article 39. RESERVED.......................................................40
Article 40. RESERVED.......................................................40
ii
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Page
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Article 41. SUPPORT FOR INVESTIGATION OF SATELLITE ANOMALIES...............41
Article 42. INSURANCE......................................................41
Article 43. MISSION OPERATIONS SUPPORT.....................................42
Article 44. DARS LICENSE...................................................42
Article 45. STANDARD OF CONDUCT............................................43
Article 46. ORDER OF PRECEDENCE............................................43
iii
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restriction on the title page of this Contract.
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Page
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APPENDICES AND ATTACHMENTS
Attachment A Payment Plans
B Milestone Achievement Certification
C Non-disclosure Agreement
D Deferred Financing Term Sheet
iv
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restriction on the title page of this Contract.
<PAGE>
PREAMBLE
AMENDED AND RESTATED CONTRACT, dated as of June 30, 1998, between CD Radio Inc.,
a corporation organized and existing under the laws of the State of Delaware,
having its principal place of business at 1180 Avenue of the Americas, 14th
Floor, New York, New York 10036 (hereinafter referred to as the "Purchaser"),
and Space Systems/Loral, Inc., a corporation organized and existing under the
laws of the State of Delaware, having a place of business at 3825 Fabian Way,
Palo Alto, California, 94303 (hereinafter referred to as the "Contractor").
Use or disclosure of the data contained on this page is subject to the
restriction on the title page of this Contract.
1
<PAGE>
WITNESSETH:
WHEREAS, the Purchaser and the Contractor are parties to a Contract
dated as of March 2, 1993 (as amended, supplemented or otherwise modified prior
to the date hereof, the "Existing Contract"), pursuant to which, among other
things, the Contractor agreed to construct and deliver three (3) Satellites for
use in the digital audio radio system ("DARS") being developed by the Purchaser
(such system, as modified or expanded from time to time, the "CD Radio DARS
System");
WHEREAS, the Purchaser and the Contractor are parties to a Memorandum
of Agreement, dated as of March 27, 1998 (the "MOA"), pursuant to which the
Purchaser and the Contractor agreed to amend the Existing Contract to, among
other things, provide for the construction, Launch and on-orbit, checked-out
delivery of three (3) Satellites with a fourth Satellite delivered to Ground
Storage for use in the CD Radio DARS System;
WHEREAS, the Contractor and the Purchaser desire to execute and deliver
this Contract to (i) supersede both the Existing Contract and the MOA and (ii)
provide for the construction, Launch and on-orbit, checked-out delivery of three
(3) Satellites with a fourth Satellite delivered to Ground Storage for use in
the CD Radio DARS System;
*
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, and other good and valuable consideration, the receipt of
which is hereby acknowledged, the Purchaser and the Contractor hereby agree as
follows:
2
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subject to the restriction on the title page of this Contract.
<PAGE>
Article 1.
DEFINITIONS
The following terms shall have the meanings assigned to them below:
1.1 The "Purchaser" means CD Radio Inc., a Delaware corporation, and
its successors and assigns.
1.2 The "Contractor" means Space Systems/Loral, Inc.
1.3 The "Parties" means the Purchaser and the Contractor.
1.4 "Contract" means this Amended and Restated Contract, its Exhibits
and Attachments plus any amendments hereto or thereto, to which the Parties
agree in writing.
1.5 "Satellite" or "Spacecraft" shall mean a CD Radio DARS Satellite
contemplated by and to be supplied to the Purchaser under this Contract.
1.6 "Mission Operations Support Services" shall mean the services
performed by the Contractor including orbit raising of FM-1. FM-2 and FM-3 and
In-Orbit Testing of such Satellites.
1.7 "Terminated Ignition" shall mean, when, for each Satellite
separately of FM-1, FM-2 and FM-3, Intentional Ignition has occurred and is not
followed by liftoff.
1.8 "Launch Vehicle" means one of the expendable Launch Vehicles used
for the Launch of the CD Radio DARS Satellites, as described in Article 7.
1.9 "Launch Agency" means that organization which is responsible for
the Launch Site and conducting the applicable Launch.
1.10 "Launch Site" means the facility used by a Launch Agency for
purposes of Launching a Satellite.
1.11 "Launch Support" means those services provided by the Contractor,
pursuant to the Statement of Work hereto, in support of a Launch by a Launch
Agency.
1.12 "Launch" of a Satellite means Intentional Ignition.
3
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the restriction on the title page of this Contract.
<PAGE>
1.13 "Launch Services Agreement" means the Contract(s) between the
Contractor and the Launch Agency which provides the terms and conditions for
Launching one or more Satellites which are being constructed under this
Contract.
1.14 "Ground Storage" of a Satellite means a condition where the
Satellite or its component parts are secured in a controlled environment for
preservation on the ground.
1.15 "Effective Date of Contract" or "EDC" means March 2, 1993.
1.16 "Affiliate" with respect to any person or entity, shall mean any
person or entity directly or indirectly controlling, controlled by or under
common control with such person or entity.
1.17 "Intentional Ignition" means the ignition of the first stage main
engine(s) of the Launch Vehicle. 1.18 "Launch Pad" shall mean the designated
area at the Launch Site from which the Satellite will be Launched.
1.19 "FM" means, with respect to any Satellite, Flight Model.
1.20 *
1.21 *
1.22 "Data and Documentation" means the information to be provided by
the Contractor in accordance with Exhibit A, Annex 2, Deliverable Document List.
1.23 "Price" shall have the meaning specified in Article 4 of this
Contract, as reduced or increased from time to time in accordance with the terms
of this Contract.
1.24 *
1.25 "In-Orbit Check Out Amount" shall mean payments numbered 20B, 21E
and 22E for FM's 1, 2 and 3, respectively, (e.g., milestones entitled "Complete
IOT") as shown on Attachment A to this Contract.
1.26 "On-Orbit/Checked Out" shall mean a Satellite that is placed in an
orbital location as defined in Exhibit B, Section 1, (i.e., on-orbit)and which
has been tested in accordance with Exhibit D, Test Plan, to validate the
Satellite's performance as specified in Exhibit B.
4
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the restriction on the title page of this Contract.
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1.27 "Insurance Management Support Services" shall mean the technical
assistance provided by the Contractor to the Purchaser in support of the
procurement of insurance for the Satellites.
1.28 "Satellite Failure" means (i) a Satellite that has a service life
that, at any point in time, is predicted to be less than six (6) years,
including the number of years that have already occurred since the date of
completion of in-orbit testing or (ii) a Satellite that, at any point in time,
has fewer than fifty percent 50% of its EIRP specified in Exhibit B.
1.29 *
1.30 "In-Orbit Testing" or "IOT" shall have the meaning described in
Exhibit A, Statement of Work.
1.31 *
5
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the restriction on the title page of this Contract.
<PAGE>
Article 2.
SCOPE OF WORK
2.1 Work Effort. The Contractor shall provide the necessary personnel,
material, services, and facilities, to manufacture, test and deliver
On-Orbit/Checked Out or to Ground Storage as specified in Sub-Article 3.3, four
(4) complete Spacecraft in accordance with the Satellite Performance
Specification, Exhibit B to this Contract, and perform the services described in
Exhibit A, Statement of Work, (except those items of hardware and services
listed as "optional," unless such options are exercised by the Purchaser in
accordance with the terms of this Contract), to the extent specified in this
Contract, and to perform the work required hereunder in accordance with the
Exhibits listed below, which are attached hereto and made a part hereof by
reference:
2.1.1 Exhibit A, Statement of Work (SOW) Revision 5, dated 21 July
1998, SS/L-TP93002-02
2.1.2 Exhibit B, Satellite Performance Specification, Revision 9, dated
21 July 1998, SS/L-TP93002-03
2.1.3 Exhibit C - Product Assurance Program Plan, Revision 2, dated 14
January 1997, SS/L-TP93002-04
2.1.4 Exhibit D - Test Plan, Revision 3C, dated 21 July 1998,
SS/L-TP93002-05
2.1.5 Exhibit E - Dynamic Simulator Specification dated 21 July 1998,
SS/L-TP93002-06
*
6
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the restriction on the title page of this Contract.
<PAGE>
Article 3.
DELIVERABLE ITEMS AND DELIVERY SCHEDULE
3.1 Satellite Delivery. Each of the Satellites to be delivered
On-Orbit/Checked Out shall be delivered in accordance with the provisions of
Sub-Article 3.3 below and Exhibit A, with such delivery being deemed to have
occurred upon completion of In Orbit Testing of the applicable Satellite which
is conducted to verify that the performance of the Satellite has not degraded
during Launch. For a Satellite delivered into Ground Storage pursuant to
Sub-Article 3.3 or Article 35, delivery shall be deemed to have occurred when
the Satellite arrives at the designated Ground Storage site.
3.2 Delivery of Services. Delivery of services shall be deemed to have
occurred when such services have been completed in accordance with the
requirements of Exhibit A.
3.3 Deliverable Items. The goods and services to be delivered and the
corresponding delivery schedule under this Contract are as follows:
Item Description Delivery Schedule Place of Delivery
- ---- ----------- ----------------- -----------------
1 First Satellite January 30, 2000, per Exhibit B,
(FM-1) On-Orbit/Checked Out Section 1
2 Second Satellite February 28, 2000, per Exhibit B,
(FM-2) On-Orbit/Checked Out Section 1
3 Third Satellite March 31, 2000, per Exhibit B,
(FM-3) On-Orbit/Checked Out Section 1
4 Fourth Satellite May 31, 2000 Purchaser designated
(FM-4) CONUS Ground
Storage site
5-7 Launch Services for November 1999 (FM-1) Launch Site
FM-1, FM-2 and December 1999 (FM-2)
FM-3 in accordance January 2000 (FM-3)
with the terms of
Article 7
7
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the restriction on the title page of this Contract.
<PAGE>
Item Description Delivery Schedule Place of Delivery
- ---- ----------- ----------------- -----------------
8 Optional Satellite Per Sub-Article 14.2 Purchaser designated
CONUS Ground
Storage site
9 Dynamic Simulator September 1, 1999 Purchaser CONUS
(Qty 1) TT&C facility
10 Mission Operations Per Exhibit A Per Exhibit A
Support Services
FM-1, FM-2 and
FM-3
11 Insurance As Required N/A
Management Support
Services for FM-1,
FM-2 and FM-3
12 Data and Per Exhibit A Per Exhibit A
Documentation
13 Training Per Exhibit A Palo Alto, CA
New York, NY
14 Insurance Option Per Article 16 N/A
3.4 Late Delivery Penalties. If all of FM-1, FM-2 and FM-3 Satellites
(including applicable Launch Services and one (1) dynamic simulator) are not
delivered On-Orbit/Checked Out by 31 July 2000 the Price shall, unless such
delays are excusable within the meaning of Article 18 - FORCE MAJEURE, be
reduced by Forty-Five-Thousand dollars ($45,000) per day for each day of delay
starting on August 1, 2000 for up to eighty-nine (89) days thereafter with a
maximum Price reduction of Four-Million-Fifty-Thousand dollars ($4,050,000).
If FM-4 is not delivered to Ground Storage by 30 September 2000, then
the Price shall, unless such delay is excusable within the meaning of Article 18
FORCE MAJEURE, be reduced by Fifteen-Thousand dollars ($15,000) per day for each
day of delay starting on October 1, 2000 for up to eighty-nine (89) days
thereafter with a maximum Price reduction of
One-Million-Three-Hundred-Fifty-Thousand dollars ($1,350,000).
3.5 *
3.6 Limit of Liability. EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED
HEREIN, THE CONTRACTOR SHALL NOT BE LIABLE FOR ANY SPECIAL, INDIRECT, INCIDENTAL
OR CONSEQUENTIAL DAMAGES OR FOR LOST REVENUES OR PROFITS DUE TO LATE DELIVERY OF
ANY ITEMS, INCLUDING BUT NOT LIMITED TO THE SATELLITES REQUIRED TO BE DELIVERED
UNDER THIS CONTRACT.
3.7 *
3.8 *
3.9 *
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Article 4.
PRICE
The price to be paid by the Purchaser to the Contractor for performance
of its obligations under this Contract is
Four-Hundred-Thirty-Eight-Million-Forty- Thousand Dollars ($438,040,000) plus
the price of the Launch Services provided by the Contractor in accordance with
Article 7 (the "Price").
The Price does not include any of the options available to the
Purchaser under the terms of this Contract. *
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Article 5.
PAYMENTS
5.1 General.
5.1.1 Payments by the Purchaser to the Contractor of the Price shall be
in accordance with the applicable Payment Plan provided in Attachment A.
5.1.2 *
5.1.3 *
5.1.4 *
5.2 *
5.3 Payment Conditions. * All payments to the Contractor from the
Purchaser shall be in United States Dollars and shall be made by electronic
funds transfer (EFT) to the following account:
BANK OF AMERICA, NT & SA
SPACE SYSTEMS/LORAL
ACCOUNT NO. 75-69165
CHICAGO, ILLINOIS
ABA #071-000-039
or other such accounts as the Contractor may specify from time to time in
written notices to the Purchaser.
5.4 Payments Associated with Options. In the event that the Purchaser
exercises any of the options provided for under this Contract, then the
Purchaser shall make payments for such option(s) in accordance with the
respective Payment Plans which are a subset of Attachment A hereto.
5.5 *
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Article 6.
PURCHASER FURNISHED ITEMS
6.1 Facilities for IOT. The Purchaser shall make available to the
Contractor the use of the Purchaser's Satellite control facilities for the
purposes of In-Orbit Testing of the Satellites.
6.2 Spacecraft Monthly Reports. The Purchaser shall provide to the
Contractor, no less frequently than monthly during the on-orbit life of each
Satellite, an informal letter report which shall describe the general health and
operating status of the Satellites and specifically identify any defined
anomalies. For the purpose of this Article, a Satellite anomaly means any
occurrence in-orbit that was not anticipated in the Satellite Orbital Operation
Handbook (SOOH) delivered to the Purchaser pursuant to Annex 2 of Exhibit A. In
the event that a Satellite anomaly is encountered, the Purchaser shall provide
and/or give access to such data as the Contractor may require for investigation
and/or correction of such anomaly. Further, the Purchaser shall grant such
reasonable access to ground stations and the Satellites as the Contractor might
require for an investigation of such anomaly. The Contractor shall use its best
efforts to understand the anomaly.
6.3 Purchaser Delays. If the Contractor is delayed due to failure of
the Purchaser to perform its obligations under this Article, the Contractor
shall notify the Purchaser of such delay and failure. If the Purchaser fails to
cure such failure within thirty (30) days thereafter, the Contractor shall have
the option to perform such obligations on behalf of the Purchaser; if the
Contractor does so, it will so notify the Purchaser and the Purchaser shall
reimburse the Contractor by means of an equitable adjustment in the Price,
schedule, and other affected portions of this Contract. Whether or not the
Contractor elects to perform such Purchaser obligations, delays caused by the
Purchaser's failure shall be subject to the provisions of Article 19 - PURCHASER
DELAY OF WORK.
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Article 7.
LAUNCH SERVICES
7.1 Atlas, Sea-Launch and Proton Launch Services. Subject to the
provisions set forth below, the Contractor and the Purchaser agree that Launch
services under this Contract shall consist of three (3) Launches ("Launch
Services") and shall be provided on two (2) Proton Launch Vehicles and an Atlas
IIIA Launch Vehicle. The Contractor agrees that FM-1 and FM-2 shall be Launched
on Proton Launch Vehicles and, subject to the provisions set forth below, that
FM-3 shall be Launched on an Atlas IIIA Launch Vehicle.
In the event that the Contractor, after consultation with the
Purchaser, determines that the Atlas IIIA Launch Vehicle is not suitably
optimized for Launch of FM-3 (which determination shall be made prior to August
27, 1998), then the Purchaser shall, by August 28, 1998 instruct the Contractor
to substitute either a Proton Launch Vehicle (to the extent that a Proton Launch
Vehicle is available), a Sea-Launch Launch Vehicle or an Atlas IIIB Launch
Vehicle (to the extent that an Atlas IIIB Launch Vehicle is available) for such
unsuitable Launch Vehicle. Any such substitution of Launch Vehicles shall not
change the applicable Launch dates or delivery schedule contained in Sub-Article
3.3.
* On or before August 3, 1998, the Contractor shall inform the Purchaser, in
writing, whether a Sea-Launch Launch Vehicle which may be selected by the
Purchaser can be replaced by an additional Proton Launch Vehicle. In the event a
Launch Failure occurs in the industry that causes a postponement of a scheduled
Launch, the Contractor will work with the Purchaser and its Launch Agencies to
obtain the earliest possible Launch date for the affected Satellite.
7.2 Ariane Launch Vehicles. The Contractor shall use reasonable best
efforts, provided they entail no net cost or liability to the Contractor and the
Purchaser, to modify its Multiple Launch Service Agreement ("MLSA") with
Arianespace S.A. ("Arianespace") to add the two (2) Ariane launchers which were
previously under contract between the Purchaser and Arianespace. In this
connection, the Contractor shall use reasonable best efforts, provided they
entail no net cost nor liability to the Contractor and the Purchaser, to secure
Arianespace's agreement to reimburse the Purchaser, fully or partially, for all
amounts paid under the Purchaser/Arianespace agreement. Such efforts will be
made to secure the reimbursement prior to March 31, 2000 although no assurances
can be made. The Contractor agrees to include the Purchaser in (or at least to
consult on a regular basis with the Purchaser regarding) the Arianespace
negotiations that directly affect the Purchaser's interests. Upon reaching
successful agreement with Arianespace, the
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Contractor will inform the Purchaser of the terms of the agreement and promptly
pay over to the Purchaser any reimbursement amounts paid by Arianespace in
connection with the Purchaser/Arianespace agreement.
7.3 *
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Article 8.
INSPECTION, INTERIM AND FINAL ACCEPTANCE
8.1 Inspections and Testing of Satellites. The Satellites shall be
subjected to inspection and acceptance testing in accordance with Exhibit A,
Statement of Work, Exhibit C, Product Assurance Plan and Exhibit D, Test Plan.
The Purchaser shall have the right to conduct inspections of the Satellites and
witness acceptance testing in accordance with the paragraph below, and to
examine the test data resulting from such tests. The Contractor will give
reasonable advance notice to the Purchaser, when practicable, as to the time
such tests will be conducted and the nature of the test. Failure of the
Purchaser to witness the tests shall not prevent the tests from proceeding.
8.2 Interim Acceptance of the Satellites. The Satellite(s) will be
inspected and subject to Interim Acceptance by the Purchaser at the Contractor's
Palo Alto facility. Upon completion of the Purchaser's inspection of the
Satellites and upon satisfactory completion of the acceptance testing by the
Contractor, the Purchaser shall provide written notice to the Contractor of its
Interim Acceptance of a Satellite. This written Interim Acceptance shall be
provided at the Satellite Pre-shipment Review, to be held in Palo Alto, prior to
the shipment of the Satellites to the Launch Site for FM-1, FM-2 and FM-3 or to
Ground Storage for FM-4.
8.3 Final Acceptance of FM-1, 2 and 3 Satellites. When each of FM-1,
FM-2 and FM-3 arrive at the Launch Site, inspection and verification testing
will be performed by the Contractor to make sure that no damage occurred to the
Satellites during shipment to the Launch Site. The Contractor shall then conduct
the Satellite Launch Readiness Review in accordance with Exhibit A, Statement of
Work. Final Acceptance of a Satellite shall be deemed to occur upon delivery
On-Orbit/Checked Out. The Parties sole rights and remedies in the event of Final
Acceptance based on Satisfactory; Less Than Satisfactory Operation, or Satellite
Failure, shall be as set forth in Article 12, In-Orbit Check-Out.
8.4 Final Acceptance of the Fourth Satellite. Final Acceptance of FM-4
shall be deemed to occur only upon delivery of such Satellite to the Purchaser's
designated CONUS Ground Storage facility.
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Article 9.
CIP POINT, TITLE, AND RISK OF LOSS
9.1 Title and Risk of Loss. The title for FM-1, FM-2 and FM-3 shall
pass to the Purchaser at the time of delivery of such Satellite On-Orbit/Checked
Out or, in the case of a Satellite delivered for Ground Storage, in accordance
with the requirements of Article 35 hereof. Risk of loss and/or damage for FM-1,
FM-2 and FM-3 shall pass to the Purchaser at the time of Launch of such
Satellite or, in the case of a Satellite delivered for Ground Storage, in
accordance with the requirements of Article 35 hereof. Title and risk of loss
and/or damage for FM-4 shall pass to the Purchaser upon delivery of the
Satellite to the Purchaser designated CONUS Ground Storage site. Neither the
Contractor nor any of its subcontractors or suppliers at any tier shall be
liable to the Purchaser or its agents, representatives, or customers (including
insurers of Satellite(s)) for loss of or damage to a Satellite after Launch
(including if the Contractor furnishes post-Launch mission or operational
support, if any), regardless of the cause or theory. The Contractor's sole
responsibility in the event of such loss or damage arising from or related to
the provision of such support shall be as set forth in Article 25. The Purchaser
agrees to indemnify and hold harmless the Contractor for all costs, expenses and
losses of the Contractor that result from claims or litigation based upon the
Contractor's alleged responsibility, or liability, or the alleged responsibility
of the Contractor's subcontractors or suppliers for loss of, or damage to, the
Satellites occurring after Launch, regardless of the cause or theory.
9.2 CIP Point. The Contractor will provide Carriage and Insurance Paid
(CIP) to the applicable Launch Pad for FM-1, FM-2 and FM-3 and to the applicable
Purchaser designated CONUS Ground Storage site for FM-4.
9.3 Terminated Ignition Contingency Support. In the event of the
occurrence of a Terminated Ignition of the Launch Vehicle used for the Launch of
the FM-1, FM-2 or FM-3, the Parties agree that the Contractor shall immediately
reacquire risk of loss of the affected Satellite and immediately commence work
subsequently required to ready the Satellite for a Launch Vehicle relaunch
(including, as applicable, demating and defueling of Satellite, procurement of
applicable insurance(s), the Contractor taking re-possession of the Satellite
upon its removal from the Launch Vehicle, storage, shipping of Satellite back to
Palo Alto, refurbishing, retesting, re-shipping, and re-initiation and
performance of a subsequent Launch, and any other related effort). It is agreed
by the Parties that such support shall be provided at the Purchaser's expense
and shall be subject to an equitable adjustment to this Contract for schedule
and the price of such work as mutually agreed to by the Parties. Equitable
adjustment for such work and all affected terms of this Contract, its Exhibits
and Schedule(s), as applicable, shall be negotiated within thirty (30) days of
the Terminated Ignition or as otherwise agreed to by the Parties.
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In such event where the Contractor proceeds with the Terminated
Ignition contingency support as described in this Article 9.3, the application
of Article 25 shall also apply.
In such event where the Contractor proceeds with the Terminated
Ignition contingency support and pending final negotiation of an equitable
adjustment, both as described in this Article 9.3, the Parties agree to perform
their respective obligations described elsewhere in this Contract.
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Article 10.
ACCESS TO WORK IN PROGRESS
10.1 Work in Progress at Contractor's Plant. For the purpose of
observing the quality of the Contractor's performance of work, a pre-agreed
limited number of the Purchaser's personnel (including its consultants who must
be approved in advance by the Contractor) shall be allowed to observe, on a
non-interference basis, work being performed at the subsystem level and above
for the Satellites, at the Contractor's plant. Such observation shall occur
during normal working hours that are reasonable under the circumstances. The
Contractor shall provide office space and access to telephone, copy and fax
machine services for the Purchaser's personnel, not to exceed four (4), at the
Contractor's facility.
10.2 Work in Progress at Subcontractor's Plants. To the extent
permitted by the Contractor's major subcontractors, and any U.S. Government
restrictions, the Contractor shall allow the Purchaser access to work being
performed pursuant to this Contract in subcontractors' plants for the purpose of
observing the quality of subcontractor's performance of work, subject to the
right of the Contractor to accompany the Purchaser on any visit to a
subcontractor's plant. The Contractor will exert its best efforts in
subcontracting to obtain permission for such access to subcontractors'
facilities.
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Article 11.
TAXES AND DUTIES
11.1 U.S. Taxes (Excluding Sales Taxes). Tariffs, duties, taxes (except
sales taxes) or other charges levied by any taxing authority within the United
States of America on the goods, equipment, materials or effort covered by this
Contract shall be paid by the Contractor.
11.2 U.S. Sales Taxes. The Purchaser shall be responsible for the
payment of any sales taxes levied against the effort under this Contract by any
taxing authority within the United States.
11.3 Foreign Taxes. The Contractor shall be responsible for all foreign
taxes (including sales taxes, if any) on the goods, equipment, materials or
effort covered by this Contract, including those associated with subcontract
work.
11.4 Contractor Payment of Taxes. In the event that the Contractor is
required to pay or withhold any sales tax imposed by any taxing authority within
the United States in connection with this Contract, which is the responsibility
of the Purchaser under the terms of this Contract, and the Contractor pays such
sales tax for the Purchaser, the Price shall be increased by an amount to
account for such sales tax and the amount shall be invoiced by the Contractor as
an obligation that is immediately due and payable by the Purchaser.
11.5 Survival. The provisions of this Article shall survive the
expiration, completion, or termination of this Contract.
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Article 12.
IN-ORBIT CHECK-OUT FOR FM-1, FM-2 and FM-3
12.1 *
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Article 13.
SATISFACTORY OPERATION
For purposes of calculating the In-Orbit Check-Out Amount, the term
"Satisfactory Operation" means that the applicable Satellite is in conformance
with the requirements set forth in Exhibit B - Satellite Performance
Specification to this Contract, taking into account tolerances for measurement
accuracy; provided, however, that any failure of the applicable Satellite to
meet the performance specified in said Exhibit which is capable of being
corrected by switching to one redundant unit in the Satellite within 30 minutes
after said failure is discovered or which does not have a material impact on
Satellite performance (including broadcast capacity and useful life), shall not
be deemed as causing nonconformance to said Exhibit.
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Article 14.
ADDITIONAL SATELLITE OPTION
14.1 Order for Optional Satellite. The Purchaser may, at its option to
be exercised by written notice delivered to the Contractor at any time on or
before 1 May 2000, order the Contractor to produce and deliver CIP to a
Purchaser designated CONUS Ground Storage site an additional Satellite identical
to those being furnished pursuant to Article 2- SCOPE OF WORK.
14.2 Delivery of Optional Satellite. If the optional Satellite is
ordered on or before 1 November 1998, then the delivery of the optional
Satellite shall be six months following the delivery of FM-4 ordered hereunder.
If the optional Satellite is ordered after 1 November 1998, then the delivery of
this optional Satellite shall be 28 months after the option is exercised, or six
months following the delivery of FM-4 ordered hereunder, whichever is later.
14.3 *
14.4 Payment Plan. A Payment Plan for an optional Satellite ordered
under this Article is included in the Payment Plan, Attachment A.
14.5 Terms and Conditions. In the event that the option provided for
under this Article is exercised by the Purchaser, then the terms and conditions
of this Contract shall be applicable to such option (unless the Parties agree
otherwise), except for the financial and delivery provisions of the Contract
which will be modified to reflect the procurement of the additional optional
Satellite.
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Article 15.
SUCCESSFUL INJECTION
15.1 Definition. Injection of a Satellite shall be considered
successful if both of the following circumstances occur:
a. No damage occurs to the Satellite which can be shown to
have resulted from Launch Failure or malfunction.
b. The elements of the transfer orbit attained by the Launch
Vehicle and Launch Vehicle orientation at the time of separation of the
Satellite from the Launch Vehicle are within the 3-sigma limits of the Launch
Vehicle performance established by the Contractor.
15.2 Unsuccessful Injection. If the transfer orbit attained by the
Launch Vehicle or Launch Vehicle orientation at the time of separation of the
Satellite from the Launch Vehicle are outside the 3sigma limits, the Satellite
injection shall be considered unsuccessful. However, the Contractor shall use
its best efforts to utilize the propulsion capabilities of the Satellite to
achieve a successful final orbit. Notwithstanding achievement of a successful
final orbit, this situation shall be treated as an "Unsuccessful Injection."
Payment of the In-Orbit Check Out Amount for the applicable Satellite shall be
made and the Purchaser shall then have the right to use said Satellite for any
purpose without incurring any obligation to the Contractor (subject to the terms
of the Purchaser's salvage provision of any applicable insurance policy).
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Article 16.
INSURANCE OPTION
16.1 Exercise of Option. The Purchaser may, at its option, to be
exercised by written notice delivered to the Contractor by
March 31, 1999 for FM-1, FM-2 or FM-3 order the Contractor to procure Launch
insurance to cover the risk of loss to the applicable Satellite for the period
of time from Launch (as defined in this Contract) through a period after Launch
which shall be defined by the Purchaser at the time of option exercise.
16.2 Price and Payment Terms. Upon written receipt by the Contractor of
the Purchaser's election to exercise this option, the Contractor shall provide
the Purchaser with the price and payment terms for this option within thirty
(30) days. If the Purchaser accepts the Contractor's price and payment terms,
then the exercise of this option shall be subsequently effected through an
amendment to this Contract.
16.3 Risk of Loss and Title. Subsequent to agreement by the Parties on
the price and applicable terms for this option, the Parties agree that risk of
loss of the effected Satellite(s) shall pass at the end of the period covered by
this insurance option.
16.4 Terms and Conditions. In the event that the option provided for
under this Article 16 is procured by the Purchaser, (i) the remaining terms and
conditions of this Contract, as applicable, and, as modified in this Article 16,
shall apply, and (ii) the Purchaser and the Contractor agree to incorporate
appropriate language required to support this effort (e.g., applicable insurance
related definitions and language).
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Article 17.
U.S. GOVERNMENT LICENSES FOR FM-1, FM-2 OR FM-3
17.1 U.S. Government License. The Contractor shall have the
responsibility to obtain export licenses as required for delivery and Launch of
FM-1, FM-2 and FM-3. The Purchaser agrees to use its best efforts to assist the
Contractor in such efforts. The Contractor shall have no liability for costs,
damages or expenses incurred by the Purchaser for any reason whatsoever,
resulting from or in connection with any decision on the part of the U.S.
Government with regard to the issuance of a license, or refusal to issue a
license for export or Launch on a non-U.S. Launch Vehicle. Both Parties agree to
abide by the provisions of any license issued by the U.S. Government.
17.2 Purchaser's Documentation Required for License Application. The
Purchaser agrees to provide the Contractor with the Purchaser's data or
documentation, as may be required for submitting any license request.
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Article 18.
FORCE MAJEURE
It is recognized by the Parties that a Force Majeure event may delay
the performance of the work on the Program or cause non-performance of this
Contract by the Contractor, provided however that the Contractor shall use its
best efforts to avoid or minimize the effects of such late delivery, delay or
non-performance. Such excusable delay shall not be a default hereunder or a
ground for termination hereof.
18.1 Definition. Force Majeure shall include any event beyond the
reasonable control of the Contractor and its subcontractors and shall
include, but will not be limited to, acts of God, acts of a public enemy, acts
of any Government in its sovereign capacity, war and warlike events, unusually
severe weather, fire, mud slides, earthquakes, floods, epidemics, quarantine
restrictions, sabotage, riots and embargoes; which in every case, are beyond the
reasonable control and without the fault or negligence of the Contractor and its
subcontractors. Upon the occurrence of Force Majeure, an equitable adjustment
shall be negotiated in the schedule and other affected portions of this
Contract. In addition , failure to deliver the Launch Services required by this
Contract due to causes beyond the Contractor's control (including prior failures
of the designated Launch Vehicle) will be an excusable delay under this Article
18.
18.2 Delayed Delivery. Accordingly, the Contractor shall not be
responsible for the late delivery, delay of final completion or
non-performance of its contractual obligations due to Force Majeure events to
the extent such events affect the delivery, completion or non-performance under
this Contract.
18.3 Notification. The Contractor shall advise the Purchaser in
writing as soon as possible after the Contractor has learned of a
delay or potential delay but not later than five (5) days after the onset, and
again at the termination, of a Force Majeure event.
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Article 19.
PURCHASER'S DELAY OF WORK
If the performance of all or any part of the work required by this
Contract is delayed or interrupted by (1) any act of the Purchaser in the
administration of this Contract, or (2) by any acts of the Purchaser which are
not expressly or impliedly authorized by this Contract, or (3) by the
Purchaser's failure to perform its contractual obligations within the time
specified in this Contract, or within a reasonable time if no time is specified,
then this Contract shall be equitably adjusted in the Price, performance
requirements, schedule, and/or any other affected terms of this Contract. Such
delay of work does not include that caused by a Force Majeure event.
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Article 20.
RIGHTS IN DATA
The Contractor shall retain all rights, title and interest in any
Contractor data, invention, discovery or improvement utilized or developed by
the Contractor during the performance of this Contract.
20.1 Deliverable Data. The Purchaser's officers, employees,
consultants, representatives and agents shall have the perpetual, paid-up,
royalty-free, world-wide, nonexclusive right to use the deliverable Data and
Documentation for the purpose of establishing, operating, and maintaining the CD
Radio DARS System and for no other purpose. The Purchaser's officers, employees,
consultants, representatives, and agents shall not disclose such Data and
Documentation (or any other data obtained by Purchaser under this Contract) to
other companies, organizations or persons without the express written consent of
the Contractor.
20.2 Other Data. All other Contractor data, or data of its
subcontractors, to which the Purchaser may have access to in the course of the
Contractor's performance of this Contract shall remain the property of the
Contractor or its subcontractors and shall not be duplicated, used, or disclosed
to persons other than the Purchaser's officers, employees, consultants,
representatives or agents and shall be used solely to assist the Purchaser in
establishing, operating and maintaining the CD Radio DARS System including
Satellite/ground equipment interface. This data may only be provided to third
parties with the prior written approval of the Contractor, and, if applicable,
Contractor's subcontractors, in each case which consent will not be unreasonably
withheld or delayed. Nothing contained in this Article shall require the
Contractor to provide any data beyond that set forth in Exhibit A.
20.3 Purchaser's Data. The Contractor and its officers, employees,
consultants, subcontractors and representatives shall not disclose any data or
information obtained from the Purchaser and its officers, employees, consultants
or representatives during the performance of its obligations under this Contract
to other companies, organizations or persons without the express written consent
of the Purchaser.
20.4 Confidentiality. The confidentiality obligations imposed on the
Contractor and Purchaser under this Article 20 with regard to data provided
under this Contract shall survive the termination, for whatever reason, of this
Contract, in accordance with the requirements of Attachment C, Non-Disclosure
Agreement.
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Article 21.
PATENT INDEMNITY
21.1 The Contractor, at its own expense, shall defend, indemnify and
hold the Purchaser harmless against any claim or suit against the Purchaser
based on an allegation that the manufacture of any item in the performance of
this Contract, or the normal intended use, lease or sale of any item delivered
or to be delivered under this Contract, infringes any U.S. letters patent,
copyrights or trade secrets, and shall pay any royalties and other costs of the
settlement of such claim or suit and the costs and damages finally awarded,
including reasonable attorney fees as the result of any suit, provided that the
Purchaser promptly notifies the Contractor in writing of any such claim or suit
and gives the Contractor authority and such assistance and information as is
reasonably available to the Purchaser for the defense of such claim or suit.
21.2 If the manufacture of any item in the performance of this
Contract, or the normal intended use, lease or sale of any item delivered under
this Contract, is enjoined as a result of a suit based on such claim of
infringement, the Contractor shall resolve the matter by negotiating a license
or other agreement so that the injunction no longer pertains; otherwise, the
Contractor shall be liable to the Purchaser for the Purchaser's additional costs
and damages arising as a result of such injunction, subject to the limitation
set forth in Sub-Article 21.6 provided that the conditions of Sub-Article 21.3
herein do not apply.
21.3 The indemnity provided under this Article shall not apply to the
Contractor's delivery of normally non-infringing items and their intended use
which are rendered infringing by the Purchaser's modification of said items or
by a combination of said items with items not provided by the Contractor under
this Contract.
21.4 The indemnity provided under this Article does not extend to any
infringement resulting from a change in method of manufacture of an item to be
delivered, ordered by the Purchaser pursuant to Article 27 - CHANGES, or the
stipulation by the Purchaser of the specific design of an item to be delivered
if infringement would not have occurred but for compliance with such change or
design.
21.5 The indemnity provided under this Article does not extend to any
claim that the placement of any Satellite in any orbit other than
geostationary(e.g., a highly inclined geosynchronous orbit) directed or
stipulated by the Purchaser infringes the intellectual property rights of any
third party.
21.6 *
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Article 22.
INDEMNITY - PERSONAL INJURY/PROPERTY DAMAGE
22.1 Contractor Indemnification of the Purchaser. The Contractor shall
indemnify and hold harmless the Purchaser, its officers, directors, employees,
consultants, representatives and agents from any loss, damage (not including any
lost profits or consequential damages), claims, liability, and causes of action
for injury or death of any third party, or for damage to, or destruction of,
third party property (excluding any Satellite provided under this Contract
following the Launch of such Satellite) arising out of negligent acts or
omissions by the Contractor, its officers, directors, employees, consultants,
representatives, agents or subcontractors in connection with, or relating to,
the manufacture, testing, and delivery of a Satellite occurring at or before the
Launch or, if delivered to Ground Storage, delivery to Ground Storage, of the
last Satellite ordered under this Contract, except to the extent such loss,
damage, claims, liabilities or causes of action arise from the fault or
negligence on the part of the Purchaser, its officers, directors, employees,
consultants, representatives, agents or subcontractors. The Contractor's
responsibility with respect to items delivered hereunder shall be solely
governed by the provisions of Article 25, WARRANTY.
22.2 Purchaser Indemnification of Contractor. The Purchaser shall
indemnify and hold harmless the Contractor, its officers, directors, employees,
consultants, representatives and agents from any loss, damage (not including any
lost profits or consequential damages), claims, liability, and causes of action
for injury or death of any third party, or for damage to or destruction of third
party property arising out of negligent acts or omissions by the Purchaser, its
officers, directors, employees, consultants, representatives, agents, or
subcontractors occurring at or before the Launch (or, if delivered to Ground
Storage, delivery to Ground Storage) of the last Satellite ordered under this
Contract, except to the extent such loss, damage, claims, liabilities or causes
of action, arises from the fault or negligence on the part of the Contractor,
its officers, directors, employees, consultants, representatives, agents, or
subcontractors.
22.3 Property Damage Insurance. The Contractor certifies it has all-
risk property insurance and will maintain such policy through completion of this
Contract. The Contractor will use best efforts to include the Purchaser as a
named beneficiary, at no additional cost to Contractor, under any indemnities or
insurance provided by a Launch Agency against claims by third parties for bodily
or property damage resulting from a Launch.
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Article 23.
RESERVED
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Article 24.
DEFAULT
24.1 Failure to Perform by the Contractor. Subject to the expiration of
the Late Delivery Penalty Periods provided in Article 3.4, if the Contractor (1)
fails to deliver the deliverable items or perform the work under the Contract
within the time specified herein, or any approved extension thereof, or (2)
fails to prosecute the work so as to endanger performance of this Contract, or
(3) fails to perform any of the other material provisions of this Contract, and
in each case does not cure such failure within 30 days (or such longer period as
authorized by the Purchaser) after receipt from the Purchaser of written notice
of such failure, then the Purchaser, at its option, may terminate this Contract
in whole or in part by written notice of default. Upon termination for default,
the Contractor shall be reimbursed for the terminated work as follows: *
24.2 *
24.3 *
24.4 Contractor Termination.
24.4.1 The Contractor may terminate this Contract for the Purchaser's
failure to comply with any material provision of this Contract; provided, that
the right of the Contractor to terminate this Contract upon breach by the
Purchaser of any of its covenants and agreements set forth in Sub-Articles 5.1.2
through 5.1.4 hereof shall be governed by Sub-Article 24.4.2 below. Such
termination, under this Sub-Article 24.4.1, will become effective should the
Purchaser fail to correct such nonperformance within thirty (30) days of receipt
of notice in writing from the Contractor.
24.4.2 (i) The Contractor may immediately terminate this
Contract upon the occurrence of an "Event of Default" (as such term is defined
in the Bank of America Credit Agreement) under the Bank of America Credit
Agreement. Any such termination under this Article 24.4.2 shall become effective
upon delivery to the Purchaser of notice of such termination in writing from the
Contractor.
