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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (Date of earliest event reported): March 30, 1999
STEINWAY MUSICAL INSTRUMENTS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 001-11911 35-1910745
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
800 SOUTH STREET, SUITE 425
WALTHAM, MASSACHUSETTS 02453-1472
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (781) 894-9770
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On March 30, 1999, Steinway, Inc. ("Steinway"), an indirect, wholly-owned
subsidiary of Steinway Musical Instruments, Inc., acquired the building
located at 109-111 West 57th Street in New York, New York. Since its
construction in 1925 this 17-story building has been the site of Steinway's
flagship retail store known as Steinway Hall. Steinway currently occupies
approximately 17% of the building.
The acquisition was accomplished as follows: Steinway paid $29,328,000 to
purchase an interest in 111 West 57th Street Associates, L.P., a limited
partnership that owned the property (see Exhibit 10.1). Simultaneous with
this acquisition, Steinway redeemed its partnership interest for fee title to
the building (see Exhibit 10.2) and entered into a ninety-nine year land
lease (see Exhibit 10.3). Annual rent payable under the land lease will be
$2,170,000 for the first ten years, $2,790,000 for the subsequent ten year
period and shall thereafter be adjusted every twenty years to the greater of
the existing rent or 4% of the fair market value of the land and building
combined.
Additional fees assumed and/or incurred by Steinway in connection with the
acquisition, including legal, brokerage, transfer taxes, mortgage recording
fees, title insurance and similar charges, approximated $2,100,000.
Funds for the acquisition were provided from cash on hand and a new
$22,500,000 mortgage loan provided by Steinway's existing domestic lender.
The mortgage, due in monthly installments of $170,000, bears interest at the
30-day Libor rate plus 1.5%.
In connection with the acquisition, Steinway entered into a ten-year master
lease whereby all of Steinway's interest in the land and building was leased
back to the owner of the land (see Exhibit 10.4). Annual rent payable to
Steinway under this master lease is $4,650,000. Steinway has no plans to
change the use of the building.
On a pro forma basis using current interest rates, the approximate effect of
the acquisition on the Company's annual operations will be as follows:
earnings before interest, depreciation and taxes will increase $2,175,000,
offset by additional interest and depreciation of $2,050,000 and $770,000,
respectively. The annual net decrease in earnings after taxes will be
approximately $385,000, or $.04 per fully diluted share.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
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<S> <C>
10.1 Partnership Interest Purchase Agreement, dated as of March 23,
1999, by and between NI Reproma Inc., Manhattan 57th Street
Associates, and Steinway, Inc.
10.2 Redemption and Lease Agreement, dated as of March 23, 1999, by and
between Steinway, Inc. and 111 West 57th Street Associates, L.P.
10.3 Ground Lease Agreement, dated as of March 30, 1999, between 111
West 57th Street Associates, L.P. and Steinway, Inc.
</TABLE>
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<TABLE>
<S> <C>
10.4 Master Lease Agreement, dated as of March 30, 1999, between 111
West 57th Street Associates, L.P. and Steinway, Inc.
</TABLE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
STEINWAY MUSICAL INSTRUMENTS, INC.
/s/ Dana D. Messina
-----------------------------------------------
Dana D. Messina
Director, President and Chief Executive Officer
Date: April 12, 1999
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Exhibit 10.1
PARTNERSHIP INTEREST PURCHASE AGREEMENT
PARTNERSHIP INTEREST PURCHASE AGREEMENT (this "Agreement"), dated as
of March 23, 1999, by and between NI REPROMA INC. ("MP") and MANHATTAN 57TH
STREET ASSOCIATES ("NP"), collectively, as seller ("Seller") and STEINWAY, INC.,
as buyer("Buyer").
W I T N E S S E T H :
WHEREAS, Seller is the owner of a 49.6505% partnership interest in 111
WEST 57TH STREET ASSOCIATES, L.P., a New York limited partnership (the
"Partnership"); and,
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to
purchase from Seller, Seller's interest in the Partnership, consisting of MP's
0.2495% interest as a general partner in the Partnership (the "Seller GP
Interest") and NP's 49.401% interest as a limited partner in the Partnership
(the "Seller LP Interest", and, together with the Seller GP Interest, the
"Interest"), on the terms and conditions set forth
below;
NOW, THEREFORE, the parties do hereby agree as follows:
1. PURCHASE, SALE AND ASSIGNMENT OF INTEREST. At the Closing (as
defined below) and subject to the terms and conditions set forth below, Seller
will sell, convey, transfer and assign, and Buyer will purchase and acquire, all
of Seller's right, title and interest in and to the Interest, free and clear of
any and all liens, claims, equities, encumbrances, security interests,
limitations and restrictions of any nature whatsoever (collectively, "Liens").
2. CONSIDERATION FOR INTEREST. The full consideration for the
Interest shall be the sum of Twenty-Nine Million Three Hundred Twenty-Seven
Thousand Six Hundred Twenty-Five ($29,327,625) Dollars (the "Purchase Price"),
payable as follows:
a. The sum of Two Million Nine Hundred Thirty-Three Thousand
($2,933,000) Dollars (the "Downpayment"), payable simultaneously with the
execution of this Agreement, to the order of Proskauer Rose LLP, as escrow agent
(the "Escrow Agent"), which Downpayment shall be held by Escrow Agent and
disbursed as provided in that certain Escrow Agreement of even date herewith by
and among Escrow Agent, Seller, Buyer and the Partnership.
b. The balance of the Purchase Price, in the
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amount of Twenty-Six Million Three Hundred Ninety-Four Thousand Six Hundred
Twenty-Five ($26,394,625) Dollars, payable at the Closing to the order of
Seller.
c. Any amounts payable hereunder shall be paid by wire transfer
of immediately available federal funds to the account or accounts designated by
the applicable parties.
3. CLOSING. The closing of the transactions contemplated herein
(the "Closing") shall take place at the offices of Proskauer Rose LLP, located
at 1585 Broadway, New York, New York 10036 at 10:00 A.M. on such date as may be
mutually agreed upon by the parties, provided, however, that in no event shall
the Closing occur later than March 30, 1999, time being of the essence with
respect to such outside date, provided that Seller shall receive confirmation of
the receipt of the Purchase Price, evidenced by a federal wire confirmation
number, by 12:00 noon on March 30, 1999. For purposes of this Agreement, the
term "Closing Date" shall mean the date on which the Closing shall actually
occur.
4. REPRESENTATIONS AND WARRANTIES.
a. BY MP. MP hereby represents and warrants to Buyer that:
i. ORGANIZATION OF MP. MP is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. MP has full corporate power to execute and deliver, and to perform
its obligations under, this Agreement and any agreement, instrument, certificate
or other document necessary to effectuate the transactions contemplated hereby
and such execution, delivery and performance has been duly authorized by all
requisite corporate action by or on behalf of MP.
ii. TITLE; CONSENTS. MP owns the Seller GP Interest free
and clear of any and all Liens, and has obtained all necessary consents to enter
into, and be bound by, this Agreement and any other agreement, instrument,
certificate or other document necessary to effectuate the transactions
contemplated hereby. MP has the full right, power and authority to enter into,
and be bound by, this Agreement and any other agreement, instrument, certificate
or other document necessary to effectuate the transactions contemplated hereby.
iii. ENFORCEABILITY. This Agreement has been, and at the
Closing each of this Agreement and any other agreement, instrument, certificate
or other document contemplated hereby will be, duly executed and delivered by MP
and either
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constitutes or will constitute, as the case may be, the legal, valid and binding
obligation of MP, enforceable in accordance with the terms hereof or thereof, as
the case may be, subject to applicable bankruptcy, insolvency, reorganization,
fraudulent transfer, moratorium and similar laws or by other laws affecting
creditors' rights generally.
iv. NO CONFLICTS. The execution, delivery and performance
of MP's obligations under this Agreement and any other agreement, instrument,
certificate or other document necessary to effectuate the transactions
contemplated hereby: (1) do not, and will not at the Closing, violate or
conflict with the Certificate of Incorporation, bylaws or other governing
documents of MP; and (2) do not, and will not at the Closing (with or without
the giving of notice, the passage of time, or both): (a) conflict with, result
in the breach of, constitute a default under, require any consent, approval or
waiver which has not been (or will not at Closing be) received under, or give
rise to a right to accelerate any obligation under, or give rise to a right of
termination under, any agreement or instrument to which MP is a party, by which
it is bound or to which any of its assets or properties is subject; (b) conflict
with, violate or require any consent, approval, waiver, order, authorization,
registration, declaration or filing pursuant to any law, ordinance, injunction,
judgment, order, decree, permit, concession, grant, franchise, license, or other
provision of law or any other governmental requirement or authorization
applicable to MP; or (c) result in any Lien on any asset or property of MP.
b. BY NP. NP hereby represents and warrants to Buyer that:
i. ORGANIZATION OF NP. NP is a general partnership duly
formed, validly existing and in good standing under the laws of the State of New
York. NP has full partnership power to execute and deliver, and to perform its
obligations under, this Agreement and any agreement, instrument, certificate or
other document necessary to effectuate the transactions contemplated hereby and
such execution, delivery and performance has been duly authorized by all
requisite partnership action by or on behalf of NP.
ii. TITLE; CONSENTS. NP owns the Seller LP Interest free
and clear of any and all Liens, and has obtained all necessary consents to enter
into, and be bound by, this Agreement and any other agreement, instrument,
certificate or other document necessary to effectuate the transactions
contemplated hereby. NP has the full right, power and authority to enter into,
and be bound by, this Agreement and any other agreement, instrument, certificate
or other document necessary to
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effectuate the transactions contemplated hereby.
iii. ENFORCEABILITY. This Agreement has been, and at the
Closing each of this Agreement and any other agreement, instrument, certificate
or other document contemplated hereby will be, duly executed and delivered by NP
and either constitutes or will constitute, as the case may be, the legal, valid
and binding obligation of NP, enforceable in accordance with the terms hereof or
thereof, as the case may be, subject to applicable bankruptcy, insolvency,
reorganization, fraudulent transfer, moratorium and similar laws or by other
laws affecting creditors' rights generally.
iv. NO CONFLICTS. The execution, delivery and performance
of NP's obligations under this Agreement and any other agreement, instrument,
certificate or other document necessary to effectuate the transactions
contemplated hereby: (1) do not, and will not at the Closing, violate or
conflict with the Business Certificate for Partners, partnership agreement or
other governing documents of NP; and (2) do not, and will not at the Closing
(with or without the giving of notice, the passage of time, or both): (a)
conflict with, result in the breach of, constitute a default under, require any
consent, approval or waiver which has not been (or will not at Closing be)
received under, or give rise to a right to accelerate any obligation under, or
give rise to a right of termination under, any agreement or instrument to which
NP is a party, by which it is bound or to which any of its assets or properties
is subject; (b) conflict with, violate or require any consent, approval, waiver,
order, authorization, registration, declaration or filing pursuant to any law,
ordinance, injunction, judgment, order, decree, permit, concession, grant,
franchise, license, or other provision of law or any other governmental
requirement or authorization applicable to NP; or (c) result in any Lien on any
asset or property of NP.
c. BY BUYER. Buyer represents and warrants to Seller that:
i. ORGANIZATION OF BUYER. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Buyer has full corporate power to execute and deliver, and to perform
its obligations under, this Agreement and any agreement, instrument, certificate
or other document necessary to effectuate the transactions contemplated hereby,
and such execution, delivery and performance has been duly authorized by all
requisite corporate action by or on behalf of Buyer.
ii. AUTHORITY. Buyer has the full right, power and
authority to enter into, and be bound by, this
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Agreement and any other agreement, instrument, certificate or other document
necessary to effectuate the transactions contemplated hereby.
iii. ENFORCEABILITY. This Agreement has been, and at the
Closing each of this Agreement and any other agreement, instrument, certificate
and other document contemplated hereby will be, duly executed and delivered by
Buyer and either constitutes or will constitute, as the case may be, the legal,
valid and binding obligation of Buyer, enforceable in accordance with the terms
hereof or thereof, as the case may be, subject to applicable bankruptcy,
insolvency, reorganization, fraudulent transfer, moratorium and similar laws or
by other laws affecting creditors' rights generally.
iv. NO CONFLICTS. The execution, delivery and performance
of Buyer's obligations under this Agreement and any other agreement, instrument,
certificate or other document necessary to effectuate the transactions
contemplated hereby: (1) do not, and will not at the Closing, violate or
conflict with the Certificate of Incorporation, bylaws or other governing
documents of Buyer; and (2) do not, and will not at the Closing (with or without
the giving of notice, the passage of time, or both): (a) conflict with, result
in the breach of, constitute a default under, require any consent, approval or
waiver which has not been (or will not at Closing be) received under, or give
rise to a right to accelerate any obligation under, or give rise to a right of
termination under, any agreement or instrument to which Buyer is a party, by
which it is bound or to which any of its assets or properties is subject; or (b)
conflict with, violate or require any consent, approval, waiver, order,
authorization, registration, declaration or filing pursuant to any law,
ordinance, injunction, judgment, order, decree, permit, concession, grant,
franchise, license, or other provision of law or any other governmental
requirement or authorization applicable to Buyer.
5. CONDITIONS PRECEDENT.
a. In addition to any other conditions expressly provided in
this Agreement, the duties and obligations of Buyer hereunder are subject to (i)
the simultaneous consummation of the closing contemplated by that certain
Redemption and Lease Agreement of even date herewith between the Partnership and
Buyer (the "Redemption and Lease Agreement"), and (ii) Buyer receiving a waiver
of the mortgage recording tax due in connection with the financing to be
obtained by Buyer in connection with the transactions contemplated by this
Agreement and the Redemption and Lease Agreement from the New York City
Industrial Development Agency. If either of the above conditions precedent
shall not be
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satisfied, Buyer may terminate this Agreement on written notice to Seller, in
which event the provisions of Section 7.c. shall apply.
b. In addition to any other conditions expressly provided in
this Agreement, the duties and obligations of Seller hereunder are subject to
the performance of all obligations under a certain side letter by and among NP,
MP and NI Manhattan 57th, Inc. (collectively, the "Nissho Entities") and the
Partnership, dated as of the date hereof (the "Letter Agreement"), a copy of
which is annexed EXHIBIT A hereto, other than those obligations of the Nissho
Entities thereunder. In the event that such obligations are not timely
performed under the Letter Agreement, Seller may (i) waive such condition
precedent and close as contemplated herein, or (ii) terminate this Agreement on
written notice to Buyer, in which event the provisions of Section 7.c. shall
apply.