(ii) The Contractor may immediately terminate this Contract
upon a breach by the Purchaser of any of its covenants and agreements contained
in Sub-Article 5.1.4, such termination to become effective upon delivery to the
Purchaser of notice of such termination in writing from the Contractor.
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(iii) The Contractor may terminate this Contract upon a breach
by the Purchaser of any of its covenants and agreements contained in Sub-Article
5.1.3. Such termination shall only become effective should the Purchaser fail to
correct such non-performance within thirty (30) days of receipt of notice of
such termination in writing from the Contractor.
(iv) *
24.4.3 *
The Contractor's termination claim under Sub-Article 24.4 (a) through
(d) shall be forwarded to the Purchaser within ninety (90) days of the
Contractor's notice of termination to the Purchaser. The Purchaser may require
at its expense that the Contractor's claim for the above costs be verified by an
independent party. Such verification would exclude Contractor's Proprietary
Data.
24.5 Residual Inventory and Unfurnished Launch Services. Following the
submission of the Contractor's termination claim to the Purchaser, the
Contractor shall dispose of the residual inventory and unfurnished Launch
Services using its best efforts to purchase or sell any parts, components,
boxes, Launch Service(s) or subsystems originally bought or manufactured for
this Contract on the best terms possible in the circumstances, *. In the event
the amount of the Contractor's termination claim exceeds the amounts paid to the
Contractor to the date of termination, *, to the termination claim. In the event
that payments to the Contractor by the Purchaser to the date of termination,
plus the amount received from the disposal of such inventory, is in excess of
the Contractor's termination claim, *. At the conclusion of the Contractor's
claim for lost profits and damages allowed under Sub-Article 24.4.1 (e), any
excess shall be promptly refunded to the Purchaser. In the event that the amount
paid to the Contractor to the date of termination, *, if any, is insufficient to
cover the amount of the Contractor's termination claim, then the Contractor
shall have the right to proceed against the Purchaser for the amount of such
excess.
24.6 LIMITATION OF THE PURCHASER'S LIABILITY. THE RIGHTS AND REMEDIES
SET FORTH IN THIS Article SHALL BE THE SOLE REMEDIES TO WHICH THE CONTRACTOR IS
ENTITLED IF THE PURCHASER FAILS TO MEET OR PERFORM ITS OBLIGATIONS UNDER THIS
CONTRACT. THE PURCHASER SHALL HAVE NO LIABILITY FOR CONSEQUENTIAL DAMAGES.
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Article 25.
WARRANTY
The Contractor warrants that (i) for FM-1, FM-2 and FM-3, from Interim
Acceptance pursuant to Article 8.2 up to Launch or (ii) for FM-4 for a period *
starting from Interim Acceptance pursuant to Article 8.2, each Satellite is in
accordance with the applicable specification and other requirements of this
Contract, and is free from defects in materials and workmanship. This warranty
is subject to the following provisions with respect to such Satellite(s).
25.1 Unlaunched Satellite(s). During the warranty period, either party
may give notice to the other of a defect. The Contractor's sole responsibility
under this warranty shall be either to repair or replace any component which is
discovered during the warranty period to be defective in material or
workmanship, and to retest the repaired or replaced component as is determined
appropriate action by the Parties, in order to place the Satellite in a suitable
condition for Launch. This warranty shall continue for the duration of the
applicable warranty period as stated in this Article 25.
The remedy under this Sub-Article 25.1 shall not apply if adjustment,
repair or parts replacement is required because of accident, unusual physical or
electrical stress, negligence, misuse, failure of environmental control
prescribed in operations and maintenance manuals, repair or alterations by the
Purchaser, its officers, directors, employees, consultants, representatives,
agents or subcontractors, or causes other than ordinary use. If the defect is
not covered by this warranty, the Purchaser shall pay the Contractor the cost of
repairs or replacement, the transportation charges and a reasonable profit. Such
repair cost shall be invoiced to the Purchaser pursuant to the provisions of
Article 5. The remedy stated in this Sub-Article 25.1 is the Purchaser's
exclusive remedy for the Contractor's nonconformance with the warranties set
forth in this Article.
25.2 Transportation Charges. Transportation charges for the repaired or
replaced item shall be at the Contractor's expense only if the Contractor is
found responsible under the terms of this warranty. The Purchaser shall notify
the Contractor in writing of any such defect, relevant information with respect
thereto, and of the intended return of the item sufficiently in advance of the
intended shipment date to arrange shipment should the Contractor so desire.
25.3 Launched Satellite. This warranty shall not apply to a Satellite
after its Launch.
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25.4 Limit of Liability. NOTWITHSTANDING ANY OTHER PROVISIONS OF THIS
CONTRACT TO THE CONTRARY, THIS WARRANTY IS IN LIEU OF ALL OTHER WARRANTIES,
EXPRESSED OR IMPLIED, INCLUDING MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE, WHETHER ARISING FROM LAW, CUSTOM OR CONDUCT, AND THE RIGHTS AND
REMEDIES PROVIDED HEREIN ARE EXCLUSIVE AND IN LIEU OF ANY OTHER RIGHTS OR
REMEDIES RELATED TO THE DESIGN, MANUFACTURE, MATERIALS, WORKMANSHIP, OR
CONFORMANCE TO SPECIFICATION REQUIREMENTS OF THE SATELLITE(S) AND ASSOCIATED
ITEMS AS ARE SET FORTH IN EXHIBITS A THROUGH E HERETO, (EXCEPT FOR RIGHTS AND
REMEDIES ARISING UNDER Article 8, "INSPECTION AND ACCEPTANCE", Article 12,
"IN-ORBIT CHECK-OUT" AND Article 24, "DEFAULT"). IN NO EVENT SHALL THE
CONTRACTOR BE LIABLE FOR ANY INDIRECT, SPECIAL, EXEMPLARY, INCIDENTAL OR
CONSEQUENTIAL DAMAGES, OR FOR LOST REVENUES OR PROFITS.
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Article 26.
DISPUTES AND ARBITRATION
Any disputes which may arise between the Parties with respect to
performance of obligations or interpretation of this Contract, which cannot be
settled by negotiation between the Parties themselves, shall upon application of
either of the Parties be submitted for settlement by arbitration by the American
Arbitration Association in New York, New York, in accordance with the rules of
commercial arbitration of the American Arbitration Association using three
arbitrators, whose decision and award shall be final and binding on the Parties
and be enforceable by any Court of competent jurisdiction. In resolving any
dispute, the arbitrators shall apply the laws of the State of New York with
respect to all matters, including the interpretation of the terms and conditions
of this Contract. Of the three arbitrators in the case, one shall be appointed
by the Purchaser, one shall be appointed by the Contractor and the third shall
be appointed by the agreement of both Parties. In the event that the Parties
cannot agree on the third arbitrator, then the third arbitrator shall be
appointed by the President of the American Arbitration Association. Each Party
shall bear the costs of preparing and presenting its own case, unless the
arbitrators' award shall provide otherwise.
A party may, pending resolution of a dispute in an arbitration
proceeding brought under this Article 26, nevertheless seek specific performance
in any court having jurisdiction therefor, of the obligations, undertakings,
agreements and covenants of the other party pursuant to this Contract.
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Article 27.
CHANGES
27.1 Changes in Scope of Work. Purchaser-desired changes to the Scope
of Work may be implemented provided the Parties agree in advance upon a mutually
satisfactory Contract adjustment regarding Price, schedule, and other provisions
of this Contract affected by such changes. Any such change shall become
effective only upon the execution by the Parties of an amendment to this
Contract incorporating such changes and the resulting adjustment. The Contractor
shall have no obligation to proceed with the Purchaser-desired changes prior to
the execution of such an amendment or receipt of a funded Authorization to
Proceed (ATP) wherein the Purchaser assumes the cost of the Contractor's
performance on the desired change.
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Article 28.
MISCELLANEOUS PROVISIONS
28.1 Applicable Law. This Contract shall be construed and interpreted
and the rights of the Parties shall be determined, in all respects, according to
the laws of the State of New York (USA), without regard to any principles of
conflicts of law that would result in a choice of law other than New York.
28.2 Amendments and Supplements. This Contract may be amended or
supplemented by additional written Agreements, Articles or Certificates, as may
be determined by the Parties from time to time to be necessary, appropriate or
desirable to further the purpose hereof, to clarify the intention of the
Parties, or to add to or modify the covenants, terms or conditions hereof or
thereof.
28.3 Headings. The headings in this Contract are for convenience only
and shall not be considered a part of, or affect, the construction or
interpretation of any provisions of this Contract.
28.4 Counterparts. This Contract may be executed in two or more
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same document.
28.5 Severability. In the event any one or more of the provisions of
this Contract shall, for any reason, be held to be invalid or unenforceable, the
remaining provisions of this Contract shall be unimpaired, and the invalid or
unenforceable provisions shall be replaced, if possible, by a mutually
acceptable provision which, being valid and enforceable, comes nearest to the
intention of the Parties.
28.6 LIMITATION OF LIABILITY. THE CONTRACTOR SHALL NOT BE LIABLE
DIRECTLY OR INDIRECTLY TO THE PURCHASER, TO THE PURCHASER'S OFFICERS, DIRECTORS,
EMPLOYEES, AGENTS OR CUSTOMERS, OR TO PERMITTED ASSIGNEES OR SUCCESSOR OWNERS OF
THE SATELLITE(S) FOR ANY AMOUNTS REPRESENTING LOSS OF PROFITS, LOSS OF BUSINESS,
OR INDIRECT, SPECIAL, EXEMPLARY, CONSEQUENTIAL OR PUNITIVE DAMAGES ARISING FROM
THE PERFORMANCE OR NONPERFORMANCE OF THIS CONTRACT OR ANY ACTS OR OMISSIONS
ASSOCIATED THEREWITH OR RELATED TO THE USE OF ANY ITEMS OR SERVICES FURNISHED
HEREUNDER, WHETHER THE BASIS OF THE LIABILITY IS BREACH OF CONTRACT, TORT
(INCLUDING
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NEGLIGENCE AND STRICT LIABILITY), STATUTES OR ANY OTHER LEGAL THEORY. IN NO
EVENT SHALL THE CONTRACTOR'S TOTAL LIABILITY UNDER OR IN CONNECTION WITH THIS
CONTRACT EXCEED THE CONTRACT PRICE.
28.7 Alenia. The Contractor has teamed with Alenia Spazio in the
execution of this program. The Parties agree that the previous sentence does not
create a contractual liability or relationship between the Purchaser and Alenia
Spazio under this Contract.
28.8 No Third Party Beneficiaries. Nothing contained in this Contract,
express or implied, is intended to or shall confer upon anyone other the parties
hereto (and their permitted successors and assigns) any right, benefit or remedy
of any nature whatsoever under or by reason of this Contract.
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Article 29.
RESERVED
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Article 30.
INTER-PARTY WAIVER OF LIABILITY
Notwithstanding any indemnification provisions set forth in this
Contract, the Purchaser agrees, on behalf of itself and its officers, directors,
employees, consultants, representatives, agents, subcontractors, insurers, and
customers, to sign and agree to the no-fault, no-subrogation, inter-party waiver
of liability provisions set forth in any Launch Services Agreement prior to
entering on the Launch Site.
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Article 31.
AUTHORITY OF THE PURCHASER'S REPRESENTATIVE
No request, notice, authorization, direction or order received by the
Contractor and issued either pursuant to an Article of this Contract, to a
provision of any document incorporated in this Contract by reference, or
otherwise, shall be binding upon either the Contractor or the Purchaser, unless
issued or confirmed in writing by the Chief Executive Officer of the Purchaser
or by his authorized representative. Designations of authorized representatives
(1) shall be in writing, signed by the Chief Executive Officer of the Purchaser,
and (2) shall define the scope and limitations of the authorized
representatives' authorities. A copy of each such designation and of each
modification or cancellation thereof, shall be furnished to the Contractor. The
Contractor shall immediately notify, in writing, the Chief Executive Officer of
the Purchaser or his authorized representative whenever a request, notice,
authorization, direction, or order has been received from a representative of
the Purchaser other than the Chief Executive Officer of the Purchaser or his
authorized representative, which, but for the lack of authorization on the part
of the issuing Purchaser's representative, would effect a change within the
meaning of Article 27 - CHANGES, or an increase in the Price or amounts allotted
to this Contract, or which but for such lack of authorization, would otherwise
be the basis for the modification of the Contract Statement of Work, delivery or
performance schedule, Price, or any other terms and conditions of this Contract.
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Article 32.
PUBLIC RELEASE OF INFORMATION
32.1 Within a reasonable time prior to the issuance of news releases,
articles, brochures, advertisements, prepared speeches, and other information
releases concerning the work performed hereunder by the Contractor, a
subcontractor or any employee or a consultant of either, the Contractor shall
obtain the written approval of the Purchaser concerning the content and timing
of such releases. Approval will not be unreasonably delayed or denied.
32.2 The Purchaser may issue news releases, articles, brochures,
advertisements, prepared speeches, or other information concerning the CD Radio
DARS System or the products and services to be provided under this Contract
without the express consent of the Contractor; provided that to the extent such
information relates to * or (ii) the Contractor in any other capacity besides
manufacturer, then such information shall only be released for use with the
prior written approval of the Contractor.
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Article 33.
FUNCTIONS NOT THE RESPONSIBILITY OF THE CONTRACTOR
33.1 Radio Frequencies. The Contractor is not responsible for radio
frequencies coordination, or the preparation of filings with the Federal
Communications Commission or the International Telecommunications Union/Radio
Communication Bureau registration. The Contractor shall provide technical
support, when needed, to assist the Purchaser in making the above filings.
33.2 General. The Contractor shall not be responsible for any
undertakings not expressly and specifically set forth in this Contract as being
the assigned responsibility of the Contractor.
Article 34.
RESERVED
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Article 35.
SATELLITE GROUND STORAGE OPTION
35.1 Notification. The Purchaser may, at its option to be exercised no
later than September 1, 1999 (for FM-1, FM-2 or FM-3) order the Contractor to
store a Satellite for a period of up to two (2) years after Interim Acceptance
of the Satellite. In the case of FM-4, the Purchaser may, also at its option to
be exercised no later than three (3) months prior to Satellite Pre-Shipment
Review as defined in Exhibit A, order the Contractor to provide Ground Storage
for the Satellite up to two (2) years after Final Acceptance of such Satellite.
35.2 Storage Location. Such Ground Storage shall be performed at a
Contractor controlled facility and shall be conducted in accordance with the
Satellite Storage Plan described in Section 8 of Exhibit D, Program Test Plan.
35.3 *
For a Satellite stored for two (2) years, the Purchaser shall notify
the Contractor of its desire to have such Satellite refurbished or to continue
Ground Storage of a Satellite for up to an additional twelve (12) months beyond
the period specified in Article 35.1. Within ninety (90) days after the
Contractor's receipt of the Purchaser's notice electing refurbishment or
continued Ground Storage, the Contractor shall provide the Purchaser with (i) a
plan for refurbishment and retesting to recertify the Satellite as Launchworthy
or (ii) a plan for continued Ground Storage, in either case together with
proposed adjustments to applicable provisions.
35.4 Payments. Any monthly storage charge referred to in Sub-Article
35.3 shall be paid commencing thirty (30) days from the date the Satellite is
stored and continuing each month until the Purchaser directs the Contractor to
remove the Satellite from storage, conduct the verification tests and ship the
Satellite to the Launch Site. Payment for the verification testing shall be made
30 days after the Contractor issues an invoice for such testing. Payments shall
be made by wire transfer as set forth in Article 5 - PAYMENTS.
35.5 Title and Risk of Loss. Title and risk of Loss to a Satellite
delivered for Ground Storage shall remain with the Contractor at the Storage
Site and notwithstanding the provisions of Article 9 - CIP POINT, TITLE, AND
RISK OF LOSS and/or Article 25, WARRANTY, the Contractor shall assume full
responsibility for any loss or damage to the Satellite during storage and
transportation
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to the Launch Site and while the Satellite is at the Launch Site up to the time
of Launch. *
35.6 Launch Services for a Stored Satellite. In the event that the
Purchaser exercises the option to store a Spacecraft, and subsequent to a period
of storage directs the Contractor to prepare the Spacecraft for Launch, then the
Contract shall be equitably adjusted to cover *.
35.7 Escalation. The Prices quoted in this Article for the storage of a
Satellite shall be escalated in accordance with the formula in Article 5, from
the Effective Date of Contract to the option exercise date.
35.8 Storage at the Contractor's Site. In the event that the Purchaser
directs the Contractor to deliver one or more Satellites for Ground Storage in
accordance with this Article 35, then *.
35.9 Delivery of the Satellite to a Location Named by the Purchaser. In
the event that the Purchaser directs the Contractor to deliver a Satellite to a
location other than one controlled and operated by the Contractor, then *.
35.10 *.
35.11 Maximum Storage Period. In no event shall a Satellite procured
hereunder remain in storage at a location owned and operated by the Contractor
for a period in excess of * of such Satellite by the Purchaser. At the
conclusion of the storage period provided for hereunder, the Purchaser shall
direct the Contractor to deliver the Satellite to a location designated by the
Purchaser. At the time the Contractor receives direction as to the delivery of
such Satellite from storage, the Purchaser shall *.
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Article 36.
NOTICES
Any notices or correspondence required or desired to be given or made
hereunder shall be in writing and shall be effective when delivered to an
authorized recipient party at the address indicated below:
PURCHASER: CD Radio Inc.
1180 Avenue of the Americas, 14th Floor
New York, New York 10036
Phone: (212) 899-5031
Fax: (212) 899-5050
Attention: General Counsel
Phone: (212) 899-5031
Fax: (212) 899-5050
and
CD Radio Inc.
2175 K Street, NW
Washington, CD 20037
Attention: Rob Briskman
Phone: (202) 296-6192
Fax: (202) 296-6265
CONTRACTOR: Space Systems/LORAL, Inc.
3825 Fabian Way
Palo Alto, California 943034697
*
Either party may change the above notice addresses by giving written notice to
the other party of said change.
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Article 37.
ASSIGNMENT
37.1 This Contract may not be assigned other than to an Affiliate,
either in whole or in part, by either party without the express written approval
of the other party (which approval shall not be unreasonably withheld or
delayed); provided however, this clause does not restrict the Contractor from
utilizing subsidiaries or other divisions of its company to manufacture
subsystems or components of the Satellite(s) or other hardware; * assignee with
respect to other satellites.
37.2 Notwithstanding the above, in the event either party is sold to or
merged into another company, its responsibilities under this Contract shall not
be altered, and the successor shall remain liable for performance of this
Contract.
Article 38.
RESERVED
Article 39.
RESERVED
Article 40.
RESERVED
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Article 41.
SUPPORT FOR INVESTIGATION OF SATELLITE ANOMALIES
In the event that a Launched Satellite experiences anomalies during its
operational life, the Contractor will provide reasonable support by qualified
personnel to investigate said anomalies from Palo Alto, CA. * The above effort
shall be provided on the verbal request of the Purchaser which shall be
confirmed in writing within 24 hours of the time of the verbal request.
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Article 42.
INSURANCE
42.1 The Purchaser agrees to obtain any insurer's written agreement to
waive all rights of subrogation against the Contractor and against the
Contractor's subcontractors and suppliers at any tier. The Purchaser agrees to
indemnify and hold the Contractor harmless from and against all costs, expenses
or losses of the Contractor directly or indirectly resulting from any
subrogation action brought by the Satellite insurers.
42.2 The Contractor agrees to provide the Purchaser with quotes to
obtain insurance for FM-1, FM-2, and FM-3 applicable from Launch and orbit
raising through placement of the Satellites in their orbit locations *.
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Article 43.
MISSION OPERATIONS SUPPORT
The Mission Operations Support Services to be provided by the
Contractor under this Contract is as provided for in Exhibit A, Statement of
Work. The Contractor shall not be liable to the Purchaser or any third party for
loss of, or damage to the Satellite(s) resulting from any Contractor acts in
furnishing services to the Purchaser (including any act or failure to act
alleged to be negligent in any degree). The Purchaser agrees to indemnify and
hold the Contractor harmless from and against all costs, expenses and losses
resulting from any claim or litigation directly or indirectly premised on loss
of or damage to any Satellite after Launch.
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Article 44.
*
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Article 45.
STANDARD OF CONDUCT
Both Parties agree that all their actions in carrying out the
provisions of this Contract shall be in compliance with applicable laws and
regulations, and neither party will pay or accept bribes, kickbacks, or other
illegal payments, or engage in unlawful conduct.
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Article 46.
ORDER OF PRECEDENCE
In the event of conflict between this Contract, its Exhibits and the
Annexes thereto, the following order of decreasing precedence shall follow:
1. Contract (excluding Exhibits)
2. Exhibit A
3. Exhibit B
4. Exhibit C
5. Exhibit D
6. Exhibit E
IN WITNESS THEREOF, the Parties have executed this Contract as of
the date se t forth below:
SPACE SYSTEMS/LORAL, INC.
SIGNATURE: /s/ C. Patrick DeWitt
-----------------------------------
NAME: C. Patrick DeWitt
-----------------------------------
TITLE: Executive Vice President, Business
-----------------------------------
DATE: July 28, 1998
-----------------------------------
CD RADIO INC.
SIGNATURE: /s/ Andrew J. Greenbaum
-----------------------------------
NAME: Andrew J. Greenbaum
-----------------------------------
TITLE: Executive Vice President and Chief
Financial Officer
-----------------------------------
DATE: July 28, 1998
-----------------------------------
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July 6, 1998
Mr. Keno V. Thomas
120 East 87th Street
Apt. P10C
New York, New York 10128
Dear Mr. Thomas:
This letter agreement (the "Agreement") confirms our understanding and
agreement with respect to your termination of employment with CD Radio Inc. (the
"Company") as follows:
1. Termination of Employment. Effective as of today (the "Termination
Date"), your employment with the Company and its affiliates shall be terminated.
You hereby resign, effective immediately, from all offices that you hold with
the Company and any of its affiliates.
2. Severance Payments; Stock Options. (a) In accordance with the terms
of the Employment and Noncompetition Agreement, dated as of April 28, 1997 (the
"Employment Agreement"), between you and the Company, you shall be paid
severance in the amount of $125,000, less applicable withholding taxes (the
"Severance Payment"). The Severance Payment will be paid to you on the first
regular payroll date of the Company following the Termination Date.
(b) (i) you shall be entitled to retain 10,000 options to purchase the
common stock, par value $0.001 per share (the "Common Stock"), of the Company at
an exercise price per share of $12.875 (which options are currently vested
pursuant to the Stock Option Agreement, dated as of April 28, 1997 (the "Stock
Option Agreement"), between you and the Company); and (ii) the Company shall
vest an additional 40,000 options to purchase the Common Stock at an exercise
price per share of $12.875 which were granted pursuant to the Stock Option
Agreement (such 50,000 options described in clauses (i) and (ii) shall hereafter
be referred to as, the "Stock Options"). In each case, you agree that the Stock
Options shall only be exercisable until December 31, 1999.
(c) You acknowledge and agree that all other options to purchase the
Common Stock which are held by you, whether pursuant to the Stock Option
Agreement or oral agreements with the Company, shall be forfeited immediately.
3. Full Satisfaction. You hereby acknowledge and agree that, except for
the Severance Payment that will become payable to you hereunder and the Stock
<PAGE>
Options, you will not be entitled to any other compensation or benefits from the
Company or its affiliates, including, without limitation, any other severance or
termination benefits.
4. Confidential Information. Except as expressly modified by this
Agreement, the terms of the Employment Agreement, which by their terms continue
after your termination of employment, shall remain in full force and effect.
5. Return of Property to the Company. All memoranda, notes, lists,
records and other documents or papers (and all copies thereof), including items
stored in computer memories, on microfilm or by other means, made or compiled by
you, or made available to you relating to the Company or its affiliates or its
business, are and shall remain the property of the Company and shall be
delivered to the Company promptly upon the execution of this Agreement. You
shall immediately return to the Company all other property and equipment which
has been purchased by the Company for your use.
6. General Release. (a) For and in consideration of the Severance
Payment and the Stock Options, you hereby agree on behalf of yourself, your
agents, assignees, attorneys, successors, assigns, heirs and executors, to, and
you do hereby, fully and completely forever release the Company and its
affiliates, predecessors and successors and all of their respective past and/or
present officers, directors, employees, agents, representatives, administrators,
attorneys, insurers and fiduciaries in their individual and/or representative
capacities (hereinafter collectively referred to as the "Releasees"), from any
and all causes of action, suits, agreements, promises, damages, disputes,
controversies, contentions, differences, judgments, claims, debts, dues, sums of
money, accounts, reckonings, bonds, bills, covenants, contracts, variances,
trespasses, extents, executions and demands of any kind whatsoever, which you or
your heirs, executors, administrators, successors and assigns ever had, now have
or may have against the Releasees or any of them, in law, admiralty or equity,
whether known or unknown to you, for, upon, or by reason of, any matter, action,
omission, course or thing whatsoever occurring up to the date of this Agreement,
including, without limitation, in connection with or in relationship to your
employment or other service relationship with the Company or its affiliates, the
termination of any such employment or service relationship and any applicable
employment, compensatory or equity arrangement with the Company or its
respective affiliates; provided that such released claims shall not include any
claims to enforce your rights under, or with respect to, this Agreement (such
released claims are collectively referred to herein as the "Released Claims").
(b) Notwithstanding the generality of clause (a) above, the Released
Claims include, without limitation, (i) any and all claims under Title_VII of
the Civil Rights Act of 1964, the Age Discrimination in Employment Act of 1967,
the Civil Rights Act of 1971, the Civil Rights Act of 1991, the Fair Labor
Standards Act, the Employee Retirement Income Security Act of 1974, the
Americans with Disabilities Act, the Family and Medical Leave Act of 1993, and
any and all other federal, state or local laws, statutes, rules and regulations
pertaining to employment or otherwise, and (ii) any claims for wrongful
discharge, breach of contract, fraud, misrepresentation or any compensation
claims, or any other claims under any statute, rule or regulation or under the
common law, including compensatory damages, punitive damages, attorney's fees,
costs, expenses and all claims for any other type of damage or relief.
(c) THIS MEANS THAT, BY SIGNING THIS AGREEMENT, YOU WILL HAVE WAIVED
ANY RIGHT YOU MAY HAVE HAD TO BRING A LAWSUIT OR MAKE ANY CLAIM AGAINST THE
RELEASEES BASED ON ANY ACTS OR OMISSIONS OF THE RELEASEES UP TO THE DATE OF THIS
AGREEMENT.
<PAGE>
(d) You represent that you have read carefully and fully understand the
terms of this Agreement, and that you have been advised to consult with an
attorney and have had the opportunity to consult with an attorney prior to
signing this Agreement. You acknowledge that you are executing this Agreement
voluntarily and knowingly and that you have not relied on any representations,
promises or agreements of any kind made to you in connection with your decision
to accept the terms of this Agreement, other than those set forth in this
Agreement.
7. Governing Law. This Agreement will be governed, construed and
interpreted under the laws of the State of New York.
8. Entire Agreement; Counterparts. This constitutes the entire
agreement between the parties. It may not be modified or changed except by
written instrument executed by all parties. This Agreement may be executed in
counterparts, each of which shall constitute an original and which together
shall constitute a single instrument.
<PAGE>
If this letter correctly sets forth your understanding of our agreement
with respect to the foregoing matters, please so indicate by signing below on
the line provided for your signature.
Very truly yours,
CD RADIO INC.
By: /s/ Patrick L. Donnelly
---------------------------
Patrick L. Donnelly
Executive Vice President, General
Counsel and Secretary
Reviewed, approved and agreed:
/s/ Keno Thomas
- ---------------
Keno Thomas
EMPLOYMENT AND NONCOMPETITION AGREEMENT
This EMPLOYMENT AND NONCOMPETITION AGREEMENT is dated as of May 18,
1998 (the "Agreement"), by and between CD RADIO INC., a Delaware corporation,
(the "Company"), and PATRICK L. DONNELLY (the "Executive"). In consideration of
the mutual covenants and conditions set forth herein, the Company and the
Executive agree as follows:
1. EMPLOYMENT. The Company hereby employs the Executive and the
Executive hereby accepts employment with the Company subject to the covenants
and conditions of this Agreement.
2. DUTIES AND REPORTING RELATIONSHIP.
(a) Duties. The Executive shall be employed in the capacity of
an Executive Vice President and General Counsel of the Company responsible for
all legal matters. During the term of this Agreement the Executive shall, on a
fulltime basis, use his skills and render services to the best of his ability in
supervising the programming affairs of the Company and shall, in addition,
perform such other activities and duties as the Chairman and Chief Executive
Officer of the Company shall, from time to time, specify and direct.
(b) Reporting Relationship. The Executive shall report to the
Chairman and Chief Executive Officer of the Company.
3. TERM. The term of this Agreement shall be deemed to have commenced
and be effective on and from May 18, 1998, and end on May 18, 2001, unless
terminated earlier pursuant to the provisions of Paragraph 6 below.
4. COMPENSATION.
(a) Annual Salary. During the term of this Agreement, the
Executive shall be paid a salary of U.S. $260,000 per year, subject to any
increases that the Board of Directors or the compensation committee thereof
shall approve.
(b) Stock Options. The Company hereby grants to the Executive
the option to purchase 110,000 shares of the Company's common stock, par value
$0.001 per share (the "Common Stock") at U.S.$33.50 per share, on such terms and
subject to such conditions as are set forth in the option agreement attached
hereto as Exhibit A.
(c) Other. All compensation paid to the Executive hereunder
shall be subject to any and all such payroll and withholding deductions as are
required by the law of any applicable jurisdiction, state or federal, with
taxing authority with respect to such compensation.
5. ADDITIONAL COMPENSATION, EXPENSES AND BENEFITS.
(a) Expenses. The Company shall promptly reimburse the
Executive for all reasonable and necessary business expenses incurred and
advanced by his in carrying out his duties under this Agreement. The Executive
shall present to the Company from time to time an itemized account of such
expenses in such form as may be required by the Company.
(b) Benefits. During the term of employment hereunder, the
Executive shall be entitled to participate fully in any benefit plans, programs,
policies and any fringe benefits which may be made available to the corporate
officers of the Company generally including but not limited to medical, dental
and life insurance; provided, however, that the Executive shall participate in
any bonus, stock option or stock purchase or compensation plan currently in
effect or subsequently established by the Company to the extent, and only to the
extent authorized by the plan document or the Board of Directors or the
compensation committee thereof.
6. TERMINATION.
<PAGE>
(a) Termination for Cause. The Company has the right and may
elect to terminate this Agreement for Cause. For purposes of this Agreement,
"Cause" shall be limited to (i) action by the Executive involving willful
malfeasance having a material adverse effect on the Company or (ii) the
Executive being convicted of a felony; provided that any action by the Executive
shall not constitute "Cause" if, in good faith, the Executive believed such
action to be in or not opposed to the best interests of the Company, or if the
Executive shall be entitled, under applicable law or the Certificate of
Incorporation or Bylaws of the Company, to be indemnified with respect to such
action. Termination or the Executive for Cause pursuant to this Subparagraph
6(a) shall be communicated by a Notice of Termination. For purposes of this
Agreement a "Notice of Termination" shall mean delivery to the Executive of a
copy of a resolution duly adopted by the affirmative vote of not less than a
majority of the directors present and voting at a meeting of the Company's Board
or Directors called and held for that purpose after reasonable notice to the
Executive and reasonable opportunity for the Executive, together with the
Executive's counsel, to be heard before the Board prior to such vote, finding
that in the good faith opinion of the Board the Executive was guilty of conduct
set forth in the first sentence of this Subparagraph 6(a) and specifying the
particulars thereof in detail (the date of such termination by the Board is
referred hereinafter as the "Termination Date"). For purposes of this Agreement,
no such purported termination of the Executive's employment shall be effective
without such Notice of Termination.
(b) Voluntary Resignation. Should the Executive wish to resign
from his position with the Company during the term of his employment, the
Executive shall give thirty (30) days written notice to the Company, setting
forth the reasons and specifying the date as of which his resignation is to
become effective. The date specified in such written notice shall be referenced
herein as the "Termination Date." Failure to provide such notice shall entitle
the Company only to fix the Termination Date as of the last business day on
which the Executive reported for work at his principal place of employment with
the Company and shall have no other effect.
(c) Without Cause. The Company shall have the absolute right
to terminate the Executive's employment without cause at any time. If the
Company elects to terminate the Executive without cause, the Company shall give
thirty (30) days written notice to the Executive. Thirty (30) days after such
notice is given to the Executive shall be referenced herein as the "Termination
Date."
(d) Compensation and Benefits Upon Termination. If the
employment of the Executive is terminated for any reason except (i) by the
Company for Cause or (ii) by the Executive voluntarily, the Executive shall be
entitled to receive, and the Company shall pay without setoff, counterclaim or
other withholding except as set forth in Paragraph 4(c) the following amount (in
addition to any salary, benefits or other sums due the Executive through the
Termination Date) an amount equal to one-half (1/2) of his annual salary then in
effect. Any amount becoming payable under this Paragraph 6(d) shall be paid on
the Termination Date.
7. NONDISCLOSURE OF CONFIDENTIAL INFORMATION. As a condition of his
employment hereunder, the Executive has executed and delivered to the Company an
agreement addressing the nondisclosure of confidential information (the
"Nondisclosure Agreement") in the form attached hereto as Exhibit B and
incorporated herein by reference as if set forth in full herein.
8. COVENANT NOT TO COMPETE. For a period beginning on the date of this
Agreement and ending one (1) years after the Termination Date, the Executive
will not, directly or indirectly, enter into the employment of, render services
to or acquire any interest whatsoever in (whether for his own account as an
individual proprietor, or as a partner, associate, shareholder, officer,
director, consultant, trustee or otherwise), or otherwise assist, any person or
entity engaged in any operations in North America involving any satellite
digital audio radio service or any subscription-based digital audio radio
service delivered to cars or other mobile vehicles; provided, however, that
nothing herein shall prevent the purchase or ownership by the Executive by way
of investment of up to four percent (4%) of the shares or equity interest of any
corporation or other entity. Without limiting the generality of the foregoing,
the Executive agrees that during the one (1) year period set forth above the
Executive will not call on or otherwise solicit business or assist others to
solicit business from any of the customers or potential customers of the Company
as to any product or service that competes with any product or service provided
or marketed by or actually under development by the Company at the time of the
Executive's termination. The Executive furthermore agrees that he will not
solicit or assist others to solicit the employment of or hire any employee of
the Company throughout the term of this Covenant Not To Compete without the
prior written consent of the Company.
9. REMEDIES. The Executive agrees that damages for breach of any of his
covenants under Paragraphs 7 and 8 above will be difficult to determine and
inadequate to remedy the harm
<PAGE>
which may be caused thereby, and therefore consents that these covenants may be
enforced by temporary or permanent injunction without the necessity of bond.
Such injunctive relief shall be in addition to and not in place of any other
remedies available at law or equity. The Executive believes, as of the date of
this Agreement, that the provisions of this Agreement are reasonable and that
the Executive is capable of gainful employment without breaching this Agreement.
However, should any court or tribunal decline to enforce any provision of
Paragraph 7 or 8 of this Agreement, this Agreement shall, to the extent
applicable in the circumstances before such court or tribunal, be deemed to be
modified to restrict the Executive's competition with the Company to the maximum
extent of time, scope and geography which the court or tribunal shall find
enforceable, and such provisions shall be so enforced. The losing party shall
reimburse the prevailing party for any costs and attorneys fees incurred in
connection with any action to enforce the covenants under Paragraph 8 above. The
Company and the Executive shall have available to them all remedies at law and
in equity for the enforcement of this Agreement, which remedies (including but
not limited to termination of this Agreement as provided herein) shall be
cumulative and not elective.
10. INDEMNIFICATION. The Company shall indemnify the Executive to the
full extent provided in the Company's Certi-ficate of Incorporation and Bylaws
and the law of the State of Delaware in connection with his activities as an
officer and director of the Company.
11. GOLDEN PARACHUTE PAYMENTS. If as a result of a change in control,
the Executive is required to pay an excise tax on "excess parachute payments"
(as defined in Section 280G(b) of the Code) under Section 4999 of the Code, the
Company shall reimburse the Executive for the amount of such taxes paid. In
addition, the Company shall pay the Executive such additional amounts as are
necessary to place the Executive in the same financial position that she would
have been in if she had not incurred any tax liability under Section 4999 of the
Code as a result of such change in control; provided, however, that the Company
shall in no event pay the Executive any amounts with respect to any penalties or
interest due under any provision of the Code. The determination of the amount,
if any, of any "excess parachute payments" and any tax liability under Section
4999 of the Code shall be made by a nationallyrecognized independent accounting
firm agreed to by the Company and the Executive. The fees and expenses of such
accounting firm shall be paid by the Company. The determination of such
accounting firm shall be final and binding on the parties. The Company agrees to
pay to the Executive any amounts to be paid or reimbursed under this Paragraph
11 within thirty (30) days after receipt by the Company of written notice from
the accounting firm which sets forth such accounting firm's determination.
12. ENTIRE AGREEMENT. The provisions contained herein and the exhibits
hereto constitute the entire agreement between the parties with respect to the
subject matter hereof and supersede any and all prior agreements, understandings
and communications between the parties, oral or written, with respect to such
subject matter.
13. MODIFICATION. Any waiver, alteration, amendment or modification of
any provisions of this Agreement and the exhibits hereto shall not be valid
unless in writing, approved by a majority of the directors of the Company who
are not fulltime employees of the Company, and signed by both the Executive and
the Company.
14. SEVERABILITY. If any provision of this Agreement shall be declared
to be invalid or unenforceable, in whole or in part, such invalidity or
unenforceability shall not affect the remaining provisions hereof, which shall
remain in full force and effect.
15. ASSIGNMENT. The Executive may not assign any of his rights or
delegate any of his duties hereunder without the written consent of the Company.
The Company may not assign any of its rights or delegate any of its obligations
hereunder.
16. BINDING EFFECT. Subject to the limitations set forth in Paragraph
13 above, this Agreement shall be binding upon and inure to the benefit of the
successors in interest of the Executive and the Company.
17. NOTICE. All notices and other communications required or permitted
hereunder shall be made in writing and shall be deemed effective when initially
transmitted by courier or facsimile transmission and five (5) days after mailing
by registered or certified mail:
(i) if to the Company:
CD Radio Inc.
Sixth Floor
<PAGE>
1001 22nd Street, N.W.
Washington, D.C. 20037
Telecopier No.: (202)296-6265
(ii) if to the Executive:
Patrick L. Donnelly
55 Dartmouth Street
Garden City, New York 10901
Telecopier No.: (516)326-9730
or to such other person or address as either of the parties shall furnish in
writing to the other party from time to time.
18. CHOICE OF LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed entirely within said state jurisdiction.
19. ATTORNEYS' FEES. In the event of litigation arising out of or in
connection with this Agreement, the prevailing party shall be entitled to
recover from the other party all of its attorneys' fees and other expenses
incurred in connection with such litigation.
20. NONMITIGATION. After the termination of his employment hereunder,
the Executive shall not be required to mitigate damages or the amount of any
benefit or payment provided under this Agreement by seeking other employment, or
otherwise; nor shall the amount of any benefit or payment provided for under
this Agreement be reduced by any compensation earned by the Executive as the
result of employment by another employer.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above mentioned.
CD RADIO INC.
By: /s/ David Margolese
-----------------------
Name: David Margolese
Title: Chairman and Chief
Executive Officer
EXECUTIVE
/s/ Patrick L. Donnelly
-----------------------
Patrick L. Donnelly
Form of Stock Option Agreement
THIS OPTION HAS NOT BEEN REGISTERED UNDER STATE OR FEDERAL SECURITIES
LAWS. THIS OPTION MAY NOT BE TRANSFERRED EXCEPT BY WILL OR UNDER THE LAWS OF
DESCENT AND DISTRIBUTION.
CD RADIO INC.
1994 DIRECTORS' NONQUALIFIED STOCK OPTION PLAN
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Agreement") is entered into as of
the ____ day of ________ 199_ ("Date of Grant"), by and between CD Radio, Inc.,
a Delaware corporation (the "Company"), and ____________ (the "Optionee").