6. DOCUMENTS TO BE DELIVERED AT CLOSING.
a. BY MP. At the Closing, MP shall execute and deliver, or
cause to be executed and delivered on its behalf, to Buyer:
i. an assignment and assumption in the form annexed as
EXHIBIT B hereto, conveying to Buyer all of MP's right, title and interest in
and to the Seller GP Interest;
ii. a certificate, signed by an officer of MP and dated as
of the Closing Date, stating that the representations and warranties contained
in Section 4.a. of this Agreement are true and correct as of the Closing Date
with the same effect as if they were made at the Closing;
iii. a FIRPTA certification in the form annexed as EXHIBIT C
hereto, verified as true and sworn to under penalties of perjury by a officer of
MP; and,
iv. any transfer tax returns, affidavits and other
documents required in accordance with Paragraph 31 of the New York State Tax
Law, the New York City Real Property Transfer Tax imposed by the Title II of
Chapter 46 of the Administrative Code of the City of New York and any other tax
payable by reason of conveyance of an interest such as the Interest
(hereinafter, collectively, the "Conveyance Tax Returns").
b. BY NP. At the Closing, NP shall execute and deliver, or
cause to be executed and delivered on its behalf, to Buyer:
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i. an assignment and assumption in the form annexed as
EXHIBIT B hereto, conveying to Buyer all of NP's right, title and interest in
and to the Seller LP Interest;
ii. a certificate signed by an officer of NP's general
partner, dated as of the Closing Date, stating that the representations and
warranties contained in Section 4.b. of this Agreement are true and correct as
of the Closing Date with the same effect as if they were made at the Closing;
iii. a FIRPTA certification in the form annexed as EXHIBIT C
hereto, verified as true and sworn to under penalties of perjury by a officer of
NP; and,
iv. the Conveyance Tax Returns.
c. BY BUYER. At the Closing, Buyer shall execute and deliver,
or cause to be executed and delivered on its behalf, to Seller:
i. an assignment and assumption in the form annexed as
EXHIBIT B hereto by Buyer of all of (x) the obligations of a general partner of
the Partnership (with respect to the Seller GP Interest), and (y) the
obligations of a limited partner of the Partnership (with respect to the Seller
LP Interest), in each case as provided in that certain Second Amended and
Restated Agreement of Limited Partnership of the Partnership, dated as of June
15, 1990, as amended by that certain Amendment to the Second Amended and
Restated Agreement of Limited Partnership of the Partnership, dated as of
January 1, 1994 and that certain Second Amendment to the Second Amended and
Restated Agreement of Limited Partnership of the Partnership, dated as of
October, 1998 (as the same may be further modified, amended or restated from
time to time, the "Partnership Agreement"), and otherwise;
ii. a certificate signed by an officer of Buyer, dated as
of the Closing Date, stating that the representations and warranties contained
in Section 4.c. of this Agreement are true and correct as of the Closing Date
with the same effect as if they were made at the Closing;
iii. the Conveyance Tax Returns; and,
iv. certified resolutions of the Board of Directors of
Buyer in a form reasonably satisfactory to counsel for Seller, authorizing
Buyer's execution, delivery and performance of the transactions contemplated
herein and all other actions to be taken by Borrower hereunder.
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d. OTHER. The delivery of the documents required in
paragraph c above and acceptance of transfer of title to the Interest by Buyer
shall be deemed to be full performance and discharge of any and all obligations
on the part of Seller to be performed pursuant to the provisions of this
Agreement, except where such agreements and obligations are specifically stated
to survive the Closing. Notwithstanding the foregoing, Seller acknowledges that
the representations and warranties contained in Sections 4.a. and 4.b. above
shall run for the benefit of Buyer's successors and assigns with respect to the
ownership of the Interest, including, without limitation, the Partnership (upon
the redemption of the Interest as provided in the Redemption and Lease
Agreement), and shall survive the Closing.
7. DEFAULT; TERMINATION.
a. BUYER'S DEFAULT. If Buyer shall fail or refuse to perform
Buyer's obligations in accordance with this Agreement, then the parties hereto
agree that Seller's sole remedy shall be to cause Escrow Agent to deliver to
Seller and the Partnership the Downpayment, together with any interest thereon,
in the manner provided in the Escrow Agreement, which may be retained by Seller
and the Partnership as liquidated damages, whereupon this Agreement shall
terminate and neither party to this Agreement shall have any further rights or
obligations hereunder (other than any such rights or obligations that are
expressly stated in this Agreement to survive the termination thereof). The
provisions herein contained for liquidated and agreed-upon damages are bona fide
provisions for such and are not a penalty, the parties agreeing that by reason
of Seller binding itself to the sale of the Interest and by reason of the
withdrawal of the Interest from sale at a time when other parties would be
interested in acquiring the Interest, that Seller will have sustained damages if
Buyer defaults, which damages will be substantial but will not be capable of
determination with mathematical precision, and therefore, as aforesaid, this
provision for liquidated and agreed-upon damages has been incorporated in this
Agreement as a provision beneficial to both parties. The parties acknowledge
and agree that a default by Buyer under the Redemption and Lease Agreement shall
be deemed to be a default by Buyer hereunder.
b. SELLER'S DEFAULT. If the conveyance of the Interest to
Buyer in accordance with the terms of this Agreement shall fail to occur due to
a default by Seller in the performance of Seller's obligations hereunder or a
default by the Nissho Entities under the Letter Agreement, then Buyer, as
Buyer's sole remedy, may elect to either (i) terminate this Agreement in which
event (a) Seller shall cause Escrow Agent to return the Downpayment, together
with interest, if any, which has accrued
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thereon, to Buyer, and (b) neither party shall have any further rights or
obligations hereunder (other than any such rights or obligations that are
expressly stated herein to survive the termination hereof), or (ii) bring an
action to seek specific performance of Seller's obligations hereunder without
any abatement of the Purchase Price or allowance of any kind and in which
proceeding no monetary claim is made, or monetary judgment or other relief is
sought or obtained against Seller.
c. TERMINATION. In the event that either party shall terminate
this Agreement due to the failure of a condition precedent described in Section
5.a. or Section 5.b. above (other than any such failure arising from a default
by Buyer under the Redemption and Lease Agreement), (a) Seller shall cause
Escrow Agent to return the Downpayment, together with interest, if any, which
has accrued thereon, to Buyer, and (b) neither party shall have any further
rights or obligations hereunder (other than any such rights or obligations that
are expressly stated herein to survive the termination hereof).
8. BROKERS.
a. Buyer represents and warrants to Seller that Buyer dealt
with no broker, finder or salesperson in connection with this Agreement, other
than Insignia/Edward S. Gordon Co., Inc. (the "Partnership Broker") and Cushman
and Wakefield Inc. (the "Buyer Broker", and together with the Partnership
Broker, the "Broker"). Buyer shall indemnify Seller, and hold Seller harmless,
from and against, any and all losses, damages, liabilities, costs and expenses
(including without limitation, reasonable attorneys' fees and disbursements)
incurred by Seller to the extent arising out of a claim for commission or other
compensation made by a broker, finder or salesperson with whom Buyer dealt in
connection herewith, including, without limitation, the Buyer Broker, but
excluding the Partnership Broker (other than any claim by the Partnership Broker
relating to Buyer's failure to pay the $250,000 described in Section 8.c.
below).
b. Seller represents and warrants to Buyer that Seller dealt
with no broker, finder or salesperson in connection with this Agreement other
than Broker. Seller shall indemnify Buyer, and hold Buyer harmless, from and
against, any and all losses, damages, liabilities, costs and expenses
(including, without limitation, reasonable attorneys' fees and disbursements)
incurred by Buyer to the extent arising out of a claim for commission or other
compensation made by a broker, finder or salesperson with whom Seller dealt in
connection herewith, including, without limitation, the Partnership Broker
(other than any claim by the Partnership Broker relating to Buyer's failure
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to pay the $250,000 described in Section 8.c. below), but excluding the Buyer
Broker.
c. Buyer shall pay (i) any commission due to the Buyer Broker
pursuant to a separate written agreement between Buyer and the Buyer Broker, and
(ii) Two Hundred Fifty Thousand ($250,000) Dollars towards the commission due to
the Partnership Broker, pursuant to and as provided in the Redemption and Lease
Agreement. The Partnership shall pay any commission due to the Partnership
Broker in excess of the Two Hundred Fifty Thousand ($250,000) Dollars paid by
Buyer as provided above pursuant to a separate written agreement between the
Partnership and the Partnership Broker, as required by the Redemption and Lease
Agreement.
d. The provisions of this Article 8 shall survive the Closing
and/or the termination of this Agreement.
9. MISCELLANEOUS.
a. FURTHER ASSURANCES. Each of the parties shall cooperate and
take such actions, and execute such other documents as the other parties or any
one of them may reasonably request in order to carry out the transactions
contemplated by this Agreement.
b. NO PARTNERSHIP, ETC. The execution of this Agreement is not
intended to be, nor shall it be construed to be, the formation of a partnership
or joint venture between the parties to this Agreement or their respective
affiliates.
c. NOTICE. All notices, demands, requests, consents,
approvals, reports or other communications required or permitted to be given
pursuant to this Agreement shall be in writing and shall be deemed given: (i)
when delivered by hand (including, without limitation, delivery by any private
or public courier service); (ii) when delivered by first class, certified mail,
return receipt requested, postage prepaid (or when delivery is attempted, if
such delivery is refused by recipient); or (iii) when sent by tested telex,
telecopier or other facsimile reproduction equipment, to the following addresses
(or such other address as the recipient party may hereafter specify in the same
manner):
If to Buyer, to it at:
Steinway Musical Instruments, Inc.
800 South Street, Suite 425
Waltham, Massachusetts 02453-1472
Attention: Dennis M. Hanson, Esq.
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Fax: (781) 894-9803
with a copy to:
Milbank, Tweed, Hadley & McCloy LLP
One Chase Manhattan Plaza
New York, New York 10005
Attention: Barbara J. Briggs, Esq.
Fax: (212) 530-5219
If to Seller, to it at:
c/o Nissho Iwai American Corporation
1211 Avenue of Americas
New York, New York 10036
Attention: Shigemitsu Hozumi
Fax: (212) 704-6836
with a copy to:
Greenberg Traurig
200 Park Avenue
New York, New York 10166
Attention: Richard A. Rosenbaum, Esq.
Fax: (212) 801-6400
and with a copy to the Partnership at:
c/o Wexford Management LLC
411 West Putnam Avenue
Greenwich, Connecticut 06830
Attention: Joseph M. Jacobs
Fax: (203) 862-7320
If to Escrow Agent, to it at:
Proskauer Rose LLP
1585 Broadway
New York, New York 10036
Attention: Wendy J. Schriber, Esq.
Fax: (212) 969-2900
d. ENTIRE AGREEMENT. This Agreement, the Exhibits annexed
hereto and the Escrow Agreement described herein contain the entire agreement
and understanding of the parties with respect to the subject matter hereof, and
all prior negotiations, proposals and agreements (whether written or oral)
between them (or their respective affiliates) relating to the subject matter
hereof have been superseded and are merged in this
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Agreement.
e. ASSIGNMENT. This Agreement is binding upon and shall inure
to the benefit of the parties and their respective successors and permitted
assigns. Notwithstanding the foregoing, Buyer shall not assign its rights under
this Agreement without (x) obtaining Seller's prior written consent thereto,
which consent may be granted or denied by Seller in Seller's sole and absolute
discretion, (y) obtaining the Partnership's prior written consent to the
simultaneous assignment of the Redemption and Lease Agreement as provided
therein, and (z) assigning the Redemption and Lease Agreement to the same
assignee simultaneously with the assignment of this Agreement; provided,
however, that Buyer may simultaneously assign this Agreement and the Redemption
and Lease Agreement to an affiliate of Buyer on prior written notice to, but
without the consent of, Seller and the Partnership. Notwithstanding the
foregoing, with respect to any assignment of this Agreement permitted hereunder,
no such assignment shall relieve the Buyer of its obligations hereunder and,
subsequent to any such assignment, Buyer's liability hereunder shall continue
notwithstanding any subsequent modification or amendment hereof or the release
of any assignee hereunder from any liability, to all of which Buyer hereby
consents in advance.
f. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, such term, provision, covenant or restriction
shall be void or unenforceable only to the extent specifically set forth in any
such holding, and the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated. In the event that any such term,
provision, covenant or restriction is so held to be invalid, void or
unenforceable, the parties hereto shall use their best efforts to find and
employ an alternative means to achieve the same or substantially the same result
as that contemplated by such term, provision, covenant or restriction.
g. WAIVERS, ETC. No failure or delay on the part of any party
hereto in exercising any power or right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. No modification or waiver of any provision of this Agreement
nor consent to any departure by any party therefrom shall in any event be
effective unless the same shall be in writing, and then such waiver or consent
shall
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<PAGE>
be effective only in the specific instance and for the purpose for which given.
h. GOVERNING LAW. This Agreement shall be construed and
interpreted according to the laws of the State of New York, without reference to
such state's principles governing conflicts of laws.
i. HEADINGS. The headings used herein are for convenience of
reference only, are not part of this Agreement and are not intended to affect
the construction, or to be taken into account in the interpretation, of this
Agreement.
j. COUNTERPARTS; EFFECT. This Agreement may be signed in any
number of counterparts with the same effect as if the signatures were all upon
the same instrument.
[END OF TEXT]
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<PAGE>
[EXECUTION PAGE]
IN WITNESS WHEREOF, the parties hereto have executed, or caused this
Agreement to be executed on their behalf, on the day first above written.
SELLER:
NI REPROMA INC.
By: /s/ S. Hozumi
-----------------------------
Name: S. Hozumi
Title: Vice President
MANHATTAN 57TH STREET ASSOCIATES
By: NI REPROMA INC., its Managing
General Partner
By: /s/ S. Hozumi
-----------------------------
Name: S. Hozumi
Title: Vice President
BUYER:
STEINWAY, INC.
By: /s/ Dennis M. Hanson
-----------------------------
Name: Dennis M. Hanson
Title: V.P. and C.F.O.
<PAGE>
Exhibit 10.2
REDEMPTION AND LEASE AGREEMENT
REDEMPTION AND LEASE AGREEMENT (this "Agreement"), dated as of the
23rd day of March, 1999, by and between STEINWAY, INC., a Delaware corporation,
having an address at One Steinway Place, Long Island City, New York 11105
("Steinway"), and 111 WEST 57TH STREET ASSOCIATES, L.P., a New York limited
partnership, having an office c/o Wexford Management LLC, 411 West Putnam
Avenue, Greenwich, Connecticut 06830(the "Partnership").
W I T N E S S E T H :
WHEREAS, simultaneously herewith, Steinway has entered into a certain
Partnership Interest Purchase Agreement (the "Purchase Agreement") with NI
REPROMA INC. ("MP") and MANHATTAN 57TH STREET ASSOCIATES ("NP"), collectively,
as seller ("Seller"), pursuant to which Steinway has agreed to purchase Seller's
interest in the Partnership, consisting of MP's 0.2495% interest as a general
partner in the Partnership (the "Seller GP Interest") and NP's 49.401% interest
as a limited partner in the Partnership (the "Seller LP Interest", and, together
with the Seller GP Interest, the "Interest"), on the terms and conditions set
forth therein; and
WHEREAS, the Partnership is the owner of, INTER ALIA, the fee interest
in certain real property known by the street address of 111 West 57th Street,
New York, New York, as more particularly described in EXHIBIT "A" attached
hereto and made a part hereof (the Partnership's interest in such real property
being referred to herein as the "Property"); and
WHEREAS, simultaneously with the consummation of Steinway's purchase
of the Interest pursuant to the Purchase Agreement, the Partnership desires to
(i) redeem the Interest in exchange for the Partnership conveying to Steinway
fee title to the buildings and improvements situated on the Property (the
"Improvements"), but expressly reserving unto the Partnership fee title to the
land upon which the Improvements are situated (the "Land"), (ii) enter into a
ground lease with Steinway with respect to the Land, (iii) enter into a master
lease with Steinway for the Land and the Improvements, and (iv) extend the term
of Steinway's existing space lease for a portion of the Property (the "Steinway
Space Lease") to December 31, 2008, in each case on the terms and subject to the
conditions set forth herein; and
WHEREAS, Steinway desires to accomplish such redemption and lease
transactions, in each case on the terms and subject to
<PAGE>
the conditions set forth herein.
NOW, THEREFORE, in consideration of the premises, and other good and
valuable consideration, the mutual receipt and legal sufficiency of which the
parties hereto hereby acknowledge, the Partnership and Steinway hereby agree as
follows:
1. REDEMPTION OF THE INTEREST AND CONVEYANCE OF THE IMPROVEMENTS.
a. At the Closing (as defined below) and subject to the terms
and conditions set forth below, Steinway, in complete redemption for the
Interest, will transfer the Interest to the Partnership, in exchange for which
the Partnership will convey fee title to the Improvements to Steinway pursuant
to the Deed (as defined below), reserving unto the Partnership fee title to the
Land. Accordingly, from and after the Closing Date (as defined below), and
after taking into account such redemption of the Interest and conveyance of the
Improvements, Steinway shall no longer possess any interest in the Partnership,
and accordingly, the percentage shares of the remaining partners in the
Partnership shall be adjusted accordingly. The Partnership shall accept the
aforesaid transfer of the Interest at the Closing, subject to the terms and
conditions set forth below.
b. At the Closing, (x) the Partnership shall execute and
deliver to Steinway (i) a release of Steinway from any commitments, obligations
and liabilities of Steinway to the Partnership under and by virtue of the
partnership agreement of the Partnership or Steinway's ownership of the
Interest, whether arising on, before or after the Closing Date, which release
shall be in the form annexed hereto as EXHIBIT "B-1" (the "Partnership
Release"), and (ii) a Form K-1 issued by the Partnership to Steinway showing no
income or loss allocable to Steinway by virtue of Steinway's ownership of the
Interest prior to the redemption of same in accordance with this Agreement, and
(y) Steinway shall execute and deliver to the Partnership a release of the
Partnership from any commitments, obligations and liabilities of the Partnership
to Steinway under and by virtue of the partnership agreement of the Partnership
or Steinway's ownership of the Interest, whether arising on, before or after the
Closing Date, which release shall be in the form annexed hereto as EXHIBIT "B-2"
(the "Steinway Release").
c. At or after the Closing, Jasie, Inc. ("Jasie"), as a general
partner of the Partnership, shall be permitted to enter into such amendments to
the partnership agreement or any certificate of partnership relating to the
partnership, and to any other agreement to which the partnership is a party, as
Jasie shall deem necessary or desirable in order to reflect the redemption of
the Interest and the identity of the
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<PAGE>
remaining partners as a result of such redemption.
2. EXECUTION OF THE GROUND LEASE AND THE MASTER LEASE. At the
Closing and subject to the terms and conditions set forth below, simultaneously
with the redemption of the Interest and the conveyance of the Improvements
pursuant to the Deed as contemplated by Section 1 hereof:
a. the Partnership and Steinway will enter into (x) a long term
ground lease substantially in the form annexed hereto as EXHIBIT "D" (the
"Ground Lease"), pursuant to which the Partnership shall demise the Land to
Steinway on the terms and conditions provided therein, (y) an assignment of
leases in the form annexed hereto as EXHIBIT "E", pursuant to which the
Partnership shall assign to Steinway all right, title and interest of the
Partnership in and to any space leases affecting the Land and the Improvements
for the term of the Ground Lease (the "Partnership Lease Assignment") and (z) an
assignment of management, service and maintenance agreements in the form annexed
hereto as EXHIBIT "F", pursuant to which the Partnership shall assign to
Steinway all right, title and interest of the Partnership in and to any
management, service and/or maintenance agreements affecting the Land and the
Improvements for the term of the Ground Lease (the "Partnership Contract
Assignment");
b. the Partnership and Steinway will enter into (x) a master lease
substantially in the form annexed hereto as EXHIBIT "G" (the "Master Lease"),
pursuant to which Steinway shall sublease the Land (subject to the Ground Lease)
and lease the Improvements to the Partnership on the terms and conditions
provided therein, (y) an assignment of leases in the form annexed hereto as
EXHIBIT "H", pursuant to which Steinway shall assign to the Partnership all
right, title and interest of Steinway in and to any space leases affecting the
Land and the Improvements for the term of the Master Lease (the "Steinway Lease
Assignment"), and (z) an assignment of management, service and maintenance
agreements in the form annexed hereto as EXHIBIT "I" pursuant to which Steinway
shall assign to the Partnership all right, title and interest of Steinway in and
to any management, service and/or maintenance agreements affecting the Land and
the Improvements for the term of the Master Lease (the "Partnership Contract
Assignment"); and
c. the Partnership and Steinway will enter into an amendment to the
Steinway Space Lease in the form annexed hereto as EXHIBIT "J" (the "Space Lease
Amendment"), pursuant to which the term of the Steinway Space Lease shall be
extended to December 31, 2008 on the terms and conditions provided therein.
3. APPORTIONMENTS. There shall be no apportionments performed at the
Closing. In addition, except for the conveyance
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<PAGE>
of the Improvements to Steinway pursuant to the Deed, (i) Steinway shall not be
entitled to any payments or other consideration on account of the cash or other
assets of the Partnership as of the Closing Date, and (ii) Steinway shall not be
entitled to any payments or other distributions from the Partnership for
revenues that the Partnership collects, regardless of whether such revenues
derive from any period before, on or after the Closing Date, in either case by
virtue of Steinway's purchase or redemption of the Interest, the conveyance of
the Improvements or the consummation of the lease transactions described herein.
The provisions of this Section 3 shall survive the Closing and/or the
termination of this Agreement.
4. CLOSING. The closing of the transactions contemplated herein
(the "Closing") shall take place at the offices of Proskauer Rose LLP, located
at 1585 Broadway, New York, New York 10036 at 10:00 A.M. on such date as may be
mutually agreed upon by the parties, provided, however, that in no event shall
the Closing occur later than March 30, 1999, time being of the essence with
respect to such outside date. For purposes of this Agreement, the term "Closing
Date" shall mean the date on which the Closing shall actually occur.
5. REPRESENTATIONS.
a. IN GENERAL. Steinway shall accept the Improvements (with respect
to the conveyance described above) and the Land (with respect to the Ground
Lease) in their "as is" condition on the Closing Date, subject to any and all
violations of any applicable laws, rules, orders, ordinances, regulations,
statutes, requirements, codes, resolutions and executive orders (including,
without limitation, zoning and environmental laws) of all governmental
authorities, and of any and all of their departments and bureaus, affecting the
Property or the use or occupancy of the Property (collectively, "Legal
Requirements"), regardless of whether such violations have been noted or issued.
Steinway acknowledges and agrees that, except for the representations,
statements or warranties (if any) of the Partnership expressly set forth in this
Agreement, Steinway has not relied, and shall not be entitled to rely, on any
representations, statements, or warranties, express or implied, which may have
been made, or alleged by Steinway to have been made, by or on behalf of the
Partnership or any broker, agent, employee or other representative of the
Partnership, in respect of the Property, the status of title to the Property,
the zoning or other laws, regulations, rules and orders applicable thereto, the
nature and extent of any Impositions (as defined in the Ground Lease), or the
use that may be made of the Property, including, without limitation, any
guarantees, promises, projections, operating expenses, set-ups or other
information
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<PAGE>
pertaining to the Property, and any state of facts revealed by any engineering
report, environmental report, financial statements, books and records or other
information provided by the Partnership or any broker, agent, employee or other
representative of the Partnership in connection with Steinway's due diligence
investigation of the Property. Additionally, Steinway acknowledges and agrees
that the Partnership shall not be liable for any latent or patent defects in the
Property.
b. STEINWAY'S REPRESENTATIONS. Steinway hereby represents and
warrants to the Partnership that:
i. ORGANIZATION OF STEINWAY. Steinway is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware. Steinway has full corporate power to execute and deliver,
and to perform its obligations under, this Agreement and any agreement,
instrument, certificate or other document necessary to effectuate the
transactions contemplated hereby and such execution, delivery and performance
has been duly authorized by all requisite corporate action by or on behalf of
Steinway.
ii. TITLE; CONSENTS. On the Closing Date, Steinway shall
own the Interest free and clear of any and all liens, claims, equities,
encumbrances, security interests, limitations and restrictions of any nature
whatsoever created by Steinway (collectively, "Liens"), and has obtained all
necessary consents to enter into, and be bound by, this Agreement and any other
agreement, instrument, certificate or other document necessary to effectuate the
transactions contemplated hereby. Steinway has the full right, power and
authority to enter into, and be bound by, this Agreement and any other
agreement, instrument, certificate or other document necessary to effectuate the
transactions contemplated hereby.
iii. ENFORCEABILITY. This Agreement has been, and at the
Closing each of this Agreement and any other agreement, instrument, certificate
or other document contemplated hereby will be, duly executed and delivered by
Steinway and either constitutes or will constitute, as the case may be, the
legal, valid and binding obligation of Steinway, enforceable in accordance with
the terms hereof or thereof, as the case may be, subject to applicable
bankruptcy, insolvency, fraudulent transfer, moratorium and similar laws or by
other laws affecting creditors' rights generally.
iv. NO CONFLICTS. The execution, delivery and performance
of Steinway's obligations under this Agreement and any other agreement,
instrument, certificate or other document necessary to effectuate the
transactions contemplated
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<PAGE>
hereby: (1) do not, and will not at the Closing, violate or conflict with the
Certificate of Incorporation, bylaws or other governing documents of Steinway;
and (2) do not, and will not at the Closing (with or without the giving of
notice, the passage of time, or both): (a) conflict with, result in the breach
of, constitute a default under, require any consent, approval or waiver which
has not been (or will not at Closing be) received under, or give rise to a right
to accelerate any obligation under, or give rise to a right of termination
under, any agreement or instrument to which Steinway is a party, by which it is
bound or to which any of its assets or properties is subject; or (b) conflict
with, violate or require any consent, approval, waiver, order, authorization,
registration, declaration or filing pursuant to any law, ordinance, injunction,
judgment, order, decree, permit, concession, grant, franchise, license, or other
provision of law or any other governmental requirement or authorization
applicable to Steinway.
c. BY THE PARTNERSHIP. The Partnership hereby represents and
warrants to Steinway that:
i. ORGANIZATION OF THE PARTNERSHIP. The Partnership is a
limited partnership duly formed, validly existing and in good standing under the
laws of the State of New York. The Partnership has full partnership power to
execute and deliver, and to perform its obligations under, this Agreement and
any agreement, instrument, certificate or other document necessary to effectuate
the transactions contemplated hereby and such execution, delivery and
performance has been duly authorized by all requisite partnership action by or
on behalf of the Partnership.
ii. CONSENTS. The Partnership has obtained all necessary
consents to enter into, and be bound by, this Agreement and any other agreement,
instrument, certificate or other document necessary to effectuate the
transactions contemplated hereby. The Partnership has the full right, power and
authority to enter into, and be bound by, this Agreement and any other
agreement, instrument, certificate or other document necessary to effectuate the
transactions contemplated hereby.
iii. ENFORCEABILITY. This Agreement has been, and at the
Closing each of this Agreement and any other agreement, instrument, certificate
or other document contemplated hereby will be, duly executed and delivered by
the Partnership and either constitutes or will constitute, as the case may be,
the legal, valid and binding obligation of the Partnership, enforceable in
accordance with the terms hereof or thereof, as the case may be, subject to
applicable bankruptcy, insolvency, fraudulent transfer, moratorium and similar
laws or by other laws
6
<PAGE>
affecting creditors' rights generally.
iv. NO CONFLICTS. The execution, delivery and performance
of the Partnership's obligations under this Agreement and any other agreement,
instrument, certificate or other document necessary to effectuate the
transactions contemplated hereby: (1) do not, and will not at the Closing,
violate or conflict with the Business Certificate for Partners, partnership
agreement or other governing documents of the Partnership; and (2) do not, and
will not at the Closing (with or without the giving of notice, the passage of
time, or both): (a) conflict with, result in the breach of, constitute a default
under, require any consent, approval or waiver which has not been (or will not
at Closing be) received under, or give rise to a right to accelerate any
obligation under, or give rise to a right of termination under, any agreement or
instrument to which the Partnership is a party, by which it is bound or to which
any of its assets or properties is subject; (b) conflict with, violate or
require any consent, approval, waiver, order, authorization, registration,
declaration or filing pursuant to any law, ordinance, injunction, judgment,
order, decree, permit, concession, grant, franchise, license, or other provision
of law or any other governmental requirement or authorization applicable to the
Partnership; or (c) result in any Lien on the Property.
6. CONDITION PRECEDENT.
a. The duties and obligations of the parties hereunder are
subject to the simultaneous consummation of the closing contemplated by the
Purchase Agreement.
b. The duties and obligations of the Partnership hereunder are
subject to the Partnership obtaining, on or before the Closing Date, a
commitment for fee mortgage financing encumbering the Partnership's interest in
the Land, which commitment shall be satisfactory to the Partnership in its sole
discretion.