1. Grant of Option. Subject to the terms and conditions hereof and the
Company's 1994 Stock Option Plan (the "Plan"), the Company hereby grants to the
Optionee the right and option (the "Option") to purchase up to five thousand
(5,000) shares (the "Shares") of the common stock, $0.001 par value, of the
Company, at a price per share of $5.00 (the "Exercise Price"). This Option is
intended not to qualify as an Incentive Stock Option for purposes of Section 422
of the Internal Revenue Code of 1986, as amended (the "Code"). In the case of
any stock split, stock dividend or like change in the nature of shares granted
by this Agreement occurring after the date hereof, the number of shares and
option price shall be proportionately adjusted as set forth in Section 4(k) of
the Plan. [Initial Options: This Option shall vest and become fully exercisable
on the first anniversary of the Date of Grant./Annual Options: Annual Options
shall vest and become fully exercisable immediately upon the Date of Grant.]
2. Termination of Option. The Option shall terminate, to the extent not
previously exercised, ten (10) years from the Date of Grant or earlier in
accordance with Sections 4(e), 4(i) and 4(k) of the Plan. The unvested portion
of the Option shall terminate immediately upon the Optionee's termination of
employment for any reason whatsoever.
3. Non-transferable. This Option may not be transferred, assigned,
pledged or hypothecated in any manner (whether by operation of law or otherwise)
other than by will or by the applicable laws of descent and distribution, and
shall not be subject to execution, attachment or similar process. Upon any
attempt to transfer, assign, pledge, hypothecate or otherwise dispose of this
Option or of any right or privilege conferred hereby, contrary to the provisions
hereof, or upon the sale or levy or any attachment or similar process upon the
rights and privileges conferred hereby, this Option shall thereupon terminate
and become null and void.
<PAGE>
2
4. Investment Intent. By accepting the Option, the Optionee represents
and agrees for himself and all persons who acquire rights in the Option through
the Optionee, that none of the Shares purchased upon exercise of the Option will
be distributed in violation of applicable federal and state laws and
regulations. If requested by the Company, the Optionee shall furnish evidence
satisfactory to the Company (including a written and signed representation
letter and a consent to be bound by all transfer restrictions imposed by
applicable law, legend condition or otherwise) to that effect, prior to delivery
of the purchased Shares.
5. Exercise. Subject to Sections 1 and 2 hereof and the Plan, This
Option may be exercised in whole or in part by means of a written notice of
exercise signed and delivered by the Optionee (or, in the case of exercise after
death of the Optionee by the executor, administrator, heir or legatee of the
Optionee, as the case may be) to the Company at the address set forth herein for
notices to the Company. Such notice (a) shall state the number of Shares to be
purchased and the date of exercise, and (b) shall be accompanied by payment of
the full exercise price. Payment of the exercise price may be in cash, by
certified or cashier's check or a Director may pay for all or any portion of the
aggregate Option exercise price (i) by delivering to the Company shares of
Common Stock previously held by such Director or (ii) having shares withheld
from the amount of shares of Common Stock to be received by the Director.
6. Withholding. Prior to delivery of any Shares purchased upon exercise
of this Option, the Company shall determine the amount of any United States
federal and state income tax, if any, which is required to be withheld under
applicable law and shall, as a condition of exercise of this Option and delivery
of certificates representing the Shares purchased upon exercise of the Option,
collect from the Optionee the amount of any such tax to the extent not
previously withheld.
7. Rights of the Optionee. Neither this Option, the execution of this
Agreement nor the exercise of any portion of this Option shall confer upon the
Optionee any right to, or guarantee of, continued employment by the Company, or
in any way limit the right of the Company to terminate employment of the
Optionee at any time, subject to the terms of any employment agreements between
the Company and the Optionee.
8. Professional Advice. The acceptance and exercise of the Option may
have consequences under federal and state tax and securities laws which may vary
depending upon the individual circumstances of the Optionee. Accordingly, the
Optionee acknowledges that he has been advised to consult his personal legal and
tax advisor in connection with this Agreement and his dealings with respect to
the Option. Without limiting other matters to be considered, the Optionee should
consider whether
<PAGE>
3
upon exercise of the Option, the Optionee will file an election with the
Internal Revenue Service pursuant to Section 83(b) of the Code.
9. Agreement Subject to Plan. The Option and this Agreement are subject
to the terms and conditions set forth in the Plan and in any amendments to the
Plan existing now or in the future, which terms and conditions are incorporated
herein by reference. A copy of the Plan previously has been delivered to the
Optionee. Should any conflict exist between the provisions of the Plan and those
of this Agreement, those of the Plan shall govern and control. This Agreement
and the Plan comprise the entire understanding between the Company and the
Optionee with respect to the Option.
10. Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York without regard to its
conflict of laws principles to the contrary, and shall bind and inure to the
benefit of the heirs, executors, personal representatives, successors and
assigns of the parties hereto.
11. Notices. Any notice required or permitted to be made or given
hereunder shall be mailed via certified or registered mail or delivered
personally to the addresses set forth below, or as changed from time to time by
written notice to the other:
Company: CD Radio Inc.
1800 Avenue of the Americas
New York, New York 10036
Attention: David Margolese
Optionee: _______________________
_______________________
_______________________
_______________________
Notices and other communications shall be deemed received and effective upon the
earlier of (i) hand delivery to the recipient, or (ii) give (5) days after being
mailed by
<PAGE>
4
certificate or registered mail, postage prepaid, return receipt requested.
Either party may, by notice in writing, direct that future notices or demands be
sent to a different address.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
CD RADIO INC.: OPTIONEE:
By: _________________________ _________________________
Its: _____________________ Name: ____________________
May 29, 1998
VIA FACSIMILE;
ORIGINAL VIA REGISTERED LETTER,
RETURN RECEIPT REQUESTED
Ms. Brigitte Vienne, Head Financing and Risk Management
Mr. Eckard Weinrich, Mission Manager
Arianespace S.A.
Boulevard de l'Europe, B.P. 177
91006 Evry Cedex, France
Directeur General
Arianespace Finance S.A.
18, rue Dicks
L-1016 Luxembourg
Re: Termination of Launch Services Agreement
Ref: Launch Services Agreement 97.5.915, between CD Radio Inc. ("CD Radio")
and Arianespace S.A. ("Arianespace"), dated July 22, 1997 (the "Launch
Agreement"); Arianespace Customer Loan Agreements for Launches #1 and
#2, between CD Radio and Arianespace Finance S.A. ("AEF"), dated July
22, 1997 (the "Loan Agreements"); and the Multiparty Agreements for
Launches #1 and #2, among CD Radio, Arianespace and AEF, dated July 22,
1997 (the "Multiparty Agreements") (collectively, the "Agreements").
Dear Sirs/Madame:
Pursuant to its rights under Paragraph 18.1 of the above-cited Launch
Agreement, CD Radio hereby notifies Arianespace and AEF that it is terminating
the Launch Agreement as to both Launch #1 and Launch #2.
To date, CD Radio has made payments to Arianespace of $15,870,653 for
Launch #1, and of $7,040,000 for Launch #2, for a total payment of $22,910,653.
Under the terms of Paragraph 18.2 of the Launch Agreement, CD Radio's
termination fee is 10% of the launch services price of each of the terminated
launches, for a total of $17,600,000 (based on $8,800,000 per launch). Pursuant
to Sub-paragraph 18.2.3, CD Radio is entitled to the difference between amounts
it has paid for the launches in excess of the termination fee, or $5,310,653,
which Arianespace is required to refund within thirty (30) days of this notice
of
<PAGE>
termination. As soon as Arianespace has refunded such amount to CD Radio, the
Launch Agreement shall be considered terminated as to both Launch #1 and Launch
#2, and neither party shall have any liability to the other with respect to
either of the launches, except pursuant to provisions that, by their express
terms, shall survive the termination of the Launch Agreement.
Pursuant to Section 2.05 of the Loan Agreements cited above, amounts
advanced by AEF under the Loan Agreements are subject to mandatory prepayment by
CD Radio upon termination of the Launch Agreement. The amounts extended to CD
Radio by AEF for Launch #1 and Launch #2 are $13,270,653 and $4,440,000,
respectively (including $1,800,000 in non-refundable fees for each launch, but
excluding interest), for a total of $17,710,653. Pursuant to Section 2.05(b)(i)
of each of the Loan Agreements, these amounts must be prepaid, without penalty,
no later than five (5) Business Days after the termination of the Launch
Agreement, together with interest thereon accrued to the date of prepayment, any
outstanding fees and any other amounts due and payable under the Loan
Agreements. By countersigning this letter agreement, AEF agrees that,
notwithstanding anything to the contrary in the Agreements or any exhibits
thereto, CD Radio's prepayment shall be due five (5) Business Days after the
later of (i) AEF's receipt of this notice and (ii) CD Radio's receipt from AEF
of an invoice detailing the amount of the prepayment, including interest, fees
and any other costs.
By countersigning this letter agreement below, Arianespace agrees,
notwithstanding anything to the contrary in the Agreements or any exhibits
thereto, to pay the $5,310,653 it owes to CD Radio to AEF within five (5)
Business Days (as defined in the Loan Agreements) to AEF, following which
Arianespace's obligation to pay such amount to CD Radio shall be extinguished.
By its signature below, AEF further agrees to apply such amount received from
Arianespace against CD Radio's prepayment obligation to AEF. As soon as AEF has
received from CD Radio the difference between CD Radio's prepayment obligation,
including interest, fees and any other costs, and the $5,310,653 it shall
receive from Arianespace, the Loan Agreements and the Multiparty Agreements
shall be considered terminated, the Commitments (as defined in each of the Loan
Agreements) shall be reduced to zero, and neither AEF nor CD Radio shall have
any further obligations to the other under any of such agreements, except
pursuant to provisions that, by their express terms, shall survive the
termination of the Loan Agreements.
<PAGE>
By countersigning this letter, Arianespace agrees that, notwithstanding
the terms of Section 18.1 of the Launch Agreement; this termination shall be
effective upon receipt by telecopy.
We deeply appreciate all your efforts toward the success of CD Radio.
Best regards,
/s/ David Margolese
-------------------
David Margolese
Chairman and Chief Executive
Officer
cc: Ralph Jaeger, Arianespace S.A.
Paul Zermati, Esq., Arianespace S.A.
Robert D. Briskman, CD Radio
Patrick Donnelly, Esq., CD Radio
AGREED:
ARIANESPACE S.A.
By: /s/ Brigitte Vienne
- -----------------------
Date: 29 May 1998
ARIANESPACE FINANCE S.A.
By: /s/ Brigitte Vienne
- -----------------------
Date: 29 May 1998
================================================================================
$115,000,000
CREDIT AGREEMENT
among
CD RADIO INC.
and
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Administrative Agent and as a Bank
Dated as of June 30, 1998
Arranged By
BANCAMERICA ROBERTSON STEPHENS
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS...................................................................1
1.1 Certain Defined Terms.....................................................1
1.2 Other Interpretive Provisions............................................15
1.3 Accounting Principles....................................................16
ARTICLE II
THE TERM LOANS............................. 17
2.1 Amounts and Terms of Commitments........................................17
2.2 Loan Accounts...........................................................17
2.3 Procedure for Borrowing.................................................17
2.4 Conversion and Continuation Elections...................................18
2.5 Voluntary Termination or Reduction of Commitments.......................19
2.6 Optional Prepayments....................................................19
2.7 Mandatory Prepayments of Loans; Mandatory Commitment Reductions.........20
(a) Asset Dispositions..........................................20
(b) Payments on Overall Contract................................20
(c) General.....................................................20
(d) Reduction of Commitment.....................................20
2.8 Repayment................................................................20
2.9 Interest.................................................................20
2.10 Fees....................................................................21
(a) Arrangement, Agency Fees.....................................21
(b) Commitment Fees.............................................21
2.11 Computation of Fees and Interest.......................................21
2.12 Payments by the Company................................................22
2.13 Payments by the Banks to the Agent.....................................22
2.14 Sharing of Payments, Etc...............................................23
2.15 Security...............................................................23
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY..................24
3.1 Taxes...................................................................24
3.2 Illegality..............................................................25
3.3 Increased Costs and Reduction of Return.................................25
3.4 Funding Losses..........................................................26
3.5 Inability to Determine Rates............................................27
3.6 Reserves on Offshore Rate Loans.........................................27
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3.7 Certificates of Banks...................................................27
3.8 Substitution of Banks...................................................27
3.9 Survival................................................................27
ARTICLE IV
CONDITIONS PRECEDENT..........................28
4.1 Conditions of Initial Loans.............................................28
(a) Credit Agreement; Pledge Agreement and Support Agreement....28
(b) Overall Contract............................................28
(c) Resolutions; Incumbency.....................................28
(d) Organization Documents; Good Standing.......................28
(e) Interest Rate Protection....................................28
(f) No Disruption of Financial and Capital Markets..............29
(g) Support Agreement...........................................29
(h) Legal Opinions..............................................29
(i) Payment of Fees.............................................29
(j) Collateral Documents........................................29
(k) Solvency Opinion............................................30
(l) Reserved....................................................30
(m) Satisfaction of Remarketing Agent...........................30
(n) Insurance...................................................30
(o) Certificate.................................................30
(p) No Default..................................................31
(q) Other Documents.............................................31
4.2 Conditions to All Borrowings............................................31
(a) Notice of Borrowing.........................................31
(b) Continuation of Representations and Warranties..............31
(c) No Existing Default.........................................31
(d) No Future Advance Notice....................................31
(e) Progress Payments...........................................31
(f) Satisfaction of Remarketing Agent...........................31
ARTICLE V
REPRESENTATIONS AND WARRANTIES..................... 32
5.1 Corporate Existence and Power; Compliance with Laws.....................32
5.2 Corporate Authorization; No Contravention...............................32
5.3 Governmental Authorization..............................................32
5.4 Binding Effect..........................................................32
5.5 Litigation..............................................................33
5.6 No Default..............................................................33
5.7 ERISA Compliance........................................................33
5.8 Certain Documents.......................................................34
5.9 Taxes...................................................................34
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5.10 Margin Regulations.....................................................34
5.11 Labor Matters ......................................................34
5.12 Year 2000 Matters......................................................34
5.13 Title to Properties....................................................35
5.14 Financial Condition....................................................35
5.15 Material Adverse Effects...............................................35
5.16 Environmental Matters..................................................35
5.17 Collateral Documents...................................................36
5.18 Regulated Entities.....................................................36
5.19 No Burdensome Restrictions.............................................36
5.20 Copyrights, Patents, Trademarks and Licenses, etc......................36
5.21 Subsidiaries...........................................................37
5.22 Insurance..............................................................37
5.23 Solvency...............................................................37
5.24 Full Disclosure........................................................37
ARTICLE VI
AFFIRMATIVE COVENANTS......................... 37
6.1 Financial Statements....................................................37
6.2 Certificates; Other Information.........................................38
6.3 Notices.................................................................38
6.4 Preservation of Corporate Existence, Etc................................40
6.5 Maintenance of Property.................................................40
6.6 Maintenance of Approvals................................................40
6.7 Insurance...............................................................41
6.8 Payment of Obligations..................................................41
6.9 Progress Payments ......................................................41
6.10 Compliance with Laws...................................................41
6.11 Compliance with ERISA..................................................41
6.12 Inspection of Property and Books and Records...........................42
6.13 Environmental Laws.....................................................42
6.14 Use of Proceeds ......................................................42
6.15 Further Assurances.....................................................42
ARTICLE VII
NEGATIVE COVENANTS........................... 43
7.1 Consolidated Net Worth..................................................43
7.2 Limitation on Liens.....................................................43
7.3 Disposition of Assets...................................................44
7.4 Consolidations and Mergers..............................................45
7.5 Loans and Investments...................................................45
7.6 Assignment of Launch Vehicle Sale Contract..............................46
7.7 Transactions with Affiliates............................................46
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7.8 Use of Proceeds ..................................................... 46
7.9 Contingent Obligations................................................. 46
7.10 Joint Ventures........................................................ 47
7.11 Lease Obligations..................................................... 47
7.12 Restricted Payments................................................... 47
7.13 ERISA................................................................. 47
7.14 Change in Business.................................................... 48
7.15 Accounting Changes.................................................... 48
7.16 Clear Market.......................................................... 48
7.17 Modification of Overall Contract...................................... 48
7.18 Year 2000 Matters..................................................... 48
ARTICLE VIII
EVENTS OF DEFAULT........................... 48
8.1 Event of Default ......................................................48
(a) Non-Payment.................................................48
(b) Representation or Warranty..................................48
(c) Specific Defaults...........................................49
(e) Other Defaults..............................................49
(f) Cross-Default...............................................49
(g) Insolvency; Voluntary Proceedings...........................49
(h) Involuntary Proceedings.....................................49
(i) ERISA.......................................................50
(j) Monetary Judgments..........................................50
(k) Non-Monetary Judgments......................................50
(l) Change of Control...........................................50
(m) Loss of Approvals or Consents...............................50
(n) Material Adverse Change.....................................50
(o) Priority....................................................51
(p) Overall Contract............................................51
(q) Collateral..................................................51
8.2 Remedies ......................................................51
8.3 Rights Not Exclusive....................................................51
8.4 Certain Financial Covenant Defaults.....................................52
ARTICLE IX
THE AGENT................................52
9.1 Appointment and Authorization; "Agent"..................................52
9.2 Delegation of Duties....................................................52
9.3 Liability of Agent......................................................52
9.4 Reliance by Agent.......................................................53
9.5 Notice of Default.......................................................53
9.6 Credit Decision ........................................................53
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9.7 Indemnification of Agent................................................54
9.8 Agent in Individual Capacity............................................54
9.9 Successor Agent.........................................................55
9.10 Withholding Tax........................................................55
9.11 Collateral Matters.....................................................56
ARTICLE X
MISCELLANEOUS..............................57
10.1 Amendments and Waivers.................................................57
10.2 Notices................................................................58
10.3 No Waiver; Cumulative Remedies.........................................58
10.4 Costs and Expenses.....................................................58
10.5 Company Indemnification................................................59
10.6 Survival; Defense......................................................60
10.7 Marshalling; Payments Set Aside........................................60
10.8 Successors and Assigns.................................................61
10.9 Assignments, Participations, etc.......................................61
10.10 Confidentiality ......................................................62
10.11 Set-off...............................................................63
10.12 Automatic Debits of Fees..............................................63
10.13 Notification of Addresses, Lending Offices, Etc.......................63
10.14 Counterparts..........................................................63
10.15 Severability..........................................................64
10.16 No Third Parties Benefited............................................64
10.17 Governing Law and Jurisdiction........................................64
10.18 Waiver of Jury Trial..................................................64
10.19 Entire Agreement......................................................65
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SCHEDULES
Schedule 2.1 Commitments
Schedule 5.5 Litigation
Schedule 7.2 Permitted Liens
Schedule 7.9 Contingent Obligations
Schedule 10.2 Lending Offices; Addresses for Notices
EXHIBITS
Exhibit A Form of Pledge Agreement
Exhibit B Form of Support Agreement
Exhibit C Form of Notice of Borrowing
Exhibit D Form of Notice of Conversion/Continuation
Exhibit E Form of Compliance Certificate
Exhibit F-1 Form of Legal Opinion of Paul, Weiss, Rifkind, Wharton & Garrison
Exhibit F-2 Form of Legal Opinion of Willkie Farr & Gallagher
Exhibit G Form of Assignment and Acceptance
Exhibit H Form of Promissory Note
Exhibit I Form of Remarketing Agent Certificate
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CREDIT AGREEMENT
This CREDIT AGREEMENT is entered into as of June 30, 1998, among CD
RADIO INC., a Delaware corporation (the "Company"), Bank of America National
Trust and Savings Association, a national banking association ("BofA"), as a
Bank and as administrative agent for the Banks (in such capacity, the "Agent").
WHEREAS, the Banks have agreed to make available to the Company a
secured term loan credit facility upon the terms and conditions set forth in
this Agreement;
NOW, THEREFORE, in consideration of the mutual agreements, provisions
and covenants contained herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
1.1 Certain Defined Terms. The following terms have the following
meanings:
"Acquisition" means any transaction or series of related transactions
for the purpose of or resulting, directly or indirectly, in (a) the
acquisition of all or substantially all of the assets of a Person, or of
any business or division of a Person, (b) the acquisition of in excess of
50% of the capital stock, partnership interests, membership interests or
equity of any Person, or otherwise causing any Person to become a
Subsidiary, or (c) a merger or consolidation or any other combination with
another Person (other than a Person that is a Subsidiary) provided that the
Company or a Subsidiary is the surviving entity.
"Affected Bank" has the meaning specified in Section 3.8.
"Affiliate" means, as to any Person, any other Person which, directly
or indirectly, is in control of, is controlled by, or is under common
control with, such Person. A Person shall be deemed to control another
Person if the controlling Person possesses, directly or indirectly, the
power to direct or cause the direction of the management and policies of
the other Person, whether through the ownership of voting securities,
membership interests, by contract, or otherwise.
"Agent" means BofA in its capacity as agent for the Banks hereunder,
and any successor agent arising under Section 9.9. 1
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"Agent-Related Persons" means BofA and any successor agent arising
under Section 9.9, together with their respective Affiliates (including, in
the case of BofA, the Arranger), and the officers, directors, employees,
agents and attorneys-in-fact of such Persons and Affiliates.
"Agent's Payment Office" means the address for payments set forth on
Schedule 10.2 or such other address as the Agent may from time to time
specify.
"Agreement" means this Credit Agreement.
"Applicable Margin" means
(i) with respect to Base Rate Loans, .75%; and
(iii) with respect to Offshore Rate Loans, 1.75%.
"Arranger" means BancAmerica Robertson Stephens, a Delaware
corporation.
"Assignee" has the meaning specified in subsection 10.9(a).
"Assignment and Acceptance" has the meaning specified in Section
10.9(a).
"Attorney Costs" means and includes all reasonable fees and
disbursements of any law firm or other external counsel, the allocated cost
of internal legal services and all reasonable disbursements of internal
counsel.
"Bank" means BofA, in its capacity as a lender hereunder, and any other
financial institution from time to time party hereto (collectively, the
"Banks").
"Bankruptcy Code" means the Federal Bankruptcy Reform Act of 1978 (11
U.S.C. ss. 101, et seq.).
"Base Rate" means, for any day, the higher of: (a) 0.50% per annum
above the latest Federal Funds Rate; and (b) the rate of interest in effect
for such day as publicly announced from time to time by BofA as its
"reference rate." (The "reference rate" is a rate set by BofA based upon
various factors including BofA's costs and desired return, general economic
conditions and other factors, and is used as a reference point for pricing
some loans, which may be priced at, above, or below such announced rate.)
Any change in the reference rate announced by BofA shall take effect at the
opening of business on the day specified in the public announcement of such
change.
"Base Rate Loan" means a Loan that bears interest based on the Base
Rate.
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"BofA" has the meaning specified in the preamble hereto.
"Borrowing" means a borrowing hereunder consisting of Loans of the same
Type made to the Company on the same day by the Banks under Article II,
and, other than in the case of Base Rate Loans, having the same Interest
Period.
"Borrowing Date" means any date on which a Borrowing occurs under
Section 2.3.
"Business Day" means any day other than a Saturday, Sunday or other day
on which commercial banks in New York City or San Francisco are authorized
or required by law to close and, if the applicable Business Day relates to
any Offshore Rate Loan, means such a day on which dealings are carried on
in the applicable offshore dollar interbank market.
"Capital Adequacy Regulation" means any guideline, request or directive
of any central bank or other Governmental Authority, or any other law, rule
or regulation, whether or not having the force of law, in each case,
regarding capital adequacy of any bank or of any corporation controlling a
bank.
"CERCLA" has the meaning specified in the definition of "Environmental
Laws."
"Change of Control" means (i) any "person" or "group" (as such terms
are used in Sections 13(d) and 14(d) of the Exchange Act), shall become, or
obtain rights (whether by means or warrants, options or otherwise) to
become, the "beneficial owner" (as defined in Rules 13(d)-3 and 13(d)-5
under the Exchange Act), directly or indirectly, of more than 40% of the
outstanding common stock of the Company or (ii) the board of directors of
the Company shall cease to consist of a majority of Continuing Directors.
"Charge" has the meaning specified in Section 8.4.
"Closing Date" means the date on which all conditions precedent set
forth in Section 4.1 are satisfied or waived by all Banks (or, in the case
of subsection 4.1(j), waived by the Person entitled to receive such
payment).
"Code" means the Internal Revenue Code of 1986, and regulations
promulgated thereunder.
"Collateral" means all has the meaning specified in the Pledge
Agreement.
"Collateral Documents" means, collectively, (i) the Pledge Agreement
and the Support Agreement and all other security agreements, mortgages,
deeds of trust, patent and trademark assignments, lease assignments,
guarantees and other similar
3
<PAGE>
agreements between the Company or any Subsidiary and the Banks or the Agent
for the benefit of the Banks now or hereafter delivered to the Banks or the
Agent pursuant to or in connection with the transactions contemplated
hereby, and all financing statements (or comparable documents now or
hereafter filed in accordance with the Uniform Commercial Code or
comparable law) against the Company or any Subsidiary as debtor in favor of
the Banks or the Agent for the benefit of the Banks as secured party, and
(ii) any amendments, supplements, modifications, renewals, replacements,
consolidations, substitutions and extensions of any of the foregoing.
"Commitment" means, as to all Banks, aggregate Commitments of one
hundred fifteen million dollars ($115,000,000) and, as to any Bank, such
Bank's Pro Rata Share of the aggregate Commitment. The Commitments as of
the Closing Date shall be as set forth on Schedule 2.1.
"Compliance Certificate" means a certificate substantially in the form
of Exhibit E.
"Consolidated Net Worth" means, at a particular date, all amounts which
would be included under shareholders' equity on a consolidated balance
sheet of the Company and its Subsidiaries determined on a consolidated
basis in accordance with GAAP as at such date, plus (i) preferred stock
issued by the Company whether or not included in shareholders' equity and
(ii) all accrued but unpaid dividends on preferred stock issued by the
Company.
"Contingent Obligation" means, as to any Person, any direct or indirect
liability of that Person, whether or not contingent, with or without
recourse, (a) with respect to any Indebtedness, lease, dividend, letter of
credit or other obligation (the "primary obligations") of another Person
(the "primary obligor"), including any obligation of that Person (i) to
purchase, repurchase or otherwise acquire such primary obligations or any
security therefor, (ii) to advance or provide funds for the payment or
discharge of any such primary obligation, or to maintain working capital or
equity capital of the primary obligor or otherwise to maintain the net
worth or solvency or any balance sheet item, level of income or financial
condition of the primary obligor, (iii) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such
primary obligation of the ability of the primary obligor to make payment of
such primary obligation, or (iv) otherwise to assure or hold harmless the
holder of any such primary obligation against loss in respect thereof
(each, a "Guaranty Obligation"); (b) with respect to any Surety Instrument
issued for the account of that Person or as to which that Person is
otherwise liable for reimbursement of drawings or payments; or (c) to
purchase any materials, supplies or other property from, or to obtain the
services of, another Person if the relevant contract or other related
document or obligation requires that payment for such materials, supplies
or other property, or for such services, shall be made regardless of
whether delivery of such materials, supplies or other property is ever made
or tendered, or such services are ever performed or tendered. The amount of
any Contingent Obligation shall, in the case of Guaranty Obligations, be
deemed equal to the stated or determinable amount of the primary obligation
in respect of
4
<PAGE>
which such Guaranty Obligation is made or, if not stated or if
indeterminable, the maximum reasonably anticipated liability in respect
thereof, and in the case of other Contingent Obligations shall be equal to
the maximum reasonably anticipated liability in respect thereof.
"Continuing Directors" means the directors of the Company on the
Closing Date, and each other director, if, in each case, such other
director's nomination for election to the board of directors of the Company
is recommended by at least 66- 2/3% of the then Continuing Directors.
"Contractual Obligation" means, as to any Person, any provision of any
security issued by such Person or of any agreement, undertaking, contract,
indenture, mortgage, deed of trust or other instrument, document or
agreement to which such Person is a party or by which it or any of its
property is bound.
"Conversion/Continuation Date" means any date on which, under Section
2.4, the Company (a) converts Loans of one Type to another Type, or (b)
continues as Loans of the same Type, but with a new Interest Period, Loans
having Interest Periods expiring on such date.
"Default" means any event or circumstance which, with the giving of
notice, the lapse of time, or both, would (if not cured or otherwise
remedied during such time) constitute an Event of Default.
"Disposition" means (i) the sale, lease, conveyance or other
disposition of property, other than sales or other dispositions expressly
permitted under subsection 7.3(a) or 7.3(b), and (ii) the sale or transfer
by the Company or any Subsidiary of the Company of any equity securities
issued by any Subsidiary of the Company and held by such transferor Person.
"Dollars", "dollars" and "$" each mean lawful money of the United
States.
"Eligible Assignee" means a commercial bank or a financial institution,
a fund, or other accredited investor (as defined in Regulation D of the
Securities Act) that is engaged in the making, purchasing or otherwise
investing, in commercial loans in the ordinary course of business.
"Environmental Claims" means all claims, however asserted, by any
Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or for release or
injury to the environment or threat to public health, personal injury
(including sickness, disease or death), property damage, natural resources
damage, or otherwise alleging liability or responsibility for damages
(punitive or otherwise), cleanup, removal, remedial or response costs,
restitution, civil or criminal penalties, injunctive relief, or other type
of relief, resulting from or based upon the presence, placement, discharge,
emission or release (including intentional and unintentional, negligent and
non-negligent, sudden or non-sudden, accidental or non-accidental,
placement, spills, leaks,
5
<PAGE>
discharges, emissions or releases) of any Hazardous Material at, in, or
from Property, whether or not owned by the Company.
"Environmental Laws" means all federal, state or local laws, statutes,
common law duties, rules, regulations, ordinances and codes, together with
all administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental
Authorities, in each case relating to environmental, health, safety and
land use matters; including the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA"), the Clean Air Act, the
Federal Water Pollution Control Act of 1972, the Solid Waste Disposal Act,
the Federal Resource Conservation and Recovery Act, the Toxic Substances
Control Act, the Emergency Planning and Community Right-to-Know Act and any
similar Requirement of Law of any Governmental Authority having
jurisdiction over the Company or its business.
"Environmental Permits" has the meaning specified in subsection
5.16(b).
"ERISA" means the Employee Retirement Income Security Act of 1974, and
regulations promulgated thereunder.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with the Company within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code
for purposes of provisions relating to Section 412 of the Code).
"ERISA Event" means (a) a Reportable Event with respect to a Pension
Plan; (b) a withdrawal by the Company or any ERISA Affiliate from a Pension
Plan subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer (as defined in Section 4001(a)(2) of ERISA) or a
cessation of operations which is treated as such a withdrawal under Section
4062(e) of ERISA; (c) a complete or partial withdrawal by the Company or
any ERISA Affiliate from a Multiemployer Plan or notification that a
Multiemployer Plan is in reorganization; (d) the filing of a notice of
intent to terminate, the treatment of a Plan amendment as a termination
under Section 4041 or 4041A of ERISA, or the commencement of proceedings by
the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an event or
condition which might reasonably be expected to constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the
imposition of any liability under Title IV of ERISA, other than PBGC
premiums due but not delinquent under Section 4007 of ERISA, upon the
Company or any ERISA Affiliate.
"Estimated Remediation Costs" means all costs associated with
performing work to remediate contamination of real property or groundwater,
including engineering and other professional fees and expenses, costs to
remove, transport and dispose of contaminated soil, costs to "cap" or
otherwise contain contaminated soil, and costs to pump and treat water and
monitor water quality.
6
<PAGE>
"Eurodollar Reserve Percentage" has the meaning specified in the
definition of "Offshore Rate".
"Event of Default" means any of the events or circumstances specified
in Section 8.1.
"Event of Loss" means, with respect to any property including, without
limitation, Launch Vehicles, any of the following: (a) any loss,
destruction or damage of such property; (b) any pending or threatened
institution of any proceedings for the condemnation or seizure of such
property or for the exercise of any right of eminent domain; or (c) any
actual condemnation, seizure or taking, by exercise of the power of eminent
domain or otherwise, of such property, or confiscation of such property or
the requisition of the use of such property.
"Exchange Act" means the Securities Exchange Act of 1934, and
regulations promulgated thereunder.
"FDIC" means the Federal Deposit Insurance Corporation, and any
Governmental Authority succeeding to any of its principal functions.
"Federal Funds Rate" means, for any day, the rate set forth in the
weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Bank of New York (including
any such successor, "H.15(519)") on the preceding Business Day opposite the
caption "Federal Funds (Effective)"; or, if for any relevant day such rate
is not so published on any such preceding Business Day, the rate for such
day will be the arithmetic mean as determined by the Agent of the rates for
the last transaction in overnight Federal funds arranged prior to 9:00 a.m.
(New York City time) on that day by each of three leading brokers of
Federal funds transactions in New York City selected by the Agent.
"Fee Letter" has the meaning specified in subsection 2.10(a).
"FRB" means the Board of Governors of the Federal Reserve System, and
any Governmental Authority succeeding to any of its principal functions.
"GAAP" means generally accepted accounting principles set forth from
time to time in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public Accountants
and statements and pronouncements of the Financial Accounting Standards
Board (or agencies with similar functions of comparable stature and
authority within the U.S. accounting profession), which are applicable to
the circumstances as of the Closing Date.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof, any central bank (or similar monetary
or regulatory authority) thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other
7
<PAGE>
entity owned or controlled, through stock or capital ownership or
otherwise, by any of the foregoing.
"Guaranty Obligation" has the meaning specified in the definition of
"Contingent Obligation."
"Hazardous Materials" means all those substances that are regulated by,
or which may form the basis of liability under, any Environmental Law,
including any substance identified under any Environmental Law as a
pollutant, contaminant, hazardous waste, hazardous constituent, special
waste, hazardous substance, hazardous material, or toxic substance, or
petroleum or petroleum derived substance or waste.
"Indebtedness" of any Person means, without duplication, (a) all
indebtedness for borrowed money; (b) all obligations issued, undertaken or
assumed as the deferred purchase price of property or services (other than
trade payables entered into in the ordinary course of business on ordinary
terms); (c) all non-contingent reimbursement or payment obligations with
respect to Surety Instruments; (d) all obligations evidenced by notes,
bonds, debentures or similar instruments, including obligations so
evidenced incurred in connection with the acquisition of property, assets
or businesses; (e) all indebtedness created or arising under any
conditional sale or other title retention agreement, or incurred as
financing, in either case with respect to property acquired by the Person
(even though the rights and remedies of the seller or bank under such
agreement in the event of default are limited to repossession or sale of
such property); (f) all obligations with respect to capital leases; (g) all
indebtedness referred to in clauses (a) through (f) above secured by (or
for which the holder of such Indebtedness has an existing right, contingent
or otherwise, to be secured by) any Lien upon or in property (including
accounts and contracts rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such
Indebtedness; and (h) all Guaranty Obligations in respect of indebtedness
or obligations of others of the kinds referred to in clauses (a) through
(g) above. For all purposes of this Agreement, the Indebtedness of any
Person shall include all recourse Indebtedness of any partnership or joint
venture or limited liability company in which such Person is a general
partner or a joint venturer or a member.
"Indemnified Liabilities" has the meaning specified in Section 10.5.
"Indemnified Person" has the meaning specified in Section 10.5.
"Independent Auditor" has the meaning specified in subsection 6.1(a).
"Initial Date" means, for purposes of Section 3.1, in the case of BofA,
the date of its execution and delivery of this Agreement, in the case of an
Agent other than BofA, the date such successor becomes an Agent pursuant to
Section 9.9, and, in the case of each Bank other than BofA, the date of the
Assignment and Acceptance pursuant to which it becomes a Bank.
8
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"Insolvency Proceeding" means, with respect to any Person, (a) any
case, action or proceeding with respect to such Person before any court or
other Governmental Authority relating to bankruptcy, reorganization,
insolvency, liquidation, receivership, dissolution, winding-up or relief of
debtors, or (b) any general assignment for the benefit of creditors,
composition, marshalling of assets for creditors, or other, similar
arrangement in respect of its creditors generally or any substantial
portion of its creditors; undertaken under U.S. Federal, state or foreign
law, including the Bankruptcy Code.
"Interest Payment Date" means, as to any Offshore Rate Loan, the last
day of each Interest Period applicable to such Loan and, as to any Base
Rate Loan, the last Business Day of each calendar quarter, provided,
however, that if any Interest Period for an Offshore Rate Loan exceeds
three months, the date that falls three months after the beginning of such
Interest Period and after each Interest Payment Date thereafter is also an
Interest Payment Date.
"Interest Period" means, as to any Offshore Rate Loan, the period
commencing on the Borrowing Date of such Loan or on the
Conversion/Continuation Date on which the Loan is converted into or
continued as an Offshore Rate Loan, and ending on the date one, two, three
or six months thereafter as selected by the Company in its Notice of
Borrowing or Notice of Conversion/Continuation; provided that:
(i) if any Interest Period would otherwise end on a day that
is not a Business Day, that Interest Period shall be extended to the
following Business Day unless, in the case of an Offshore Rate Loan,
the result of such extension would be to carry such Interest Period
into another calendar month, in which event such Interest Period shall
end on the preceding Business Day;
(ii) any Interest Period pertaining to an Offshore Rate Loan
that begins on the last Business Day of a calendar month (or on a day
for which there is no numerically corresponding day in the calendar
month at the end of such Interest Period) shall end on the last
Business Day of the calendar month at the end of such Interest Period;
(iii) no Interest Period for any Loan shall extend beyond the
Maturity Date; and
(iv) during the first two months following the Closing Date,
the Company may select an Interest Period ending less than one month
after the Borrowing Date or Conversion/Continuation Date of such Loan.
"Investments" has the meaning specified in Section 7.5.
"IRS" means the Internal Revenue Service, and any Governmental
Authority succeeding to any of its principal functions under the Code.
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"Joint Venture" means a partnership, limited liability company, joint
venture or other legal arrangement (whether created by contract or
conducted through a separate legal entity) now or hereafter formed by the
Company or any of its Subsidiaries with another Person in order to conduct
a common venture or enterprise with such Person.
"Launch Vehicles" means the satellite launch vehicles described in the
Launch Vehicle Sale Contract.
"Launch Vehicle Sale Contract" means Article 7 of the Overall Contract.
"Lending Office" means, as to any Bank, the office or offices of such
Bank specified on Schedule 10.2, or such other office or offices as the
Bank may from time to time notify the Company and the Agent.
"Lien" means any security interest, mortgage, deed of trust, pledge,
hypothecation, assignment, charge or deposit arrangement, encumbrance, lien
(statutory or other) or preferential arrangement of any kind or nature
whatsoever in respect of any property (including those created by, arising
under or evidenced by any conditional sale or other title retention
agreement, the interest of a lessor under a capital lease, any financing
lease having substantially the same economic effect as any of the
foregoing, or the filing of any financing statement naming the owner of the
asset to which such lien relates as debtor, under the Uniform Commercial
Code or any comparable law) and any contingent or other agreement to
provide any of the foregoing, but not including the interest of a lessor
under an operating lease.
"Loan" means an extension of credit by a Bank to the Company under
Article II, and may be a Base Rate Loan or an Offshore Rate Loan (each, a
"Type" of Loan).
"Loan Documents" means this Agreement, any Notes, the Collateral
Documents, the Fee Letter and all other documents delivered to the Agent or
any Bank in connection with the transactions contemplated by this
Agreement.
"Margin Stock" means "margin stock" as such term is defined in
Regulation T, U or X of the FRB.
"Material Adverse Effect" means (a) a material adverse change in, or a
material adverse effect upon, the operations, business, properties,
condition (financial or otherwise) or prospects of the Company or the
Company and its Subsidiaries taken as a whole; (b) a material impairment of
the ability of the Company to perform under any Loan Document; or (c) a
material adverse effect upon (i) the legality, validity, binding effect or
enforceability against the Company of any Loan Document, or (ii) the
perfection or priority of any Lien granted under the Pledge Agreement.
"Maturity Date" shall mean September 30, 1999.
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"Multiemployer Plan" means a "multiemployer plan", within the meaning
of Section 4001(a)(3) of ERISA, to which the Company or any ERISA Affiliate
makes, is making, or is obligated to make contributions or, during the
preceding three calendar years, has made, or been obligated to make,
contributions.