7. DOCUMENTS TO BE DELIVERED AT CLOSING.
a. BY THE PARTNERSHIP. At the Closing, the Partnership shall
execute and deliver, or cause to be executed and delivered on its behalf, to
Steinway:
i. an assignment and assumption in the form annexed as
EXHIBIT "K" hereto, pursuant to which Steinway conveys to the Partnership all of
Steinway's right, title and interest in and to the Interest and the Partnership
assumes all obligations with respect thereto from and after the Closing (the
"Steinway Interest Assignment");
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ii. a bargain and sale deed without covenants for the
Improvements in the form of EXHIBIT "L" attached hereto and made a part hereof
(the "Deed"), pursuant to which the Partnership shall convey fee title to the
Improvements to Steinway, free and clear of any and all Liens other than (w) the
Ground Lease and the Master Lease, (x) any and all space leases, tenancies,
concessions, licenses and occupancies affecting the Property in effect on the
date hereof and entered into by the Partnership from and after the date hereof
in the ordinary course of the Partnership's business (collectively, the
"Leases"), (y) the matters described on EXHIBIT "M" annexed hereto, and (z) any
other exceptions to title which are not listed in the title report issued by
First American Title Insurance Company of New York under Title No. 135NYNY28589,
as last amended on March 18, 1999, which arise prior to the Closing and which
are accepted by Steinway (as hereinafter defined) (the "Permitted
Encumbrances");
iii. the Ground Lease;
iv. a recordable memorandum of ground lease in the form of
EXHIBIT "N" attached hereto and made a part hereof (the "Ground Lease Memo");
v. the Partnership Lease Assignment;
vi. the Partnership Contract Assignment;
vii. the Master Lease;
viii. a recordable memorandum of master lease in the
form of EXHIBIT "O" attached hereto and made a part hereof (the "Master Lease
Memo");
ix. the Space Lease Amendment;
x. the Partnership Release;
xi. the side letter regarding certain capital expenditure
items in the form annexed hereto as EXHIBIT "P" (the "Cap Exp Letter");
xii. a "non-foreign person affidavit" that meets the
requirements of Section 1445(b)(2) of the Internal Revenue Code of 1986, as
amended;
xiii. a certificate of the Partnership, dated as of the
Closing Date, stating that the representations and warranties contained in
Section 5.c. of this Agreement are
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true and correct as of the Closing Date with the same effect as if they were
made at the Closing; and
xiv. any transfer tax returns, affidavits and other
documents required in accordance with Paragraph 31 of the New York State Tax
Law, the New York City Real Property Transfer Tax imposed by the Title II of
Chapter 46 of the Administrative Code of the City of New York and any other tax
payable by reason of conveyance of the Improvements or the execution and
delivery of the Ground Lease (hereinafter, collectively, the "Conveyance Tax
Returns").
b. BY STEINWAY. At the Closing, Steinway shall execute and
deliver, or cause to be executed and delivered on its behalf, to the
Partnership:
i. the Steinway Interest Assignment;
ii. the Ground Lease;
iii. the Ground Lease Memo;
iv. the Master Lease;
v. the Master Lease Memo;
vi. the Steinway Lease Assignment;
vii. the Steinway Contract Assignment;
viii. the Space Lease Amendment;
ix. the Steinway Release;
x. the Cap Exp Letter;
xi. a certificate of Steinway, dated as of the Closing
Date, stating that the representations and warranties contained in Section 5.b.
of this Agreement are true and correct as of the Closing Date with the same
effect as if they were made at the Closing; and
xii. the Conveyance Tax Returns.
c. OTHER. The acceptance of transfer of title to the
Improvements and the execution and delivery of the Ground Lease, the Master
Lease and the Space Lease Amendment by Steinway shall be deemed to be full
performance and discharge of any and all obligations on the part of the
Partnership to be performed pursuant to the provisions of this Agreement, except
where such
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agreements and obligations are specifically stated to survive the Closing.
8. DEFAULT; TERMINATION.
a. STEINWAY'S DEFAULT. If Steinway shall fail or refuse to
perform Steinway's obligations in accordance with this Agreement, then the
parties hereto agree that the Partnership's sole remedy shall be to cause the
Escrow Agent (as defined in the Purchase Agreement) to deliver to Seller and the
Partnership the Downpayment (as defined in the Purchase Agreement), together
with any interest thereon, in the manner provided in the Escrow Agreement, which
may be retained by Seller and the Partnership as liquidated damages, whereupon
this Agreement shall terminate and neither party to this Agreement shall have
any further rights or obligations hereunder (other than any such rights or
obligations that are expressly stated in this Agreement to survive the
termination thereof). The provisions herein contained for liquidated and
agreed-upon damages are bona fide provisions for such and are not a penalty, the
parties agreeing that by reason of the Partnership binding itself to the
conveyance of the Improvements and the consummation of the transactions
contemplated by this Agreement and by reason of the withdrawal of the
Improvements from sale at a time when other parties would be interested in
acquiring same, that the Partnership will have sustained damages if Steinway
defaults, which damages will be substantial but will not be capable of
determination with mathematical precision, and therefore, as aforesaid, this
provision for liquidated and agreed-upon damages has been incorporated in this
Agreement as a provision beneficial to both parties. The parties acknowledge
and agree that a default by Steinway under the Purchase Agreement shall be
deemed to be a default by Steinway hereunder.
b. THE PARTNERSHIP'S DEFAULT. If the conveyance of the
Improvements to Steinway and the consummation of the transactions contemplated
by this Agreement in accordance with the terms hereof shall fail to occur due to
a default by the Partnership in the performance of the Partnership's obligations
hereunder or under the Letter Agreement (as defined in the Purchase Agreement),
then Steinway, as Steinway's sole remedy, may either (i) terminate this
Agreement in which event (a) the Partnership shall cause Escrow Agent to return
the Downpayment, together with interest, if any, which has accrued thereon, to
Steinway, (b) the Partnership shall, or shall cause the Class U Partners (as
such term is defined in the Letter Agreement) to, reimburse Steinway for all
reasonable out-of-pocket costs incurred by Steinway to third parties in
connection with the attempted consummation of transactions contemplated in this
Agreement and the Purchase Agreement, but in no event in excess
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of $250,000 (the "Reimbursable Costs"), upon presentation by Steinway of
reasonable supporting documents evidencing the incurrence of such Reimbursable
Costs (it being understood that such obligation to pay the Reimbursable Costs
shall survive the termination of this Agreement), and (c) neither party shall
have any further rights or obligations hereunder (other than any such rights or
obligations that are expressly stated herein to survive the termination hereof),
or (ii) bring an action to seek specific performance of the Partnership's
obligations hereunder in which proceeding no monetary claim is made, or monetary
judgment or other relief is sought or obtained against the Partnership.
c. TERMINATION. In the event that Steinway shall terminate
this Agreement due to the failure of the condition precedent described in
Section 6.a. above (other any such failure arising from a default by Steinway
under the Purchase Agreement) or the Partnership shall terminate this Agreement
due to the failure of any condition precedent described in Paragraph 6 above or
pursuant to Section 10.b. below, (a) the Partnership shall cause Escrow Agent
to return the Downpayment, together with interest, if any, which has accrued
thereon, to Steinway, (b) if said termination results from the Partnership's
failure to fulfill its obligations under the Letter Agreement, the Partnership
shall, or shall cause the Class U Partners to, reimburse Steinway for the
Reimbursable Costs, upon presentation by Steinway of reasonable supporting
documents evidencing the incurrence of such Reimbursable Costs (it being
understood and agreed that this clause (b) does not apply to any failure by the
Partnership to obtain a mortgage commitment as described in Section 6.b. above),
and (c) neither party shall have any further rights or obligations hereunder
(other than any such rights or obligations that are expressly stated herein to
survive the termination hereof).
9. BROKERS.
a. Steinway represents and warrants to the Partnership that
Steinway dealt with no broker, finder or salesperson in connection with this
Agreement, other than Insignia/Edward S. Gordon Co., Inc. (the "Partnership
Broker") and Cushman and Wakefield Inc. (the "Steinway Broker", and together
with the Partnership Broker, the "Broker"). Steinway shall indemnify the
Partnership, and hold the Partnership harmless, from and against, any and all
losses, damages, liabilities, costs and expenses (including without limitation,
reasonable attorneys' fees and disbursements) incurred by the Partnership to the
extent arising out of a claim for commission or other compensation made by a
broker, finder or salesperson with whom Steinway dealt in connection herewith,
including, without limitation, the Steinway Broker, but excluding the
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Partnership Broker (other than any claim by the Partnership Broker Relating to
Steinway's failure to pay the $250,000 described in Section 9.c. below).
b. The Partnership represents and warrants to Steinway that the
Partnership dealt with no broker, finder or salesperson in connection with this
Agreement other than Broker. The Partnership shall indemnify Steinway, and hold
Steinway harmless, from and against, any and all losses, damages, liabilities,
costs and expenses (including, without limitation, reasonable attorneys' fees
and disbursements) incurred by Steinway to the extent arising out of a claim for
commission or other compensation made by a broker, finder or salesperson with
whom the Partnership dealt in connection herewith, including, without
limitation, the Partnership Broker (other than any claim by the Partnership
Broker relating to Steinway's failure to pay the $250,000 described in Section
9.c. below), but excluding the Steinway Broker.
c. Steinway shall pay (i) any commission due to the Steinway
Broker pursuant to a separate written agreement between Steinway and the
Steinway Broker, and (ii) Two Hundred Fifty Thousand ($250,000) Dollars towards
the commission due to the Partnership Broker. The Partnership shall pay any
commission due to the Partnership Broker in excess of the Two Hundred Fifty
Thousand ($250,000) Dollars paid by Steinway as provided above pursuant to a
separate written agreement between the Partnership and the Partnership Broker.
d. The provisions of this Article 9 shall survive the Closing
and/or the termination of this Agreement.
10. COVENANTS REGARDING TITLE TO THE PROPERTY.
a. Except as expressly provided in this Article 10, the
Partnership shall have no obligation to remove any exception to title to the
Property on or before the Closing Date.
b. The Partnership hereby covenants and agrees, from and after
the date hereof through the Closing Date, not to create any exception to title
to the Property other than the Permitted Encumbrances. To the extent that
Steinway discovers any title exception (other than those described in the
immediately preceding sentence) which arises from or after the date hereof and
which Steinway is not willing to take title to the Improvements and the Ground
Lease subject to, Steinway shall promptly notify the Partnership in writing, and
the Partnership may, at its election (i) cause such title exception to be
removed as an exception on Steinway's title insurance policy (or cause Steinway
to be insured against the collection of same from the
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Property) on or prior to the Closing, at the Partnership's sole cost and
expense, or (ii) terminate this Agreement, in which event the provisions of
Section 8.c. shall be applicable.
11. CONDEMNATION AND DESTRUCTION.
a. If, prior to the Closing Date, all or a "significant
portion" of the Property is taken by eminent domain (or is the subject of a
pending taking which has not been consummated), the Partnership shall notify
Steinway of such fact and either party shall have the option to terminate this
Agreement upon notice to the other party given not later ten (10) business days
after the date of the Partnership's notice. If this Agreement is terminated as
aforesaid, neither party shall have any further rights or obligations hereunder
(other than any such rights or obligations that are expressly stated in this
Agreement to survive the termination thereof).
b. If neither party elects to terminate this Agreement as
provided in Section 11.a. above, or, if neither party is entitled to terminate
this Agreement pursuant to said Section 11.a., the transactions contemplated
hereby shall be consummated with no abatement of any rents payable pursuant to
the Ground Lease, and at the Closing (i) the Partnership shall assign and turn
over to Steinway, and Steinway shall be entitled to receive and keep, all of the
Partnership's interest in and to any and all awards for such taking by eminent
domain which relate to the Improvements, reserving unto the Partnership any and
all awards for such taking by eminent domain which relate to the Land, and (ii)
the fixed rent payable by the Partnership under the Master Lease shall be
equitably adjusted to reflect the diminution in the value of the Improvements.
c. For purposes of this Agreement, a "significant portion" of
the Property shall be deemed to have been taken if, after giving effect to such
taking, the rentable square footage of the Property shall be reduced by more
than ten (10%) percent.
d. If, prior to the Closing Date, the Improvements, or any part
thereof, is destroyed by fire or other casualty, the Partnership shall promptly
notify Steinway of such fact. Notwithstanding the foregoing, Steinway shall
accept the Property in its then "as is" condition with no abatement of any rents
payable pursuant to the Ground Lease or the Master Lease and with no assignment
by the Partnership to Steinway of any insurance proceeds payable in connection
with such fire or other casualty, provided, however, that subsequent to the
Closing, the Partnership shall promptly comply with its repair and/or
restoration obligations pursuant to the Master Lease.
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12. CONVEYANCE TAXES; OTHER CLOSING COSTS.
a. Steinway shall be solely responsible for, and shall pay in
full at the Closing, the New York State Real Property Transfer Tax imposed by
Paragraph 31 of the New York State Tax Law, the New York City Real Property
Transfer Tax imposed by Title II of Chapter 46 of the Administrative Code of the
City of New York and any other tax payable by reason of the conveyance of the
Improvements to Steinway, and the Partnership shall pay any such tax payable by
reason of the execution and delivery of the Ground Lease.
b. Steinway shall be solely responsible for the cost of any due
diligence performed by Steinway in connection with the consummation of the
transactions contemplated hereby, including, without limitation, any survey and
any engineering or environmental report, any recording charges related to the
Deed or the Ground Lease Memo, any title insurance premiums or other charges,
the fees and expenses of its legal counsel and other advisors and the commission
payable to Broker as provided in Paragraph 9.
c. The Partnership shall be solely responsible for any
recording charges relating to the Master Lease Memo and the fees and expenses of
its legal counsel and other advisors (other than Broker to the extent provided
in Paragraph 9).