"Net Proceeds" means, as to any Disposition by a Person, proceeds in
cash, checks or other cash equivalent financial instruments as and when
received by such Person, net of: (a) the direct costs relating to such
Disposition excluding amounts payable to such Person or any Affiliate of
such Person, (b) sale, use or other transaction taxes paid or payable by
such Person as a direct result thereof, and (c) amounts required to be
applied to repay principal, interest and prepayment premiums and penalties
on Indebtedness secured by a Lien on the asset which is the subject of such
Disposition. "Net Proceeds" shall also include proceeds paid on account of
any Event of Loss, net of (i) all money actually applied to repair or
reconstruct the damaged property or property affected by the casualty,
condemnation or taking, (ii) all of the costs and expenses reasonably
incurred in connection with the collection of such proceeds, award or other
payments, and (iii) any amounts retained by or paid to parties having
superior rights to such proceeds, awards or other payments.
"Note" means a promissory note executed by the Company in favor of a
Bank pursuant to subsection 2.2(b), in substantially the form of Exhibit H.
"Notice of Borrowing" means a notice in substantially the form of
Exhibit C.
"Notice of Conversion/Continuation" means a notice in substantially the
form of Exhibit D.
"Obligations" means all advances, debts, liabilities, obligations,
covenants and duties arising under any Loan Document owing by the Company
to any Bank, the Agent, or any Indemnified Person, whether direct or
indirect (including those acquired by assignment), absolute or contingent,
due or to become due, now existing or hereafter arising.
"Offshore Rate" means, for any Interest Period, with respect to
Offshore Rate Loans comprising part of the same Borrowing, the rate of
interest per annum determined by the Agent as follows:
Offshore Rate = [LIBOR or IBOR (for Interest Periods under 1 month)]
----------------------------------------------------
1.00 - Eurodollar Reserve Percentage
Where,
"Eurodollar Reserve Percentage" means for any day for any Interest
Period the maximum reserve percentage (expressed as a decimal, rounded
upward to the next 1/100th of 1%) in effect on such day (but only to the
extent actually applicable to any Bank) under regulations issued from time
to time by the FRB for determining the maximum reserve requirement
(including any
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emergency, supplemental or other marginal reserve requirement) with respect
to Eurocurrency funding (currently referred to as "Eurocurrency
liabilities");
"IBOR" means the rate of interest per annum determined by the Agent as
the rate at which dollar deposits in the approximate amount of BofA's
Offshore Rate Loan for such Interest Period would be offered by BofA's
Grand Cayman Branch, Grand Cayman B.W.I. (or such other office as may be
designated for such purpose by BofA), to major banks in the offshore dollar
interbank market at their request at approximately 11:00 a.m. (New York
City time) two Business Days prior to the commencement of such Interest
Period; and
"LIBOR" means the rate of interest per annum determined by the Agent to
be the arithmetic mean (rounded upward to the next 1/16th of 1%) of the
rates of interest per annum notified to the Agent by the Reference Bank as
the rate of interest at which dollar deposits in the approximate amount of
the amount of the Loan to be made or continued as, or converted into, an
Offshore Rate Loan by such Reference Bank and having a maturity comparable
to such Interest Period would be offered to major banks in the London
interbank market at their request at approximately 11:00 a.m. (London time)
two Business Days prior to the commencement of such Interest Period.
The Offshore Rate shall be adjusted automatically as to all Offshore
Rate Loans then outstanding as of the effective date of any change in the
Eurodollar Reserve Percentage.
"Offshore Rate Loan" means a Loan that bears interest based on the
Offshore Rate.
"Organization Documents" means, for any corporation, the certificate or
articles of incorporation, the bylaws, any certificate of determination or
instrument relating to the rights of preferred shareholders of such
corporation, any shareholder rights agreement, and all applicable
resolutions of the board of directors (or any committee thereof) of such
corporation.
"Other Taxes" means any present or future stamp, court or documentary
taxes or any other excise or property taxes, charges or similar levies
which arise from any payment made hereunder or from the execution,
delivery, performance, enforcement or registration of, or otherwise with
respect to, this Agreement or any other Loan Documents.
"Overall Contract" means the Amended and Restated Contract,
SS/L-TP9003- 02, dated June 30, 1998, between the Company and SS/L.
"Participant" has the meaning specified in subsection 10.9(d).
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"PBGC" means the Pension Benefit Guaranty Corporation, or any
Governmental Authority succeeding to any of its principal functions under
ERISA.
"Pension Plan" means a pension plan (as defined in Section 3(2) of
ERISA) subject to Title IV of ERISA which the Company sponsors, maintains,
or to which it makes, is making, or is obligated to make contributions, or
in the case of a multiple employer plan (as described in Section 4064(a) of
ERISA) has made contributions at any time during the immediately preceding
five (5) plan years.
"Permitted Liens" has the meaning specified in Section 7.2.
"Person" means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust,
unincorporated association, joint venture or Governmental Authority.
"Plan" means an employee benefit plan (as defined in Section 3(3) of
ERISA) which the Company sponsors or maintains or to which the Company
makes, is making, or is obligated to make contributions and includes any
Pension Plan.
"Pledge Agreement" means the Pledge Agreement to be executed and
delivered by the Company, substantially in the form of Exhibit A, as the
same may be amended, supplemented or otherwise modified from time to time.
"Property" means any facility or property owned, leased or operated by
the Company or any of its Subsidiaries.
"Pro Rata Share" means, as to any Bank at any time, the percentage
equivalent (expressed as a decimal, rounded to the ninth decimal place) at
such time of such Bank's Commitment divided by the combined Commitments of
all Banks.
"Reference Bank" means BofA.
"Remarketing Agent" means Loral Space & Communications Ltd.
"Replacement Bank" has the meaning specified in Section 3.8.
"Reportable Event" means, any of the events set forth in Section
4043(c) of ERISA or the regulations thereunder, other than any such event
for which the 30-day notice requirement under ERISA has been waived in
regulations issued by the PBGC.
"Required Banks" means at any time Banks then holding more than 50% of
the then aggregate unpaid principal amount of the Loans, or, if no amounts
are outstanding, Banks then having more than 50% of the aggregate amount of
the Commitments.
"Requirement of Law" means, as to any Person, any law (statutory or
common), treaty, rule or regulation or determination of an arbitrator or of
a
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Governmental Authority, in each case applicable to or binding upon the
Person or any of its property or to which the Person or any of its property
is subject.
"Responsible Officer" means the chief executive officer, the president
or chief financial officer of the Company, or any other officer having
substantially the same authority and responsibility; or, with respect to
compliance with financial covenants, the chief financial officer or the
treasurer of the Company, or any other officer having substantially the
same authority and responsibility.
"Securities Act" means the Securities Act of 1933, as amended.
"SEC" means the Securities and Exchange Commission, or any Governmental
Authority succeeding to any of its principal functions.
"Senior Secured Discount Notes" means the 15% Senior Secured Discount
Notes due 2007 of the Company, in an aggregate principal amount not to
exceed $297,000,000.
"Solvent" means, as to any Person at any time, that (a) the fair value
of the property of such Person is greater than the amount of such Person's
liabilities (including disputed, contingent and unliquidated liabilities)
as such value is established and liabilities evaluated for purposes of
Section 101(31) of the Bankruptcy Code; (b) the present fair saleable value
of the property of such Person is not less than the amount that will be
required to pay the probable liability of such Person on its debts as they
become absolute and matured; (c) such Person is able to realize upon its
property and pay its debts and other liabilities (including disputed,
contingent and unliquidated liabilities) as they mature in the normal
course of business; (d) such Person does not intend to, and does not
believe that it will, incur debts or liabilities beyond such Person's
ability to pay as such debts and liabilities mature; and (e) such Person is
not engaged in business or a transaction, and is not about to engage in
business or a transaction, for which such Person's property would
constitute unreasonably small capital.
"SS/L" means Space Systems/Loral, Inc.
"Subsidiary" of a Person means any corporation, association,
partnership, limited liability company, joint venture or other business
entity of which more than 50% of the voting stock, membership interests or
other equity interests (in the case of Persons other than corporations), is
owned or controlled directly or indirectly by the Person, or one or more of
the Subsidiaries of the Person, or a combination thereof. Unless the
context otherwise clearly requires, references herein to a "Subsidiary"
refer to a Subsidiary of the Company.
"Support Agreement" means the Agreement to be executed and delivered by
the Agent and the Remarketing Agent, substantially in the form of Exhibit
B, as the same may be amended, supplemented or otherwise modified from time
to time.
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"Surety Instruments" means all letters of credit (including standby and
commercial), banker's acceptances, bank guaranties, shipside bonds, surety
bonds and similar instruments.
"Taxes" means any and all present or future taxes, levies, assessments,
imposts, duties, deductions, fees, withholdings or similar charges, and all
liabilities with respect thereto, excluding, in the case of each Bank and
the Agent, respectively, (i) taxes imposed on or measured by its net income
and franchise taxes imposed in lieu of taxes imposed on or measured by net
income by the jurisdiction (or any political subdivision or taxing
authority thereof or therein) under the laws of which such Bank or the
Agent, as the case may be, is organized or maintains a lending office, (ii)
United States withholding taxes imposed under laws in effect on the Initial
Date with respect to such Bank or the Agent or under laws in effect on the
date a Bank changes its Lending Office (other than pursuant to a request of
the Company) except to the extent that such Bank's assignor, if any, was
entitled, at the time of assignment or such Bank was entitled, at the time
it changes its applicable Lending Office, to receive additional amounts
from the Company pursuant to Section 3.1; provided, however, that United
States withholding taxes imposed under laws in effect on the Initial Date
with respect to the Remarketing Agent, as successor to the Banks under the
Support Agreement, shall be Taxes for the purposes of this Agreement and
(iii) United States withholding taxes that are attributable to the Bank's
or the Agent's failure to comply with Section 9.10.
"Term Loan" has the meaning specified in Section 2.1.
"Type" has the meaning specified in the definition of "Loan."
"UCC" means the Uniform Commercial Code as in effect in the State of
New York.
"Unfunded Pension Liability" means the excess of a Plan's benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of
that Plan's assets, determined in accordance with the assumptions used for
funding the Pension Plan pursuant to Section 412 of the Code for the
applicable plan year.
"United States" and "U.S." each means the United States of America.
"Wholly Owned Subsidiary" means any corporation in which (other than
directors' qualifying shares required by law) 100% of the capital stock of
each class having ordinary voting power, and 100% of the capital stock of
every other class, in each case, at the time as of which any determination
is being made, is owned, beneficially and of record, by the Company, or by
one or more of the other Wholly Owned Subsidiaries, or both.
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<PAGE>
1.2 Other Interpretive Provisions. (a) The meanings of defined terms
are equally applicable to the singular and plural forms of the defined terms.
(b) The words "hereof", "herein", "hereunder" and similar
words refer to this Agreement as a whole and not to any particular provision of
this Agreement; and subsection, Section, Schedule and Exhibit references are to
this Agreement unless otherwise specified.
(c) (i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other writings,
however evidenced.
(ii) The term "including" is not limiting and means
"including without limitation."
(iii) In the computation of periods of time from a
specified date to a later specified date, the word "from" means "from and
including"; the words "to" and "until" each mean "to but excluding", and the
word "through" means "to and including."
(iv) The term "property" includes any kind of
property or asset, real, personal or mixed, tangible or intangible.
(d) Unless otherwise expressly provided herein, (i) references
to agreements (including this Agreement) and other contractual instruments shall
be deemed to include all subsequent amendments and other modifications thereto,
but only to the extent such amendments and other modifications are not
prohibited by the terms of any Loan Document, and (ii) references to any statute
or regulation are to be construed as including all statutory and regulatory
provisions consolidating, amending, replacing, supplementing or interpreting the
statute or regulation.
(e) The captions and headings of this Agreement are for
convenience of reference only and shall not affect the interpretation of this
Agreement.
(f) This Agreement and other Loan Documents may use several
different limitations, tests or measurements to regulate the same or similar
matters. All such limitations, tests and measurements are cumulative and shall
each be performed in accordance with their terms. Unless otherwise expressly
provided, any reference to any action of the Agent or the Banks by way of
consent, approval or waiver shall be deemed modified by the phrase "in its/their
sole discretion."
(g) This Agreement and the other Loan Documents are the result
of negotiations among and have been reviewed by counsel to the Agent, the
Company, the Remarketing Agent and the Banks, and are the products of all
parties. Accordingly, they shall not be construed against the Banks or the Agent
merely because of the Agent's or Banks' involvement in their preparation.
1.3 Accounting Principles. (a) Unless the context otherwise clearly
requires, all accounting terms not expressly defined herein shall be construed,
and all financial
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<PAGE>
computations required under this Agreement shall be made, in accordance with
GAAP, consistently applied.
(b) References herein to "fiscal year" and "fiscal quarter"
refer to such fiscal periods of the Company.
ARTICLE II
THE TERM LOANS
2.1 Amounts and Terms of Commitments. Each Bank severally agrees, on
the terms and conditions set forth herein, to make loans to the Company (each
such loan, a "Term Loan") from time to time on any Business Day during the
period from the Closing Date to the Maturity Date in an aggregate amount not to
exceed such Bank's Pro Rata Share of the Commitment. Amounts borrowed as Term
Loans which are repaid or prepaid by the Company may not be reborrowed.
2.2 Loan Accounts. (a) The Loans made by each Bank shall be evidenced
by one or more loan accounts or records maintained by such Bank in the ordinary
course of business. The loan accounts or records maintained by the Agent and
each Bank shall be conclusive absent manifest error of the amount of the Loans
made by the Banks to the Company and the interest and payments thereon. Any
failure so to record or any error in doing so shall not, however, limit or
otherwise affect the obligation of the Company hereunder to pay any amount owing
with respect to the Loans.
(b) Upon the request of any Bank made through the Agent, the
Loans made by such Bank may be evidenced by one or more Notes, instead of or in
addition to loan accounts. Each such Bank shall endorse on the schedules annexed
to its Note(s) the date, amount and maturity of each Loan made by it and the
amount of each payment of principal made by the Company with respect thereto.
Each such Bank is irrevocably authorized by the Company to endorse its Note(s)
and each Bank's record shall be conclusive absent manifest error; provided,
however, that the failure of a Bank to make, or an error in making, a notation
thereon with respect to any Loan shall not limit or otherwise affect the
obligations of the Company hereunder or under any such Note to such Bank.
2.3 Procedure for Borrowing. (a) Each Borrowing shall be made upon the
Company's irrevocable written notice delivered to the Agent in the form of a
Notice of Borrowing (which notice must be received by the Agent prior to 11:00
a.m. (New York City time) (i) three Business Days prior to the requested
Borrowing Date, in the case of Offshore Rate Loans and (ii) one Business Day(s)
prior to the requested Borrowing Date, in the case of Base Rate Loans)
specifying:
(A) the requested Borrowing Date, which shall be a Business
Day;
(B) the Type of Loans comprising the Borrowing; and
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(C) the duration of the Interest Period applicable to such
Loans included in such notice. If the Notice of Borrowing fails to specify the
duration of the Interest Period for any Borrowing comprised of Offshore Rate
Loans, such Interest Period shall be three months;
provided, however, that with respect to the Borrowing to be made on the Closing
Date, the Notice of Borrowing shall be delivered to the Agent not later than (i)
three Business Days prior to the Closing Date, in the case of Offshore Rate
Loans, and (ii) 11:00 a.m. (New York City time) on the Closing Date, in the case
of Base Rate Loans.
(b) The Agent will promptly notify each Bank of its receipt of
any Notice of Borrowing and of the amount of such Bank's Pro Rata Share of that
Borrowing.
(c) Each Bank will make the amount of its Pro Rata Share of
each Borrowing available to the Agent for the account of the Company at the
Agent's Payment Office by 11:00 a.m. (New York City time) on the Borrowing Date
requested by the Company in funds immediately available to the Agent. The
proceeds of all such Loans will then be made available to the Company by the
Agent by wire transfer in accordance with written instructions provided to the
Agent by the Company of like funds as received by the Agent.
(d) After giving effect to any Borrowing, unless the Agent
shall otherwise consent, there may not be more than three different Interest
Periods in effect.
2.4 Conversion and Continuation Elections. (a) The Company may, upon
irrevocable written notice to the Agent in accordance with subsection 2.4(b):
(i) elect, as of any Business Day, in the case of
Base Rate Loans, or as of the last day of the applicable Interest Period, in the
case of Offshore Rate Loans, to convert any such Loans into Loans of any other
Type; or
(ii) elect, as of the last day of the applicable
Interest Period, to continue any Loans (or any part thereof) having Interest
Periods expiring on such day.
(b) The Company shall deliver a Notice of
Conversion/Continuation to be received by the Agent not later than 11:00 a.m.
(New York City time) at least (i) three Business Days in advance of the
Conversion/Continuation Date, if the Loans are to be converted into or continued
as Offshore Rate Loans or (ii) one Business Day in advance of the
Conversion/Continuation Date, if the Loans are to be converted into Base Rate
Loans, specifying:
(i) the proposed Conversion/Continuation Date;
(ii) the aggregate amount of Loans to be converted or
continued;
(iii) the Type of Loans resulting from the proposed
conversion or continuation; and
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(iv) other than in the case of conversions into Base
Rate Loans, the duration of the requested Interest Period.
(c) If upon the expiration of any Interest Period applicable
to Offshore Rate Loans, the Company has failed to select timely a new Interest
Period to be applicable to such Offshore Rate Loans, or if any Default or Event
of Default then exists, the Company shall be deemed to have elected to convert
such Offshore Rate Loans into Base Rate Loans effective as of the expiration
date of such Interest Period.
(d) The Agent will promptly notify each Bank of its receipt of
a Notice of Conversion/Continuation, or, if no timely notice is provided by the
Company, the Agent will promptly notify each Bank of the details of any
automatic conversion. All conversions and continuations shall be made ratably
according to the respective outstanding principal amounts of the Loans with
respect to which the notice was given held by each Bank.
(e) Unless the Required Banks otherwise consent, during the
existence of a Default or Event of Default, the Company may not elect to have a
Loan converted into or continued as an Offshore Rate Loan.
(f) After giving effect to any conversion or continuation of
Loans, unless the Agent shall otherwise consent, there may not be more than
three different Interest Periods in effect.
2.5 Voluntary Termination or Reduction of Commitments. The Company may,
upon not less than three Business Days' prior notice to the Agent, terminate the
Commitments, or permanently reduce the Commitments by an aggregate minimum
amount of $5,000,000 or any multiple of $1,000,000 in excess thereof; unless,
after giving effect thereto and to any prepayments of Loans made on the
effective date thereof, the then-outstanding principal amount of the Loans would
exceed the amount of the combined Commitments then in effect. Once reduced in
accordance with this Section, the Commitments may not be increased. Any
reduction of the Commitments shall be applied to each Bank according to its Pro
Rata Share. All accrued commitment fees to, but not including the effective date
of any reduction or termination of Commitments, shall be paid on the effective
date of such reduction or termination.
2.6 Optional Prepayments. (a) Subject to Section 3.4, the Company may,
at any time or from time to time, upon not less than three Business Days'
irrevocable notice for Offshore Rate Loans, or by irrevocable notice by 11:00
a.m. (New York City time) on the day of repayment for Base Rate Loans, to the
Agent, ratably prepay Loans in whole or in part, in minimum amounts of
$5,000,000 or any multiple of $1,000,000 in excess thereof. Such notice of
prepayment shall specify the date and amount of such prepayment and the Type(s)
of Loans to be prepaid. The Agent will promptly notify each Bank of its receipt
of any such notice, and of such Bank's Pro Rata Share of such prepayment. If
such notice is given by the Company, the Company shall make such prepayment and
the payment amount specified in such notice shall be due and payable on the date
specified therein, together with accrued interest except for Base Rate Loans to
each such date on the amount prepaid and any amounts required pursuant to
Section 3.4.
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(b) Upon the making of any optional prepayment under this
Section 2.6, the Loan of each Bank shall automatically be reduced by an amount
equal to such Bank's ratable share of the aggregate of principal repaid,
effective as of the earlier of the date that such prepayment is made or the date
by which such prepayment is due and payable hereunder. All accrued commitment
fees to, but not including the effective date of any reduction or termination of
Commitments, shall be paid pursuant to Section 2.10(b).
2.7 Mandatory Prepayments of Loans; Mandatory Commitment Reductions.
(a) Asset Dispositions. If the Company or any Subsidiary shall at any time or
from time to time make or agree to make a Disposition, or shall suffer an Event
of Loss, then (i) the Company shall promptly notify the Agent of such proposed
Disposition or Event of Loss (including the amount of the estimated Net Proceeds
to be received by the Company or such Subsidiary in respect thereof) and (ii)
promptly upon, and in no event later than three Business Days after, receipt by
the Company or the Subsidiary of the Net Proceeds of such Disposition or Event
of Loss, the Company shall prepay the Loans in an aggregate amount equal to the
amount of such Net Proceeds.
(b) Payments on Overall Contract. If any payments are received
by the Company under the Overall Contract, 100% of such payments shall be
applied on the date of such payment toward the prepayment of the Loans.
(c) General. Any prepayments pursuant to this Section 2.7
shall be applied first to any Base Rate Loans then outstanding and then to
Offshore Rate Loans with the shortest Interest Periods remaining. The Company
shall pay, together with each prepayment under this Section 2.7, accrued
interest except for Base Rate Loans on the amount prepaid and any amounts
required pursuant to Section 3.4.
(d) Reduction of Commitment. Upon the making of any mandatory
prepayment under this Section 2.7, the Loan of each Bank shall automatically be
reduced by an amount equal to such Bank's ratable share of the aggregate of
principal repaid, effective as of the earlier of the date that such prepayment
is made or the date by which such prepayment is due and payable hereunder. All
accrued commitment fees to, but not including the effective date of any
reduction or termination of Commitments, shall be paid pursuant to Section
2.10(b).
2.8 Repayment. The Company shall repay the Loans in full on the
Maturity Date.
2.9 Interest. (a) Each Loan shall bear interest on the outstanding
principal amount thereof from the applicable Borrowing Date at a rate per annum
equal to the Offshore Rate or the Base Rate, as the case may be, plus the
Applicable Margin.
(b) Interest on each Loan shall be paid in arrears on each
Interest Payment Date. Interest shall also be paid on the date of any prepayment
of Loans except for Base Rate Loans under Section 2.6 or 2.7 for the portion of
the Loans so prepaid and upon payment (including prepayment) in full thereof
and, during the existence of any Event of
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Default, interest shall be paid on demand of the Agent at the request or with
the consent of the Required Banks.
(c) Notwithstanding subsection (a) of this Section, while any
Event of Default exists or after acceleration, the Company shall pay interest
(after as well as before entry of judgment thereon to the extent permitted by
law) on the principal amount of all outstanding Loans, at a rate per annum which
is determined by adding 3% per annum to the Applicable Margin then in effect for
such Loans and, in the case of Obligations not subject to an Applicable Margin,
at a rate per annum equal to the Base Rate plus 3%; provided, however, that, on
and after the expiration of any Interest Period applicable to any Offshore Rate
Loan outstanding on the date of occurrence of such Event of Default or
acceleration, the principal amount of such Loan shall, during the continuation
of such Event of Default or after acceleration, bear interest at a rate per
annum equal to the Base Rate plus 3%.
(d) Anything herein to the contrary notwithstanding, the
obligations of the Company to any Bank hereunder shall be subject to the
limitation that payments of interest shall not be required for any period for
which interest is computed hereunder, to the extent (but only to the extent)
that contracting for or receiving such payment by such Bank would be contrary to
the provisions of any law applicable to such Bank limiting the highest rate of
interest that may be lawfully contracted for, charged or received by such Bank,
and in such event the Company shall pay such Bank interest at the highest rate
permitted by applicable law.
2.10 Fees. (a) Arrangement, Agency Fees. The Company shall pay an
arrangement fee to the Arranger for the Arranger's own account, and shall pay an
agency fee to the Agent for the Agent's own account, as required by the letter
agreement ("Fee Letter") between the Company and the Arranger and Agent dated
May 27, 1998.
(b) Commitment Fees. The Company shall pay to the Agent for
the account of each Bank a commitment fee on the actual daily unused portion of
such Bank's Commitment, computed on a quarterly basis in arrears on the last
Business Day of each calendar quarter based upon the daily utilization for that
quarter as calculated by the Agent, equal to 1/2 of one percent per annum. Such
commitment fee shall accrue from the Closing Date to the Maturity Date and shall
be due and payable quarterly in arrears on the last Business Day of each March,
June, September and December commencing on September 30, 1998 through the
Maturity Date, with the final payment to be made on the Maturity Date. The
commitment fees provided in this subsection shall accrue at all times after the
above-mentioned commencement date, including at any time during which one or
more conditions in Section 4.2 are not met.
2.11 Computation of Fees and Interest. (a) All computations of interest
for Base Rate Loans when the Base Rate is determined by BofA's "reference rate"
shall be made on the basis of a year of 365 or 366 days, as the case may be, and
actual days elapsed. All other computations of fees and interest shall be made
on the basis of a 360-day year and actual days elapsed (which results in more
interest being paid than if computed on the basis of a 365-day year). Interest
and fees shall accrue during each period during which interest or such fees are
computed from the first day thereof to the last day thereof.
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(b) Each determination of an interest rate by the Agent shall
be conclusive and binding on the Company and the Banks in the absence of
manifest error.
(c) If any Reference Bank's Commitment terminates (other than
on termination of all the Commitments), or for any reason whatsoever the
Reference Bank ceases to be a Bank hereunder, that Reference Bank shall
thereupon cease to be a Reference Bank, and the Offshore Rate shall be
determined on the basis of the rates as notified by the Administrative Agent.
2.12 Payments by the Company. (a) All payments to be made by the
Company shall be made without set-off, recoupment or counterclaim. Except as
otherwise expressly provided herein, all payments by the Company shall be made
to the Agent for the account of the Banks at the Agent's Payment Office, and
shall be made in dollars and in immediately available funds, no later than 11:00
a.m. (New York City time) on the date specified herein. The Agent will promptly
distribute to each Bank its Pro Rata Share (or other applicable share as
expressly provided herein) of such payment in like funds as received. Any
payment received by the Agent later than 2:00 p.m. (New York City time) shall be
deemed to have been received on the following Business Day and any applicable
interest or fee shall continue to accrue.
(b) Subject to the provisions set forth in the definition of
"Interest Period" herein, whenever any payment is due on a day other than a
Business Day, such payment shall be made on the following Business Day, and such
extension of time shall in such case be included in the computation of interest
or fees, as the case may be.
(c) Unless the Agent receives notice from the Company prior to
the date on which any payment is due to the Banks that the Company will not make
such payment in full as and when required, the Agent may assume that the Company
has made such payment in full to the Agent on such date in immediately available
funds and the Agent may (but shall not be so required), in reliance upon such
assumption, distribute to each Bank on such due date an amount equal to the
amount then due such Bank. If and to the extent the Company has not made such
payment in full to the Agent, each Bank shall repay to the Agent on demand such
amount distributed to such Bank, together with interest thereon at the Federal
Funds Rate for each day from the date such amount is distributed to such Bank
until the date repaid.
2.13 Payments by the Banks to the Agent. (a) Unless the Agent receives
notice from a Bank on or prior to the Closing Date or, with respect to any
Borrowing after the Closing Date, at least one Business Day prior to the date of
such Borrowing, that such Bank will not make available as and when required
hereunder to the Agent for the account of the Company the amount of that Bank's
Pro Rata Share of the Borrowing, the Agent may assume that each Bank has made
such amount available to the Agent in immediately available funds on the
Borrowing Date and the Agent may (but shall not be so required), in reliance
upon such assumption, make available to the Company on such date a corresponding
amount. If and to the extent any Bank shall not have made its full amount
available to the Agent in immediately available funds and the Agent in such
circumstances has made available to the Company such amount, that Bank shall on
the Business Day following such Borrowing Date
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make such amount available to the Agent, together with interest at the Federal
Funds Rate for each day during such period. A notice of the Agent submitted to
any Bank with respect to amounts owing under this subsection (a) shall be
conclusive, absent manifest error. If such amount is so made available, such
payment to the Agent shall constitute such Bank's Loan on the Borrowing Date for
all purposes of this Agreement. If such amount is not made available to the
Agent on the Business Day following the Borrowing Date, the Agent will notify
the Company of such failure to fund and, upon demand by the Agent, the Company
shall pay such amount to the Agent for the Agent's account, together with
interest thereon for each day elapsed since the date of such Borrowing, at a
rate per annum equal to the interest rate applicable at the time to the Loans
comprising such Borrowing.
(b) The failure of any Bank to make any Loan on any Borrowing
Date shall not relieve any other Bank of any obligation hereunder to make a Loan
on such Borrowing Date, but no Bank shall be responsible for the failure of any
other Bank to make the Loan to be made by such other Bank on any Borrowing Date.
2.14 Sharing of Payments, Etc. If, other than as expressly provided
elsewhere herein, any Bank shall obtain on account of the Loans made by it any
payment (whether voluntary, involuntary, through the exercise of any right of
set-off, or otherwise) in excess of its ratable share (or other share
contemplated hereunder), such Bank shall immediately (a) notify the Agent of
such fact, and (b) purchase from the other Banks such participations in the
Loans made by them as shall be necessary to cause such purchasing Bank to share
the excess payment pro rata with each of them; provided, however, that if all or
any portion of such excess payment is thereafter recovered from the purchasing
Bank, such purchase shall to that extent be rescinded and each other Bank shall
repay to the purchasing Bank the purchase price paid therefor, together with an
amount equal to such paying Bank's ratable share (according to the proportion of
(i) the amount of such paying Bank's required repayment to (ii) the total amount
so recovered from the purchasing Bank) of any interest or other amount paid or
payable by the purchasing Bank in respect of the total amount so recovered. The
Company agrees that any Bank so purchasing a participation from another Bank
may, to the fullest extent permitted by law, exercise all its rights of payment
(including the right of set-off, but subject to Section 10.11) with respect to
such participation as fully as if such Bank were the direct creditor of the
Company in the amount of such participation. The Agent will keep records (which
shall be conclusive and binding in the absence of manifest error) of
participations purchased under this Section and will in each case notify the
Banks following any such purchases or repayments.
2.15 Security. All obligations of the Company and the Subsidiaries
under this Agreement, the Notes and all other Loan Documents shall be secured in
accordance with the Collateral Documents.
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ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY
3.1 Taxes. (a) Any and all payments by the Company to each Bank or the
Agent under this Agreement and any other Loan Document shall be made free and
clear of, and without deduction or withholding for, any Taxes. In addition, the
Company shall pay all Other Taxes.
(b) If the Company shall be required by law to deduct or
withhold any Taxes from or in respect of any sum payable hereunder to any Bank
or the Agent, then:
(i) the sum payable shall be increased as necessary
so that, after making all required deductions and withholdings for Taxes
(including deductions and withholdings applicable to additional sums payable
under this Section 3.1), such Bank or the Agent, as the case may be, receives an
amount equal to the sum it would have received had no such deductions or
withholdings been made;
(ii) the Company shall make such deductions and
withholdings; and
(iii) the Company shall pay the full amount deducted
or withheld to the relevant taxing authority or other authority in accordance
with applicable law.
(c) The Company agrees to indemnify and hold harmless each
Bank and the Agent for the full amount of any Taxes or Other Taxes (including
without limitation any Taxes or Other Taxes imposed on amounts payable under
this Section 3.1) paid by such Bank or the Agent (as the case may be) and any
liability (including penalties, interest, additions to tax and expenses) arising
therefrom or with respect thereto, whether or not such Taxes or Other Taxes were
correctly or legally asserted. Payment under this indemnification shall be made
within 30 days after the date the Bank or the Agent makes written demand
therefor.
(d) Within 30 days after the date of any payment by the
Company of Taxes or Other Taxes, the Company shall furnish to each Bank or the
Agent the original or a certified copy of a receipt evidencing payment thereof,
or other evidence of payment satisfactory to such Bank or the Agent.
(e) Any Bank shall use reasonable efforts (consistent with
legal and regulatory restrictions) to change the jurisdiction of its Lending
Office if such change would avoid the need for, or reduce the amount of, any
payment required to be made pursuant to Section 3.1(b) or Section 3.1(c), and,
if such change in the sole judgment of such Bank is not otherwise
disadvantageous to such Bank.
(f) If a Bank receives a refund in respect of any Taxes to
which it has been indemnified by the Company or with respect to which the
Company has paid additional amounts pursuant to this Section 3.1, it shall
within 30 days from the date of such receipt pay over such refund to the Company
(but only to the extent of indemnity payments made, or
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additional amounts paid, by the Company under this Section 3.1 with respect to
the Taxes giving rise to such refund), net of all out-of-pocket expenses of such
Bank and without interest (other than interest paid by the relevant Governmental
Authority with respect to such refund); provided, however, that the Company,
upon the request of such Bank, agrees to repay the amount paid over to the
Company (plus penalties, interest or other charges) to such Bank in the event
such Bank is required to repay such refund to such Governmental Authority.
3.2 Illegality. (a) If any Bank determines that the introduction of any
Requirement of Law, or any change in any Requirement of Law, or in the
interpretation or administration of any Requirement of Law, has made it
unlawful, or that any central bank or other Governmental Authority has asserted
that it is unlawful, for any Bank or its applicable Lending Office to make
Offshore Rate Loans, then, on notice thereof by the Bank to the Company through
the Agent, any obligation of that Bank to make Offshore Rate Loans shall be
suspended until the Bank notifies the Agent and the Company that the
circumstances giving rise to such determination no longer exist.
(b) If a Bank determines that it is unlawful to maintain any
Offshore Rate Loan, the Company shall, upon its receipt of notice of such fact
and demand from such Bank (with a copy to the Agent), prepay in full such
Offshore Rate Loans of that Bank then outstanding, together with interest
accrued thereon and amounts required under Section 3.4, either on the last day
of the Interest Period thereof, if the Bank may lawfully continue to maintain
such Offshore Rate Loans to such day, or immediately, if the Bank may not
lawfully continue to maintain such Offshore Rate Loan. If the Company is
required to so prepay any Offshore Rate Loan, then concurrently with such
prepayment, the Company shall borrow from the affected Bank, in the amount of
such repayment, a Base Rate Loan.
(c) If the obligation of any Bank to make or maintain Offshore
Rate Loans has been so terminated or suspended, the Company may elect, by giving
notice to the Bank through the Agent that all Loans which would otherwise be
made by the Bank as Offshore Rate Loans shall be instead Base Rate Loans.
3.3 Increased Costs and Reduction of Return. (a) Except as to taxes,
levies, assessments, imposts, duties, deductions, fees, withholdings or similar
charges, and all liabilities with respect thereto (it being understood that the
Company shall not have any liability for any taxes, levies, assessments,
imposts, duties, deductions, fees, withholdings or similar charges, and all
liabilities with respect thereto, except as provided in Section 3.1), if any
Bank determines that, due to either (i) the introduction of or any change (other
than any change by way of imposition of or increase in reserve requirements
included in the calculation of the Offshore Rate or in respect of the assessment
rate payable by any Bank to the FDIC for insuring U.S. deposits) in or in the
interpretation of any law or regulation or (ii) the compliance by that Bank with
any guideline or request from any central bank or other Governmental Authority
(whether or not having the force of law), there shall be any increase in the
cost to such Bank of agreeing to make or making, funding or maintaining any
Offshore Rate Loans, then the Company shall be liable for, and shall from time
to time, upon demand (with a copy of such demand to be sent to the Agent), pay
to the Agent for the account of
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such Bank, additional amounts as are sufficient to compensate such Bank for such
increased costs.
(b) If any Bank shall have determined that (i) the
introduction of any Capital Adequacy Regulation, (ii) any change in any Capital
Adequacy Regulation, (iii) any change in the interpretation or administration of
any Capital Adequacy Regulation by any central bank or other Governmental
Authority charged with the interpretation or administration thereof, or (iv)
compliance by the Bank (or its Lending Office) or any corporation controlling
the Bank with any Capital Adequacy Regulation, affects or would affect the
amount of capital required or expected to be maintained by the Bank or any
corporation controlling the Bank and (taking into consideration such Bank's or
such corporation's policies with respect to capital adequacy and such Bank's
desired return on capital) determines that the amount of such capital is
increased as a consequence of its Commitment, loans, credits or obligations
under this Agreement, then, upon demand of such Bank to the Company through the
Agent, the Company shall pay to the Bank, from time to time as specified by the
Bank, additional amounts sufficient to compensate the Bank for such increase.
3.4 Funding Losses. The Company shall reimburse each Bank and hold each
Bank harmless from any loss or expense which the Bank may sustain or incur as a
consequence of:
(a) the failure of the Company to make on a timely basis any
payment of principal of any Offshore Rate Loan;
(b) the failure of the Company to borrow, continue or convert
a Loan after the Company has given (or is deemed to have given) a Notice of
Borrowing or a Notice of Conversion/ Continuation;
(c) the failure of the Company to make any prepayment in
accordance with any notice delivered under Section 2.6;
(d) the prepayment (including pursuant to Section 2.7) or
other payment (including after acceleration thereof) of an Offshore Rate Loan on
a day that is not the last day of the relevant Interest Period; or
(e) the automatic conversion under Section 2.4 of any Offshore
Rate Loan to a Base Rate Loan on a day that is not the last day of the relevant
Interest Period;
including any such loss or expense arising from the liquidation or reemployment
of funds obtained by it to maintain its Offshore Rate Loans or from fees payable
to terminate the deposits from which such funds were obtained. For purposes of
calculating amounts payable by the Company to the Banks under this Section and
under subsection 3.3(a), each Offshore Rate Loan made by a Bank (and each
related reserve, special deposit or similar requirement) shall be conclusively
deemed to have been funded at the LIBOR used in determining the Offshore Rate
for such Offshore Rate Loan by a matching deposit or other borrowing in the
interbank eurodollar market for a comparable amount and for a comparable period,
whether or not such Offshore Rate Loan is in fact so funded.
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3.5 Inability to Determine Rates. If the Agent determines that for any
reason adequate and reasonable means do not exist for determining the Offshore
Rate for any requested Interest Period with respect to a proposed Offshore Rate
Loan, or that the Offshore Rate applicable pursuant to subsection 2.9(a) for any
requested Interest Period with respect to a proposed Offshore Rate Loan does not
adequately and fairly reflect the cost to the Banks of funding such Loan, the
Agent will promptly so notify the Company and each Bank. Thereafter, the
obligation of the Banks to make or maintain Offshore Rate Loans, as the case may
be, hereunder shall be suspended until the Agent revokes such notice in writing.
Upon receipt of such notice, the Company may revoke any Notice of Borrowing or
Notice of Conversion/Continuation then submitted by it. If the Company does not
revoke such Notice, the Banks shall make, convert or continue the Loans, as
proposed by the Company, in the amount specified in the applicable notice
submitted by the Company, but such Loans shall be made, converted or continued
as Base Rate Loans instead of Offshore Rate Loans, as the case may be.
3.6 Reserves on Offshore Rate Loans. The Company shall pay to each
Bank, as long as such Bank shall be required under regulations of the FRB to
maintain reserves with respect to liabilities or assets consisting of or
including Eurocurrency funds or deposits (currently known as "Eurocurrency
liabilities"), additional costs on the unpaid principal amount of each Offshore
Rate Loan equal to the actual costs of such reserves allocated to such Loan by
the Bank (as determined by the Bank in good faith, which determination shall be
conclusive), payable on each date on which interest is payable on such Loan,
provided the Company shall have received at least 15 days' prior written notice
(with a copy to the Agent) of such additional interest from the Bank. If a Bank
fails to give notice 15 days prior to the relevant Interest Payment Date, such
additional interest shall be payable 15 days from receipt of such notice.
3.7 Certificates of Banks. Any Bank claiming reimbursement or
compensation under this Article III shall deliver to the Company (with a copy to
the Agent) a certificate setting forth in reasonable detail the amount payable
to the Bank hereunder and such certificate shall be conclusive and binding on
the Company in the absence of manifest error.
3.8 Substitution of Banks. Upon the receipt by the Company from any
Bank (an "Affected Bank") of a claim for compensation under Section 3.3 or 3.6,
the Company may: (i) request the Affected Bank to use its best efforts to obtain
a replacement bank or financial institution satisfactory to the Company and to
the Agent (a "Replacement Bank") to acquire and assume all or a ratable part of
all of such Affected Bank's Loans and Commitment; (ii) request one more of the
other Banks to acquire and assume all or part of such Affected Bank's Loans and
Commitment; or (iii) designate a Replacement Bank. Any such designation of a
Replacement Bank under clause (i) or (iii) shall be subject to the prior written
consent of the Agent (which consent shall not be unreasonably withheld).