13. CONFIDENTIALITY.
a. Steinway agrees that it shall treat any information it has
obtained or may obtain (whether orally, in writing or in any other form) from or
on behalf of the Partnership concerning the Property (such information, as well
as any documents, memoranda, notes and other writings, and any computer data
prepared by Steinway or its agents or representatives based in whole or in part
on such information, is hereinafter referred to as the "Confidential
Information") in accordance with the provisions hereof.
b. The Confidential Information shall not be used or duplicated
by Steinway for any purpose other than evaluating the Property. Steinway shall
keep the Confidential Information strictly confidential and shall not disclose
the Confidential Information to any person; provided, however, the Confidential
Information may be disclosed to (i) Steinway's attorneys, accountants, potential
lenders and other advisors (collectively, "Consultants"), (ii) the directors,
officers, partners and employees of Steinway or any Consultant (all of whom are
collectively referred to as "Related Parties" and
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individually as a "Related Party") who, in Steinway's reasonable judgment, need
to know such information in connection with Steinway's efforts to evaluate the
Property, and (iii) any other person to which disclosure shall be necessary to
effect compliance with any law, rule, regulation or order applicable to
Steinway, provided that in the case of disclosure described in clause (iii),
Steinway shall take all reasonable steps to protect Confidential Information
from further disclosure. Steinway shall inform the Consultants and the Related
Parties of the confidential nature of such information, shall direct the
Consultants and the Related Parties to keep all such information in the
strictest confidence and to use such information only for the purpose of
evaluating the Property. Any disclosures made by the Consultants or the Related
Parties that are prohibited by this Agreement shall be deemed made by, and be
the responsibility of, Steinway.
c. The Partnership and Steinway shall each keep the financial
terms of the transactions contemplated by this Agreement and the Purchase
Agreement strictly confidential (the "Financial Terms"), and shall not disclose
the Financial Terms to any person; provided, however, the Financial Terms may be
disclosed to (i) either party's Consultants, (ii) the Related Parties of the
Partnership and Steinway, and (iii) any other person to which disclosure shall
be necessary (after in each case written notice to the other party) to effect
compliance with any law, rule, regulation or order applicable to such disclosing
party; and, provided further, however, that provisions of this Section 13.c.
shall not apply from and after the date upon which Steinway discloses the
Financial Terms to the Securities Exchange Commission or any similar body as
required by applicable reporting obligation.
d. In the event that this Agreement shall be terminated as
provided herein, at the request of the Partnership, Steinway shall promptly
deliver to the Partnership all written Confidential Information and will not
retain any copies, extracts or other reproductions in whole or in part of such
material.
e. Each party acknowledges that the other party will incur
irreparable damage if any of the provisions of this Paragraph 13 should be
breached. Accordingly, if either party or any of its agents or representatives
breaches or threatens to breach any of the provisions of this Paragraph 13, the
other party shall be entitled, without prejudice to the rights and remedies
otherwise available to it, to an injunction (without any bond or other security
being required therefor) restraining any breach of the provisions of this
Paragraph 13 by the other party or its agents or representatives.
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<PAGE>
f. Each party hereby indemnifies, defends and holds the other
party harmless from and against any and all losses, damages, claims,
liabilities, costs and expenses (including attorneys' fees and disbursements)
suffered or incurred by such other party, which arise, in whole or in part, out
of or in connection with the breach of this Paragraph 13 by the indemnifying
party or its Consultants or any Related Party, irrespective of whether or not
authorized by such indemnifying party.
g. The terms of this Paragraph 13 shall survive the termination
of this Agreement.
14. MISCELLANEOUS.
a. FURTHER ASSURANCES. Each of the parties shall cooperate and
take such actions, and execute such other documents as the other parties or any
one of them may reasonably request in order to carry out the transactions
contemplated by this Agreement.
b. NO PARTNERSHIP, ETC. The execution of this Agreement is not
intended to be, nor shall it be construed to be, the formation of a partnership
or joint venture between the parties to this Agreement or their respective
affiliates.
c. NOTICE. All notices, demands, requests, consents,
approvals, reports or other communications required or permitted to be given
pursuant to this Agreement shall be in writing and shall be deemed given: (i)
when delivered by hand (including, without limitation, delivery by any private
or public courier service); (ii) when delivered by first class, certified mail,
return receipt requested, postage prepaid (or when delivery is attempted if such
delivery is refused by recipient); or (iii) when sent by tested telex,
telecopier or other facsimile reproduction equipment, to the following addresses
(or such other address as the recipient party may hereafter specify in the same
manner):
If to Steinway, to it at:
Steinway Musical Instruments, Inc.
800 South Street, Suite 425
Waltham, Massachusetts 02453-1472
Attention: Dennis M. Hanson, Esq.
Fax: (781) 894-9803
with a copy to:
Milbank, Tweed, Hadley & McCloy LLP
16
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One Chase Manhattan Plaza
New York, New York 10005
Attention: Barbara J. Briggs, Esq.
Fax: (212) 530-5219
If to the Partnership, to it at:
c/o Wexford Management LLC
411 West Putnam Avenue
Greenwich, Connecticut 06830
Attention: Joseph M. Jacobs
Fax: (203) 862-7320
with a copy to:
Proskauer Rose LLP
1585 Broadway
New York, New York 10036
Attention: Wendy J. Schriber, Esq.
Fax: (212) 969-2900
d. ENTIRE AGREEMENT. This Agreement and the Exhibits annexed
hereto contain the entire agreement and understanding of the parties with
respect to the subject matter hereof, and all prior negotiations, proposals and
agreements (whether written or oral) between them (or their respective
affiliates) relating to the subject matter hereof have been superseded and are
merged in this Agreement.
e. ASSIGNMENT. This Agreement is binding upon and shall inure
to the benefit of the parties and their respective successors and permitted
assigns. Notwithstanding the foregoing, Buyer shall not assign its rights under
this Agreement without (x) obtaining the Partnership's prior written consent
thereto, which consent may be granted or denied by the Partnership in the
Partnership's sole and absolute discretion, (y) obtaining Seller's prior written
consent to the simultaneous assignment of the Purchase Agreement as provided
therein, and (z) assigning the Purchase Agreement to the same assignee
simultaneously with the assignment of this Agreement; provided, however, that
Steinway may simultaneously assign this Agreement and the Purchase Agreement to
an affiliate of Steinway on prior written notice to, but without the consent of,
Seller and the Partnership. Notwithstanding the foregoing, with respect to any
assignment of this Agreement permitted hereunder, no such assignment shall
relieve Steinway of its obligations hereunder and, subsequent to any such
assignment, Steinway's liability hereunder shall continue notwithstanding any
subsequent modification or amendment hereof or the release of any assignee
hereunder from any liability, to all of which Steinway hereby
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consents in advance.
f. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, such term, provision, covenant or restriction
shall be void or unenforceable only to the extent specifically set forth in any
such holding, and the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated. In the event that any such term,
provision, covenant or restriction is so held to be invalid, void or
unenforceable, the parties hereto shall use their best efforts to find and
employ an alternative means to achieve the same or substantially the same result
as that contemplated by such term, provision, covenant or restriction.
g. WAIVERS, ETC. No failure or delay on the part of any party
hereto in exercising any power or right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right of power, or
any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. No modification or waiver of any provision of this Agreement
nor consent to any departure by any party therefrom shall in any event be
effective unless the same shall be in writing, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given.
h. GOVERNING LAW. This Agreement shall be construed and
interpreted according to the laws of the State of New York, without reference to
such state's principles governing conflicts of laws.
i. HEADINGS. The headings used herein are for convenience of
reference only, are not part of this Agreement and are not intended to affect
the construction, or to be taken into account in the interpretation, of this
Agreement.
j. COUNTERPARTS; EFFECT. This Agreement may be signed in any
number of counterparts with the same effect as if the signatures were all upon
the same instrument.
[END OF TEXT]
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[EXECUTION PAGE]
IN WITNESS WHEREOF, the parties hereto have executed, or caused this
Agreement to be executed on their behalf, on the day first above written.
THE PARTNERSHIP:
111 WEST 57TH STREET ASSOCIATES, L.P.
By: JASIE, INC., General Partner
By: /s/ Joseph M. Jacobs
-------------------------
Name: Joseph M. Jacobs
Title: President
STEINWAY:
STEINWAY, INC.
By: /s/ Dennis M. Hanson
-------------------------
Name: Dennis M. Hanson
Title: V.P. and C.F.O.
<PAGE>
Exhibit 10.3
LEASE AGREEMENT, dated as of March 30, 1999 (this "Lease"), between
111 WEST 57TH STREET ASSOCIATES, L.P., a New York limited partnership, having an
office c/o Wexford Management LLC, 411 West Putnam Avenue, Greenwich,
Connecticut 06830 ("Lessor"), and STEINWAY, INC., a Delaware corporation, having
an address at One Steinway Place, Long Island City, New York 11105 ("Lessee").
65535RT65535CLE I
DEMISE; TERM
I.1 LEASE OF PREMISES; TITLE AND CONDITION.
(a) In consideration of the rents and covenants herein stipulated to
be paid and performed by Lessee and upon the terms and conditions herein
specified, Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor,
the premises (the "Premises") consisting of (i) the parcel of land described in
SCHEDULE A annexed hereto and made a part hereof (such parcel hereinafter
referred to the "Land"), and (ii) the easements, rights and appurtenances
relating to the Land, including, without limitation, the agreements, if any, set
forth in SCHEDULE B, annexed hereto and made a part hereof. The Premises are
leased to Lessee in their present condition without representation or warranty
by Lessor of any kind and subject to all applicable Legal Requirements (as
hereinafter defined) now or hereafter in effect and to the existing state of
title, including, without limitation, the title matters listed in SCHEDULE C,
attached hereto and made a part hereof (the "Permitted Exceptions"). Lessee has
examined the Premises and title to the Premises and has found all of the same to
be satisfactory for all purposes. All buildings and other improvements
(including, without limitation, the attachments and other affixed property) now
or hereafter located on the Land (collectively referred to as the
"Improvements") are not the subject of this Lease, and Lessor shall not acquire
pursuant to this Lease any right, title or interest therein or thereto, nor in
any additions, alterations, restorations and repairs to and replacements of any
of the foregoing, except for the right of reversion provided in Section 9.1 upon
the expiration or earlier termination of this Lease, and except as expressly
provided below. Any Improvements now or hereafter located or constructed on or
placed upon the Premises shall be and remain the property of Lessee, subject to
the terms of this Lease, including, without limitation, the right of reversion
provided in Section 9.1 upon the expiration or earlier termination of this
Lease. The Premises and the Improvements shall be collectively referred to
herein as the "Property".
(b) Lessee acknowledges and agrees that, except for the
representations, statements or warranties (if any) of Lessor expressly set forth
in this Lease, Lessee has not relied, and
<PAGE>
shall not be entitled to rely, on any representations, statements, or
warranties, express or implied, which may have been made, or alleged by
Lessee to have been made, by or on behalf of Lessor or any broker, agent,
employee or other representative of Lessor, in respect of the Premises, the
status of title to the Premises, the zoning or other laws, regulations, rules
and orders applicable thereto, the nature and extent of any Impositions (as
hereinafter defined), or the use that may be made of the Premises, it being
the parties' intention that Lessor shall have no liability whatsoever for any
representations, statements or warranties made, or alleged to have been made
with respect to the foregoing except for any such representations, statements
or warranties expressly set forth in this Lease.
(c) Lessee agrees that, except as otherwise expressly set forth in
this Lease, no representations, statements or warranties, express or implied,
have been made by or on behalf of Lessor that would entitle or permit Lessee
to have any abatement, reduction, set-off, counterclaim, defense or deduction
with respect to any Rental (as hereinafter defined) or other sum payable
hereunder, that Lessee has relied on no such representations, statements or
warranties and that Lessor shall not in any event whatsoever be liable by
reason of any claim of representation or misrepresentation or breach of
warranty with respect thereto.
I.2 USE; COVENANT OF QUIET ENJOYMENT; RIGHT OF INSPECTION.
(a) Lessee may use the Premises for the maintenance and operation
of an office building, and for any lawful purpose appurtenant thereto.
Lessor covenants that, if and as long as Lessee shall faithfully perform the
agreements, terms, covenants and conditions hereof, Lessee and any person
claiming through or under Lessee shall and may (subject, however, to the
provisions, reservations, terms and conditions of this Lease) peaceably and
quietly have, hold and enjoy the Premises for the term hereby granted without
molestation or disturbance by or from Lessor or any person claiming through
or under Lessor. The foregoing does not, and shall not be deemed to, create
or give to any person claiming through or under Lessee or to any other person
except Lessee any claim or right of action against Lessor.
(b) Lessor and its agents and designees may, upon reasonable
notice and at reasonable times, and subject to the rights of any subtenants,
licensees, and guests, enter upon and examine the Property and show the
Property to prospective purchasers, mortgagees or lessees of the Premises or
the interest of Lessor therein, as long as such examination or showing shall
not unreasonably interfere with the business operations of Lessee at the
Property.
I.3 TERM. The Premises are leased for a term (the "Term") of ninety-nine
(99) years. The Term shall commence on the date
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hereof (the "Commencement Date") and expire on March 31, 2098 (the
"Expiration Date").
I.4 FEE MORTGAGES.
(a) The parties agree that Lessor shall be permitted to mortgage
the fee interest in the Land during the Term of this Lease (each, a "Fee
Mortgage"). This Lease (including, without limitation, the FMV Purchase
Option granted to Lessee pursuant to Section 12.3 below) shall be subject and
subordinate to the terms and provisions of, and the lien of, any such Fee
Mortgage, provided that (i) such Fee Mortgage contains an express provision
to the effect that, if there shall be a foreclosure of the Fee Mortgage, the
holder of such Fee Mortgage will not evict Lessee, disturb Lessee's
possession under this Lease, or terminate or disturb Lessee's leasehold
estate or rights hereunder, and will recognize Lessee as the direct tenant of
such holder on the same terms and conditions as are contained in this Lease,
subject to the provisions hereinafter set forth, provided no Event of Default
shall have occurred and be continuing hereunder, or (ii) Lessee shall obtain
a separate subordination, non-disturbance and attornment agreement from the
holder of such Fee Mortgage, which agreement may be conditioned upon
conditions then ordinary and customary in subordination, non-disturbance and
attornment agreements entered into by lenders at that time. If, in connection
with the financing of the Premises, any lending institution shall request
reasonable modifications of this Lease that do not increase Lessee's monetary
obligations under this Lease, or materially adversely affect or diminish the
rights, or materially increase the other obligations of Lessee under this
Lease, Lessee shall make such modifications.
(b) Unless expressly waived or modified therein, any nondisturbance
provision contained in a Fee Mortgage or any separate subordination,
nondisturbance and attornment agreement delivered to Lessee by the holder of any
Fee Mortgage shall be deemed to have been made on the condition that neither the
holder of such Fee Mortgage nor anyone claiming by, through or under such
holder, including a purchaser at a foreclosure sale, shall be:
(i) liable for any act or omission of any prior lessor
(including, without limitation, the then defaulting Lessor), except to the
extent arising or continuing after the holder of such Fee Mortgage or such
purchaser shall have succeeded to the right and title of the defaulting lessor
in the Premises, or
(ii) subject to any defense or offsets which Lessee may have
against any prior lessor (including, without limitation, the then defaulting
Lessor), except to the extent arising or continuing after the holder of the Fee
Mortgage or such purchaser shall have succeeded to the right and title of the
defaulting lessor in the Premises, and then only to the extent
3
<PAGE>
provided in Section 1.5 hereof, or
(iii) bound by any payment of Rental which Lessee may have
made to any prior landlord (including, without limitation, the then
defaulting Lessor) more than thirty (30) days in advance of the date upon
which such payment was due, or
(iv) bound by any obligation to make any payment to or on
behalf of Lessee, except to the extent arising or continuing after the holder of
such Fee Mortgage or such purchaser shall have succeeded to the right and title
of the defaulting lessor in the Premises, or
(v) bound by any obligation to perform any work or to make
improvements to the Premises, or
(vi) bound by any amendment or modification of this Lease made
after the date of its mortgage without its consent (other than any amendment
which confirms the amount of any Basic Rent determinated in accordance with the
provisions of Section 2.2 below or any CPI Escalation as provided in Section
13.2), or
(vii) bound to return any collateral delivered by Lessee to
Lessor in connection with Lessee's obligations under this Lease until such
collateral has come into its actual possession and Lessee would be entitled to
such collateral pursuant to the terms of this Lease.
(c) Within fifteen (15) days after request of Lessor, Lessee shall
execute and deliver such documents, agreements, instruments, assignments, forms
and affidavits which may be required in connection with any such superior Fee
Mortgage, and to confirm the subordination of this Lease to such superior Fee
Mortgage, including, without limitation, any subordination, nondisturbance and
attornment agreement contemplated by subparagraph (a) above.
(d) No termination (except in connection with a condemnation of all
or substantially all of the Property as described in Section 5.1 below),
cancellation, surrender or modification (other than any amendment which confirms
the amount of any Basic Rent determinated in accordance with the provisions of
Section 2.2 below or any CPI Escalation as provided in Section 13.2) of this
Lease by Lessor, nor any waiver by Lessor of any right to collect Rental or any
material, monetary provision of this Lease, shall be effective as to the holder
of any Fee Mortgage unless consented to in writing by the holder of such Fee
Mortgage.
(e) A copy of any notice of default from Lessee to Lessor under this
Lease shall be given to the holder of any Fee Mortgage. Such notices shall be
given in the manner described in Paragraph 8.1 and shall in all respects be
covered by the provisions of that Paragraph, it being understood and agreed,
however, that any notice delivered to the holder of a Fee Mortgage by e-mail or
facsimile shall only be effective upon the actual receipt thereof by the holder
of such Fee Mortgage.
I.5 MASTER LEASE.
(a) Lessor and Lessee have simultaneously entered into
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<PAGE>
a certain Master Lease, of even date herewith, pursuant to which Lessee, as
landlord, has leased to Lessor, as tenant, the Property (the "Master Lease").
The parties acknowledge and agree that during the First Basic Rent Period
(as hereinafter defined), Lessor's right to receive a portion of the annual
Basic Rent hereunder in the amount of $270,000 per annum (the "Annual
Subordinate Rent Amount") shall be subordinate to Lessee's right to receive
the basic fixed rent payable by Lessor to Lessee pursuant to the Master Lease
(the "Master Lease Fixed Rent"), such that to the extent that, and for so
long as, any portion of the Master Lease Fixed Rent is not paid by Lessor
when due, Lessee shall be permitted to deduct from the next payment(s) of
Basic Rent payable hereunder the amount of such unpaid Master Lease Fixed
Rent, but in no event shall Lessee be permitted to deduct from the Basic Rent
payable hereunder an amount in excess of $22,500 per month or the Annual
Subordinate Rent Amount in any given calendar year during the term hereof, it
being understood and agreed, however, that (x) upon the earlier to occur of
(i) the payment to Lessee of any such unpaid Master Lease Fixed Rent (whether
by application of the offset of Basic Rent as provided above or otherwise),
and (ii) the deduction by Lessee of the Annual Subordinate Rent Amount from
the Basic Rent, Lessee shall have no further right to any offset against the
Rental provided herein with respect to any such unpaid Master Lease Fixed
Rent Amount, (y) Lessor shall receive a credit against the Master Lease Fixed
Rent payable by Lessor under the Master Lease in the amount of any offset
against Basic Rent taken by Lessee in accordance with the provisions of this
Section 1.5, and (z) to the extent that Lessor shall pay any Master Lease
Fixed Rent after Lessee shall have taken an offset against the Basic Rent
hereunder with respect thereto, Lessee shall make a corresponding payment of
Basic Rent hereunder.
(b) Notwithstanding anything in this Lease to the contrary, to the
extent that any covenant or obligation to be performed by Lessee hereunder is
also required to be performed by the lessee under the Master Lease, performance
of such covenant or obligation by the lessee under the Master Lease shall be
deemed to constitute performance by the Lessee hereunder.
65535RT65535CLE II
RENT
II.1 BASIC RENT. Lessee shall pay to Lessor as basic rent ("Basic Rent"):
(i) for that portion of the Term from the Commencement Date through December 31,
2008 (the "First Basic Rent Period"), Basic Rent for the Premises shall be an
amount equal to $2,170,000 per annum ($180,833.33 per month); (ii) for that
portion of the Term from January 1, 2009 through December 31, 2018 (the "Second
Basic Rent Period"), Basic Rent for the Premises shall be an amount equal to
$2,790,000 per annum ($232,500.00 per month); (iii) for that portion of the Term
from January 1, 2019 through December 31, 2038 (the "Third Basic Rent Period"),
Basic Rent for the Premises shall be an amount equal
5
<PAGE>
to the greater of (x) $2,790,000 per annum ($232,500.00 per month) and (y) 4%
of the Fair Market Value of the Property (as hereinafter defined) as of the
commencement of the Third Basic Rent Period; (iv) for that portion of the
Term from January 1, 2039 through December 31, 2058 (the "Fourth Basic Rent
Period"), Basic Rent for the Premises shall be an amount equal to the greater
of (x) the Basic Rent per annum during the Third Basic Rent Period and (y) 4%
of the then Fair Market Value of the Property as of the commencement of the
Fourth Basic Rent Period; (v) for that portion of the Term from January 1,
2059 through December 31, 2078 (the "Fifth Basic Rent Period"), Basic Rent
for the Premises shall be an amount equal to the greater of (x) the Basic
Rent per annum during the Fourth Basic Rent Period and (y) 4% of the then
Fair Market Value of the Property as of the commencement of the Fifth Basic
Rent Period; and (vi) for that portion of the Term from January 1, 2079
through March 31, 2098 (the "Sixth Basic Rent Period"), Basic Rent for the
Premises shall be an amount equal to the greater of (x) the Basic Rent per
annum during the Fifth Basic Rent Period and (y) 4% of the then Fair Market
Value of the Property as of the commencement of the Sixth Basic Rent Period.
II.2 DETERMINATION OF FAIR MARKET VALUE. At least ninety (90) days
prior to the first day of each of the Third Basic Rent Period, the Fourth
Basic Rent Period, the Fifth Basic Rent Period and the Sixth Basic Rent
Period, Lessor shall notify Lessee of Lessor's estimate of the Fair Market
Value of the Property as of the relevant date. Within thirty (30) days after
the giving of such notice, Lessee shall notify Lessor whether Lessee accepts
or rejects Lessor's estimate. If Lessee accepts such estimate, or if Lessee
fails to reject such estimate within such thirty (30) day period, time being
of the essence, then the Fair Market Value of the Property shall be the
amount set forth in Lessor's estimate. If Lessee rejects Lessor's estimate
within such thirty (30) day period, time being of the essence, the Fair
Market Value of the Property shall be determined by arbitration in accordance
with Article XI of this Lease. If the disputed Fair Market Value of the
Property shall not have been determined (by arbitration or by agreement
between the parties) at the time Lessee is required to pay such disputed
Basic Rent, then pending such determination, the Basic Rent shall continue to
be paid at the rate applicable to the immediately preceding Basic Rent Period
until such time as the amount of the disputed Basic Rent has been determined.
Within ten (10) days after notice of the determination of the disputed Basic
Rent, Lessee shall pay to Lessor any underpayment of such Basic Rent,
together with interest thereon from the date any such Basic Rent payment
first became due until the date such Basic Rent Payment is received by Lessor
at the rate per annum equal to one (1%) percent above the "prime rate" (the
"Prime Rate") announced from time to time by The Chase Manhattan Bank, or, if
such bank ceases to exist, a bank of comparable stature (but in no event
shall such rate exceed the maximum amount permitted by law).
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II.3 MONTHLY INSTALLMENTS. The Basic Rent shall be due and payable in
equal monthly installments in advance, on the Commencement Date and on the first
day of each month thereafter during the Term. If the Commencement Date occurs
on a day other than the first day of a calendar month or the Expiration Date
occurs on a day other than the last day of a calendar month, the monthly
installment of Basic Rent for such partial calendar month shall be prorated on
the basis of a thirty (30) day month.
II.4 NET LEASE; NON-TERMINABILITY.
(a) This Lease is a net, net, net lease and Lessee's obligations
hereunder shall be absolute and unconditional. The Basic Rent, Impositions
(as hereinafter defined) and all other amounts payable by Lessee hereunder
shall be absolutely net to Lessor and shall be payable by Lessee without any
notice, demand, counterclaim or defense, and except as expressly provided in
Section 1.5 above, without any abatement, suspension, deferment, diminution,
setoff, deduction or reduction whatsoever, free from any charges,
assessments, impositions, expenses or deductions of any and every kind or
nature whatsoever, so that this Lease shall yield net to Lessor under all
circumstances and conditions (whether now or hereafter existing and whether
or not within the contemplation of the parties), the Basic Rent, Impositions
and all other amounts payable by Lessee hereunder. Lessee shall pay all
costs, expenses and charges of every kind and nature relating to the Property
and the operation, use, occupancy, management, condition, maintenance and
repair thereof, which arise or become due or payable during or after (but, if
payable after, attributable to a period falling within) the Term (other than
any payments of principal or interest, prepayment premiums, loan fees, exit
fees or any other amounts which may become due and payable by Lessor to the
holder of any Fee Mortgage in connection with such Fee Mortgage financing
obtained by Lessor and which are not otherwise provided to be the
responsibility of Lessee pursuant to the terms of this Lease), and Lessee
shall indemnify Lessor against, and hold Lessor harmless from, such costs,
expenses and charges, and Lessee's liability for the payment of any of such
costs, expenses and charges which shall become payable after the Term as
aforesaid is hereby expressly provided to survive the Term.
(b) Except as expressly provided in Section 5.1(b), any present or
future law to the contrary notwithstanding, this Lease shall not terminate, nor
shall Lessee have any right to terminate, rescind or void this Lease or to be
released or discharged from any obligations or liability hereunder, nor shall
Lessee be entitled to any abatement or reduction, set-off, counterclaim, defense
or deduction with respect to any Rental or other sum payable hereunder, except
as expressly provided in Section 1.5, nor shall the obligations of Lessee
hereunder be affected under any circumstances for any reason, including, without
limitation: (i) any damage to or destruction of the Property, (ii) any taking of
the Property or any part thereof by condemnation or otherwise, (iii) any
prohibition, limitation, restriction or prevention of Lessee's use, occupancy or
enjoyment
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of the Property, or any interference with such use, occupancy or enjoyment by
any Person (whether due to any defect in or failure of Lessor's title to the
Premises or otherwise), (iv) any action of any court, administrative agency
or other governmental authority, (v) any action, omission or breach on the
part of Lessor under this Lease or under any other agreement to which Lessee
and Lessor are parties, (vi) the impossibility of performance by Lessor or
Lessee or both, or (vii) any other cause whatsoever, whether similar or
dissimilar to the foregoing. The obligations of Lessee hereunder are and
shall in all events be construed as separate and independent covenants and
agreements and shall continue unaffected unless such obligations shall have
been modified in writing (which writing shall be executed by Lessor and
Lessee) or terminated pursuant to an express provision of this Lease. Lessee
waives all rights to terminate or surrender this Lease, or, except as
expressly provided in Section 1.5, to abate or defer any Rental or other sums
payable hereunder, or to claim that a constructive eviction has occurred with
respect to the Premises or any part thereof.
(c) Lessee shall remain obligated under this Lease in accordance with
its terms, and shall not take any action to terminate, rescind or void this
Lease as a result of any bankruptcy, insolvency, reorganization, liquidation,
dissolution or other proceeding affecting Lessor or any assignee of Lessor, or
any action with respect to this Lease which may be taken by any receiver,
trustee or liquidator or by any court. Except as otherwise expressly provided
herein, Lessee waives all rights at any time conferred by statute or otherwise
to quit, terminate or surrender this Lease or the Property, or to any abatement
or deferment of any amount payable by Lessee hereunder.
(d) All amounts payable by Lessee pursuant to this Lease, including,
without limitation, the Basic Rent, Impositions, and all other amounts payable
by Lessee under this Lease (collectively, "Rental"), shall constitute rent under
this Lease, and all of the Rental to be paid to Lessor pursuant to the
provisions of this Lease shall be paid as provided in this Article II.
(e) Each item of Rental hereunder shall be obligations within the
meaning of Section 365(d)(3) of the Bankruptcy Code, including without
limitation, all amounts which are due and payable after the occurrence of any
bankruptcy or insolvency proceeding of Lessee.
(f) All Rental under this Lease shall be payable when due and, except
as otherwise expressly provided herein, without notice or demand and without any
abatement, deduction, counterclaim or offset whatsoever, by wire transfer of
immediately available funds, and shall be payable to a bank account or bank
accounts designated by Lessor in accordance with wire transfer instructions
provided by Lessor, from time to time, in a notice to Lessee, which designation
shall remain in effect until Lessee's receipt of any subsequent or modified
written instructions. All Rental paid under this Lease to Persons other than
Lessor shall be, and be construed as, payments made by Lessee for the benefit of
Lessor. Lessor shall have the right to
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direct Lessee to pay all or any part of the Rental directly to the holder of
a Fee Mortgage or any other third party, and Lessee shall be obligated to
comply with such request.
(g) No payment by Lessee or receipt or acceptance by Lessor of a
lesser amount than the correct amount of any Rental shall be deemed to be other
than a payment on account, nor shall any endorsement or statement on any check
or any letter accompanying any check or payment be deemed an accord and
satisfaction, and Lessor may accept such check or payment without prejudice to
Lessor's right to recover the balance or pursue any other remedy in this Lease
or at law provided.