3.9 Survival. The agreements and obligations of the Company in this
Article III shall survive the payment of all other Obligations.
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ARTICLE IV
CONDITIONS PRECEDENT
4.1 Conditions of Initial Loans. The obligation of each Bank to make
its initial Loan hereunder is subject to the following conditions:
(a) Credit Agreement; Pledge Agreement and Support Agreement.
The Agent shall have received (i) this Agreement, executed and delivered by the
Agent, the Company and each Bank listed on Schedule 2.1, (ii) the Pledge
Agreement, executed and delivered by the Company and (iii) the Support
Agreement, executed and delivered by the Company, the Agent and the Remarketing
Agent.
(b) Overall Contract. The Agent shall have received the
Overall Contract, executed and delivered by the parties thereto, in form and
substance satisfactory to the Agent.
(c) Resolutions; Incumbency. The Agent shall have received:
(i) copies of the resolutions of the board of
directors of the Company authorizing the transactions contemplated hereby,
certified as of the Closing Date by the Secretary of the Company; and
(ii) a certificate of the Secretary of the Company
certifying the names and true signatures of the officers of the Company
authorized to execute, deliver and perform, as applicable, this Agreement, and
all other Loan Documents to be delivered by it hereunder.
(d) Organization Documents; Good Standing. The Agent shall
have received each of the following documents:
(i) the articles or certificate of incorporation and
the bylaws of the Company as in effect on the Closing Date, certified by the
Secretary of the Company as of the Closing Date; and
(ii) a good standing certificate for the Company from
the Secretary of State (or similar, applicable Governmental Authority) of its
state of incorporation and each state where the Company is qualified to do
business as a foreign corporation as of a date not more than seven days prior to
the Closing Date;
(e) Interest Rate Protection. The Company shall have entered
into and implemented interest rate cap or collar derivative contracts with
respect to the full principal amount of the Term Loans for the purpose of
protecting against fluctuations in interest rates or the exchange of notional
interest obligations, either generally or under specific contingencies, with
terms and conditions satisfactory to the Agent.
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(f) No Disruption of Financial and Capital Markets. There
shall not have been any disruption or adverse change in the financial or capital
markets generally or in the bank syndication market in particular which the
Arranger, in its judgment, deems material.
(g) Support Agreement. All conditions to the effectiveness of
the Support Agreement shall have been fulfilled.
(h) Legal Opinions. The Agent shall have received the
following executed legal opinions:
(i) the legal opinion of Paul, Weiss, Rifkind,
Wharton & Garrison, counsel to the Company, substantially in the form of Exhibit
F-1;
(ii) the legal opinion of Willkie Farr & Gallagher,
counsel of the Remarketing Agent, substantially in the form of Exhibit F-2; and
(iii) any other legal opinions reasonably requested
by the Agent.
Each such legal opinion shall cover such matters incident to the transactions
contemplated by this Agreement as the Agent may reasonably require.
(i) Payment of Fees. The Agent shall have received evidence of
payment by the Company of all accrued and unpaid fees, costs and expenses to the
extent then due and payable on the Closing Date, together with Attorney Costs of
BofA to the extent invoiced prior to or on the Closing Date, plus such
additional amounts of Attorney Costs as shall constitute BofA's reasonable
estimate of Attorney Costs incurred or to be incurred by it through the closing
proceedings (provided that such estimate shall not thereafter preclude final
settling of accounts between the Company and BofA); including any such costs,
fees and expenses arising under or referenced in Sections 2.10 and 10.4.
(j) Collateral Documents. The Agent shall have received the
Collateral Documents, executed by the Company, in appropriate form for
recording, where necessary, together with:
(i) acknowledgment copies of all UCC-l financing
statements filed, registered or recorded to perfect the security interests of
the Agent for the benefit of the Banks, or other evidence satisfactory to the
Agent that there has been filed, registered or recorded all financing statements
and other filings, registrations and recordings necessary and advisable to
perfect the Liens of the Agent for the benefit of the Banks in accordance with
applicable law;
(ii) written advice relating to such Lien and
judgment searches as the Agent shall have requested, and such termination
statements or other documents as may be necessary to confirm that the Collateral
is subject to no other Liens in favor of any Persons (other than Permitted
Liens);
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(iii) all certificates and instruments representing
the Collateral;
(iv) evidence that all other actions necessary or, in
the opinion of the Agent, desirable to perfect and protect the first priority
security interest created by the Collateral Documents have been taken;
(v) funds sufficient to pay any filing tax or fee in
connection with any and all UCC-1 financing statements; and
(vi) evidence that all other actions necessary or, in
the opinion of the Agent or the Banks, desirable to perfect and protect the
first priority Lien created by the Collateral Documents, and to enhance the
Agent's ability to preserve and protect its interests in and access to the
Collateral, have been taken.
(k) Solvency Opinion. The Agent shall have received a solvency
opinion from the Chief Financial Officer of the Company, in form and substance
satisfactory to the Agent.
(l) Reserved.
(m) Satisfaction of Remarketing Agent. The Remarketing Agent
shall have certified in writing to the Agent that it is satisfied that all of
the conditions in this Section 4.1 have been met or, in the alternative, that it
consents to any waivers of such conditions and confirms its obligations under
the Support Agreement notwithstanding such waivers, substantially in the form of
Exhibit I.
(n) Insurance. The Agent shall have received insurance
certificates (i) satisfying the requirements of Section 6.7 and (ii) confirming
insurance in effect in sufficient amount, in the Agent's sole judgment, to cover
the construction of the Launch Vehicles to the satisfaction of the Remarketing
Agent.
(o) Certificate. A certificate signed by a Responsible
Officer, dated as of the Closing Date, stating that:
(i) the representations and warranties contained in
Article V are true and correct on and as of such date, as though made on and as
of such date;
(ii) no Default or Event of Default exists or would
result from the initial Borrowing; and
(iii) since March 31, 1998, there has occurred no
event or circumstance that has resulted or could reasonably be expected to
result in a Material Adverse Effect.
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(p) No Default. The Agent shall have received a certificate of
a Responsible Officer of the Company certifying that no default has occurred
under the Launch Vehicle Sale Contract.
(q) Other Documents. The Agent shall have received such other
approvals, opinions, documents or materials as the Agent may request.
4.2 Conditions to All Borrowings. The obligation of each Bank to make
any Loan to be made by it (including its initial Loan) is subject to the
satisfaction of the following conditions precedent on the relevant Borrowing
Date:
(a) Notice of Borrowing. The Agent shall have received (with,
in the case of the initial Loan only, a copy for each Bank) a Notice of
Borrowing.
(b) Continuation of Representations and Warranties. The
representations and warranties in Article V shall be true and correct on and as
of such Borrowing Date with the same effect as if made on and as of such
Borrowing Date (except to the extent such representations and warranties
expressly refer to an earlier date, in which case they shall be true and correct
as of such earlier date).
(c) No Existing Default. No Default or Event of Default shall
exist or shall result from such Borrowing.
(d) No Future Advance Notice. Neither the Agent nor any Bank
shall have received from the Company any notice that any Collateral Document
will no longer secure on a first priority basis future advances or future Loans
to be made or extended under this Agreement.
(e) Progress Payments. The Agent and the Banks shall be
satisfied that the Company shall have sufficient liquidity to pay the component
of progression payments due to SS/L under the Launch Vehicle Sale Contract or
scheduled to come due prior to the next advance of the Term Loans and which are
not to be paid out of the proceeds of the Term Loans.
(f) Satisfaction of Remarketing Agent. The Remarketing Agent
shall have certified in writing to the Agent that it is satisfied that all of
the conditions in this Section 4.2 have been met or, in the alternative, that it
consents to any waivers of such conditions and confirms its obligations under
the Support Agreement notwithstanding such waivers, substantially in the form of
Exhibit I.
Each Notice of Borrowing submitted by the Company hereunder shall constitute a
representation and warranty by the Company hereunder, as of the date of each
such notice and as of each Borrowing Date, that the conditions in this Section
4.2 are satisfied.
ARTICLE V
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REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Agent and each Bank
that:
5.1 Corporate Existence and Power; Compliance with Laws. The Company:
(a) is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware;
(b) has the power and authority and all governmental licenses,
authorizations, consents and approvals to own its assets, carry on its business
and to execute, deliver, and perform its obligations under the Loan Documents;
(c) is duly qualified as a foreign corporation and in good
standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such
qualification; and
(d) is in compliance with all Requirements of Law.
5.2 Corporate Authorization; No Contravention. The execution, delivery
and performance by the Company of this Agreement and each other Loan Document to
which the Company is party, have been duly authorized by all necessary corporate
action, and do not and will not:
(a) contravene the terms of any of the Company's Organization
Documents;
(b) conflict with or result in any breach or contravention of,
or the creation of any Lien under, any document evidencing any Contractual
Obligation to which the Company is a party or any order, injunction, writ or
decree of any Governmental Authority to which the Company or its property is
subject; or
(c) violate any Requirement of Law.
5.3 Governmental Authorization. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority (except for filings in connection with the Liens granted
to the Agent under the Collateral Documents) is necessary or required in
connection with the execution, delivery or performance by, or enforcement
against, the Company or any of its Subsidiaries of this Agreement or any other
Loan Document.
5.4 Binding Effect. This Agreement and each other Loan Document to
which the Company is a party constitute the legal, valid and binding obligations
of the Company, enforceable against the Company in accordance with their
respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, or similar laws affecting the enforcement of creditors'
rights generally or by equitable principles relating to enforceability.
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5.5 Litigation. Except as specifically disclosed in Schedule 5.5, there
are no actions, suits, proceedings, claims or disputes pending, or to the best
knowledge of the Company, threatened or contemplated, at law, in equity, in
arbitration or before any Governmental Authority, against the Company or its
Subsidiaries or any of their respective properties which:
(a) purport to affect or pertain to this Agreement or any
other Loan Document, or any of the transactions contemplated hereby or thereby;
or
(b) if determined adversely to the Company or its
Subsidiaries, would reasonably be expected to have a Material Adverse Effect. No
injunction, writ, temporary restraining order or any order of any nature has
been issued by any court or other Governmental Authority purporting to enjoin or
restrain the execution, delivery or performance of this Agreement or any other
Loan Document, or directing that the transactions provided for herein or therein
not be consummated as herein or therein provided.
5.6 No Default. No Default or Event of Default exists or would result
from the incurring of any Obligations by the Company or from the grant or
perfection of the Liens of the Agent and the Banks on the Collateral. As of the
Closing Date, neither the Company nor any Subsidiary is in default under or with
respect to any Contractual Obligation in any respect which, individually or
together with all such defaults, could reasonably be expected to have a Material
Adverse Effect, or that would, if such default had occurred after the Closing
Date, create an Event of Default under subsection 8.1(e).
5.7 ERISA Compliance.
(a) Each Plan is in compliance in all material respects with
the applicable provisions of ERISA, the Code and other federal or state law.
Each Plan which is intended to qualify under Section 401(a) of the Code has
received a favorable determination letter from the IRS and to the best knowledge
of the Company, nothing has occurred which would cause the loss of such
qualification. The Company and each ERISA Affiliate has made all required
contributions to any Plan subject to Section 412 of the Code, and no application
for a funding waiver or an extension of any amortization period pursuant to
Section 412 of the Code has been made with respect to any Plan.
(b) There are no pending or, to the best knowledge of Company,
threatened claims, actions or lawsuits, or action by any Governmental Authority,
with respect to any Plan which has resulted or could reasonably be expected to
result in a Material Adverse Effect. There has been no prohibited transaction or
violation of the fiduciary responsibility rules with respect to any Plan which
has resulted or could reasonably be expected to result in a Material Adverse
Effect.
(c) (i) No ERISA Event has occurred or is reasonably expected
to occur; (ii) no Pension Plan has any Unfunded Pension Liability; (iii) neither
the Company nor any ERISA Affiliate has incurred, or reasonably expects to
incur, any liability
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under Title IV of ERISA with respect to any Pension Plan (other than premiums
due and not delinquent under Section 4007 of ERISA); (iv) neither the Company
nor any ERISA Affiliate has incurred, or reasonably expects to incur, any
liability (and no event has occurred which, with the giving of notice under
Section 4219 of ERISA, would result in such liability) under Section 4201 or
4243 of ERISA with respect to a Multiemployer Plan; and (v) neither the Company
nor any ERISA Affiliate has engaged in a transaction that could be subject to
Section 4069 or 4212(c) of ERISA.
5.8 Certain Documents. The Company has delivered to the Agent a
complete and correct copy of the Overall Contract, including any amendments,
supplements or modifications thereto.
5.9 Taxes. The Company and its Subsidiaries have filed all Federal and
other material tax returns and reports required to be filed, and have paid all
Federal and other material taxes, assessments, fees and other governmental
charges levied or imposed upon them or their properties, income or assets
otherwise due and payable, except those which are being contested in good faith
by appropriate proceedings and for which adequate reserves have been provided in
accordance with GAAP. There is no proposed tax assessment against the Company or
any Subsidiary that would, if made, have a Material Adverse Effect.
5.10 Margin Regulations. Neither the Company nor any Subsidiary is
generally engaged in the business of purchasing or selling Margin Stock or
extending credit for the purpose of purchasing or carrying Margin Stock.
5.11 Labor Matters. Except as, in the aggregate, could not reasonably
be expected to have a Material Adverse Effect: (a) there are no strikes or other
labor disputes against the Company or any of its Subsidiaries pending or, to the
knowledge of the Company, threatened; (b) hours worked by and payment made to
employees of the Company and its Subsidiaries have not been in violation of the
Fair Labor Standards Act or any other applicable Requirement of Law dealing with
such matters; and (c) all payments due from the Company or any of its
Subsidiaries on account of employee health and welfare insurance have been paid
or accrued as a liability on the books of the Company or the relevant
Subsidiary.
5.12 Year 2000 Matters. On the basis of a comprehensive review and
assessment of the Company's systems and equipment and inquiry made of the
Company's material suppliers, vendors and customers, the Company reasonably
believes that the "Year 2000 problem" (that is, the inability of computers, as
well as embedded microchips in non- computing devices, to perform properly,
including performance of date-sensitive functions with respect to certain dates
prior to and after December 31, 1999), including costs of remediation, could not
reasonably be expected to result in a Default or Event of Default or to have a
Material Adverse Effect. The Company has developed feasible contingency plans
adequately to ensure uninterrupted and unimpaired business operation in the
event of failure of its own or a third party's systems or equipment due to the
Year 2000 problem, including those of vendors, customers and suppliers, as well
as a general failure of or interruption in its communications and delivery
infrastructure. Except for any reprogramming referred to above, the computer
systems of the Company and its Subsidiaries are and, with ordinary
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course upgrading and maintenance, will continue for the term of this Agreement
to be, sufficient for the conduct of their business as currently conducted.
5.13 Title to Properties. The Company and each Subsidiary have good
record and marketable title in fee simple to, or valid leasehold interests in,
all real property necessary or used in the ordinary conduct of their respective
businesses, except for such defects in title as could not, individually or in
the aggregate, have a Material Adverse Effect. As of the Closing Date, the
property of the Company and its Subsidiaries is subject to no Liens, other than
Permitted Liens.
5.14 Financial Condition. The unaudited consolidated financial
statements of the Company and its Subsidiaries dated March 31, 1998, and the
related consolidated statements of income or operations, shareholders' equity
and cash flows for the fiscal quarter ended on that date:
(i) were prepared in accordance with GAAP
consistently applied throughout the period covered thereby, except as otherwise
expressly noted therein, subject to ordinary, good faith year end audit
adjustments;
(ii) fairly present the financial condition of the
Company and its Subsidiaries as of the date thereof and results of operations
for the period covered thereby; and
(iii) show all material indebtedness and other
liabilities, direct or contingent, of the Company and its consolidated
Subsidiaries as of the date thereof, including liabilities for taxes, material
commitments and Contingent Obligations.
5.15 Material Adverse Effects. Since March 31, 1998, there has been no
Material Adverse Effect.
5.16 Environmental Matters. (a) The on-going operations of the Company
and each of its Subsidiaries comply in all respects with all Environmental Laws,
except such non-compliance which would not (if enforced in accordance with
applicable law) result in a Material Adverse Effect.
(b) The Company and each of its Subsidiaries have obtained all
licenses, permits, authorizations and registrations required under any
Environmental Law ("Environmental Permits") and necessary for their respective
ordinary course operations, all such Environmental Permits are in good standing,
and the Company and each of its Subsidiaries are in compliance with all material
terms and conditions of such Environmental Permits.
(c) None of the Company, any of its Subsidiaries or any of
their respective present property or operations, is subject to any outstanding
written order from or agreement with any Governmental Authority, nor subject to
any judicial or docketed administrative proceeding, respecting any Environmental
Law, Environmental Claim or Hazardous Material.
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(d) There are no Hazardous Materials or other conditions or
circumstances existing with respect to any property of the Company or any
Subsidiary, or arising from operations prior to the Closing Date, of the Company
that would reasonably be expected to give rise to any Environmental Claim(s)
which could have a Material Adverse Effect. In addition, (i) neither the Company
nor any Subsidiary has any underground storage tanks (x) that are not properly
registered or permitted under applicable Environmental Laws, or (y) that are
leaking or disposing of Hazardous Materials off-site, and (ii) the Company and
its Subsidiaries have notified all of their employees of the existence, if any,
of any health hazard arising from the conditions of their employment and have
met all notification requirements under Title III of CERCLA and all other
Environmental Laws.
5.17 Collateral Documents. (a) The provisions of each of the Collateral
Documents are effective to create in favor of the Agent for the benefit of the
Banks, a legal, valid and enforceable first priority security interest in all
right, title and interest of the Company and its Subsidiaries in the collateral
described therein; and financing statements have been filed in the offices in
all of the jurisdictions listed in the schedule to the Pledge Agreement.
(b) All representations and warranties of the Company
contained in the Collateral Documents are true and correct.
5.18 Regulated Entities. None of the Company, any Person controlling
the Company, or any Subsidiary, is an "Investment Company" within the meaning of
the Investment Company Act of 1940. The Company is not subject to regulation
under the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act, any state public utilities code, or any other Federal
or state statute or regulation limiting its ability to incur Indebtedness.
5.19 No Burdensome Restrictions. Neither the Company nor any Subsidiary
is a party to or bound by any Contractual Obligation, or subject to any
restriction in any Organization Document, or any Requirement of Law, which could
reasonably be expected to have a Material Adverse Effect.
5.20 Copyrights, Patents, Trademarks and Licenses, etc. The Company or
its Subsidiaries own or are licensed or otherwise have the right to use all of
the patents, trademarks, service marks, trade names, copyrights, contractual
franchises, authorizations and other rights that are reasonably necessary for
the operation of their respective businesses, without conflict with the rights
of any other Person. To the best knowledge of the Company, no slogan or other
advertising device, product, process, method, substance, part or other material
now employed, or now contemplated to be employed, by the Company or any
Subsidiary infringes upon any rights held by any other Person. No claim or
litigation regarding any of the foregoing is pending or threatened, and no
patent, invention, device, application, principle or any statute, law, rule,
regulation, standard or code is pending or, to the knowledge of the Company,
proposed, which, in either case, could reasonably be expected to have a Material
Adverse Effect.
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5.21 Subsidiaries. The Company has no Subsidiaries other than Satellite
CD Radio Inc. and has no equity investments in any other corporation or entity.
5.22 Insurance. The properties of the Company and its Subsidiaries are
insured with financially sound and reputable insurance companies not Affiliates
of the Company, in such amounts, with such deductibles and covering such risks
as are customarily carried by companies engaged in similar businesses and owning
similar properties in localities where the Company or such Subsidiary operates.
5.23 Solvency. The Company is Solvent.
5.24 Full Disclosure. None of the representations or warranties made by
the Company or any Subsidiary in the Loan Documents as of the date such
representations and warranties are made or deemed made, and none of the
statements contained in any exhibit, report, statement or certificate furnished
by or on behalf of the Company or any Subsidiary in connection with the Loan
Documents (including the offering and disclosure materials delivered by or on
behalf of the Company to the Banks prior to the Closing Date), contains any
untrue statement of a material fact or omits any material fact required to be
stated therein or necessary to make the statements made therein, in light of the
circumstances under which they are made, not misleading as of the time when made
or delivered.
ARTICLE VI
AFFIRMATIVE COVENANTS
So long as any Bank shall have any Commitment hereunder, or any Loan or
other Obligation shall remain unpaid or unsatisfied, unless the Required Banks
waive compliance in writing:
6.1 Financial Statements. The Company shall deliver to the Agent, in
form and detail satisfactory to the Agent and the Required Banks, with
sufficient copies for each Bank and the Remarketing Agent:
(a) as soon as available, but not later than 90 days after the
end of each fiscal year, a copy of the audited consolidated balance sheet of the
Company and its Subsidiaries as at the end of such year and the related
consolidated statements of income or operations, shareholders' equity and cash
flows for such year, setting forth in each case in comparative form the figures
for the previous fiscal year, and accompanied by the opinion of a
nationally-recognized independent public accounting firm ("Independent Auditor")
which report shall state that such consolidated financial statements present
fairly the financial position for the periods indicated in conformity with GAAP
applied on a basis consistent with prior years. Such opinion shall not be
qualified or limited solely because of a restricted or limited examination by
the Independent Auditor of any material portion of the Company's or any
Subsidiary's records; and
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(b) as soon as available, but not later than 45 days after the
end of each of the first three fiscal quarters of each fiscal year (commencing
with the fiscal quarter ended June 30, 1998), a copy of the unaudited
consolidated balance sheet of the Company and its Subsidiaries as of the end of
such quarter and the related consolidated statements of income and cash flows
for the period commencing on the first day and ending on the last day of such
quarter, and certified by a Responsible Officer as fairly presenting, in
accordance with GAAP (subject to ordinary, good faith year-end audit
adjustments), the financial position and the results of operations of the
Company and the Subsidiaries.
6.2 Certificates; Other Information. The Company shall furnish to the
Agent, with sufficient copies for each Bank and the Remarketing Agent:
(a) concurrently with the delivery of the financial statements
referred to in subsections 6.1(a) and (b), a Compliance Certificate executed by
a Responsible Officer;
(b) promptly, copies of all financial statements and reports
that the Company sends to its shareholders, and copies of all financial
statements and regular, periodical or special reports (including Forms 10K, 10Q
and 8K) that the Company or any Subsidiary may make to, or file with, the SEC;
(c) promptly, but in any event within 45 days, after the last
day of each fiscal quarter, written reports as provided by SS/L as to the
progress of the construction of the Launch Vehicles and other transactions
contemplated under the Overall Contract, including reports as to capital
expenditures of the Company;
(d) promptly, such additional information regarding the
business, financial or corporate affairs of the Company or any Subsidiary as the
Agent, at the request of any Bank, may from time to time request; and
(e) promptly upon sending or receipt, copies of any and all
management letters and correspondence relating to management letters, sent or
received by Company to or from the Independent Auditor.
6.3 Notices. The Company shall promptly notify the Agent and each Bank:
(a) of the occurrence of any Default or Event of Default, and
of the occurrence or existence of any event or circumstance that foreseeably
will become a Default or Event of Default;
(b) of (i) any breach or non-performance of, or any default
under, any Contractual Obligation of the Company or any of its Subsidiaries
which could result in a Material Adverse Effect; and (ii) any dispute,
litigation, investigation, proceeding or suspension which may exist at any time
between the Company or any of its Subsidiaries and any Governmental Authority;
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(c) of the commencement of, or any material development in,
any litigation or proceeding affecting the Company or any Subsidiary (i) in
which the amount of damages claimed is $10,000,000 (or its equivalent in another
currency or currencies) or more, (ii) in which injunctive or similar relief is
sought and which, if adversely determined, would reasonably be expected to have
a Material Adverse Effect, or (iii) in which the relief sought is an injunction
or other stay of the performance of this Agreement or any Loan Document;
(d) upon, but in no event later than 10 days after, becoming
aware of (i) any and all enforcement, cleanup, removal or other governmental or
regulatory actions instituted, completed or threatened against the Company or
any Subsidiary or any of their respective properties pursuant to any applicable
Environmental Laws, (ii) all other Environmental Claims, and (iii) any
environmental or similar condition on any real property adjoining or in the
vicinity of the property of the Company or any Subsidiary that could reasonably
be anticipated to cause such property or any part thereof to be subject to any
restrictions on the ownership, occupancy, transferability or use of such
property under any Environmental Laws;
(e) of any other litigation or proceeding affecting the
Company or any of its Subsidiaries which the Company would be required to report
to the SEC pursuant to the Exchange Act, within four days after reporting the
same to the SEC;
(f) of the occurrence of any of the following events affecting
the Company or any ERISA Affiliate (but in no event more than 10 days after such
event), and deliver to the Agent and each Bank a copy of any notice with respect
to such event that is filed with a Governmental Authority and any notice
delivered by a Governmental Authority to the Company or any ERISA Affiliate with
respect to such event:
(i) an ERISA Event;
(ii) a material increase in the Unfunded Pension
Liability of any Pension Plan;
(iii) the adoption of, or the commencement of
contributions to, any Plan subject to Section 412 of the Code by the Company or
any ERISA Affiliate; or
(iv) the adoption of any amendment to a Plan subject
to Section 412 of the Code, if such amendment results in a material increase in
contributions or Unfunded Pension Liability.
(g) of any material change in accounting policies or financial
reporting practices by the Company or any of its consolidated Subsidiaries;
(h) of any breach or non-performance of, or any default under
the Overall Contract; and
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(i) of any adverse effect on any broadcasting license,
satellite concession or other approval, consent or Requirement of Law which, if
adversely determined, could impair the ability of the Company to operate in
accordance with its business plan.
Each notice under this Section shall be accompanied by a written
statement by a Responsible Officer setting forth details of the occurrence
referred to therein, and stating what action the Company or any affected
Subsidiary proposes to take with respect thereto and at what time. Each notice
under subsection 6.3(a) shall describe with particularity any and all clauses or
provisions of this Agreement or other Loan Document that have been (or
foreseeably will be) breached or violated.
6.4 Preservation of Corporate Existence, Etc. The Company shall, and
shall cause each Subsidiary to:
(a) preserve and maintain in full force and effect its
corporate existence and good standing under the laws of its state or
jurisdiction of incorporation;
(b) preserve and maintain in full force and effect all
governmental rights, privileges, qualifications, permits, licenses and
franchises necessary or desirable in the normal conduct of its business except
in connection with transactions permitted by Section 7.4 and sales of assets
permitted by Section 7.3;
(c) use reasonable efforts, in the ordinary course of
business, to preserve its business organization and goodwill; and
(d) preserve or renew all of its registered patents,
trademarks, trade names and service marks, the non-preservation of which could
reasonably be expected to have a Material Adverse Effect.
6.5 Maintenance of Property. The Company shall maintain, and shall
cause each Subsidiary to maintain, and preserve all its property which is used
or useful in its business in good working order and condition, ordinary wear and
tear excepted and make all necessary repairs thereto and renewals and
replacements thereof except where the failure to do so could not reasonably be
expected to have a Material Adverse Effect, except as permitted by Section 7.3.
The Company and each Subsidiary shall use the standard of care typical in the
industry in the operation and maintenance of its facilities.
6.6 Maintenance of Approvals. The Company shall maintain, and cause
each Subsidiary to maintain, all broadcast licenses, satellite concessions and
governmental and third-party consents and approvals necessary to conduct its
business as contemplated by its business plan.
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6.7 Insurance. In addition to insurance requirements set forth in the
Collateral Documents, the Company shall maintain, and shall cause each of its
Subsidiaries to maintain, with financially sound and reputable independent
insurers, insurance with respect to its properties and business against loss or
damage of the kinds customarily insured against by Persons engaged in the same
or similar business, of such types and in such amounts as are customarily
carried under similar circumstances by such other Persons; including workers'
compensation insurance, public liability and property and casualty insurance
which amount shall not be reduced by the Company in the absence of 30 days'
prior notice to the Agent. Upon request of the Agent or any Bank, the Company
shall furnish the Agent, with sufficient copies for each Bank, at reasonable
intervals (but not more than once per calendar year) a certificate of a
Responsible Officer of the Company (and, if requested by the Agent, any
insurance broker of the Company) setting forth the nature and extent of all
insurance maintained by the Company and its Subsidiaries in accordance with this
Section or any Collateral Documents (and which, in the case of a certificate of
a broker, were placed through such broker).
6.8 Payment of Obligations. The Company shall, and shall cause each
Subsidiary to, pay and discharge as the same shall become due and payable, all
their respective obligations and liabilities, including:
(a) all tax liabilities, assessments and governmental charges
or levies upon it or its properties or assets, unless the same are being
contested in good faith by appropriate proceedings and adequate reserves in
accordance with GAAP are being maintained by the Company or such Subsidiary;
(b) all lawful claims which, if unpaid, would by law become a
Lien upon its property; and
(c) all indebtedness, as and when due and payable, but subject
to any subordination provisions contained in any instrument or agreement
evidencing such Indebtedness.
6.9 Progress Payments. The Company shall pay when due all sums required
to be paid under the Overall Contract.
6.10 Compliance with Laws. The Company shall comply, and shall cause
each Subsidiary to comply, in all material respects with all Requirements of Law
of any Governmental Authority having jurisdiction over it or its business
(including the Federal Fair Labor Standards Act), except such as may be
contested in good faith or as to which a bona fide dispute may exist.
6.11 Compliance with ERISA. The Company shall, and shall cause each of
its ERISA Affiliates to: (a) maintain each Plan in compliance in all material
respects with the applicable provisions of ERISA, the Code and other federal or
state law; (b) cause each Plan which is qualified under Section 401(a) of the
Code to maintain such qualification; and (c) make all required contributions to
any Plan subject to Section 412 of the Code.
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6.12 Inspection of Property and Books and Records. The Company shall
maintain and shall cause each Subsidiary to maintain proper books of record and
account, in which full, true and correct entries in conformity with GAAP
consistently applied shall be made of all financial transactions and matters
involving the assets and business of the Company and such Subsidiary. The
Company shall permit, and shall cause each Subsidiary to permit, representatives
and independent contractors of the Agent or any Bank to visit and inspect any of
their respective properties, to examine their respective corporate, financial
and operating records, and make copies thereof or abstracts therefrom, and to
discuss their respective affairs, finances and accounts with their respective
directors, officers, and independent public accountants, all at the expense of
the Company and at such reasonable times during normal business hours and as
often as may be reasonably desired, upon reasonable advance notice to the
Company; provided, however, when an Event of Default exists the Agent or any
Bank may do any of the foregoing at the expense of the Company at any time
during normal business hours and without advance notice.
6.13 Environmental Laws. (a) The Company shall, and shall cause each
Subsidiary to, conduct its operations and keep and maintain its property in
compliance with all Environmental Laws.
(b) Upon the written request of the Agent or any Bank, the
Company shall submit and cause each of its Subsidiaries to submit, to the Agent
with sufficient copies for each Bank, at the Company's sole cost and expense, at
reasonable intervals, a report providing an update of the status of any
environmental, health or safety compliance, hazard or liability issue identified
in any notice or report required pursuant to subsection 6.3(d), that could,
individually or in the aggregate, result in liability in excess of $10,000,000.
6.14 Use of Proceeds. The proceeds of the Loans shall be used to: (i)
fund progression payments under the Launch Vehicle Sale Contract and (ii) to
pay, or reimburse the Company for, related interest, expenses and fees,
including the costs of derivative cap or collar transactions, incurred relative
to the financing detailed herein.
6.15 Further Assurances. (a) The Company shall ensure that all written
information, exhibits and reports furnished to the Agent or the Banks do not and
will not contain any untrue statement of a material fact and do not and will not
omit to state any material fact or any fact necessary to make the statements
contained therein not misleading in light of the circumstances in which made,
and will promptly disclose to the Agent and the Banks and correct any defect or
error that may be discovered therein or in any Loan Document or in the
execution, acknowledgement or recordation thereof.
(b) Promptly upon request by the Agent or the Required Banks,
the Company shall (and shall cause any of its Subsidiaries to) do, execute,
acknowledge, deliver, record, re-record, file, re-file, register and
re-register, any and all such further acts, deeds, conveyances, security
agreements, mortgages, assignments, estoppel certificates, financing statements
and continuations thereof, termination statements, notices of assignment,
transfers, certificates, assurances and other instruments the Agent or such
Banks, as the case may be, may reasonably require from time to time in order (i)
to carry out more effectively the purposes of this Agreement or any other Loan
Document, (ii) to subject to the Liens created
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by any of the Collateral Documents any of the properties, rights or interests
covered by any of the Collateral Documents, (iii) to perfect and maintain the
validity, effectiveness and priority of any of the Collateral Documents and the
Liens intended to be created thereby, and (iv) to better assure, convey, grant,
assign, transfer, preserve, protect and confirm to the Agent and Banks the
rights granted or now or hereafter intended to be granted to the Banks under any
Loan Document or under any other document executed in connection therewith.
ARTICLE VII
NEGATIVE COVENANTS
So long as any Bank shall have any Commitment hereunder, or any Loan or
other Obligation shall remain unpaid or unsatisfied, unless the Required Banks
waive compliance in writing:
7.1 Consolidated Net Worth. The Company shall not permit Consolidated
Net Worth at any time to be less than the sum of (i) (A) up to and including
December 31, 1998, $100,000,000, and (B) thereafter, $50,000,000, (ii) 50% of
cumulative Consolidated Net Income for each fiscal quarter of the Company
(beginning with the fiscal quarter ending June 30, 1998) for which Consolidated
Net Income is positive, (iii) 100% of the Net Cash Proceeds of any offering by
the Company of common equity consummated after the Closing Date and (iv) 100% of
any capital contribution made to the Company or any of its Subsidiaries after
the Closing Date by any holder of the Company's Capital Stock.
7.2 Limitation on Liens. The Company shall not, and shall not suffer or
permit any Subsidiary to, directly or indirectly, make, create, incur, assume or
suffer to exist any Lien upon the Collateral, except those created by or in
accordance with the Loan Documents. In addition, the Company shall not, and
shall not suffer or permit any Subsidiary to, directly or indirectly, make,
create, incur, assume or suffer to exist any Lien upon or with respect to any
part of its property, whether now owned or hereafter acquired, other than the
following ("Permitted Liens"):
(a) (i) any Lien on property of the Company or any Subsidiary
on the Closing Date and set forth in Schedule 7.2 securing Indebtedness
outstanding on such date and (ii) any Lien securing Indebtedness incurred after
the Closing Date;
(b) any Lien created under any Loan Document or pursuant to
Section 5.5 of the Overall Contract;
(c) Liens for taxes, fees, assessments or other governmental
charges which are not delinquent or remain payable without penalty, or to the
extent that non-payment thereof is permitted by Section 6.8, provided that no
notice of lien has been filed or recorded under the Code;
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(d) carriers', warehousemen's, mechanics', landlords',
materialmen's, repairmen's or other similar Liens arising in the ordinary course
of business which are not delinquent or remain payable without penalty or which
are being contested in good faith and by appropriate proceedings, which
proceedings have the effect of preventing the forfeiture or sale of the property
subject thereto;
(e) Liens (other than any Lien imposed by ERISA) consisting of
pledges or deposits required in the ordinary course of business in connection
with workers' compensation, unemployment insurance and other social security
legislation;
(f) Liens consisting of judgment or judicial attachment liens,
provided that the enforcement of such Liens is effectively stayed and all such
liens in the aggregate at any time outstanding for the Company and its
Subsidiaries do not exceed $100,000;
(g) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount, and which do not in any case
materially detract from the value of the property subject thereto or interfere
with the ordinary conduct of the businesses of the Company and its Subsidiaries;
(h) Liens on assets of corporations which become Subsidiaries
after the date of this Agreement, provided, however, that such Liens existed at
the time the respective corporations became Subsidiaries and were not created in
anticipation thereof;
(i) purchase money security interests on any property acquired
or held by the Company or its Subsidiaries in the ordinary course of business,
securing Indebtedness incurred or assumed for the purpose of financing all or
any part of the cost of acquiring such property; provided that (i) any such Lien
attaches to such property concurrently with or within 20 days after the
acquisition thereof, (ii) such Lien attaches solely to the property so acquired
in such transaction, and (iii) the principal amount of the debt secured thereby
does not exceed 100% of the cost of such property;
(j) Liens securing obligations in respect of capital leases on
assets subject to such leases, provided that such capital leases are otherwise
permitted hereunder; and
(k) Liens arising solely by virtue of any statutory or common
law provision relating to banker's liens, rights of set-off or similar rights
and remedies as to deposit accounts or other funds maintained with a creditor
depository institution; provided that (i) such deposit account is not a
dedicated cash collateral account and is not subject to restrictions against
access by the Company in excess of those set forth by regulations promulgated by
the FRB, and (ii) such deposit account is not intended by the Company or any
Subsidiary to provide collateral to the depository institution.
7.3 Disposition of Assets. The Company shall not, and shall not suffer
or permit any Subsidiary to, directly or indirectly, sell, assign, lease,
convey, transfer or
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otherwise dispose of (whether in one or a series of transactions) any property
(including accounts and notes receivable, with or without recourse) or enter
into any agreement to do any of the foregoing, except:
(a) dispositions of inventory, or used, worn-out or surplus
equipment, all in the ordinary course of business;
(b) the sale of equipment to the extent that such equipment is
exchanged for credit against the purchase price of similar replacement
equipment, or the proceeds of such sale are reasonably promptly applied to the
purchase price of such replacement equipment;
(c) dispositions of equipment by the Company or any Subsidiary
to the Company or any Subsidiary pursuant to reasonable business requirements;
and
(d) dispositions not otherwise permitted hereunder which are
made for fair market value; provided, that (i) at the time of any disposition,
no Event of Default shall exist or shall result from such disposition, (ii) the
aggregate sales price from such disposition shall be paid in cash, and (iii) the
aggregate value of all assets so sold by the Company and its Subsidiaries,
together, shall not exceed in any fiscal year $10,000,000.
7.4 Consolidations and Mergers. The Company shall not, and shall not
suffer or permit any Subsidiary to, merge, consolidate with or into, or convey,
transfer, lease or otherwise dispose of (whether in one transaction or in a
series of transactions) all or substantially all of its assets (whether now
owned or hereafter acquired) to or in favor of any Person, except:
(a) any Subsidiary may merge with the Company, provided that
the Company shall be the continuing or surviving corporation, or with any one or
more Subsidiaries, provided that if any transaction shall be between a
Subsidiary and a Wholly-Owned Subsidiary, the Wholly-Owned Subsidiary shall be
the continuing or surviving corporation; and
(b) any Subsidiary may sell all or substantially all of its
assets (upon voluntary liquidation or otherwise), to the Company or another
Wholly-Owned Subsidiary.
7.5 Loans and Investments. The Company shall not purchase or acquire,
or suffer or permit any Subsidiary to purchase or acquire, or make any
commitment therefor, any capital stock, equity interest, or any obligations or
other securities of, or any interest in, any Person, or make or commit to make
any Acquisitions, or make or commit to make any advance, loan, extension of
credit or capital contribution to or any other investment in, any Person
including any Affiliate of the Company (together, "Investments"), except for:
(a) Investments held by the Company or Subsidiary in the form
of cash equivalents, short term marketable securities, U.S. government
securities, municipal
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securities rated in the four highest ratings categories by Standard & Poor's
Ratings Services or Moody's Investors Service, Inc., commercial paper having a
maturity of up to one year and rated at least A-1 by Standard & Poor's Ratings
Service or P-1 by Moody's Investors Service, Inc., money market funds investing
solely in the foregoing or up to $35 million of preferred stock, notes or bonds
of corporations rated in the four highest ratings categories by Standard &
Poor's Ratings Services or Moody's Investors Service, Inc.;
(b) extensions of credit in the nature of accounts receivable
or notes receivable arising from the sale or lease of goods or services in the
ordinary course of business; and
(c) extensions of credit by the Company to any of its
Wholly-Owned Subsidiaries or by any of its Wholly-Owned Subsidiaries to another
of its Wholly- Owned Subsidiaries.
7.6 Assignment of Launch Vehicle Sale Contract. The Company shall not
sell, assign or transfer its rights or obligations under the Launch Vehicle Sale
Contract.
7.7 Transactions with Affiliates. The Company shall not, and shall not
suffer or permit any Subsidiary to, enter into any transaction with any
Affiliate of the Company, except upon fair and reasonable terms no less
favorable to the Company or such Subsidiary than would obtain in a comparable
arm's-length transaction with a Person not an Affiliate of the Company or such
Subsidiary.
7.8 Use of Proceeds. (a) The Company shall not, and shall not suffer or
permit any Subsidiary to, use any portion of the Loan proceeds, directly or
indirectly, (i) to purchase or carry Margin Stock, (ii) to repay or otherwise
refinance indebtedness of the Company or others incurred to purchase or carry
Margin Stock, (iii) to extend credit for the purpose of purchasing or carrying
any Margin Stock, or (iv) to acquire any security in any transaction that is
subject to Section 13 or 14 of the Exchange Act.
(b) The Company shall not, directly or indirectly, use any
portion of the Loan proceeds (i) knowingly to purchase Ineligible Securities
from the Arranger during any period in which the Arranger makes a market in such
Ineligible Securities, (ii) knowingly to purchase during the underwriting or
placement period Ineligible Securities being underwritten or privately placed by
the Arranger, or (iii) to make payments of principal or interest on Ineligible
Securities underwritten or privately placed by the Arranger and issued by or for
the benefit of the Company or any Affiliate of the Company. The Arranger is a
registered broker-dealer and permitted to underwrite and deal in certain
Ineligible Securities; and "Ineligible Securities" means securities which may
not be underwritten or dealt in by member banks of the Federal Reserve System
under Section 16 of the Banking Act of 1933 (12 U.S.C. ss. 24, Seventh), as
amended.
7.9 Contingent Obligations. The Company shall not, and shall not suffer
or permit any Subsidiary to, create, incur, assume or suffer to exist any
Contingent Obligations except:
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(a) endorsements for collection or deposit in the ordinary
course of business;
(b) Contingent Obligations of the Company and its Subsidiaries
existing as of the Closing Date and listed in Schedule 7.9; and
(c) Contingent Obligations with respect to Surety Instruments
incurred in the ordinary course of business.
7.10 Joint Ventures. The Company shall not, and shall not suffer or
permit any Subsidiary to enter into any Joint Venture, other than in the
ordinary course of business or any Joint Venture with American Mobile Radio
Corporation and its Affiliates.
7.11 Lease Obligations. The Company shall not, and shall not suffer or
permit any Subsidiary to, create or suffer to exist any obligations for the
payment of rent for any property under lease or agreement to lease, except for:
(a) leases of the Company and of Subsidiaries in existence on
the Closing Date and any renewal, replacement, extension or refinancing thereof;
(b) operating leases entered into by the Company or any
Subsidiary after the Closing Date in the ordinary course of business; and
(c) capital leases, other than those permitted under clause
(a) of this Section, entered into by the Company or any Subsidiary after the
Closing Date to finance the acquisition of equipment; provided that the
aggregate annual rental payments for all such capital leases shall not exceed in
any fiscal year $20,000,000.
7.12 Restricted Payments. The Company shall not, and shall not suffer
or permit any Subsidiary to, declare or make any dividend payment or other
distribution of assets, properties, cash, rights, obligations or securities on
account of any shares of any class of its capital stock, or purchase, redeem or
otherwise acquire for value any shares of its capital stock or any warrants,
rights or options to acquire such shares, now or hereafter outstanding; except
that the Company and any Wholly-Owned Subsidiary may:
(a) declare and make dividend payments or other distributions
payable solely in its common stock; and
(b) purchase, redeem or otherwise acquire shares of its common
stock or warrants or options to acquire any such shares with the proceeds
received from the substantially concurrent issue of new shares of its preferred
or common stock.
7.13 ERISA. The Company shall not, and shall not suffer or permit any
of its ERISA Affiliates to: (a) engage in a prohibited transaction or violation
of the fiduciary responsibility rules with respect to any Plan which has
resulted or could reasonably expected to result in liability of the Company in
an aggregate amount in excess of $100,000; or (b) engage in a transaction that
could be subject to Section 4069 or 4212(c) of ERISA.
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7.14 Change in Business. The Company shall not, and shall not suffer or
permit any Subsidiary to, engage in any material line of business substantially
different from those lines of business carried on by the Company and its
Subsidiaries on the date hereof.
7.15 Accounting Changes. The Company shall not, and shall not suffer or
permit any Subsidiary to, make any significant change in accounting treatment or
reporting practices, except as required by GAAP, or change the fiscal year of
the Company or of any Subsidiary.
7.16 Clear Market. Until 90 days following the Closing Date, the
Company shall not, and shall not suffer or permit any Subsidiary to, attempt to
syndicate or place similar credit facilities or debt issued by the Company if
such credit facilities or debt issuance would, in the Arranger's reasonable
opinion, have a detrimental effect on the successful completion of the
transactions contemplated herein; provided that this provision shall not limit
the Company's ability to issue one or more series of senior notes in a
transaction subject to, or exempt from, registration under the Securities Act of
1933, as amended.
7.17 Modification of Overall Contract. The Company shall not consent to
any amendment, modification or supplement to the Overall Contract except for
such amendment, modification or supplement which is approved by the Required
Lenders, as evidenced by their prior written approval, or that is entered into
in the ordinary course of administering the Overall Contract and which does not
adversely affect the interest of the Agent or the Banks.
7.18 Year 2000 Matters. The Company shall not acquire any additional
computer systems or other equipment with embedded microchips if such equipment,
upon full analysis, has potential Year 2000 problems.
ARTICLE VIII
EVENTS OF DEFAULT
8.1 Event of Default. Any of the following shall constitute an "Event
of Default":
(a) Non-Payment. The Company fails to make, (i) when and as
required to be made herein, payments of any amount of principal of any Loan, or
(ii) within three days after the same becomes due, payment of any interest, fee
or any other amount payable hereunder or under any other Loan Document; or
(b) Representation or Warranty. Any representation or warranty
by the Company or any Subsidiary made or deemed made herein, in any other Loan
Document, or which is contained in any certificate, document or financial or
other statement by the Company, any Subsidiary, or any Responsible Officer,
furnished at
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any time under this Agreement, or in or under any other Loan Document, is
incorrect in any material respect on or as of the date made or deemed made; or
(c) Specific Defaults. The Company fails to perform or observe
any term, covenant or agreement contained in any of Sections 7.1, 7.6, 7.16 or
7.17; or
(d) Other Specific Defaults. The Company fails to perform or
observe any term, covenant or agreement contained in Sections 7.2, 7.3, 7.4,
7.5, 7.7, 7.8, 7.9, 7.10, 7.11, 7.12, 7.13, 7.14 or 7.15 and such default shall
continue unremedied for a period of 5 days after the earlier of (i) the date
upon which a Responsible Officer knew of such failure or (ii) the date upon
which written notice thereof is given to the Company by the Agent or any Bank;
or
(e) Other Defaults. The Company or any Subsidiary party
thereto fails to perform or observe any other term or covenant contained in this
Agreement or any other Loan Document, and such default shall continue unremedied
for a period of 20 days after the earlier of (i) the date upon which a
Responsible Officer knew of such failure or (ii) the date upon which written
notice thereof is given to the Company by the Agent or any Bank; or
(f) Cross-Default. The Company or any Subsidiary (A) fails to
make any payment in respect of any Indebtedness or Contingent Obligation, having
an aggregate principal amount (including undrawn committed or available amounts
and including amounts owing to all creditors under any combined or syndicated
credit arrangement) of more than $5,000,000 when due (whether by scheduled
maturity, required prepayment, acceleration, demand, or otherwise) and such
failure continues after the applicable grace or notice period, if any, specified
in the relevant document on the date of such failure; or (B) fails to perform or
observe any other condition or covenant, or any other event shall occur or
condition exist, under any agreement or instrument relating to any such
Indebtedness or Contingent Obligation, and such failure continues after the
applicable grace or notice period, if any, specified in the relevant document on
the date of such failure if the effect of such failure, event or condition is to
cause, or to permit the holder or holders of such Indebtedness or beneficiary or
beneficiaries of such Indebtedness (or a trustee or agent on behalf of such
holder or holders or beneficiary or beneficiaries) to cause such Indebtedness to
be declared to be due and payable prior to its stated maturity, or such
Contingent Obligation to become payable or cash collateral in respect thereof to
be demanded; or
(g) Insolvency; Voluntary Proceedings. The Company or any
Subsidiary (i) ceases or fails to be solvent, or generally fails to pay, or
admits in writing its inability to pay, its debts as they become due, subject to
applicable grace periods, if any, whether at stated maturity or otherwise; (ii)
voluntarily ceases to conduct its business in the ordinary course; (iii)
commences any Insolvency Proceeding with respect to itself; or (iv) takes any
corporate action to effectuate or authorize any of the foregoing; or
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(h) Involuntary Proceedings. (i) Any involuntary Insolvency
Proceeding is commenced or filed against the Company or any Subsidiary, or any
writ, judgment, warrant of attachment, execution or similar process, is issued
or levied against a substantial part of the Company's or any Subsidiary's
properties, and any such proceeding or petition shall not be dismissed, or such
writ, judgment, warrant of attachment, execution or similar process shall not be
released, vacated or fully bonded within 60 days after commencement, filing or
levy; (ii) the Company or any Subsidiary admits the material allegations of a
petition against it in any Insolvency Proceeding, or an order for relief (or
similar order under non-U.S. law) is ordered in any Insolvency Proceeding; or
(iii) the Company or any Subsidiary acquiesces in the appointment of a receiver,
trustee, custodian, conservator, liquidator, mortgagee in possession (or agent
therefor), or other similar Person for itself or a substantial portion of its
property or business; or
(i) ERISA. (i) An ERISA Event shall occur with respect to a
Pension Plan or Multiemployer Plan which has resulted or could reasonably be
expected to result in liability of the Company under Title IV of ERISA to the
Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess of
$100,000; or (ii) the aggregate amount of Unfunded Pension Liability among all
Pension Plans at any time exceeds $100,000; or (iii) the Company or any ERISA
Affiliate shall fail to pay when due, after the expiration of any applicable
grace period, any installment payment with respect to its withdrawal liability
under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in
excess of $100,000; or
(j) Monetary Judgments. One or more non-interlocutory
judgments, non- interlocutory orders, decrees or arbitration awards is entered
against the Company or any Subsidiary involving in the aggregate a liability (to
the extent not covered by independent third-party insurance as to which the
insurer does not dispute coverage) as to any single or related series of
transactions, incidents or conditions, of $5,000,000 or more, and the same shall
remain unsatisfied, unvacated and unstayed pending appeal for a period of 10
days after the entry thereof; or
(k) Non-Monetary Judgments. Any non-monetary judgment, order
or decree is entered against the Company or any Subsidiary which does or would
reasonably be expected to have a Material Adverse Effect, and there shall be any
period of 10 consecutive days during which a stay of enforcement of such
judgment or order, by reason of a pending appeal or otherwise, shall not be in
effect; or
(l) Change of Control. There occurs any Change of Control; or
(m) Loss of Approvals or Consents. Any Governmental Authority
or third party revokes or fails to renew any material license, permit,
franchise, approval or consent of the Company or any Subsidiary, or the Company
or any Subsidiary for any reason loses any material license, permit, franchise,
approval or consent or the Company or any Subsidiary suffers the imposition of
any restraining order, escrow, suspension or impound of funds in connection with
any proceeding (judicial or
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administrative) with respect to any material license, permit, franchise,
approval or consent; or
(n) Material Adverse Change. There occurs a Material Adverse
Effect; or
(o) Priority. The Loans hereunder cease to have the priority
over other Indebtedness contemplated by this Agreement; or
(p) Overall Contract. There occurs any material default under
the Overall Contract; or
(q) Collateral.
(i) any provision of any Collateral Document shall
for any reason cease to be valid and binding on or enforceable against the
Company or any Subsidiary party thereto or the Company or any Subsidiary shall
so state in writing or bring an action to limit its obligations or liabilities
thereunder; or
(ii) any Collateral Document shall for any reason
(other than pursuant to the terms thereof) cease to create a valid security
interest in the Collateral purported to be covered thereby or such security
interest shall for any reason cease to be a perfected and first priority
security interest subject only to Permitted Liens.
8.2 Remedies. If any Event of Default occurs, the Agent shall, at the
request of, or may, with the consent of, the Required Banks:
(a) declare the Commitment of each Bank to be terminated,
whereupon the Commitments shall be terminated;
(b) declare the unpaid principal amount of all outstanding
Loans, all interest accrued and unpaid thereon, and all other amounts owing or
payable hereunder or under any other Loan Document to be immediately due and
payable, without presentment, demand, protest or other notice of any kind, all
of which are hereby expressly waived by the Company; and
(c) exercise on behalf of itself and the Banks all rights and
remedies available to it and the Banks under the Loan Documents or applicable
law; provided, however, that upon the occurrence of any event specified in
subsection (f) or (g) of Section 8.1 (in the case of clause (i) of subsection
(g) upon the expiration of the 60-day period mentioned therein), the obligation
of each Bank to make Loans shall automatically terminate and the unpaid
principal amount of all outstanding Loans and all interest and other amounts as
aforesaid shall automatically become due and payable without further act of the
Agent or any Bank.
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8.3 Rights Not Exclusive. The rights provided for in this Agreement and
the other Loan Documents are cumulative and are not exclusive of any other
rights, powers, privileges or remedies provided by law or in equity, or under
any other instrument, document or agreement now existing or hereafter arising.
8.4 Certain Financial Covenant Defaults. In the event that, after
taking into account any extraordinary charge to earnings taken or to be taken as
of the end of any fiscal period of the Company (a "Charge"), and if solely by
virtue of such Charge, there would exist an Event of Default due to the breach
of Section 7.1 as of such fiscal period end date, such Event of Default shall be
deemed to arise upon the earlier of (a) the date after such fiscal period end
date on which the Company announces publicly it will take, is taking or has
taken such Charge (including an announcement in the form of a statement in a
report filed with the SEC) or, if such announcement is made prior to such fiscal
period end date, the date that is such fiscal period end date, and (b) the date
the Company delivers to the Agent its audited annual or unaudited quarterly
financial statements in respect of such fiscal period reflecting such Charge as
taken.
ARTICLE IX
THE AGENT
9.1 Appointment and Authorization; "Agent". Each Bank hereby
irrevocably (subject to Section 9.9) appoints, designates and authorizes the
Agent to take such action on its behalf under the provisions of this Agreement
and each other Loan Document and to exercise such powers and perform such duties
as are expressly delegated to it by the terms of this Agreement or any other
Loan Document, together with such powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary contained elsewhere in this
Agreement or in any other Loan Document, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein, nor shall the Agent
have or be deemed to have any fiduciary relationship with any Bank, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Agent. Without limiting the generality of the
foregoing sentence, the use of the term "agent" in this Agreement with reference
to the Agent is not intended to connote any fiduciary or other implied (or
express) obligations arising under agency doctrine of any applicable law.
Instead, such term is used merely as a matter of market custom, and is intended
to create or reflect only an administrative relationship between independent
contracting parties.
9.2 Delegation of Duties. The Agent may execute any of its duties under
this Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects with
reasonable care.
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9.3 Liability of Agent. None of the Agent-Related Persons shall (i) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (ii) be responsible in any manner to any of the Banks for any recital,
statement, representation or warranty made by the Company or any Subsidiary or
Affiliate of the Company, or any officer thereof, contained in this Agreement or
in any other Loan Document, or in any certificate, report, statement or other
document referred to or provided for in, or received by the Agent under or in
connection with, this Agreement or any other Loan Document, or for the value of
or title to any Collateral, or the validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document, or
for any failure of the Company or any other party to any Loan Document to
perform its obligations hereunder or thereunder. No Agent- Related Person shall
be under any obligation to any Bank to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement or any other Loan Document, or to inspect the properties,
books or records of the Company or any of the Company's Subsidiaries or
Affiliates.
9.4 Reliance by Agent. (a) The Agent shall be entitled to rely, and
shall be fully protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, telegram, facsimile, telex or telephone
message, statement or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons, and upon advice and statements of legal counsel (including counsel
to the Company), independent accountants and other experts selected by the
Agent. The Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Required Banks as it deems appropriate
and, if it so requests, it shall first be indemnified to its satisfaction by the
Banks against any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action. The Agent shall in all
cases be fully protected in acting, or in refraining from acting, under this
Agreement or any other Loan Document in accordance with a request or consent of
the Required Banks and such request and any action taken or failure to act
pursuant thereto shall be binding upon all of the Banks.
(b) For purposes of determining compliance with the conditions
specified in Section 4.1, each Bank that has executed this Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with, each
document or other matter either sent by the Agent to such Bank for consent,
approval, acceptance or satisfaction, or required thereunder to be consented to
or approved by or acceptable or satisfactory to the Bank.
9.5 Notice of Default. The Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default or Event of Default, except with
respect to defaults in the payment of principal, interest and fees required to
be paid to the Agent for the account of the Banks, unless the Agent shall have
received written notice from a Bank or the Company referring to this Agreement,
describing such Default or Event of Default and stating that such notice is a
"notice of default". The Agent will notify the Banks of its receipt of any such
notice. The Agent shall take such action with respect to such Default or Event
of Default as may be requested by the Required Banks in accordance with Article
VIII;
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provided, however, that unless and until the Agent has received any such
request, the Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable or in the best interest of the Banks.
9.6 Credit Decision. Each Bank acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by the Agent hereinafter taken, including any review of the affairs of the
Company and its Subsidiaries, shall be deemed to constitute any representation
or warranty by any Agent-Related Person to any Bank. Each Bank represents to the
Agent that it has, independently and without reliance upon any Agent-Related
Person and based on such documents and information as it has deemed appropriate,
made its own appraisal of and investigation into the business, prospects,
operations, property, financial and other condition and creditworthiness of the
Company and its Subsidiaries, the value of and title to any Collateral, and all
applicable bank regulatory laws relating to the transactions contemplated
hereby, and made its own decision to enter into this Agreement and to extend
credit to the Company hereunder. Each Bank also represents that it will,
independently and without reliance upon any Agent-Related Person and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Loan Documents, and to make
such investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and
creditworthiness of the Company. Except for notices, reports and other documents
expressly herein required to be furnished to the Banks by the Agent, the Agent
shall not have any duty or responsibility to provide any Bank with any credit or
other information concerning the business, prospects, operations, property,
financial and other condition or creditworthiness of the Company which may come
into the possession of any of the Agent-Related Persons.
9.7 Indemnification of Agent. Whether or not the transactions
contemplated hereby are consummated, the Banks shall indemnify upon demand the
Agent-Related Persons (to the extent not reimbursed by or on behalf of the
Company and without limiting the obligation of the Company to do so), pro rata,
from and against any and all Indemnified Liabilities; provided, however, that no
Bank shall be liable for the payment to the Agent- Related Persons of any
portion of such Indemnified Liabilities resulting solely from such Person's
gross negligence or willful misconduct. Without limitation of the foregoing,
each Bank shall reimburse the Agent upon demand for its ratable share of any
costs or out-of-pocket expenses (including Attorney Costs) incurred by the Agent
in connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any document
contemplated by or referred to herein, to the extent that the Agent is not
reimbursed for such expenses by or on behalf of the Company. The undertaking in
this Section shall survive the payment of all Obligations hereunder and the
resignation or replacement of the Agent.
9.8 Agent in Individual Capacity. BofA and its Affiliates may make
loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in and
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generally engage in any kind of banking, trust, financial advisory, underwriting
or other business with the Company and its Subsidiaries and Affiliates as though
BofA were not the Agent hereunder and without notice to or consent of the Banks.
The Banks acknowledge that, pursuant to such activities, BofA or its Affiliates
may receive information regarding the Company or its Affiliates (including
information that may be subject to confidentiality obligations in favor of the
Company or such Subsidiary) and acknowledge that the Agent shall be under no
obligation to provide such information to them. With respect to its Loans, BofA
shall have the same rights and powers under this Agreement as any other Bank and
may exercise the same as though it were not the Agent, and the terms "Bank" and
"Banks" include BofA in its individual capacity.
9.9 Successor Agent. The Agent may, and at the request of the Required
Banks shall, resign as Agent upon 30 days' notice to the Banks. If the Agent
resigns under this Agreement, the Required Banks shall appoint from among the
Banks a successor agent for the Banks which successor agent shall be approved by
the Company. If no successor agent is appointed prior to the effective date of
the resignation of the Agent, the Agent may appoint, after consulting with the
Banks and the Company, a successor agent from among the Banks. Upon the
acceptance of its appointment as successor agent hereunder, such successor agent
shall succeed to all the rights, powers and duties of the retiring Agent and the
term "Agent" shall mean such successor agent and the retiring Agent's
appointment, powers and duties as Agent shall be terminated. After any retiring
Agent's resignation hereunder as Agent, the provisions of this Article IX and
Sections 10.4 and 10.5 shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Agent under this Agreement. If no
successor agent has accepted appointment as Agent by the date which is 30 days
following a retiring Agent's notice of resignation, the retiring Agent's
resignation shall nevertheless thereupon become effective and the Banks shall
perform all of the duties of the Agent hereunder until such time, if any, as the
Required Banks appoint a successor agent as provided for above. Notwithstanding
any other provision of this Section 9.9, if the Loans are assigned pursuant to
the Support Agreement, the Agent may resign immediately and shall be released
from all obligations and liabilities hereunder.
9.10 Withholding Tax. (a) Each Bank and Agent that is not a United
States person (as such term is defined in Section 7701(a)(30) of the Code) for
U.S. federal income tax purposes, and that is entitled to exemption from, or a
reduction of, U.S. withholding tax under Sections 1441 or 1442 of the Code (a
"Payee"), shall deliver to the Company and (in the case of a Bank) the Agent:
(i) if such Payee is entitled to an exemption from,
or a reduction of, withholding tax under a United States tax treaty, two
properly completed and executed copies of IRS Form 1001 on or prior to the
Initial Date, and also promptly upon the obsolescence or invalidity of any such
form previously delivered by such Payee;
(ii) if such Payee is entitled to an exemption from
United States withholding tax for interest paid under this Agreement because it
is effectively connected with a United States trade or business of such Payee,
two properly completed and executed copies of IRS Form 4224 on or prior to the
Initial Date, and
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also promptly upon the obsolescence or invalidity of any such form previously
delivered by such Payee; and
(iii) either IRS Form W-8 or IRS Form W-9 (as
applicable) on or prior to the Initial Date, and also promptly upon the
obsolescence or invalidity of any such form previously delivered by such Payee,
and such other form or forms as may be required under the Code or other laws of
the United States as a condition to exemption from, or reduction of, United
States withholding tax.
Such Payee agrees to promptly notify the Company and (in the case of a
Bank) the Agent of any change in circumstances which would modify or render
invalid any claimed exemption or reduction.
(b) If the IRS or any other Governmental Authority of the
United States or other jurisdiction asserts a claim that the Agent did not
properly withhold tax from amounts paid to or for the account of any Bank
(because the appropriate form was not delivered or was not properly executed, or
because such Bank failed to notify the Agent of a change in circumstances which
rendered the exemption from, or reduction of, withholding tax ineffective, or
for any other reason) such Bank shall indemnify the Agent fully for all amounts
paid, directly or indirectly, by the Agent as tax or otherwise, including
penalties and interest, and including any taxes imposed by any jurisdiction on
the amounts payable to the Agent under this Section, together with all costs and
expenses (including Attorney Costs). The obligation of the Banks under this
subsection shall survive the payment of all Obligations and the resignation or
replacement of the Agent.
9.11 Collateral Matters. (a) The Agent is authorized on behalf of all
the Banks, without the necessity of any notice to or further consent from the
Banks, from time to time to take any action with respect to any Collateral or
the Collateral Documents which may be necessary to perfect and maintain
perfected the security interest in and Liens upon the Collateral granted
pursuant to the Collateral Documents.
(b) The Banks irrevocably authorize the Agent, at its option
and in its discretion, to release any Lien granted to or held by the Agent upon
any Collateral (i) upon termination of the Commitments and payment in full of
all Loans and all other Obligations known to the Agent and payable under this
Agreement or any other Loan Document; (ii) constituting property sold or to be
sold or disposed of as part of or in connection with any disposition permitted
hereunder; (iii) constituting property in which the Company or any Subsidiary
owned no interest at the time the Lien was granted or at any time thereafter;
(iv) constituting property leased to the Company or any Subsidiary under a lease
which has expired or been terminated in a transaction permitted under this
Agreement or is about to expire and which has not been, and is not intended by
the Company or such Subsidiary to be, renewed or extended; (v) consisting of an
instrument evidencing Indebtedness or other debt instrument, if the indebtedness
evidenced thereby has been paid in full; or (vi) if approved, authorized or
ratified in writing by the Required Banks or all the Banks, as the case may be,
as provided in subsection 10.1(f). Upon request by the Agent at any time, the
Banks will confirm in writing the Agent's authority to release particular types
or items of
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Collateral pursuant to this subsection 9.11(b), provided that the absence of any
such confirmation for whatever reason shall not affect the Agent's rights under
this Section 9.11.
(c) Each Bank agrees with and in favor of each other (which
agreement shall not be for the benefit of the Company or any Subsidiary) that
the Company's obligation to such Bank under this Agreement and the other Loan
Documents is not and shall not be secured by any real property collateral now or
hereafter acquired by such Bank.
ARTICLE X
MISCELLANEOUS
10.1 Amendments and Waivers. No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent with respect to any
departure by the Company or any applicable Subsidiary therefrom, shall be
effective unless the same shall be in writing and signed by the Required Banks
(or by the Agent at the written request of the Required Banks) and the Company,
consented to in writing by the Remarketing Agent, and acknowledged by the Agent,
and then any such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given; provided, however, that
no such waiver, amendment, or consent shall, unless in writing and signed by all
Banks directly affected and the Company, consented to in writing by the
Remarketing Agent, and acknowledged by the Agent, do any of the following:
(a) increase or extend the Commitment of any Bank (or
reinstate any Commitment terminated pursuant to Section 8.2);
(b) postpone or delay any date fixed by this Agreement or any
other Loan Document for any payment of principal, interest, fees or other
amounts due to the Banks (or any of them) hereunder or under any other Loan
Document;
(c) reduce the principal of, or the rate of interest specified
herein on any Loan, or (subject to clause (ii) below) any fees or other amounts
payable hereunder or under any other Loan Document;
(d) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Loans which is required for the Banks
or any of them to take any action hereunder; or
(e) amend this Section, or Section 2.14, or any provision
herein providing for consent or other action by all Banks; or
(f) release all or substantially all of the Collateral except
as otherwise may be provided in the Collateral Document or except where the
consent of the Required Banks only is specifically provided for;
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and, provided further, that (i) no amendment, waiver or consent shall, unless in
writing and signed by the Agent in addition to the Required Banks or all the
Banks, as the case may be, affect the rights or duties of the Agent under this
Agreement or any other Loan Document, and (ii) the Fee Letter may be amended, or
rights or privileges thereunder waived, in a writing executed by the parties
thereto; provided further, that no amendment, consent or waiver to the
definition of "Required Banks" or the terms of this Section 10.1 shall be
effective unless in writing and signed by all the Banks and the Company and
acknowledged by the Agent.
10.2 Notices.
(a) All notices, requests, consents, approvals, waivers and
other communications shall be in writing (including, unless the context
expressly otherwise provides, by facsimile transmission, provided that any
matter transmitted by the Company by facsimile (i) shall be immediately
confirmed by a telephone call to the recipient at the number specified on
Schedule 10.2, and (ii) shall be followed promptly by delivery of a hard copy
original thereof) and mailed, faxed or delivered, to the address or facsimile
number specified for notices on Schedule 10.2; or, as directed to the Company or
the Agent, to such other address as shall be designated by such party in a
written notice to the other parties, and as directed to any other party, at such
other address as shall be designated by such party in a written notice to the
Company and the Agent.
(b) All such notices, requests and communications shall, when
transmitted by overnight delivery, or faxed, be effective when delivered for
overnight (next-day) delivery, or transmitted in legible form by facsimile
machine, respectively, or if mailed, upon the third Business Day after the date
deposited into the U.S. mail, or if delivered, upon delivery; except that
notices pursuant to Article II or IX to the Agent shall not be effective until
actually received by the Agent.
(c) Any agreement of the Agent and the Banks herein to receive
certain notices by telephone or facsimile is solely for the convenience and at
the request of the Company. The Agent and the Banks shall be entitled to rely on
the authority of any Person purporting to be a Person authorized by the Company
to give such notice and the Agent and the Banks shall not have any liability to
the Company or other Person on account of any action taken or not taken by the
Agent or the Banks in reliance upon such telephonic or facsimile notice. The
obligation of the Company to repay the Loans shall not be affected in any way or
to any extent by any failure by the Agent and the Banks to receive written
confirmation of any telephonic or facsimile notice or the receipt by the Agent
and the Banks of a confirmation which is at variance with the terms understood
by the Agent and the Banks to be contained in the telephonic or facsimile
notice.
10.3 No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of the Agent or any Bank, any right, remedy,
power or privilege hereunder, shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege.
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10.4 Costs and Expenses. The Company shall:
(a) whether or not the transactions contemplated hereby are
consummated, pay or reimburse the Arranger and BofA (including in its capacity
as Agent) within five Business Days after demand (subject to subsection 4.1(j))
for all costs and expenses incurred by BofA (including in its capacity as Agent)
in connection with the development, preparation, delivery, administration and
execution of, and any amendment, supplement, waiver or modification to (in each
case, whether or not consummated), this Agreement, any Loan Document and any
other documents prepared in connection herewith or therewith, and the
consummation of the transactions contemplated hereby and thereby, including
reasonable Attorney Costs incurred by the Arranger and BofA (including in its
capacity as Agent) with respect thereto;
(b) pay or reimburse the Agent, the Arranger and each Bank
within five Business Days after demand (subject to subsection 4.1(j)) for all
costs and expenses (including Attorney Costs) incurred by them in connection
with the enforcement, attempted enforcement, or preservation of any rights or
remedies under this Agreement or any other Loan Document or the exercise of any
rights under the Support Agreement during the existence of an Event of Default
or after acceleration of the Loans (including in connection with any "workout"
or restructuring regarding the Loans, and including in any Insolvency Proceeding
or appellate proceeding);
(c) pay or reimburse BofA (including in its capacity as Agent)
within five Business Days after demand (subject to subsection 4.1(j)) for all
appraisal (including the allocated cost of internal appraisal services), audit,
environmental inspection and review (including the allocated cost of such
internal services), search and filing costs, fees and expenses, incurred or
sustained by BofA (including in its capacity as Agent) in connection with the
matters referred to under subsections (a) and (b) of this Section; and
(d) pay or reimburse the Remarketing Agent within five
Business Days after demand (subject to subsection 4.1(j)) for all costs and
expenses (including up to $75,000 of Attorney Costs) incurred by it in
connection with the development, preparation, delivery, administration and
execution of, and any amendment, supplement, waiver or modification to (in each
case, whether or not consummated), this Agreement and the Support Agreement.
10.5 Company Indemnification. (a) Whether or not the transactions
contemplated hereby are consummated, the Company shall indemnify, defend and
hold the Arranger and Agent-Related Persons, and each Bank and each of its
respective officers, directors, employees, counsel, agents and attorneys-in-fact
(each, an "Indemnified Person") harmless from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, charges, expenses and disbursements (including Attorney Costs) of any
kind or nature whatsoever which may at any time (including at any time following
repayment of the Loans and the termination, resignation or replacement of the
Agent or replacement of any Bank) be imposed on, incurred by or asserted against
any such
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Person in any way relating to or arising out of this Agreement or any document
contemplated by or referred to herein, or the transactions contemplated hereby,
or any action taken or omitted by any such Person under or in connection with
any of the foregoing, including with respect to any investigation, litigation or
proceeding (including any Insolvency Proceeding or appellate proceeding) related
to or arising out of this Agreement or the Loans or the use of the proceeds
thereof, whether or not any Indemnified Person is a party thereto (all the
foregoing, collectively, the "Indemnified Liabilities"); provided, that the
Company shall have no obligation hereunder to any Indemnified Person with
respect to Indemnified Liabilities resulting solely from the gross negligence or
willful misconduct of such Indemnified Person. The agreements in this Section
shall survive payment of all other Obligations.
(b) (i) The Company shall indemnify, defend and hold harmless
each Indemnified Person, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, charges, expenses
or disbursements (including Attorney Costs and the allocated cost of internal
environmental audit or review services), which may be incurred by or asserted
against such Indemnified Person in connection with or arising out of any pending
or threatened investigation, litigation or proceeding. No action taken by legal
counsel chosen by the Agent or any Bank in defending against any such
investigation, litigation or proceeding or requested remedial, removal or
response action shall vitiate or any way impair the Company's obligation and
duty hereunder to indemnify and hold harmless the Agent and each Bank.
(ii) In no event shall any site visit, observation,
or testing by the Agent or any Bank (or any contractee of the Agent or any Bank)
be deemed a representation or warranty that Hazardous Materials are or are not
present in, on, or under, the site, or that there has been or shall be
compliance with any Environmental Law. Neither the Company nor any other Person
is entitled to rely on any site visit, observation, or testing by the Agent or
any Bank. Neither the Agent nor any Bank owes any duty of care to protect the
Company or any other Person against, or to inform the Company or any other party
of, any Hazardous Materials or any other adverse condition affecting any site or
property. Neither the Agent nor any Bank shall be obligated to disclose to the
Company or any other Person any report or findings made as a result of, or in
connection with, any site visit, observation, or testing by the Agent or any
Bank.
10.6 Survival; Defense. The obligations in this Section shall survive
payment of all other Obligations. At the election of any Indemnified Person, the
Company shall defend such Indemnified Person using legal counsel reasonably
satisfactory to such Indemnified Person, at the sole cost and expense of the
Company. All amounts owing under this Section shall be paid within 30 days after
demand.
10.7 Marshalling; Payments Set Aside. Neither the Agent nor the Banks
shall be under any obligation to marshall any assets in favor of the Company or
any other Person or against or in payment of any or all of the Obligations. To
the extent that the Company makes a payment to the Agent or the Banks, or the
Agent or the Banks exercise their right of set-off, and such payment or the
proceeds of such set-off or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside or required (including
pursuant to any settlement entered into by the Agent or such Bank in its
discretion) to be
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repaid to a trustee, receiver or any other party, in connection with any
Insolvency Proceeding or otherwise, then (a) to the extent of such recovery the
obligation or part thereof originally intended to be satisfied shall be revived
and continued in full force and effect as if such payment had not been made or
such set-off had not occurred, and (b) each Bank severally agrees to pay to the
Agent upon demand its pro rata share of any amount so recovered from or repaid
by the Agent.
10.8 Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns, except that the Company may not assign or transfer any
of its rights or obligations under this Agreement without the prior written
consent of the Agent and each Bank.
10.9 Assignments, Participations, etc. (a) Any Bank may, with the
written consent of the Company at all times other than during the existence of
an Event of Default and the Agent, which consents shall not be unreasonably
withheld, at any time assign and delegate to one or more Eligible Assignees
(provided that no written consent of the Company or the Agent shall be required
in connection with any assignment and delegation by a Bank to an Eligible
Assignee that is an Affiliate of such Bank) (each an "Assignee") all, or any
ratable part of all, of the Loans, the Commitments and the other rights and
obligations of such Bank hereunder, in a minimum amount of $5,000,000; provided,
however, that the Company and the Agent may continue to deal solely and directly
with such Bank in connection with the interest so assigned to an Assignee until
(A) written notice of such assignment, together with payment instructions,
addresses and related information with respect to the Assignee, shall have been
given to the Company and the Agent by such Bank and the Assignee; (B) such Bank
and its Assignee shall have delivered to the Company and the Agent an Assignment
and Acceptance in the form of Exhibit G ("Assignment and Acceptance") together
with any Note or Notes subject to such assignment and (C) the assignor Bank or
Assignee has paid to the Agent a processing fee in the amount of $3,500.
(b) From and after the date that the Agent notifies the
assignor Bank that it has received (and provided its consent with respect to) an
executed Assignment and Acceptance and payment of the above-referenced
processing fee, (i) the Assignee thereunder shall be a party hereto and, to the
extent that rights and obligations hereunder have been assigned to it pursuant
to such Assignment and Acceptance, shall have the rights and obligations of a
Bank under the Loan Documents, and (ii) the assignor Bank shall, to the extent
that rights and obligations hereunder and under the other Loan Documents have
been assigned by it pursuant to such Assignment and Acceptance, relinquish its
rights and be released from its obligations under the Loan Documents.
(c) Within five Business Days after its receipt of notice by
the Agent that it has received an executed Assignment and Acceptance and payment
of the processing fee, (and provided that it consents to such assignment in
accordance with subsection 10.9(a)), the Company shall execute and deliver to
the Agent, if requested, new Notes evidencing such Assignee's assigned Loans and
Commitment and, if the assignor Bank has retained a portion of its Loans and its
Commitment, replacement Notes in the principal amount of the Loans retained by
the assignor Bank (such Notes to be in exchange for, but not in payment of, the
Notes held by such Bank). Immediately upon each Assignee's making its processing
fee
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payment under the Assignment and Acceptance, this Agreement shall be deemed to
be amended to the extent, but only to the extent, necessary to reflect the
addition of the Assignee and the resulting adjustment of the Commitments arising
therefrom. The Commitment allocated to each Assignee shall reduce such
Commitments of the assigning Bank pro tanto.
(d) Any Bank may at any time sell to one or more commercial
banks or other Persons not Affiliates of the Company (a "Participant")
participating interests in any Loans, the Commitment of that Bank and the other
interests of that Bank (the "originating Bank") hereunder and under the other
Loan Documents; provided, however, that (i) the originating Bank's obligations
under this Agreement shall remain unchanged, (ii) the originating Bank shall
remain solely responsible for the performance of such obligations, (iii) the
Company and the Agent shall continue to deal solely and directly with the
originating Bank in connection with the originating Bank's rights and
obligations under this Agreement and the other Loan Documents, and (iv) no Bank
shall transfer or grant any participating interest under which the Participant
has rights to approve any amendment to, or any consent or waiver with respect
to, this Agreement or any other Loan Document, except to the extent such
amendment, consent or waiver would require unanimous consent of the Banks as
described in the first proviso to Section 10.1. In the case of any such
participation, the Participant shall be entitled to the benefit of Sections 3.1,
3.3 and 10.5 as though it were also a Bank hereunder, and if amounts outstanding
under this Agreement are due and unpaid, or shall have been declared or shall
have become due and payable upon the occurrence of an Event of Default, each
Participant shall be deemed to have the right of set-off in respect of its
participating interest in amounts owing under this Agreement to the same extent
as if the amount of its participating interest were owing directly to it as a
Bank under this Agreement.
(e) Notwithstanding any other provision in this Agreement, any
Bank may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement in favor of any
Federal Reserve Bank in accordance with Regulation A of the FRB or U.S. Treasury
Regulation 31 CFR ss.203.14, and such Federal Reserve Bank may enforce such
pledge or security interest in any manner permitted under applicable law.
10.10 Confidentiality. (a) Each Bank agrees to take and to cause its
Affiliates to take normal and reasonable precautions and exercise due care to
maintain the confidentiality of all information identified as "confidential" or
"secret" by the Company and provided to it by the Company or any Subsidiary, or
by the Agent on the Company's or such Subsidiary's behalf, under this Agreement
or any other Loan Document, and neither it nor any of its Affiliates shall use
any such information other than in connection with or in enforcement of this
Agreement and the other Loan Documents or in connection with other business now
or hereafter existing or contemplated with the Company or any Subsidiary; except
to the extent such information (i) was or becomes generally available to the
public other than as a result of disclosure by the Bank, or (ii) was or becomes
available on a non- confidential basis from a source other than the Company,
provided that such source is not bound by a confidentiality agreement with the
Company known to the Bank; provided, however, that any Bank may disclose such
information (A) at the request or pursuant to any requirement of any
Governmental Authority to which the Bank is subject or in connection
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with an examination of such Bank by any such authority; (B) pursuant to subpoena
or other court process, provided that, to the extent practicable under the
circumstances, such Bank shall provide the Company written notice thereof so
that the Company may seek a protective order or other appropriate remedy; (C)
when required to do so in accordance with the provisions of any applicable
Requirement of Law; (D) to the extent reasonably required in connection with any
litigation or proceeding to which the Agent, any Bank or their respective
Affiliates may be party, provided that, to the extent practicable under the
circumstances, such Bank shall provide the Company written notice thereof so
that the Company may seek a protective order or other appropriate remedy; (E) to
the extent reasonably required in connection with the exercise of any remedy
hereunder or under any other Loan Document; (F) to such Bank's independent
auditors and other professional advisors; (G) to any Participant or Assignee,
actual or potential, provided that such Person agrees in writing to keep such
information confidential to the same extent required of the Banks hereunder; (H)
as to any Bank or its Affiliate, as expressly permitted under the terms of any
other document or agreement regarding confidentiality to which the Company or
any Subsidiary is party or is deemed party with such Bank or such Affiliate; and
(I) to any of its Affiliates which receives such information having been made
aware of the confidential nature thereof.