(h) If any of the Basic Rent, Impositions or any other Rental payable
under the terms and provisions of this Lease shall be or become uncollectible,
reduced or required to be refunded because of any rent control or similar act or
law enacted by a governmental authority, Lessee shall enter into such
agreement(s) and take such other steps as Lessor may reasonably request and as
may be legally permissible to permit Lessor to collect the maximum rents or
other amounts which from time to time during the continuance of such legal rent
restriction may be legally permissible (and not in excess of the amounts
reserved therefor under this Lease). Upon the termination of such legal rent
restriction, (a) the Rental in question shall become and thereafter be payable
in accordance with the amounts reserved herein for the periods following such
termination, and (b) Lessee shall pay to Lessor, to the maximum extent legally
permissible, an amount equal to (i) the amount of the Rental in question which
would have been paid pursuant to this Lease but for such legal rent restriction
less (ii) the amounts with respect to such Rental paid by Lessee during the
period such legal rent restriction was in effect.
II.5 LATE PAYMENT OF RENTAL. Lessee shall pay to Lessor interest at a rate
(the "RATE") equal to (i) two (2%) percent in excess of the default rate of
interest per annum on any Fee Mortgage encumbering the Premises, or (ii) if no
such Fee Mortgage is outstanding, the rate per annum equal to eight (8%) percent
above the Prime Rate (but in no event shall the Rate exceed the maximum amount
permitted by law), on all overdue Basic Rent and other Rental from the due date
thereof until paid and on all other overdue sums due hereunder from the date of
payment by Lessor until repaid by Lessee. In addition, if Lessee fails to make
any payment of Basic Rent to Lessor on the due date thereof, Lessee shall pay a
late charge equal to five percent (5%) of the amount past due.
65535RT65535CLE III
IMPOSITIONS; LIENS; PERMITTED CONTESTS
III.1 IMPOSITIONS.
(a) Lessee covenants and agrees to pay or cause to be paid, prior to
delinquency, to the governmental authority imposing the same, all of the
following items (collectively, the
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"Impositions"): (1) taxes, payments in lieu of taxes, real property
assessments and special assessments, and business improvement district taxes
and assessments, (2) personal property taxes, (3) occupancy and rent taxes,
(4) water, water meter and sewer rents, rates and charges, (5) excises, (6)
levies, (7) license and permit fees, (8) charges for fire alarm service,
sprinkler supervisory service, gas, electricity, steam, and other public
utility or similar services, (9) fines, penalties and other similar or like
governmental charges applicable to the foregoing and any interest or costs
with respect thereto, and (10) all other governmental charges, general and
special, ordinary and extraordinary, foreseen and unforeseen, which at any
time during the Term hereof, are assessed, levied, confirmed, imposed upon,
or would grow or become due and payable out of or in respect of, or would be
charged with respect to, (t) the Premises, (u) the use and occupancy of the
Premises by Lessee, (v) encumbrances or liens on the Premises, (w) any vault,
passageway or space in or under the sidewalks or streets in front of or
adjoining the Premises, (x) any other appurtenances of the Premises, (y) the
Improvements, or any equipment, personal property or other facility used by
Lessee or its manager in the operation thereof, or (z) the Rental (or any
portion thereof) payable by Lessee hereunder. Lessee shall not be required
to pay any franchise, estate, inheritance, transfer, income or similar tax of
Lessor unless such tax is imposed, levied or assessed in substitution for any
other tax, assessment, charge or levy which Lessee is required to pay
pursuant to this Paragraph 3.1; provided, however, that if at any time during
the Term of this Lease, the method of taxation shall be such that there shall
be assessed, levied, charged or imposed on Lessor a capital levy or other tax
directly on the rents received therefrom, or upon the value of the Premises
or any present or any future improvement or improvements on the Premises,
then all such levies and taxes or the part thereof so measured or based shall
be payable by Lessee, but only to the extent that such levies or taxes would
be payable if the Premises were the only property of Lessor, and Lessee shall
pay and discharge the same as herein provided. Lessee will furnish to
Lessor, promptly after demand therefor, proof of payment of all items
referred to above which are payable by Lessee. If any such assessment may
legally be paid in installments, Lessee may pay such assessment in
installments; in such event, Lessee shall be liable only for installments
which become due and payable during the Term hereof.
(b) If required by the holder of any Fee Mortgage, Lessee shall
deposit with the holder of such Fee Mortgage: (x) on the first day of each
calendar month, one-twelfth of an amount which would be sufficient to pay any
Impositions payable, or estimated by the holder of such Fee Mortgage to be
payable, during the next ensuing 12 months, plus one-twelfth of an amount
which would be sufficient to pay the insurance premiums due for the renewal
of the coverage afforded by the policies required to be obtained by Lessee
hereunder upon the expiration thereof, and (y) to the extent deemed necessary
by the holder of such Fee Mortgage, an initial deposit in an amount necessary
so that, when
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combined with the monthly payments described in clause (x) above, sufficient
funds exist to pay the next ensuing payments of Impositions and insurance
premiums thirty (30) days prior to the due date thereof while still leaving
an amount equal to one (1) full month's payment (the amounts described in
clauses (x) and (y) above, collectively, the "Tax and Insurance Escrow
Fund"). The Tax and Insurance Escrow Fund shall be payable at the same time,
and in the same manner, as the monthly installments of Basic Rent hereunder.
At the election of the holder of such Fee Mortgage, the Tax and Insurance
Escrow Fund may be divided into separate escrows for Impositions and
insurance premiums. The holder of such Fee Mortgage will make the payments
of Impositions and insurance premiums required to be made by Lessee pursuant
to this Lease, provided that (x) not later than 30 days (or such shorter
period as may be reasonable under the circumstances) prior to the due date
therefor Lessee shall have notified the holder of such Fee Mortgage of the
scheduled amount of Impositions or insurance premiums and the payee, payee's
address and due date therefor, and (y) if the amounts deposited in the Tax
and Insurance Escrow Fund are not sufficient to pay the items set forth in
clauses (x) and (y) above, Lessee shall promptly pay to the holder of such
Fee Mortgage, upon demand, an amount which is sufficient to make up the
deficiency. The Fee Mortgage shall provide that the holder of such Fee
Mortgage may not, under any circumstances, use any amount in the Tax and
Insurance Escrow Fund for purposes other than the payment of Impositions and
insurance premiums, as described in this Section 3.1(b). If the amount of
the Tax and Insurance Escrow Fund shall exceed the amounts due for such
Impositions and insurance premiums, the holder of such Fee Mortgage shall, in
its discretion, either return any excess to Lessee or credit such excess
against future payments to be made to the Tax and Insurance Escrow Fund. To
the extent permitted by applicable law, the Tax and Insurance Escrow Fund
shall not constitute a trust fund and may be commingled with other monies
held by the holder of such Fee Mortgage. No earnings or interest on the Tax
and Insurance Escrow Fund shall be payable to Lessee. Notwithstanding
anything in this Section 3.1(b) to the contrary, the holder of the Fee
Mortgage shall be permitted to adjust the monthly payments required hereunder
from time to time on notice to Lessor and Lessee as reasonably necessary to
ensure that there shall always be sufficient funds in the Tax and Insurance
Escrow Fund to pay the next ensuing payments of Impositions and insurance
premiums thirty (30) days prior to the due date thereof while still leaving
one (1) full month's payment in the Tax and Insurance Escrow Fund.
(c) Any Imposition, relating to a fiscal period of the imposing
governmental authority, a part of which period is included within the Term
and a part of which is included in a period of time after the Expiration Date
(whether or not such Imposition shall be assessed, levied, confirmed, imposed
upon or in respect of or become a lien upon the Premises, or shall become
payable, during the Term) shall be apportioned between Lessor and Lessee as
of the Expiration Date, so that Lessee shall pay that portion of such
Imposition relating to that part of such fiscal
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period included in the period of time before the Expiration Date.
III.2 LIENS. Subject to the provisions of Paragraph 3.3, Lessee
will promptly remove and discharge any charge, lien, security interest or
encumbrance upon the Premises which arises for any reason, including all
liens which arise out of the possession, use, occupancy, construction, repair
or rebuilding of the Premises or by reason of labor or materials furnished or
claimed to have been furnished to Lessee or for the Premises, but not
including (i) the Permitted Exceptions, (ii) any sublease, assignment or
mortgage permitted by the terms of this Lease, and (iii) any charge, lien,
security interest or encumbrance affirmatively created by Lessor in its
capacity as fee owner of the Premises after the date hereof; provided that
Lessee shall have no obligation to discharge any mechanic's, laborer's,
materialman's, supplier's or vendor's lien if payment is being contested
pursuant to Paragraph 3.3 hereof. Nothing contained in this Lease shall be
construed as constituting the consent or request of Lessor, express or
implied, to or for the performance by any contractor, laborer, materialman,
supplier or vendor of any labor or services or for the furnishing of any
materials for any construction, alteration, addition, repair or demolition of
or to the Premises or any part thereof. Notice is hereby given that Lessor
will not be liable for any labor, services or materials furnished or to be
furnished to Lessee, or to anyone (other than Lessor) holding an interest in
the Premises or any part thereof through or under Lessee, and that no
mechanic's or other liens for any such labor, services or materials shall
attach to or affect the interest of Lessor in and to the Premises.
III.3 PERMITTED CONTESTS. Notwithstanding any provision hereof to the
contrary, Lessee shall not be required, nor shall Lessor have the right to
require Lessee, to pay, discharge or remove any tax, assessment, levy, fee,
rent, charge, lien or encumbrance, or to comply with any Legal Requirements
applicable to the Premises or the use thereof, as long as Lessee shall contest,
diligently and in good faith, the existence, amount or validity thereof by
appropriate proceedings which shall prevent the collection of or other
realization upon the tax, assessment, levy, fee, rent, charge, lien or
encumbrance so contested, and which also shall prevent the sale, forfeiture or
loss of the Premises, or any part thereof, or any part of the rents, issues and
profits thereof, to satisfy the same or Legal Requirements, and which shall not
affect the payment of any sums required to be paid by Lessee hereunder, provided
that (i) Lessee provides Lessor with prior written notice of such contest, and
(ii) such contest shall not subject Lessor to the risk of any criminal liability
or civil liability. Lessee shall give such security as may be reasonably
requested by Lessor to insure ultimate payment of such tax, assessment, levy,
fee, rent, charge, lien or encumbrance and compliance with Legal Requirements
and to prevent any sale or forfeiture of the Premises or any portion thereof or
any part of the rents, issues and profits thereof and to
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otherwise protect the interests of Lessor in the Premises. In the event that
Lessor, in Lessor's good faith judgment, determines at any time that the
Premises or any portion thereof or any part of the rents, issues and profits
thereof are in danger of sale or forfeiture or that action is necessary to
otherwise protect the interests of Lessor in the Premises, Lessor may pay the
amount of such contested tax, assessment, levy, fee, rent, charge, lien or
encumbrance, or comply with any Legal Requirements applicable to the Premises
or the use thereof, and in such event, the amount expended by Lessor in
connection therewith shall be deemed to be additional Rental hereunder and
shall be payable by Lessee to Lessor within ten (10) days after demand
therefor by Lessor.
65535RT65535CLE IV
MAINTENANCE AND REPAIR; SERVICES; ALTERATION
IV.1 MAINTENANCE AND REPAIR; COMPLIANCE WITH LEGAL REQUIREMENTS.
(a) Lessee, at its own cost and expense, will maintain all parts
of the Property in good repair and condition, will operate and maintain the
Property in a manner customary for a first-class office property such as the
Property, and will take all action and will make all foreseen and unforeseen
and ordinary and extraordinary changes and repairs which may be required to
keep all parts of the Property in such condition, ordinary wear and tear
excepted. Lessor shall not be required to maintain or repair the Property, or
to make any alteration, addition, change, improvement or replacement with
respect to the Property. Lessee waives the right (x) to require Lessor to
maintain or repair the Property, or to make any alteration, addition, change,
improvement or replacement with respect to the Property, or (y) to make
repairs at the expense of Lessor pursuant to any applicable present and
future laws, rules, orders, ordinances, regulations, statutes, requirements,
codes, resolutions and executive orders (including, without limitation,
environmental laws ("Environmental Laws")) of all governmental authorities
now existing or hereafter created, and of any and all of their departments
and bureaus, including, without limitation, any Board of Fire Underwriters or
similar body exercising similar functions, affecting the Property or the use
or occupancy of the Property (collectively, "Legal Requirements") or any
contract, agreement, covenant, condition or restriction at any time in effect.
(b) Throughout the Term, Lessee, at its sole cost and expense, shall
(i) timely obtain and thereafter keep in full force and effect all permits,
authorizations and approvals of governmental authorities required for the use,
occupancy, operation, maintenance, repair and insurability of the Premises, (ii)
promptly comply with, and discharge of record any violations of, any and all
applicable Legal Requirements affecting the Property or the use or occupancy of
the Property, whether or not such Legal Requirements shall necessitate
structural changes,
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improvements, interference with use and enjoyment of the Premises,
replacements or repairs, extraordinary as well as ordinary, and Lessee shall
so perform and comply, whether or not such Legal Requirements or conditions
shall now exist or shall hereafter be enacted or promulgated or come to
occur, and whether or not such Legal Requirements can be said to be within
the present contemplation of the parties hereto, and (iii) promptly comply
with the requirements of any Permitted Exception which encumbers the Property
(excluding any Fee Mortgage and the Subleases).
(c) Lessee covenants and agrees that from and after the expiration or
termination of the Master Lease: (i) all use and operation of the Property by
Lessee shall be in compliance with all Environmental Laws and required permits;
(ii) there shall be no releases of hazardous materials affecting the Property by
Lessee, and Lessee shall use commercially reasonable efforts to prevent any such
releases by any Subtenant or other user of the Property; (iii) Lessee shall not
use or store, and shall use commercially reasonable efforts to prevent any
Subtenant or other user of the Property from using or storing, hazardous
materials at the Property except (A) routine office, cleaning and janitorial
supplies, (B) in compliance with all Environmental Laws, and (C) with all
required permits; (iv) Lessee shall keep the Property free and clear of all
liens and encumbrances imposed by any Environmental Laws due to any act or
omission by Lessee or any person within Lessee's control (the "ENVIRONMENTAL
LIENS"); (v) Lessee shall, at its sole expense, fully and expeditiously
cooperate in all activities described in Section 4.1(d) below, including
providing all relevant information and making knowledgeable persons within
Lessee's control available for interviews; (vi) Lessee shall, at its sole
expense, (A) perform any environmental site assessment or other investigation of
environmental conditions at the Property upon Lessor's request based on Lessor's
reasonable belief that the Property is not in compliance with all Environmental
Laws, (B) share with Lessor the results and reports and Lessor and the Lessor
Indemnified Parties (defined below) shall be entitled to rely on such results
and reports, and (C) complete any remediation of hazardous materials affecting
the Property or other actions required by any Environmental Laws; (vii) Lessee
shall not allow any Tenant or other user of the Property to violate any
Environmental Law; and (viii) Lessee shall promptly notify Lessor in writing
after it becomes aware of (A) the presence, release, or threatened release of
hazardous materials affecting the Property, (B) any non-compliance of the
Property with any Environmental Laws, (C) any actual or potential Environmental
Lien, (D) any required or proposed remediation of environmental conditions
relating to the Property, or (E) any written communication or notice from any
person relating to hazardous materials which comes into Lessee's possession.