(b) The Company agrees that any and all public disclosure of
any part of this Agreement or any other Loan Document shall be subject to
approval by the Agent, which approval shall not be withheld unreasonably.
10.11 Set-off. In addition to any rights and remedies of the Banks
provided by law, if an Event of Default exists or the Loans have been
accelerated, each Bank is authorized at any time and from time to time, without
prior notice to the Company, any such notice being waived by the Company to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held by,
and other indebtedness at any time owing by, such Bank to or for the credit or
the account of the Company against any and all Obligations owing to such Bank,
now or hereafter existing, irrespective of whether or not the Agent or such Bank
shall have made demand under this Agreement or any Loan Document and although
such Obligations may be contingent or unmatured. Each Bank agrees promptly to
notify the Company and the Agent after any such set-off and application made by
such Bank; provided, however, that the failure to give such notice shall not
affect the validity of such set-off and application.
10.12 Automatic Debits of Fees. With respect to any commitment fee,
arrangement fee, or other fee, or any other cost or expense (including Attorney
Costs) due and payable to the Agent, BofA or the Arranger under the Loan
Documents, the Company hereby irrevocably authorizes BofA to debit any deposit
account of the Company with BofA in an amount such that the aggregate amount
debited from all such deposit accounts does not exceed such fee or other cost or
expense. If there are insufficient funds in such deposit accounts to cover the
amount of the fee or other cost or expense then due, such debits will be
reversed (in whole or in part, in BofA's sole discretion) and such amount not
debited shall be deemed to be unpaid. No such debit under this Section shall be
deemed a set-off.
10.13 Notification of Addresses, Lending Offices, Etc. Each Bank shall
notify the Agent in writing of any changes in the address to which notices to
the Bank should
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be directed, of addresses of any Lending Office, of payment instructions in
respect of all payments to be made to it hereunder and of such other
administrative information as the Agent shall reasonably request.
10.14 Counterparts. This Agreement may be executed in any number of
separate counterparts, each of which, when so executed, shall be deemed an
original, and all of said counterparts taken together shall be deemed to
constitute but one and the same instrument.
10.15 Severability. The illegality or unenforceability of any provision
of this Agreement or any instrument or agreement required hereunder shall not in
any way affect or impair the legality or enforceability of the remaining
provisions of this Agreement or any instrument or agreement required hereunder.
10.16 No Third Parties Benefited. This Agreement is made and entered
into for the sole protection and legal benefit of the Company, the Banks, the
Agent and the Agent-Related Persons, and their permitted successors and assigns,
and no other Person shall be a direct or indirect legal beneficiary of, or have
any direct or indirect cause of action or claim in connection with, this
Agreement or any of the other Loan Documents.
10.17 Governing Law and Jurisdiction. (a) THIS AGREEMENT AND THE NOTES
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
NEW YORK; PROVIDED THAT THE AGENT AND THE BANKS SHALL RETAIN ALL RIGHTS ARISING
UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE
OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND
BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE COMPANY, THE AGENT AND
THE BANKS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
NONEXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE COMPANY, THE AGENT AND
THE BANKS IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. THE
COMPANY, THE AGENT AND THE BANKS EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS,
COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY
NEW YORK LAW.
10.18 Waiver of Jury Trial. THE COMPANY, THE BANKS AND THE AGENT EACH
WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN
DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION,
PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE
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PARTIES AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED PERSON, PARTICIPANT OR
ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE.
THE COMPANY, THE BANKS AND THE AGENT EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF
ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE
FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY
JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR
OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR
ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION
HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS.
10.19 Entire Agreement. This Agreement, together with the other Loan
Documents, embodies the entire agreement and understanding among the Company,
the Banks and the Agent, and supersedes all prior or contemporaneous agreements
and understandings of such Persons, verbal or written, relating to the subject
matter hereof and thereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered in New York, New York by their proper and duly
authorized officers as of the day and year first above written.
CD RADIO INC.
By: \s\ Andrew Greenebaum
----------------------------------
Title: Executive Vice President & CFO
-------------------------------
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Administrative
Agent
By: \s\ Wendy Young
----------------------------------
Title: Vice President
-------------------------------
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as a Bank
By: \s\ Steve Aronowitz
----------------------------------
Title: Managing Director
-------------------------------
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SCHEDULE 2.1
COMMITMENTS
AND PRO RATA SHARES
Pro Rata
Bank Commitment Share
- ---- ---------- --------
Bank of America National Trust $115,000,000 100.0%
and Savings Association
TOTAL $115,000,000 100.0%
<PAGE>
SCHEDULE 10.2
ADDRESSES FOR NOTICES
CD RADIO INC.
CD Radio Inc.
1180 Avenue of the Americas
14th Floor
New York, New York 10036
Attention: Chief Financial Officer
Telephone: (212) 899-5040
Facsimile: (212) 899-5035
LORAL SPACE & COMMUNICATIONS LTD.
Loral Space & Communications Ltd.
c/o Loral SpaceCom Corporation
600 Third Avenue
New York, NY 10025
Attention: Nicholas C. Moren/Richard Mastaloni
Telephone: (212) 338-
Facsimile: (212) 867-5248
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Administrative Agent
for notices relating to payments:
Bank of America National Trust
and Savings Association
1850 Gateway Boulevard, Fourth Floor
Concord, California 94520
Attention: Ando Perlas
Telephone: (925) 675-8387
Facsimile: (925) 675-8500
for all other notices:
Bank of America National Trust
and Savings Association
Agency Management #10831
1455 Market Street, 12th Floor
San Francisco, CA 94103
Attention: Wendy Young
Telephone: (415) 436-3420
Facsimile: (415) 436-3425
<PAGE>
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as a Bank
Bank of America National Trust
and Savings Association
335 Madison Avenue
New York, NY 10017
Attention: Steve Aronowitz
Telephone: (212) 503-7950
Facsimile: (212) 503-7066
PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of July 29, 1998, made by CD RADIO INC., a
Delaware corporation (the "Company"), in favor of Bank of America National Trust
and Savings Association, as Administrative Agent (in such capacity, the "Agent")
for the Banks from time to time parties to the Credit Agreement, dated as of
June 30, 1998 (as amended, supplemented or otherwise modified from time to time,
the "Credit Agreement"), among the Company, the Agent and such Banks.
W I T N E S S E T H:
--------------------
WHEREAS, pursuant to the Credit Agreement, the Banks have severally
agreed to make Loans to the Company upon the terms and subject to the conditions
set forth therein;
WHEREAS, the Company is a party to the Pledged Contracts; and
WHEREAS, it is a condition precedent to the obligation of the Banks to
make their respective Loans to the Company under the Credit Agreement that the
Company shall have executed and delivered this Pledge Agreement to the Agent for
the ratable benefit of the Banks.
NOW, THEREFORE, in consideration of the premises and to induce the
Agent and the Banks to enter into the Credit Agreement and to induce the Banks
to make their respective Loans under the Credit Agreement, the Company hereby
agrees with the Agent, for the ratable benefit of the Banks, as follows:
1. Defined Terms. (a) Unless otherwise defined herein, terms defined in
the Credit Agreement and used herein shall have the meanings given to them in
the Credit Agreement.
(b) The following terms shall have the following meanings:
"Agreement": this Pledge Agreement, as the same may be amended,
modified or otherwise supplemented from time to time.
"Code": the Uniform Commercial Code from time to time in effect in the
State of New York.
"Collateral": the Pledged Contracts and all Proceeds.
"Collateral Account": any account established to hold money Proceeds,
maintained under the sole dominion and control of the Agent, subject to
withdrawal by the Agent for the account of the Banks only as provided in
paragraph 6(a).
<PAGE>
2
"Pledged Contracts": the contracts and agreements listed in Schedule 1,
as the same may be amended, supplemented or otherwise modified from time to
time, including, without limitation, (i) all rights of the Company to receive
moneys due and to become due to it thereunder or in connection therewith,
including, but not limited to, any termination payments thereunder (ii) all
rights of the Company to damages arising thereunder and (iii) all rights of the
Company to perform and to exercise all remedies thereunder.
"Proceeds": all "proceeds" as such term is defined in Section 9-306(1)
of the Code on the date hereof and, in any event, shall include, without
limitation, all income from the Pledged Contracts, collections thereon or
distributions with respect thereto.
(c) The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and section and paragraph
references are to this Agreement unless otherwise specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
2. Pledge; Grant of Security Interest. The Company hereby assigns and
transfers to the Agent, and hereby grants to Agent, for the ratable benefit of
the Banks, a first security interest in the Collateral, as collateral security
for the prompt and complete payment and performance when due (whether at the
stated maturity, by acceleration or otherwise) of the Obligations.
3. Representations and Warranties. The Company represents and warrants
that:
(a) Perfected First Priority Liens. The security interests granted
pursuant to this Agreement (1) upon completion of the filings and other actions
specified on Schedule 2 (which, in the case of all filings and other documents
referred to on said Schedule, have been delivered to the Agent in completed and
duly executed form) will constitute valid perfected security interests in all of
the Collateral in favor of the Agent, for the ratable benefit of the Banks, as
collateral security for the Obligations, enforceable in accordance with the
terms hereof against all creditors of the Company and any Persons purporting to
purchase any Collateral from the Company and (2) are prior to all other Liens on
the Collateral in existence on the date hereof except for unrecorded Liens
permitted by the Credit Agreement which have priority over the Liens on the
Collateral by operation of law.
(b) Chief Executive Office. On the date hereof, the Company's
jurisdiction of organization and the location of the Company's chief executive
office or sole place of business are specified on Schedule 3.
<PAGE>
3
(c) Pledged Contracts. (1) No consent of any party (other than the
Company) to any Pledged Contract is required, or purports to be required, in
connection with the execution, delivery and performance of this Agreement.
(2) Each Pledged Contract is in full force and effect and constitutes a
valid and legally enforceable obligation of the parties thereto, subject to the
effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing.
(3) No consent or authorization of, filing with or other act by or in
respect of any Governmental Authority is required in connection with the
execution, delivery, performance, validity or enforceability of any of the
Pledged Contracts by any party thereto other than those which have been duly
obtained, made or performed, are in full force and effect and do not subject the
scope of any such Pledged Contract to any material adverse limitation, either
specific or general in nature.
(4) Neither the Company nor (to the best of the Company's knowledge)
any of the other parties to the Pledged Contracts is in default in the
performance or observance of any of the terms thereof in any manner that, in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
(5) The right, title and interest of the Company in, to and under the
Pledged Contracts are not subject to any defenses, offsets, counterclaims or
claims that, in the aggregate, could reasonably be expected to have a Material
Adverse Effect.
(6) The Company has delivered to the Agent a complete and correct copy
of each Pledged Contract, including all amendments, supplements and other
modifications thereto.
(7) No amount payable to the Company under or in connection with any
Pledged Contract is evidenced by any Instrument or Chattel Paper which has not
been delivered to the Agent.
(8) None of the parties to any Pledged Contract is a Governmental
Authority.
4. Covenants. The Company covenants and agrees with the Agent and the
Banks that, from and after the date of this Agreement until this Agreement is
terminated and the security interests created hereby are released:
<PAGE>
4
(a) Maintenance of Perfected Security Interest; Further Documentation.
(1) The Company shall maintain the security interest created by this Agreement
as a perfected security interest having at least the priority described in
subsection 3(a) and shall defend such security interest against the claims and
demands of all Persons whomsoever.
(2) The Company will furnish to the Agent and the Banks from time to
time statements and schedules further identifying and describing the assets and
property of the Company and such other reports in connection therewith as the
Agent may reasonably request, all in reasonable detail.
(3) At any time and from time to time, upon the written request of the
Agent, and at the sole expense of the Company, the Company will promptly and
duly execute and deliver, and have recorded, such further instruments and
documents and take such further actions as the Agent may reasonably request for
the purpose of obtaining or preserving the full benefits of this Agreement and
of the rights and powers herein granted, including, without limitation, (i) the
filing of any financing or continuation statements under the Uniform Commercial
Code (or other similar laws) in effect in any jurisdiction with respect to the
security interests created hereby and (ii) in the case of Investment Property,
Deposit Accounts and any other relevant Collateral, taking any actions necessary
to enable the Agent to obtain "control" (within the meaning of the applicable
Uniform Commercial Code) with respect thereto.
(b) Changes in Locations, Name, etc. The Company will not, except upon
15 days' prior written notice to the Agent and delivery to the Agent of (a) all
additional executed financing statements and other documents reasonably
requested by the Agent to maintain the validity, perfection and priority of the
security interests provided for herein and (b) if applicable, a written
supplement to Schedule 3:
(i) change its jurisdiction of organization or the location of its
chief executive office or sole place of business from that referred to in
subsection 3(b); or
(ii) change its name, identity or corporate structure to such an extent
that any financing statement filed by the Agent in connection with this
Agreement would become misleading.
(c) Notices. Such Company will advise the Agent promptly, in reasonable
detail, of:
(1) any Lien (other than security interests created hereby or Liens
permitted under the Credit Agreement) on any of the Collateral which would
adversely affect the ability of the Agent to exercise any of its remedies
hereunder; and
<PAGE>
5
(2) of the occurrence of any other event which could reasonably be
expected to have a material adverse effect on the aggregate value of the
Collateral or on the security interests created hereby.
(d) Pledged Contracts. (1) The Company will perform and comply in all
material respects with all its obligations under the Pledged Contracts.
(2) The Company will not amend, modify, terminate or waive any
provision of any Pledged Contract in any manner which could reasonably be
expected to materially adversely affect the value of such Pledged Contract as
Collateral.
(3) The Company will exercise promptly and diligently each and every
material right which it may have under each Pledged Contract (other than any
right of termination).
(4) The Company will deliver to the Agent a copy of each material
demand, notice or document received by it relating in any way to any Pledged
Contract that questions the validity or enforceability of such Pledged Contract.
(e) The Company shall maintain the security interest created by this
Agreement as a first, perfected security interest and shall defend such security
interest against claims and demands of all Persons whomsoever. At any time and
from time to time, upon the written request of the Agent, and at the sole
expense of the Company, the Company will promptly and duly execute and deliver
such further instruments and documents and take such further actions as the
Agent may reasonably request for the purposes of obtaining or preserving the
full benefits of this Agreement and of the rights and powers herein granted. If
any amount payable under or in connection with any of the Collateral shall be or
become evidenced by any promissory note, other instrument or chattel paper, such
note, instrument or chattel paper shall be immediately delivered to the Agent,
duly endorsed in a manner satisfactory to the Agent, to be held as Collateral
pursuant to this Agreement.
(f) The Company shall pay, and save the Agent and the Banks harmless
from, any and all liabilities with respect to, or resulting from any delay in
paying, any and all stamp, excise, sales or other taxes which may be payable or
determined to be payable with respect to any of the Collateral or in connection
with any of the transactions contemplated by this Agreement.
5. Rights of the Banks and the Agent. All money Proceeds received by
the Agent hereunder shall be held by the Agent for the benefit of the Banks in a
Collateral Account. All Proceeds while held by the Agent in a Collateral Account
(or by the Company in trust for the Agent and the Banks) shall continue to be
held as collateral security for all the Obligations and shall not constitute
payment thereof until applied as provided in paragraph 6(a).
<PAGE>
6
6. Remedies. (a) If an Event of Default shall have occurred and be
continuing, at any time at the Agent's election, the Agent may apply all or any
part of Proceeds held in any Collateral Account in payment of the Obligations in
such order as the Agent may elect.
(b) If an Event of Default shall occur and be continuing and the Agent
shall give notice of its intent to exercise such rights to the Company, the
Agent shall have the right to receive any payments made to the Company under the
Pledged Contracts.
(c) If an Event of Default shall have occurred and be continuing, the
Agent or its nominee, on behalf of the Banks, may, at the Agent's sole option,
assume and perform upon the rights and obligations of the Company under the
Pledged Contracts and in such event shall have all rights and obligations of the
Company thereunder; provided, however, that no action by the Agent shall
constitute an assumption or agreement to perform the Pledged Contracts other
than an express written assumption agreement executed by a duly authorized
officer of the Agent.
(d) If an Event of Default shall have occurred and be continuing, the
Agent, on behalf of the Banks, may exercise, in addition to all other rights and
remedies granted in this Agreement and in any other instrument or agreement
securing, evidencing or relating to the Obligations, all rights and remedies of
a secured party under the Code. Without limiting the generality of the
foregoing, the Agent, without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except any notice
required by law referred to below) to or upon the Company or any other Person
(all and each of which demands, defenses, advertisements and notices are hereby
waived), may in such circumstances forthwith collect, receive, appropriate and
realize upon the Collateral, or any part thereof, and/or may forthwith sell,
assign, transfer or otherwise dispose of and deliver the Collateral or any part
thereof (or contract to do any of the foregoing upon such terms and conditions
as it may deem advisable and at such prices as it may deem best, for cash or on
credit or for future delivery without assumption of any credit risk). The Agent
shall apply any Proceeds from time to time held by it and the net proceeds of
any such collection, recovery, receipt, appropriation, realization or sale,
after deducting all reasonable costs and expenses of every kind incurred in
respect thereof or incidental to the care or safekeeping of any of the
Collateral or in any way relating to the Collateral or the rights of the Agent
and the Banks hereunder, including, without limitation, reasonable attorneys'
fees and disbursements of counsel to the Agent, to the payment in whole or in
part of the Obligations, in such order as the Agent may elect, and only after
such application and after the payment by the Agent of any other amount required
by any provision of law, including, without limitation, Section 9-504(1)(c) of
the Code, need the Agent account for the surplus, if any, to the Company. To the
extent permitted by applicable law, the Company waives all claims, damages and
demands it may acquire against the Agent or any Bank arising out of the exercise
by them of any rights hereunder. If any notice of a proposed sale or other
disposition of Collateral shall be required by law, such notice shall be deemed
reasonable and proper if given at least 10 days before such sale or other
disposition. The Company shall remain liable for any deficiency if the proceeds
of any sale or other disposition of Collateral are
<PAGE>
7
insufficient to pay the Obligations and the fees and disbursements of any
attorneys employed by the Agent or any Bank to collect such deficiency.
7. Agent's Appointment as Attorney-in-Fact. (a) The Company hereby
irrevocably constitutes and appoints the Agent and any officer or agent of the
Agent, with full power of substitution, as its true and lawful attorney-in-fact
with full irrevocable power and authority in the place and stead of the Company
and in the name of the Company or in the Agent's own name, from time to time in
the Agent's discretion, for the purpose of carrying out the terms of this
Agreement, to take any and all appropriate action and to execute any and all
documents and instruments which may be necessary or desirable to accomplish the
purposes of this Agreement, including, without limitation, any financing
statements, endorsements, assignments or other instruments of transfer.
(b) The Company hereby ratifies all that said attorneys shall lawfully
do or cause to be done pursuant to the power of attorney granted in paragraph
7(a). All powers, authorizations and agencies contained in this Agreement are
coupled with an interest and are irrevocable until this Agreement is terminated
and the security interests created hereby are released.
8. Conditions to Effectiveness. The rights and obligations hereunder
are subject to the condition that the Agent shall have received, in form and
substance satisfactory to the Agent, (i) this Agreement, duly executed and
delivered by the Company and (ii) an Acknowledgment and Consent, substantially
in the form of Annex A, duly executed and delivered by Space Systems/Loral, Inc.
9. Duty of Agent. The Agent's sole duty with respect to the custody,
safekeeping and physical preservation of the Collateral in its possession, under
Section 9-207 of the Code or otherwise, shall be to deal with it in the same
manner as the Agent deals with similar property for its own account. Neither the
Agent, any Bank nor any of their respective officers, directors, employees or
agents shall be liable for failure to demand, collect or realize upon any of the
Collateral or for any delay in doing so or shall be under any obligation to sell
or otherwise dispose of any Collateral upon the request of the Company or any
other Person or to take any other action whatsoever with regard to the
Collateral or any part thereof. The powers conferred on the Agent and the Banks
hereunder are solely to protect the Agent's and the Banks' interests in the
Collateral and shall not impose any duty upon the Agent or any Bank to exercise
any such powers. The Agent and the Banks shall be accountable only for amounts
that they actually receive as a result of the exercise of such powers, and
neither they nor any of their officers, directors, employees or agents shall be
responsible to the Company for any act or failure to act hereunder, except for
their own gross negligence or willful misconduct.
10. Execution of Financing Statements. Pursuant to Section 9-402 of the
Code, the Company authorizes the Agent to file financing statements with respect
to the Collateral without the signature of the Company in such form and in such
filing offices as the Agent
<PAGE>
8
reasonably determines appropriate to perfect the security interests of the Agent
under this Agreement. A carbon, photographic or other reproduction of this
Agreement shall be sufficient as a financing statement for filing in any
jurisdiction.
11. Authority of Agent. The Company acknowledges that the rights and
responsibilities of the Agent under this Agreement with respect to any action
taken by the Agent or the exercise or non-exercise by the Agent of any option,
voting right, request, judgment or other right or remedy provided for herein or
resulting or arising out of this Agreement shall, as between the Agent and the
Banks, be governed by the Credit Agreement and by such other agreements with
respect thereto as may exist from time to time among them, but, as between the
Agent and the Company, the Agent shall be conclusively presumed to be acting as
agent for the Banks with full and valid authority so to act or refrain from
acting, and neither the Company nor any party to the Pledged Contracts shall be
under any obligation, or entitlement, to make any inquiry respecting such
authority.
12. Notices. All notices, requests and demands to or upon the Agent or
the Company to be effective shall be in writing (or by telex, fax or similar
electronic transfer confirmed in writing) and shall be deemed to have been duly
given or made (1) when delivered by hand or (2) if given by mail, when deposited
in the mails by certified mail, return receipt requested, or (3) if by telex,
fax or similar electronic transfer, when sent and receipt has been confirmed,
addressed to the Agent or the Company at its address or transmission number for
notices provided in subsection 10.2 of the Credit Agreement. The Agent and the
Company may change their addresses and transmission numbers for notices by
notice in the manner provided in this Section.
13. Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
14. Amendments in Writing; No Waiver; Cumulative Remedies. (a) None of
the terms or provisions of this Agreement may be waived, amended, supplemented
or otherwise modified except by a written instrument executed by the Company and
the Agent on behalf of the Banks as required by Section 10.1 of the Credit
Agreement, provided that any provision of this Agreement may be waived by the
Agent and the Banks in a letter or agreement executed by the Agent or by telex
or facsimile transmission from the Agent.
(b) Neither the Agent nor any Bank shall by any act (except by a
written instrument pursuant to paragraph 14(a) hereof), delay, indulgence,
omission or otherwise be deemed to have waived any right or remedy hereunder or
to have acquiesced in any Default or Event of Default or in any breach of any of
the terms and conditions hereof. No failure to exercise, nor any delay in
exercising, on the part of the Agent or any Bank, any right, power or
<PAGE>
9
privilege hereunder shall operate as a waiver thereof. No single or partial
exercise of any right, power or privilege hereunder shall preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
A waiver by the Agent or any Bank of any right or remedy hereunder on any one
occasion shall not be construed as a bar to any right or remedy which the Agent
or such Bank would otherwise have on any future occasion.
(c) The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any other rights or
remedies provided by law.
15. Section Headings. The section headings used in this Agreement are
for convenience of reference only and are not to affect the construction hereof
or be taken into consideration in the interpretation hereof.
16. Successors and Assigns. This Agreement shall be binding upon the
successors and assigns of the Company and shall inure to the benefit of the
Agent and the Banks and their successors and assigns.
17. Governing Law. This Agreement shall be governed by, and construed
and interpreted in accordance with, the law of the State of New York.
<PAGE>
10
IN WITNESS WHEREOF, the undersigned has caused this Agreement to be
duly executed and delivered as of the date first above written.
CD RADIO INC.
By: \s\ Andrew Greenebaum
----------------------------------
Title: Executive Vice President & CFO
-------------------------------
<PAGE>
ANNEX A
ACKNOWLEDGEMENT AND CONSENT
The undersigned hereby acknowledges receipt of a copy of the Pledge
Agreement, dated as of June 30, 1998 (the "Pledge Agreement"), made by CD Radio
Inc. for the benefit of Bank of America National Trust and Savings Association,
as Administrative Agent (in such capacity, the "Agent"). The undersigned agrees
for the benefit of the Agent and the Banks as follows:
1. The undersigned will be bound by the terms of the Pledge Agreement
and will comply with such terms insofar as such terms are applicable to the
undersigned.
2. The terms of Section 6 of the Pledge Agreement shall apply to it,
mutatis mutandis, with respect to all actions that may be required of it under
or pursuant to or arising out of Section 6 of the Pledge Agreement.
3. In the event of an assignment of the Pledged Contracts by the Agent,
the undersigned agrees to recognize and attorn to such assignee as the successor
in interest to the Company thereunder.
SPACE SYSTEMS/LORAL, INC.
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
Address for Notices:
Space Systems/Loral, Inc. 3825 Fabian
Way, M/S PS-1 Palo Alto, CA 94303
Attention: Karen Carissimi
Tel: 650-852-5403
Fax: 650-852-5377
<PAGE>
SCHEDULE 1
TO PLEDGE AGREEMENT
DESCRIPTION OF PLEDGED CONTRACTS
1. Article 7 of the Amended and Restated Contract, SS/L-TP 9003-02,
dated as of June 30, 1998, among the Company and Space Systems/Loral, Inc., as
amended, supplemented or otherwise modified from time to time.
<PAGE>
SCHEDULE 2
TO PLEDGE AGREEMENT
ACTIONS TO PERFECT LIENS
1. Filing of Form UCC-1 in the office of the New York State Secretary
of State.
2. Filing of Form UCC-1 in the office of the New York City Register.
<PAGE>
SCHEDULE 3
TO PLEDGE AGREEMENT
LOCATION OF JURISDICTION OF ORGANIZATION
AND CHIEF EXECUTIVE OFFICE
1. Jurisdiction of organization: Delaware
2. Jurisdiction of chief executive office: New York
1180 Avenue of the Americas
New York, New York
LUCENT TECHNOLOGIES / CD RADIO
RECEIVER INTEGRATED CIRCUITS AGREEMENT *
THIS AGREEMENT is made by and between Lucent Technologies Inc., a Delaware
corporation, acting through its Microelectronics Group, having an office at Two
Oak Way, Berkeley Heights, New Jersey 07922 ("Lucent") and CD Radio, Inc., a
Delaware corporation, having its principal place of business at 2175 K Street
NW, Washington, DC, 20037 ("CD Radio"). The effective date of this Agreement is
the later of the dates of execution by the respective parties, as set forth
below herein.
IN CONSIDERATION OF the mutual covenants set forth hereinbelow, the parties
agree to the following terms and conditions:
PART 1: BUSINESS TERMS
1. BACKGROUND
This is an agreement between the Microelectronics Group of Lucent Technologies
Inc. ("Lucent") and CD Radio Inc. ("CD Radio") to develop a systems engineering
specification for the communications link of a Satellite Digital Audio Radio
Service (S- DARS), and a specification for a set of integrated circuits ("ICs")
for such a receiver ("chip set"). Upon the mutual acceptance of the chip set
specification by CD Radio and Lucent, Lucent would then fabricate and deliver a
prototype of the proposed receiver to verify the communications link performance
and thereafter design and manufacture first prototypes and then production chip
sets. The foregoing development plan is based upon Lucent's current
understanding of CD Radio's needs. It is Lucent's understanding that the
objective of the project is to develop a chip set for a low cost, addressable
satellite receiver for CD Radio's broadcasts. The details given herein are a
baseline, with further details to evolve as the project proceeds.
2. THREE PROJECT PHASES
The Lucent part of the project will be completed in three phases:
1. authorship and delivery of a systems engineering document and the development
of a chip set specification;
2. fabrication and delivery of a prototype receiver using existing components
from one or more integrated circuit ("IC") vendors; and
- --------------------------------------------------------------------------------
* This agreement is subject to a confidential treatment request. The
confidential portions have been omitted from this Form 10-Q and have been
replaced by asterisks (*). The confidential portions have been filed
separately with the Commission as provided pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934.
<PAGE>
2
3. the design, layout, fabrication, and delivery of prototype ICs and, after
approval by CD Radio, production devices for use in the consumer electronics
original equipment manufacturer's ("CE-OEM's") prototypes and production
units. 1/
Lucent's IC development would facilitate the implementation by CD Radio of four
potential products:
(a) A radio including S-DARS capability for installed car sound systems. The
antenna unit would be hard-wired to the rest of the receiver;
(b) A "Plug 'n' Play" ("PnP") adapter for a subscriber's tape cassette car sound
system; and
(c) A PnP adapter for a subscriber's compact disk ("CD") car sound system.
(d) *
Bringing these products to market requires a division of labor between Lucent,
CD Radio, and the CE-OEM. This agreement gives the roles and responsibilities of
each.
In large measure, the chip sets for all four potential products are congruent
and can be pursued in parallel. However, the products identified in subsections
(b), (c) and (d) above require some extra effort in a few areas.
3. STATEMENT OF WORK
3.1 PHASE 1 - SYSTEMS ENGINEERING
The first task of Phase 1 shall be for Lucent and CD Radio to define and agree
on an overall system level specification.
The deliverables from the systems engineering phase are the communications link
systems engineering document, chip set specification, a non-exclusive software
license for a link simulator (runs slower than real time on a software platform
such as SIMULINK), a link emulator (runs in real time on technical DSP hardware
such as SPACE), and applicable documentation.
- --------------------------------------------------------------------------------
1/ There may be more than one CE-OEM. For the sake of brevity, in this Agreement
we will take CE-OEM to mean "consumer electronics original equipment
manufacturer(s)."
<PAGE>
3
The documents, simulator, and emulator can be considered a prototype of a
portion of the earth station transmitter. This will enable CD Radio's
studio/earth station contractor to build a mission-critical version of the
encoder that will connect both (a) digital audio feeds from the studios/content
providers and b) receiver command and control output from CD Radio's customer
center to c) the satellite up-link transmitter.
Note that the Lucent systems engineering work will not cover satellite tracking,
telemetry and control, nor the studios, nor the design and positioning of
terrestrial repeaters, nor the generation of receiver commands for activation,
billing, and deactivation of subscriber's accounts at CD Radio's customer
center.
At a minimum, the emulator will provide a baseband to baseband emulation. The
extent to which actual RF up-link and space hardware can be incorporated into
the emulator will depend on the level of cooperation provided by CD Radio's
transmitter and satellite manufacturers.
CD Radio shall test, review, and approve the work in Phase 1. After such review
and approval, Lucent shall not be responsible in the case that the
communications link does not meet CD Radio's need. Upon completion of Phase 1
Lucent will provide a quotation on chip set NRE and schedule and preliminary
quotation of unit price.
3.2 PHASE 2 - PROTOTYPE RECEIVER
To verify the systems engineering concepts, a prototype receiver will be built.
Lucent will obtain and assemble existing parts from one or more component
vendors. The prototype receiver will enable early verification of the air
interface specification and receiver design, but may contain parts that are
higher in cost/power/size than the chip sets in a production receiver. Lucent
will make the prototype receiver available to a CE-OEM for engineering into a
product at CD Radio's request. Making the prototype receiver into a product may
require the CE-OEM to modify the design to lower the implementation cost and/or
size and/or power. In such a case, Lucent agrees to grant a royalty-bearing,
non-exclusive license, on commercially reasonable terms, to CD Radio and/or the
CE-OEM under any issued patent owned by Lucent (to the extent Lucent has a right
to grant such license) which is infringed by such design. No further payment by
CD Radio is necessary if such patent rights are already exhausted in the sale by
Lucent to CD Radio and/or the CE-OEM of a Lucent integrated circuit. Such a
patent license will be limited to the specific field of use in which the Lucent
integrated circuits are intended to be used, namely CD Radio's satellite digital
audio broadcasting service and its associated terrestrial repeaters.
Specifically, the license will forbid the use of such patents in the field of
wholly terrestrial broadcasting.
CD Radio and its CE-OEM shall test, review, and approve the work in Phase 2.
After such review and approval, Lucent shall not be responsible in the case that
the communications link does not meet CD Radio's need.
<PAGE>
4
After approval, the chip set design will proceed to Phase 3, as detailed below.
3.3 PHASES 1 AND 2 - PAYMENT SCHEDULE
Lucent will perform these two phases and charge CD Radio quarterly on a time and
materials basis. *
3.4 IC DEVELOPMENT AND PROTOTYPE PRODUCTION
The development work for Phase 3 will be performed by Lucent and charged to CD
Radio quarterly on a time and materials basis. *
3.5 DESIGN HAND-OFF REQUIREMENTS
CD Radio shall review Phase 3 of the project at Design Inspection 1, Design
Inspection 2, and Firmware Sign-off meetings. Review and approval by CD Radio at
these three points plus signature of the post-layout mask sign off sheet
(including prototype IC acceptance criteria) shall constitute the Design
Hand-Off Requirements mentioned below in Part 3 of this Agreement.
3.6 PRODUCTION IC PRICING
Definitive production IC pricing is unknown at this time. However, Lucent
believes it is commercially reasonable to achieve CD Radio's objective of not
more than a $50 selling price per chip set, based on the information available
today. At or before the completion of Phase 2, Lucent and CD Radio will
establish a definitive pricing plan for commercially produced quantities of the
chip set, based on the method outlined in Part 3, Section 12. Based on the
outcome of this pricing plan, the period of exclusivity outlined in Section 6.0
will be determined.
CD Radio intends to use the jointly owned chip specification to seek competitive
bids on the chip set and to use any responses for the purposes of comparison
with the price based on the method outlined in Part 3, Section 12.
4. ENGINEERING RISK
<PAGE>
5
Lucent shall not be held liable by CD Radio or its subsidiaries, affiliates, OEM
suppliers, subcontractors and customers, nor by any of their officers,
shareholders, employees, representatives, agents, attorneys and any other such
persons if the engineering objectives involved in this project are not met, so
long as Lucent's engineering work has been performed in a professional manner in
accordance with generally understood industry standards.
5. SCHEDULE
A chip development project would normally commence after Phases 1 and 2 are
complete, namely after Feb 28th, 1999. *
In this case, given the need of CD Radio to meet its service launch date of Dec
1st, 1999, Lucent will attempt an accelerated schedule, where several methods
are explored to make receivers available earlier than would normally be the
case.
The methods, to be explored in parallel, are:
1. Assess the practicality of the CE-OEM making the receiver prototype developed
in Phase 2 into a product for a Dec 1st, 1999 service launch.
2. Accelerate Phases 1 and 2 to complete them by Jun 15th 1998 and Jan 15th
1999, respectively.
3. Accelerate Phase 3 to 10 months from 15 months.
4. Commence some Phase 3 tasks in parallel with Phases 1 and 2. This shortens
the part of the chip set development that occurs after completion of Phases 1
and 2. The part of Phase 3 that has to occur after Phases 1 and 2 is a minimum
of 8 months.
If all four methods are successful, CD Radio would have receivers based on the
Phase 2 prototypes for its Dec 1st, 1999 service launch, and prototype ICs for a
low cost Phase 3 receiver delivered to the CE-OEM for system integration Sep
15th, 1999. However, no assurances can be given by Lucent that these methods
will be successful in meeting these dates.
6. ONE WAY EXCLUSIVITY AND GUARANTEED MINIMUM PURCHASE
CD Radio and its CE-OEM shall make Lucent their exclusive supplier of CD Radio's
S-DARS receiver chip sets, for a limited period, as described below.
<PAGE>
6
Nothing in this Agreement prevents Lucent from supplying the same or similar
chips incorporating any of CD Radio's IPRs to any other of its present or future
customers, including but not limited to CD Radio's competitor(s), so long as
such customers have a license agreement with CD Radio and any applicable royalty
is paid to CD Radio (as discussed under Intellectual Property below). Use of
existing CD Radio IPR by Lucent in serving non-CD Radio customers in the S-DARS
application area is contingent on CD Radio deciding to license any such IPR as
may be used in such ICs. Use of existing CD Radio IPR by Lucent in serving the
designated CE-OEM is hereby granted royalty free during the exclusivity period
described below. Use of existing CD Radio IPR by Lucent in serving any CD Radio
customers after the exclusivity period has ended is hereby granted royalty free.
* CD Radio may cancel the exclusivity arrangement if Lucent fails to deliver
to orders prototype ICs within fifteen (15) months from the date of the go ahead
payment for Phase 3.
Thereafter, CD Radio may cancel any exclusivity remaining if Lucent fails to
deliver on orders a minimum of one (1) million production chip sets during the
twelve (12) months following the start date, with a minimum of 75,000 in any
given month.
Thereafter, CD Radio may cancel any exclusivity remaining if Lucent fails to
deliver on orders a minimum of 450,000 chip sets in any given month.
Notwithstanding the above three (3) paragraphs, CD Radio shall not have the
right to cancel the exclusivity arrangement if Lucent halts delivery due to
non-payment of Lucent invoices for previously delivered services or products
relating to this project. Furthermore, the purchase orders shall be placed with
due consideration for Lucent's fabrication logistics and manufacturing lead time
as agreed prior to the commencement of Phase 3.
If CD Radio or the CE-OEM does not order and pay for a minimum of 1,000,000
delivered chip sets within the exclusivity period, CD Radio will compensate
Lucent in the amount of $2,000,000 minus $2 per chip set actually ordered,
delivered and paid for.
7. TERMINATION FOR CONVENIENCE
Either party may terminate this Agreement without cause upon six (6) months
written notice to the other party. Upon termination of this Agreement without
cause, neither party shall be liable to the other, either for compensation or
for damages of any kind or
<PAGE>
7
character whatsoever, whether on account of the loss by Lucent or CD Radio of
present or prospective profits on sales or anticipated sales, or expenditures,
investments or commitments made in connection therewith, or on account of any
other cause or thing whatsoever, except that termination shall not prejudice or
otherwise affect the rights or liabilities of the parties with respect to any
indebtedness then owing by either party to the other.
8. CONSUMER ELECTRONICS ORIGINAL EQUIPMENT MANUFACTURER (CE-OEM)
CD Radio shall delegate to the CE-OEM the following roles and responsibilities:
o printed circuit board design;
o specification, procurement and integration of:
o discrete active components, such as transistors, diodes, varactors, light
emitting diodes etc.;
o passive components such as resistors, capacitors, inductors, filters, crystal
oscillators etc.;
o keypad and display;
o antennae;
o commodity ICs such as memories, CD transmitter, FM transmitter, and power
ICs; and
o power supply and power supply management including any solar cells,
batteries, battery management, capstan generators, smoothing and voltage
regulation;
o field testing in a variety of vehicles and under a variety of conditions;
o mechanical engineering;
o electromagnetic interference and compatibility, and shielding;
o audio coupling to a tape head, or FM band transmitter, signal generator for
input to a subscriber's CD car sound system;
o making the product suitable for use by the majority of consumers, including:
o user interface hardware and firmware;
o ease of installation, set up and use;
<PAGE>
8
o consumer information booklet;
o micro-controller unit (MCU) and digital signal processor (DSP) firmware
development and integration;
o packaging, marketing and selling of receivers; and
o handling of receivers returned by consumers, if any.
o CD Radio shall oversee the CE-OEM and monitor its performance.
<PAGE>
9
PART 2: TERMS AND CONDITIONS APPLYING TO PHASES ONE AND TWO PURSUANT TO THIS
AGREEMENT
1. BINDING EFFECT
This Agreement is comprised of Parts 1, 2, and 3. The terms set forth in Parts 1
and 2 shall govern Phases 1 and 2, while the terms set forth in Parts 1 and 3
(as Part 3 may be amended by the parties before initiation of Phase 3) shall
govern Phase 3, if Phase 3 is initiated by CD Radio in its sole discretion. In
either case, Part 1 is incorporated by reference and the terms set forth in Part
1 shall prevail in the event of any conflict.
2. CONFIDENTIALITY
2.1 All information furnished or disclosed by one disclosing party to
the other receiving party which is marked with a restrictive notice or otherwise
tangibly designated as proprietary (hereinafter "Information") shall be deemed
the property of the disclosing party and shall be returned to the disclosing
party upon request. Unless such Information: (a) was previously known to the
receiving party free of any obligation to keep it confidential, or (b) has been
or is subsequently made public by the disclosing party or a third party under no
obligation of confidentiality, or (c) is independently developed by the
receiving party, then the receiving party shall, for a period ending three (3)
years after the conclusion of this Agreement, use the same degree of care, but
no less than a reasonable standard of care, as it uses with regard to its own
proprietary information to prevent disclosure, use or publication thereof.
Except as set forth in section 2.2 below, information furnished hereunder may be
used by either party only for performance under this Agreement and may be used
for other purposes only upon such terms and conditions as may be mutually agreed
upon in writing.
2.2 Neither party shall disclose any of the terms and conditions of
this Agreement without the prior written consent of the other party.
Notwithstanding the foregoing, Lucent agrees that CD Radio may disclose a
summary of the material terms and conditions of this agreement in its reports,
registration statements and other documents required to be filed with the
Securities and Exchange Commission and as otherwise may be required by the rules
and regulations of the SEC or any other applicable regulatory agencies. To the
extent practicable, CD Radio will afford Lucent a reasonable opportunity to
review and comment on any such public disclosure prior thereto and shall
consider in good faith any proposed modification of such disclosure suggested in
writing by Lucent a reasonable period of time prior to the time public
disclosure is required to be made by CD radio. At the request of Lucent, CD
Radio will apply for confidential treatment of any portions of this Agreement
which Lucent designates as being a "trade secret" within the meaning of the
Freedom of Information Act and will diligently pursue obtaining an exemption
from any such disclosure requirements.
<PAGE>
10
2.3 The parties agree that their obligations under this Section 2 shall
survive and continue after any termination of this Agreement.
3. OWNERSHIP OF INTELLECTUAL PROPERTY
3.1 All intellectual property developed or created prior to the
effective date of this Agreement ("Existing Intellectual Property") is and shall
remain the property of the party who made, developed or created or presently
owns such Existing Intellectual Property and, unless otherwise expressed in this
Agreement, no license is implied or granted herein to any Existing Intellectual
Property by virtue of this Agreement. The parties acknowledge and agree that, as
between them, any new intellectual property that is jointly developed or created
during Phases 1 and 2 and after the effective date of this Agreement ("New
Intellectual Property") shall be the joint property of the parties and each
party shall be free to use and exploit such jointly owned New Intellectual
Property without accounting in any way to the other party. In particular, the
systems engineering documents and the chip set specification jointly developed
under Phases 1 and 2 will be jointly owned by Lucent and CD Radio.
3.2 The IPR in the software simulator and emulator, and the prototype
receiver developed in Phases 1 and 2 will be solely owned by Lucent, but CD
Radio shall be granted a royalty-free license to use such software simulator,
emulator and prototype in the course of development of CD Radio's S-DARS.
4. TERMINATION OR CHANGE
CD Radio shall not terminate, suspend performance, reschedule or cancel any work
undertaken hereunder, in whole or in part, without Lucent's prior written
consent, which consent shall not be unreasonably withheld, and upon terms that
will compensate Lucent for any loss or damage resulting from such action.
5. LICENSES AND RIGHTS
No title or other ownership rights in any licensed products or any copies
thereof shall pass to CD Radio by virtue of any performance hereunder. CD Radio
agrees that it will not alter any notices on, prepare derivative works based on,
or reproduce, reverse engineer, disassemble or de-compile any software embodied
in licensed products or recorded in the purchased products furnished hereunder.
6. TERMS OF PAYMENT
CD Radio shall pay any amounts invoiced pursuant to the schedule and amounts set
forth in Part 1 pertaining to Phases 1 and 2 within thirty (30) days from the
date of Lucent's invoice. Delinquent payments are subject to an interest charge
at the rate of one and one-half percent (1-1/2%) per month, or portion thereof
(but not to exceed the maximum lawful rate).
<PAGE>
11
7. TAXES
Any tax or related charge that Lucent shall be required to pay to or collect for
any government upon or with respect to services rendered hereunder shall be
billed to CD Radio as a separate item and paid by CD Radio, unless a valid
exemption certificate is furnished by CD Radio to Lucent.
8. EXPORT CONTROL
CD Radio acknowledges that technical information transmitted in connection
herewith may be subject to export restrictions under applicable law, including
the U.S. Department of Commerce Export Administration Regulations
("Regulations"), and CD Radio agrees to comply fully with same. CD Radio assures
Lucent that it will not transmit, sell, transfer or convey any products,
technical information or software, or goods produced through the use of same, to
any country, or citizen or resident of a country, other than the United States
without first securing the written consent, if required, of the U.S. Department
of Commerce.
9. LIMITATION OF LIABILITY
NOTWITHSTANDING ANY OTHER PROVISION HEREOF, EXCEPT AS MAY ARISE OUT OF
INTENTIONAL MISCONDUCT OR GROSS NEGLIGENCE, LUCENT SHALL NOT BE LIABLE FOR
INCIDENTAL, INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES OR FOR LOST PROFITS,
SAVINGS OR REVENUES OF ANY KIND, WHETHER OR NOT LUCENT HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES. THIS PROVISION SHALL SURVIVE FAILURE OF AN
EXCLUSIVE REMEDY.
10. ASSIGNMENT
Except to any entity that succeeds it as the result of a strategic merger,
acquisition, or other corporate reorganization, CD Radio shall not assign this
Agreement or any rights or obligations hereunder without the prior written
consent of Lucent, which shall not be unreasonably withheld. Any such attempted
assignment without Lucent's consent shall be void and ineffective.
11. NON-WAIVER
No course of dealing or failure of either party to strictly enforce any term,
right or condition of this Agreement shall be construed as a waiver of such
term, right or condition. If these terms and conditions conflict with terms and
conditions of a purchase order or procurement document issued by CD Radio, the
terms and conditions contained herein shall govern. Lucent's acceptance of CD
Radio's order is conditioned upon CD Radio's acceptance of these terms and
conditions in writing. Lucent's failure to object to
<PAGE>
12
provisions contained in any communication from CD Radio shall not be deemed a
waiver of the provisions herein.
12. NO POWER TO BIND LUCENT TECHNOLOGIES
CD Radio specifically assures Lucent that it will not extend, directly or
indirectly, any warranty or representation in the name of Lucent or purport to
bind Lucent in any way.
13. TERMINATION FOR CAUSE
13.1 Either party may initiate termination of this Agreement for cause
by giving to the other party sixty (60) days prior written notice specifying the
reason for termination, which termination shall occur unless such reason for
termination is cured within such sixty (60) day period. A right to terminate
under this section shall arise upon the happening of any of the following
events:
13.1.1 a party becomes the subject of a bankruptcy petition
filed in a court in any jurisdiction, whether voluntary or involuntary; or
13.1.2 a receiver or a trustee is appointed for all or a
substantial portion of a party's assets; or
13.1.3 a party makes an assignment for the benefit of its
creditors; or
13.2 a party fails to perform substantially any material covenant,
obligation, representation or warranty under this Agreement including but not
limited to the timely payment of any fees or other charges specified under this
Agreement.
14. USE OF TRADEMARKS
The parties recognize each other's rights in their respective trademarks,
service marks, trade names and logos. Except as permitted by United States
trademark law and except as expressly provided herein, nothing in this Agreement
shall imply the grant by one party to the other of a license to use (i) any
trademark, service mark, trade name or logo of that party or any of its
affiliates in connection with advertising, licensing, marketing or any other
use, or (ii) any trademark, service mark, trade name or logo that is confusingly
similar to a name or mark used by that party or any of its affiliates.
15. FORCE MAJEURE
Except with respect to CD Radio's obligation to make timely payments when due,
neither party shall be held responsible for any delay or failure in performance
of any part of this Agreement to the extent such delay or failure is caused by
fire, flood, explosion, war, strike, embargo, government requirement, civil or
military authority, act of God, nature
<PAGE>
13
or the public enemy, inability to secure material or transportation facilities,
act or omission of carriers or any other causes beyond its reasonable control.
16. CHOICE OF LAW
The construction, interpretation and performance of this Agreement shall be
governed by the substantive laws, but not the conflicts of law, of the State of
New York. The U.N. Convention on Contracts for the International Sales of Goods
shall not apply hereto.
17. NOTICES
Unless otherwise provided, any notice required or permitted hereunder shall be
given in writing and shall be deemed effectively given upon: (i) personal
delivery to the party to be notified; (ii) seven (7) days after deposit in the
mail, by registered or certified mail, postage prepaid, return receipt
requested, (iii) on the day following facsimile transmission, with confirmed
transmission; or (iv) on the second day following deposit with a reputable
overnight courier service, in any case addressed to the party to be notified at
the address indicated for such party on the first page hereof, or at such other
address as such party may designate by ten (10) days' advance written notice to
the other party.
18. PARTIAL INVALIDITY
If any paragraph, provision, or clause thereof in this Agreement shall be found
or be held to be invalid or unenforceable in any jurisdiction in which this
Agreement is being performed, the remainder of this Agreement shall be valid and
enforceable and the parties shall negotiate, in good faith, a substitute, valid
and enforceable provision which most nearly effects the parties' intent in
entering into this Agreement.
19. COUNTERPARTS
This Agreement may be executed in two or more counterparts, all of which, taken
together, shall be regarded as one and the same instrument.
20. SECTION HEADINGS
The section headings contained in this Agreement are for reference purposes only
and shall not affect in any way the meaning or interpretation of this Agreement.
21. RELATIONSHIP OF PARTIES
The parties to this Agreement are independent contractors. There is no
relationship of agency, partnership, joint venture, employment or franchise
between the parties. Neither party has the authority to bind the other or to
incur any obligation on its behalf.
<PAGE>
14
22. DISPUTE RESOLUTION
22.1 If a dispute arises out of or relates to this Agreement, or its
breach, and if such dispute cannot be settled through good faith negotiations
within thirty (30) days, the parties agree to submit the dispute to a sole
mediator selected by the parties or, at any time at the option of a party, to
mediation by a mediator selected by the American Arbitration Association
("AAA"). The parties agree to make good faith efforts to resolve disputes by
mediation within thirty (30) days. If not thus resolved, it shall be referred to
a sole arbitrator selected by the parties within thirty (30) days of the
mediation, or in the absence of such selection, to AAA arbitration which shall
be governed by the United States Arbitration Act. The mediator or arbitrator
selected by the parties shall be knowledgeable in the law and technology and the
rules and regulations of the AAA. Such mediation or arbitration shall be
non-binding on the parties. In the event such dispute is not resolved either by
mediation or arbitration, then either party may initiate suit in the federal or
state courts in the State of New York.
22.2 The mediation or arbitration, if any, shall be held in New York
City. The requirement for mediation or arbitration shall not be deemed a waiver
of any right of termination under this Agreement and the mediator or arbitrator
is not empowered to act or make any award other than based solely on the rights
and obligations of the parties prior to any such termination.
22.3 The mediator or arbitrator may not limit, expand or otherwise
modify the terms of this Agreement.
22.4 Each party shall bear its own expenses but those related to the
compensation and expenses of the mediator or arbitrator shall be borne equally.
22.5 The mediator or arbitrator shall not have authority to award
punitive, exemplary or other damages in excess of compensatory damages and each
party irrevocably waives any claim thereto. The award shall be made within two
(2) months after selection of the mediator or arbitrator and may be entered in
any court.
22.6 The parties, their representatives, other participants and the
mediator and arbitrator shall hold the existence, content and result of
mediation or arbitration in confidence.
<PAGE>
15
23. ENTIRE AGREEMENT
Except for any written agreement between the parties relating to confidentiality
of proprietary information, the terms and conditions contained in this Agreement
supersede all prior oral or written understandings between the parties and shall
constitute the entire Agreement between the parties with respect to the subject
matter of this Agreement. This Agreement shall not be modified or amended except
by a writing signed by CD Radio and Lucent.
LUCENT TECHNOLOGIES INC. CD RADIO INC.
/s/ Judith A. Sheft /s/ Andrew J. Greenebaum
- ------------------- ------------------------
(Signature) (Signature)
Judith A. Sheft Andrew J. Greenebaum
(Name Printed) (Name Printed)
Intellectual Property & Compliance, Executive Vice President & Chief
Vice President Financial Officer
(Title Printed) (Title Printed)
April 24, 1998 April 24, 1998
(Date) (Date)
<PAGE>
16
PART 3: TERMS AND CONDITIONS APPLYING TO PHASE THREE PRODUCTION PURSUANT TO THIS
AGREEMENT
1. AGREEMENT
This Agreement, effective as of the date of latest execution by a party hereto
shown hereon, applies to one or more products (hereinafter "Device(s)") that are
identified in Lucent's Business Terms to which these terms and conditions are
attached and any additional Agreement that references this Agreement,
(hereinafter "Agreement"). As used herein, "Agreement" refers to these terms and
conditions and those parts of Part 1: Business Terms (the "Business Terms") that
refer to Phase 3 of the project. This Agreement, together with the Business
Terms, supersedes all prior oral or written understandings between the parties,
and constitutes the entire agreement between the parties, with respect to all
transactions relating to the subject matter of the Business Terms. In the event
of a conflict between the applicable Business Terms and these terms and
conditions, the terms and conditions of the Business Terms shall prevail.
Additional or differing terms appearing on any purchase order or other
procurement document do not apply. This Agreement may not be modified or amended
except by a writing signed by both parties.
2. CHANGE OF BUSINESS TERMS
Proposed prices, fees and charges are valid only for the parameters or other
particulars relating to the Device as stated in the Business Terms. If any
changes in such parameters or particulars become necessary, including but not
limited to revision or redefinition of the specification or variations in
quantities, functional description, package type, or testing requirements, upon
mutual agreement the parties may revise such prices by amendment to the Business
Terms. Other proposed fees and charges are valid only for the respective
particulars stated in the Business Terms. The parties may also amend the
Business Terms with respect to any of such indicated fees and charges to make
adjustments for changes in CD Radio's requirements. Any such amendments to the
Business Terms shall reference the Business Terms and shall be further
identified by their respective dates and shall be signed by both parties.
3. PROTOTYPE IC APPROVAL
Within ninety (90) days after receipt of prototype ICs for any Device covered by
this Agreement, CD Radio may return any claimed non-conforming prototype ICs to
Lucent with a written rejection statement specifying the alleged failure or
failures of the prototype ICs to meet the acceptance criteria as provided in the
mask order sign off sheet or mutually agreed modifications thereof (the
"Acceptance Criteria"). If CD Radio does not return the prototype ICs with a
written rejection statement within such ninety (90) day period, then the design
and prototype ICs shall be deemed to have been
<PAGE>
17
approved by CD Radio and development work shall be deemed to have been completed
by Lucent.
If any prototype IC does not meet the Acceptance Criteria and is rejected by CD
Radio, Lucent shall use commercially reasonable efforts to replace it with one
which does comply with the Acceptance Criteria. Lucent shall not, however, be
obligated to replace any non-complying prototype ICs of which it has not been
notified within ninety (90) days of shipment of same to CD Radio. If Lucent,
within ninety (90) days after receipt of CD Radio's timely written rejection
report, is unable to supply CD Radio with conforming prototype ICs, then either
party may by written notice to the other terminate this Agreement as to such
Device. Provided CD Radio has fulfilled all "Design Hand-Off Requirements," as
defined in the Business Terms, if so terminated, unless otherwise provided in
the Business Terms, all moneys paid by CD Radio to Lucent with respect to such
Device will be refunded in full within thirty (30) days. Such refund of moneys
shall be CD Radio's sole and exclusive remedy and Lucent's entire liability with
respect to non-conforming prototype ICs.
In the event that delivered prototype ICs comply with the Acceptance Criteria,
but do not function in CD Radio's application (e.g., logic design error, change
in required function, etc., not attributable to Lucent), CD Radio shall pay all
charges incurred for the development of the Device and then CD Radio and Lucent
may negotiate a mutually agreeable redesign schedule and price.
4. ORDERS
No order for production quantities of the Device shall be placed by CD Radio or
accepted by Lucent unless and until CD Radio has approved the prototype ICs for
the Device, paid all fees then due under the Business Terms and made any other
payments due to Lucent under any order based on this Agreement. All orders for
the design of the Device, for changes, for technical assistance, for production
quantities of the Device or for any other service by Lucent relating to this
Agreement shall be in writing, shall reference the Business Terms by its number
and date and any current amendments thereto by their respective dates, and shall
be signed by CD Radio. Lucent shall acknowledge all orders in writing.
<PAGE>
18
5. RESCHEDULING OF ORDERS
CD Radio may reschedule an order pursuant to the following schedule:
Days.....Time between date of reschedule request and current factory promise
date.
DAYS RESCHEDULE
- ---- ----------
Within 30 days (0-30) No rescheduling
31 days to lead-time One time reschedule by up to 90 days beyond
factory promised date is permitted with no further
reschedule or cancellation.
Beyond lead-time Reschedules and cancellations without limits.
PULL-IN WITHIN AGREED DELIVERY DATE
- -----------------------------------
CD Radio request date ("RD") may be pulled in as desired by CD Radio.
Lucent will make reasonable efforts to meet the new RD.
If improvement of the acknowledged date is possible, a new acknowledged date
will be issued.
If improvement cannot be made, the current acknowledged date will be retained;
in all cases, the requested pull-in date will be maintained with the order
history in the event an improvement can be made at a later date.
6. CANCELLATION OF ORDERS
Should CD Radio cancel any order which has been acknowledged and a shipping date
assigned, either in whole or in part, such cancellation shall be upon terms and
conditions that will compensate Lucent for any loss or damage resulting from
such cancellation. Notwithstanding the foregoing, Lucent shall use its best
efforts to mitigate any loss or damage resulting from such cancellation. Lucent
shall not be obligated to permit a cancellation if a reschedule has been
previously negotiated at CD Radio's request.
Compensation by CD Radio for production quantities of the Device shall be
according to the following schedule:
Days.....Time between date of cancellation and current factory promise date.
<PAGE>
19
Liability.....Liability is the percentage of aggregate purchase price of the
canceled portion of the order.
DAYS PERCENT OF LIABILITY
---- --------------------
0 to lead-time 100
Greater than lead-time -0-
7. WARRANTY
Lucent warrants the Device as a production item ("Item"), but not related
services or prototypes of any such Items, to be free from defects in material
and workmanship and to be in conformance with the written specification
contained in the Business Terms and amendments thereto, if any, and referenced
in an order by CD Radio. With respect to prototype ICs, Lucent shall use
commercially reasonable efforts to ensure freedom from defects and conformity
with written specifications, if any. If any defect in material or workmanship or
failure to conform to such specification ("Defect") is suspected in any such
Items, CD Radio, after obtaining a Returned Material Authorization Number from
Lucent, shall ship suspected defective samples of the Items to Lucent, following
Lucent's instructions regarding the return. No product will be accepted for
repair, replacement, credit or refund without the written authorization of and
in accordance with Lucent's instructions, which authorization and instructions
shall not be unreasonably withheld or delayed. Lucent shall analyze the
failures, making use, when appropriate, of technical information provided by CD
Radio relating to the circumstances surrounding the failures. Lucent will verify
whether any Defect appears in the Items. If Lucent determines that the returned
products are not defective, CD Radio may seek evaluation by a competent and
disinterested third party approved by Lucent (which approval shall not be
unreasonably withheld). If such third party determines that the returned
products are not defective, CD Radio shall pay Lucent all costs of handling,
inspection, repairs and transportation at Lucent's then prevailing rates. Lucent
shall, at Lucent's option, either credit or refund the purchase price or repair
or replace the defective product with the same or equivalent product without
charge at Lucent's manufacturing or repair facility provided: (i) CD Radio
notifies Lucent in writing of the claimed Defect within thirty (30) days after
CD Radio knows or reasonably should know of the claimed Defect and (ii) Lucent's
and/or the disinterested third party's examination of the Items discloses that
the claimed Defect actually exists. In the event of a replacement, Lucent shall
ship the replacing Items FOB point of origin, freight prepaid to CD Radio's
destination. Any replaced Item shall become Lucent's property. The method of
disposition of any replaced Items will be as mutually agreed by both parties in
writing. Lucent shall not be responsible for de-installation or reinstallation
of any Item or for the expenses thereof. Repairs and replacements covered by the
above warranty are warranted to be free from defects as
<PAGE>
20
set forth above. Inspection and acceptance of Items by CD Radio and/or payment
therefor shall not relieve Lucent of responsibilities hereunder.
The above warranty does not apply to, and Lucent makes no warranties with
respect to products that: are software programs (except for software programs
Lucent developed and incorporated into the Device), experimental products or
prototypes (all of which are provided "AS IS") or to Items which have been
subjected to misuse, neglect, accident or abuse or operating or environmental
conditions that materially deviate from the parameters established in applicable
specifications; or have been improperly installed, stored, maintained, repaired
or altered by anyone other than Lucent; or have had their serial numbers or
month and year of manufacture or shipment removed, defaced or altered. This
warranty does not extend to any system into which a Device is incorporated. This
warranty applies only to CD Radio and its successors and may not be assigned or
extended by CD Radio to any of its customers or other users of the Items. Lucent
will not accept returns from CD Radio's customers or users of CD Radio's
products.
EXCEPT AS STATED IN THE SECTION ENTITLED WARRANTY, LUCENT, ITS SUBSIDIARIES AND
AFFILIATES, SUBCONTRACTORS AND SUPPLIERS MAKE NO WARRANTIES, EXPRESS OR IMPLIED,
AND SPECIFICALLY DISCLAIM ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE. CD RADIO'S SOLE AND EXCLUSIVE REMEDY SHALL BE LUCENT'S
OBLIGATION TO REPAIR OR REPLACE OR CREDIT OR REFUND AS SET FORTH ABOVE.
8. PROPRIETARY RIGHTS IN TECHNICAL INFORMATION
Unless otherwise agreed in writing, CD Radio-supplied design information
relating to the Device, as incorporated in circuit design information, test
vectors, test tapes, and special requirements specifications shall remain the
property of CD Radio. CD Radio hereby authorizes Lucent to use such information
and results solely and exclusively for the design, manufacture and sale of the
Device to CD Radio and in providing related production services. The systems
engineering documents and the chip set specification jointly developed under
Phases 1 and 2 will be jointly owned by Lucent and CD Radio. Lucent retains all
ownership rights in Lucent's processing information, mask works, mask sets,
macro cells, and the like used in design, production or in filling orders placed
by CD Radio hereunder. CD Radio has no rights in or to such processing
information, mask works, mask sets, macro cells, and the like.
If and to the extent CD Radio in its sole discretion, during the term of this
Agreement, reaches any agreement with a third party to license intellectual
property rights that are solely CD Radio's in the field of digital broadcasting,
it shall either: (a) negotiate with
<PAGE>
21
Lucent the grant of a non-exclusive license to such intellectual property rights
(with royalty terms dependent on the agreement reached with the third party or
parties) or (b) provide in such third-party license (or licenses) for the grant
of a sublicense (with the terms of the sublicense to be as set forth in the
third-party license or exhibit thereto), in both cases for the purpose of
permitting Lucent to make, have made, use, lease, sell and import chip sets and
receivers for the purposes of commercializing digital broadcasting. In either
case (license or sublicense), Lucent shall be limited to supplying such Devices
only to authorized CD Radio licensees.
IPR developed by Lucent under Phase 3, as detailed herein, will be owned
exclusively by Lucent.
9. INTELLECTUAL PROPERTY INDEMNITY
Lucent will indemnify and hold harmless CD Radio from and against any claim by a
third party against CD Radio alleging that any Device furnished under this
Agreement directly infringes any patent, copyright or trademark of such third
party. Lucent shall have the obligation, at its own expense, to defend or settle
all such claims, subject to CD Radio's reasonable participation, at its own
expense, in the conduct of any such proceeding or settlement. Lucent shall
reimburse CD Radio for any costs incurred at Lucent's written request relating
to such claim and shall pay damages and costs assessed by final judgment against
CD Radio, or resulting from settlement, and attributable to such claim.
In addition, Lucent will have the right, at any time and at its option and
expense to: (i) procure for CD Radio the right to continue using such Device;
(ii) replace or modify any such Device provided or to be provided to render it
free of the infringement, while maintaining equivalent functionality and
complete compatibility with CD Radio's products; or (iii) require return of such
Device and refund the purchase price.
Lucent's obligations hereunder are conditioned upon: (i) CD Radio giving Lucent
written notice within thirty (30) days of any such claim asserted against it;
(ii) Lucent having complete control of the defense and settlement thereof,
subject to CD Radio's reasonable participation and consent (in the case of
settlement or litigation decisions affecting CD Radio); (iii) CD Radio
cooperating fully with Lucent, at Lucent's expense, to facilitate the defense or
settlement of such claim; and (iv) CD Radio's substantial compliance with the
material terms of this Agreement.
Notwithstanding the foregoing, Lucent shall have no obligation to defend or
settle any claim, and CD Radio shall indemnify and save harmless Lucent and its
suppliers and affiliated companies from all costs, expenses, liabilities and
claims, for any such claim: (i) arising from Lucent's compliance with CD Radio's
specifications, designs or instructions; or (ii) relating to any Device
furnished hereunder in combination with
<PAGE>
22
item(s), whether or not furnished by Lucent, even if such combination results
from the Device's necessary or inherent use or the use for which the device is
purchased.
The sale of any Device by Lucent shall not in any way confer upon CD Radio, or
upon anyone claiming under CD Radio, any license (expressly, by implication, by
estoppel or otherwise) under any patent claim of Lucent or others covering or
relating to any combination, machine or process in which such Device is or might
be used, or to any process or method of making such Device.
THE FOREGOING STATES THE SOLE AND EXCLUSIVE REMEDY AND OBLIGATION OF THE PARTIES
HERETO FOR INFRINGEMENT OR OTHER VIOLATION OF ANY INTELLECTUAL PROPERTY RIGHTS
ARISING OUT OF THIS AGREEMENT AND IS IN LIEU OF ALL WARRANTIES, EXPRESS, IMPLIED
OR STATUTORY, IN REGARD THERETO.
10. NONDISCLOSURE
During performance of this Agreement, the parties may disclose or furnish to
each other proprietary marketing, technical, or business information, including,
without limitation, products and/or software ("information"), relating to the
subject of this Agreement.
Information provided in tangible form shall be clearly marked as proprietary.
With respect to any devices, any technical information, including but not
limited to circuit layout, design, or software, embedded in any such device is
proprietary information notwithstanding the absence of any proprietary marking
on such device. Information provided orally will be considered proprietary, if
the disclosing party says it is proprietary at the time of oral disclosure and
summarizes it in a proprietary writing provided to the other party within 20
(twenty) days of the oral disclosure.
The receiving party shall: (a) hold information in confidence using the same
degree of care as it normally exercises to protect its own proprietary
information; (b) restrict disclosure and use of information to employees
(including any contractors or consultants) with a need-to-know, and not disclose
it to any other parties; (c) advise those employees, contractors and consultants
of their obligations with respect to the information; (d) not copy, duplicate,
reverse engineer or decompile information; (e) use the information only in
furtherance of performance under this Agreement; and (f) upon expiration or
termination of this Agreement, return all information to the disclosing party or
at the request of the disclosing party, destroy such information.
The receiving party shall have no obligation to keep confidential information
that: (a) was previously known to it free of any confidentiality obligation; (b)
was independently developed by it; (c) is or becomes publicly available other
than by unauthorized
<PAGE>
23
disclosure; (d) is disclosed to third parties by the disclosing party without
restriction; or (e) is received from a third party without violation of any
confidentiality obligation.
If a party is faced with legal action or a requirement under government
regulations to disclose or make available proprietary information received
hereunder, such party shall forthwith notify the furnishing party and, upon
request of the latter, cooperate in contesting such action or requirement at the
requesting party's expense. Neither party shall be liable for damages for any
disclosure or unauthorized access pursuant to legal action or government
regulations or for inadvertent disclosure, access, or use if the customary
degree of care as it uses with respect to its own proprietary information has
been exercised and if, upon discovery of such inadvertent disclosure, access, or
use the furnishing or receiving party has endeavored to prevent any further
(inadvertent or otherwise) disclosure or use.
Obligations imposed by this Section 10 shall survive for a period of five (5)
years after termination or expiration of this Agreement.
11. TERM OF AGREEMENT
The term of this Agreement as related to any specific Device covered by this
Agreement shall expire at the end of the purchase period specified in the
Business Terms and any agreed extensions thereto. Lucent reserves the right to
discontinue the supply of any Device(s) hereunder, subject to providing CD Radio
six (6) months written notice of discontinuation, during which period CD Radio
may place orders for reasonable quantities calling for delivery within lead-time
of the Device, and subject to the immediate termination of the exclusivity
period provided for in Part 1, if such period has not already concluded.
12. PRICE AND PAYMENT TERMS
Lucent and CD Radio will collect market price data on ICs with comparable
functions and volumes to the ICs in the chip set, for example, ICs used in IS-95
cellular telephones. Both parties will work together to estimate the difference
in value the actual ICs have with respect to the open market ICs. After
allowances are made for differences in function and performance, the price
Lucent charges for the chip sets shall not exceed that of comparable ICs at
comparable cumulative volume. Lucent will take the NRE fees paid by CD Radio
into account when calculating the chip set selling price in this way.
The price for each unit of the Device shall be as set forth in Appendix 1
hereto, as may be amended from time to time by mutual agreement of the parties.
CD Radio shall pay the invoiced amount within thirty (30) days from the date of
Lucent's invoice. Payment terms for all design and development activities of
Lucent are as specified in the Business Terms. Lucent may exercise an option to
assess an interest charge of up
<PAGE>
24
to one and one-half percent (1-1/2%) per month on all amounts which are not
timely paid (but not to exceed the maximum lawful rate). CD Radio hereby grants
to Lucent a purchase money security interest in the product to secure the
purchase price of the product until the purchase price is paid in full. CD Radio
agrees to execute and deliver all documents reasonably requested by Lucent to
perfect and maintain Lucent's security interest. Orders are subject to a maximum
outstanding credit limit (measured counting all outstanding invoices, whether or
not past due, combined with the value of all accepted orders) as reasonably
determined by Lucent. Lucent may refuse to accept purchase orders, if such
acceptance would result in CD Radio exceeding such credit limit. The amount of
credit or terms of payment may be changed or credit withdrawn by Lucent at any
time upon reasonable advance notice to CD Radio. Each shipment shall constitute
an independent transaction and CD Radio shall pay for same in accordance with
the specified payment terms. Lucent will invoice CD Radio upon shipment. If
shipments are delayed by CD Radio, Lucent may invoice CD Radio when Lucent is
prepared to ship. Lucent may invoice CD Radio immediately upon termination or
cancellation of any order. Prices shall be quoted and invoices shall be rendered
and paid in United States currency.
13. DELIVERY, TITLE, RISK OF LOSS AND TRANSPORTATION
Unless otherwise agreed to by Lucent in writing as part of the Business Terms or
any amendment thereto referenced by CD Radio in an order, (a) delivery terms on
shipments to any point in the United States shall be F.O.B. point of origin, and
(b) delivery terms on shipments to any point outside of the United States shall
be pursuant to Incoterms 1990 (FCA, country of export). Where, in order to meet
CD Radio's requests, Lucent ships or packs the Device or other materials in
other than its normal manner for shipment, additional billing may be rendered.
risk of loss shall pass to CD Radio upon delivery.
14. PRODUCT CHANGES
Lucent may at any time make changes in the Devices (i) that do not materially
affect physical or functional interchangeability or performance or (ii) when
required for purposes of safety. In the case of (ii), Lucent shall ensure that
such changes do not adversely affect the functionality of the Device or its
compatibility with CD Radio's products. No changes by Lucent may result in any
price increase.
15. MANUFACTURING FACILITY
Notwithstanding anything contained herein to the contrary, Lucent reserves the
right to manufacture the Device in any Lucent-qualified facility. Lucent also
reserves the right to transfer production from one qualified facility to another
or to manufacture at multiple qualified facilities.
<PAGE>
25
16. EXCLUSIVE REMEDIES AND LIMITATIONS OF LIABILITY
A. For purposes of the exclusive remedies and limitations of liability
set forth in this section, Lucent shall be deemed to include Lucent Technologies
Inc., its subsidiaries and affiliates and the directors, officers, employees,
agents, representatives, subcontractors and suppliers of all of them; and
"Damages" shall be deemed to refer collectively to all injury, damage, loss or
expense incurred.
B. Lucent's entire liability and CD Radio's exclusive remedies against
Lucent for any damages caused by any Device defect or failure, or arising from
the performance or non-performance of any work, regardless of the form of
action, whether in contract, tort, including negligence, strict liability or
otherwise, except as may arise from intentional misconduct or gross negligence,
shall be:
1. For infringement, the remedies set forth in the section
entitled Intellectual Property Indemnity;
2. For failure to deliver conforming prototypes, CD Radio's
sole and exclusive remedy and Lucent's entire liability shall be CD Radio's
right to a refund of moneys paid by CD Radio as provided in Section 3 of this
Part 3. For any other failure of the Device or work performed, the remedies
stated in the section entitled Warranty;
3. For delays in delivery of production quantities, Lucent
shall have no liability unless the delivery is delayed by more than thirty (30)
days by causes not attributable either to CD Radio or to conditions beyond
Lucent's reasonable control, in which case CD Radio shall have the right, as its
sole remedy, to cancel the order without incurring cancellation charges;
4. For bodily injury or death to any person proximately caused
by Lucent, CD Radio's right to proven direct damages; and
5. For claims other than set forth above, Lucent's liability
shall be limited to direct damages that are proven, in an amount not to exceed
one hundred thousand ($100,000) dollars.
C. Notwithstanding any other provision of this Agreement, Lucent shall
not be liable for incidental, indirect, special, exemplary or consequential
damages or for lost profits, savings or revenues of any kind, whether or not
Lucent has been advised of the possibility of such damages. This provision shall
survive failure of an exclusive remedy.
17. CD RADIO'S DESIGNATED EMPLOYEES ON SELLER'S PREMISES
<PAGE>
26
CD Radio's personnel shall, while on any location of Lucent or any of its
affiliates, comply with rules and regulations with regard to safety and security
at such location. Lucent shall inform such personnel of such rules and
regulations. CD Radio shall have full control over such personnel and shall be
entirely responsible for their complying with such rules and regulations. CD
Radio agrees to indemnify and save Lucent and any of its affiliates harmless
from any claims or demands, including the costs, expenses and reasonable
attorney's fees incurred on account thereof, that may be made by (i) anyone for
injuries to persons or damage to property resulting from the acts or omissions
of CD Radio's personnel or (ii) CD Radio's personnel under Worker's Compensation
or similar laws. CD Radio agrees to defend Lucent and its affiliates, at
Lucent's request, against any such claim or demand.
18. EXPORT CONTROL
The parties acknowledge that any products, software, and technical information
(including, but not limited to, services and training) provided under this
Agreement are subject to U.S. exports laws and regulations and any use or
transfer of such products, software, and technical information must be
authorized under those regulations. The parties agree that they will not use,
distribute, transfer, or transmit the products, software, or technical
information (even if incorporated into other products) except in compliance with
U.S. export regulations. If requested by Lucent, CD Radio also agrees to sign
written assurances and other export-related documents as may be required for
Lucent to comply with U.S. export regulations.
19. ASSIGNMENT
Except for Lucent's right to assign this Agreement to any of its affiliates and
CD Radio's right to assign this Agreement to any entity that succeeds it as the
result of a strategic merger, acquisition, or other corporate reorganization,
neither party shall have the right to assign this Agreement except upon the
prior written consent of the other and any such purported assignment shall be
void and ineffective.
20. IDENTIFICATION
Except as permitted by United States trademark law and except as expressly
provided herein, neither Lucent nor CD Radio shall use any identification of, or
reference to, any code, drawing, specification, trade name, trademark, trade
device, insignia, service mark, symbol, or any abbreviation, contraction, or
simulation thereof, of the other party in any advertising or promotional efforts
without such other party's prior approval.
21. EXCUSE OF PERFORMANCE
Except with respect to CD Radio's obligation to make timely payments when due,
neither party shall be held responsible for any delay or failure in performance
of any part of this
<PAGE>
27
Agreement to the extent such delay or failure is caused by fire, flood,
explosion, war, strike, embargo, government requirement, civil or military
authority, act of God, nature or the public enemy, inability to secure material
or transportation facilities, inadequate yield of products despite Lucent's
reasonable efforts, act or omission of carriers or any other causes beyond its
reasonable control. After conclusion of the exclusivity period provided for in
Part 1, Lucent may, in the event of any such circumstance, allocate in a fair
and reasonable manner, taking into account Lucent's contractual commitments, its
available production output among itself and its other customers, including at
Lucent's option those not under contract.
22. NON-WAIVER
No course of dealing or failure of either party to strictly enforce any term,
right or condition with respect to any transaction or order hereunder shall be
construed as a waiver of such term, right or condition.
23. TAXES
Any tax or related charge which Lucent shall be required to pay to or collect
for any government upon or with respect to services rendered or the sale, use or
delivery of the Device or other materials shall be billed to the CD Radio as a
separate item and paid by CD Radio, unless a valid exemption certificate is
furnished by CD Radio to Lucent.
24. CHOICE OF LAW
The construction, interpretation, and performance of this Agreement and any
transaction hereunder shall be governed by the substantive laws, but not the
conflicts of law rules, of the State of New York. The U.N. Convention on
Contracts for the International Sales of Goods shall not apply to the sale of
product hereunder.
25. MEDICAL AND LIFE SUPPORT APPLICATIONS
Lucent does not recommend the use of any Devices for medical or life support
applications wherein a failure or malfunction of the Device may directly
threaten life or cause injury and Lucent will not knowingly sell its Devices for
such use except pursuant to a written exception to this policy granted on a
case-by-case basis. No warranty is made with respect to any such medical or life
support use of any Device.
26. DISPUTES
26.1 If a dispute arises out of or relates to this Agreement, or its
breach, and if such dispute cannot be settled through good faith negotiations
within thirty (30) days, the parties agree to submit the dispute to a sole
mediator selected by the parties or, at any time at the option of a party, to
mediation by a mediator selected by the American Arbitration Association
("AAA"). The parties agree to make good faith efforts to resolve disputes by
<PAGE>
28
mediation within thirty (30) days. If not thus resolved, it shall be referred to
a sole arbitrator selected by the parties within thirty (30) days of the
mediation, or in the absence of such selection, to AAA arbitration which shall
be governed by the United States Arbitration Act. The mediator or arbitrator
selected by the parties shall be knowledgeable in the law and technology and the
rules and regulations of the AAA. Such mediation or arbitration shall be
non-binding on the parties. In the event such dispute is not resolved either by
mediation or arbitration, then either party may initiate suit in the federal or
state courts in the State of New York.
26.2 The mediation or arbitration, if any, shall be held in New York
City. The requirement for mediation or arbitration shall not be deemed a waiver
of any right of termination under this Agreement and the mediator or arbitrator
is not empowered to act or make any award other than based solely on the rights
and obligations of the parties prior to any such termination.
26.3 The mediator or arbitrator may not limit, expand or otherwise
modify the terms of this Agreement.
26.4 Each party shall bear its own expenses but those related to the
compensation and expenses of the mediator or arbitrator shall be borne equally.
26.5 The mediator or arbitrator shall not have authority to award
punitive, exemplary or other damages in excess of compensatory damages and each
party irrevocably waives any claim thereto. The award shall be made within two
(2) months after selection of the mediator or arbitrator and may be entered in
any court.
26.6 The parties, their representatives, other participants and the
mediator and arbitrator shall hold the existence, content and result of
mediation or arbitration in confidence.
<PAGE>
29
THE PARTIES, agreeing to the above terms and conditions, including by reference
all terms and conditions contained in the Business Terms, and intending to be
legally bound thereby, have caused the signatures of their respective authorized
representatives to be affixed below on the date so written.
LUCENT TECHNOLOGIES INC. CD RADIO INC.
/s/ Judith A. Sheft /s/ Andrew J. Greenebaum
- ------------------- ------------------------
(Signature) (Signature)
Judith A. Sheft Andrew J. Greenebaum
(Name Printed) (Name Printed)
Intellectual Property & Compliance, Executive Vice President & Chief
Vice President Financial Officer
(Title Printed) (Title Printed)
April 24, 1998 April 24, 1998
(Date) (Date)
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