(d) Subject to the rights of Subtenants, Lessor and
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any person designated by Lessor may enter the Property to assess the
environmental condition of the Property and its use including (i) conducting
any environmental assessment or audit (the scope of which shall be determined
by Lessor) and (ii) taking samples of soil, groundwater or other water, air,
or building materials, and conducting other invasive testing at all
reasonable times when (A) Lessor reasonably believes that a release has
occurred or the Property is not in compliance with all Environmental Laws, or
(B) such action is required by any Fee Mortgage. Subject to the rights of
Subtenants, from and after the expiration or termination of the Master Lease,
Lessee shall cooperate with and provide access to Lessor and such person.
IV.2 SERVICES. Lessor shall not be required to furnish any services,
utilities or facilities to the Property. Lessee assumes sole responsibility for
obtaining all services, utilities and facilities required at the Property, and
for the operation, repair, alteration, improvement, replacement, maintenance and
management of the Property during the Term, and shall pay all costs relating to
any of the foregoing.
IV.3 ALTERATIONS.
(a) Lessee may, at its expense, make additions to and alterations of
the Improvements, and construct additional Improvements on the Premises
(collectively, "ALTERATIONS"), provided that (i) the fair market value, utility
and useful life of the Property shall not be reduced or lessened thereby, and
the character and use of the Property as a first-class office building shall not
be altered or impaired, (ii) such Alterations shall be expeditiously completed
in a good and workmanlike first-class manner, free and clear of liens and
encumbrances, and in compliance with all applicable Legal Requirements, the
requirements of all insurance policies required to be maintained by Lessee
hereunder and the terms and provisions of this Lease, (iii) Lessee shall not
make any Alterations in violation of the terms of any Leasehold Mortgage,
restriction, easement, condition, covenant or other matter affecting title to or
use of the Property (other than any Fee Mortgage), and (iv) no Material
Alterations, as hereafter defined, shall be made unless Lessor's prior written
consent shall have been obtained, which consent shall not be unreasonably
withheld, delayed or conditioned, unless an Event of Default shall have occurred
and be continuing in which case such consent may be withheld by Lessor in its
sole discretion. "MATERIAL ALTERATION" is defined as an Alteration which
exceeds a total Estimated Cost of $2,500,000. "ESTIMATED COST" is defined as
the estimated cost of materials, construction and labor (not including
architects, engineers or other professionals), as estimated by a licensed
architect (or if not required by the terms hereof to be estimated by an
architect, as reasonably estimated by Lessor), which estimate together with a
complete description of the Work (as hereinafter defined) and all related work
shall in any case be delivered to, and such estimate and description reasonably
approved by, Lessor, and to the extent required by any Fee Mortgage, by the
holder thereof,
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before the commencement of any Work hereunder, whether or not
such Work shall constitute a Material Alteration. In addition to the
limitations set forth in (i) through (iv) above, Lessee agrees that all
Alterations, restoration, repair and any other work which Lessee shall be
required or permitted to do under the provisions of this Lease (hereinafter
collectively called the "WORK") shall be performed in each case subject to the
following:
(i) Lessee shall not perform any Work which shall have an
adverse effect on the structural portions of the Property or on the building
systems, as operated by Lessee as of the date hereof. Any Work when completed
shall be of such a character as not to reduce the value of the Property below
its value immediately prior to the commencement of such Work or damage to the
Property necessitating such Work or change.
(ii) No Work shall be performed by Lessee if the same would
materially reduce the usable square footage of the Improvements, or reduce the
permitted uses thereof under applicable zoning laws or impair other amenities of
the Property.
(iii) No Material Alterations shall be commenced until detailed
plans and specifications (including layout, architectural, mechanical and
structural drawings), prepared by a licensed architect shall have been submitted
to and approved by Lessor, and no such Work pursuant to a Material Alteration
shall be undertaken except under the supervision of the architect.
(iv) If the Work shall constitute a Material Alteration, the
reasonable out-of-pocket cost and expense of Lessor's, and to the extent
required by any Fee Mortgage, the holder thereof's respective (A) review of any
plans and specifications required to be furnished pursuant to this Lease or (B)
review/supervision of any such Work, shall be paid by Lessee to Lessor, within
ten (10) days after demand. Such review and/or supervision by Lessor and/or the
holder of any Fee Mortgage may be conducted by an engineer, architect or similar
professional retained by Lessor and/or such holder, it being understood and
agreed, however, that if Lessor and the holder of any Fee Mortgage shall obtain
separate consultants to perform the same function, Lessor may only seek
reimbursement from Lessee for the cost of one (1) such consultant.
(v) All Work shall be commenced only after all required
municipal and other governmental permits, authorizations and approvals for Work
permitted under this Lease shall have been obtained by Lessee, at its own cost
and expense, and copies thereof delivered to Lessor. Lessor will, on Lessee's
written request, promptly execute any documents necessary to be signed by Lessor
to obtain any such permits, authorizations and approvals, provided that Lessee
shall bear any out-of-pocket expense or liability of Lessor in connection
therewith; provided that none of the foregoing shall, in any manner, result in a
change in zoning or otherwise have an adverse affect on the ability to use the
Property as currently operated by Lessee.
(vi) All Work shall be commenced only after Lessee shall have
delivered to Lessor insurance policies or certificates therefor issued by
responsible insurers, bearing notations
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evidencing the payment of premiums or accompanied by other evidence
satisfactory to Lessor of such payment, for "Builders All Risk" course of
construction insurance, worker's compensation insurance covering all persons
employed in connection with the Work and with respect to whom death or bodily
injury claims could be asserted against Lessor, Lessee or the Premises, and
owner's protective liability insurance expressly covering the additional
hazards resulting from the Work with limits not less than those, and
otherwise subject to the same conditions and requirements, set forth in
Article V of this Lease with respect to the liability insurance required
thereunder. If under the provisions of any fire, liability or other
insurance policy or policies then covering the Property or any part thereof
any consent to such Alteration by said insurance company or companies issuing
such policy or policies shall be required to continue and keep such policy or
policies in full force and effect, Lessee shall obtain such consents and pay
any additional premiums or charges therefor that may be imposed by said
insurance company or companies.
(vii) If the Work shall constitute a Material Alteration, it
shall not be commenced until Lessee shall have obtained and delivered to
Lessor such security for the performance of Lessee's obligations hereunder as
shall be reasonably satisfactory to Lessor.
(viii) All Work shall be performed in accordance with any
plans and specifications therefor which shall have been approved by Lessor.
All Work shall be commenced and completed in a commercially reasonable manner.
(ix) Upon completion of any Work, Lessee, at Lessee's expense,
shall obtain certificates of final approval of such Work and certificates of
occupancy required by any governmental or quasi-governmental authority and shall
furnish Lessor with copies thereof, and, if the Work constituted Material
Alterations, together with "as-built" plans and specifications for such Work.
(x) Upon two (2) business days' advance notice (except in
the event of an emergency, for which no notice shall be required), any Work
shall be subject to inspection at any time and from time to time by any of
Lessor or the holder of any Fee Mortgage or Leasehold Mortgage, their
respective architect(s), or their duly authorized representatives. If the
Work is not being performed in accordance with the provisions of this Section
4.3 or the plans and specifications (if plans and specifications are required
as a result of a Material Alteration), or if any of the materials or
workmanship are not first-class or are unsound or improper, Lessee shall
correct any such failure and shall replace any unsound or improper materials
or workmanship.
(xi) All agreements with any contractor performing work or
supplying labor or materials in connection with any Material Alteration shall
provide that such agreements shall be conditionally assigned to the following
parties, in the following order of priority: (1) the holder of any Fee Mortgage,
(2) any Leasehold Mortgagee and (3) Lessor, and that upon written notice to the
contractor by any such party that a default hereunder has occurred, such
contractor shall attorn to any such requesting
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party and perform the remaining obligations of contractor pursuant to such
agreement for such party's benefit on the same terms and conditions provided
therein. Lessee shall execute and deliver to any such party such collateral
assignments of such agreements as such party shall reasonably request.
(xii) All Alterations installed in or upon the Property at any
time during the Term shall become part of the Improvements and shall be the
property of Lessee, subject to the terms of this Lease.
(b) Lessee may, at its cost and expense, install, or place upon or
reinstall, or replace and remove from the Property any personal property of
Lessee, provided that Lessee repairs any damage to the Improvements caused
thereby.
65535RT65535CLE V
CASUALTY AND CONDEMNATION; INSURANCE; INDEMNIFICATION
V.1 CONDEMNATION; LEASE TERMINATION.
(a) If at any time during the Term, all or any part of the
Premises shall be taken for any public or quasi-public purpose by any lawful
power or authority by the exercise of the right of condemnation or eminent
domain or by agreement among Lessor, Lessee and those authorized to exercise
such right, the entire award for the Property shall be allocable to Lessor
and Lessee in proportion to the fair market value of their respective
interests in the Property (including, without limitation, Lessor's interest
as the lessee under the Master Lease), provided, however, that if the parties
cannot agree on such fair market values, the fair market value of each
party's respective interest in the Property shall be determined by
arbitration, as provided in Article XI below, it being understood and agreed,
however, that in no event shall the portion of such award allocable to
Lessor's interest in the Property be less than $25,000,000 for such purposes.
Notwithstanding anything in this Section 5.1 to the contrary, neither Lessor
nor Lessee shall be permitted to settle any condemnation award or other
similar payment relating to the Property with the applicable condemning
authority without the prior written consent of the other party, which consent
shall not be unreasonably withheld. To the extent that the applicable
condemning authority makes any separate award or other compensation to Lessor
or Lessee which is inconsistent with the provisions of this Section 5.1,
Lessor and Lessee each hereby irrevocably assigns to the other the portion of
any such award or other compensation which is in excess of the amount which
such party shall be entitled to hereunder in connection with any such taking.
Each of the parties agrees to execute and deliver any and all documents that
may be reasonably required in order to facilitate the settlement and
collection of such awards in accordance with the provisions of this Section
5.1.
(b) If all or substantially all of the Premises shall
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be taken as provided in this Section 5.1, this Lease and the Term shall
terminate and expire on the date of such taking and the Rental payable by
Lessee hereunder shall be paid to and apportioned as of the date of such
taking. For purposes of this Section 5.1, (x) "substantially all of the
Premises" shall be deemed to mean such portion of the Premises as, when so
taken, would render the untaken portion of the Premises unusable for the
purpose for which the same were being used immediately prior to the taking,
and (y) the "date of taking" shall be deemed to be the earlier of (i) the
date on which actual possession of the whole or substantially all of the
Premises, or a part thereof, as the case may be, is acquired by any lawful
power or authority pursuant to the provisions of the applicable federal or
New York State law, or (ii) the date on which title to the Premises or the
aforesaid portion thereof shall have vested in any lawful power or authority
pursuant to the provisions of the applicable federal or New York State law.
(c) If less than substantially all of the Premises shall be taken
as provided in this Section 5.1, then this Lease and the Term shall continue
without abatement of the Rental or diminution of any of Lessee's obligations
hereunder, and Lessee shall promptly restore, to the extent practicable, any
damage to the remaining portion of the Property caused by such taking. If
the Master Lease is in force and effect on the date of such taking, Lessee's
Master Lease Award (as defined in the Master Lease) shall be paid to and held
by the Depository (as hereinafter defined) and shall be disbursed by the
Depository in the manner set forth in the Master Lease. If (i) the Master
Lease is not in force and effect on the date of such taking, or (ii) Lessee's
Master Lease Award shall be insufficient to complete any restoration of the
Property which Lessee is required to perform hereunder Lessee's portion of
any award with respect to such taking shall be paid to and held by the
Depository (as hereinafter defined) and shall be disbursed by the Depository
to Lessee in the manner set forth in Section 5.3 below for the disbursement
of insurance proceeds for Restoration Costs. If Lessee's portion of any
award shall be insufficient to complete any restoration of the Property which
Lessee is required to perform hereunder, after Lessee has expended the entire
amount of any award payable to Lessee hereunder, there shall be paid to the
Depository for disbursement as described above such portion of the award
otherwise payable to Lessor hereunder in an amount reasonably necessary to
pay the excess cost of restoration of any remaining part of the Property not
so taken (the "Excess Restoration Cost").
(d) If the temporary use of the whole or any part of the Premises
shall be taken at any time during the Term for any public or quasi-public
purpose by any lawful power or authority by the exercise of the right of
condemnation or eminent domain or by agreement between Lessee and those
authorized to exercise such right, the Term shall not be reduced or affected
in any way and Lessee shall continue to pay in full the Rental payable by
Lessee
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hereunder without reduction or abatement, and Lessee shall be entitled to
receive for itself any award or payments for such use, provided, however,
that if the taking is for a period extending beyond the Term such award or
payment shall be apportioned between Lessor and Lessee as of the last day of
the Term.
(e) In case of any governmental action not resulting in the taking
or condemnation of any portion of the Premises but creating a right to
compensation therefor, such as the changing of the grade of any street upon
which the Premises abut, then this Lease shall continue in full force and
effect without reduction or abatement of Rental. In such event, the entire
award applicable to the Property shall be allocable to Lessor and Lessee in
proportion to the fair market value of their respective interests in the
Property (including, without limitation, Lessor's interest as the lessee
under the Master Lease), provided, however, that if the parties cannot agree
on such fair market values, the fair market value of each party's respective
interest in the Property shall be determined by arbitration, as provided in
Article XI below.
(f) Notwithstanding anything which may be to the contrary in this
Section 5.1, in connection with any taking, to the extent that Lessee is
actually occupying the Improvements, Lessee shall be entitled to make a
separate claim, and to prove and receive an award for moving allowance and
other expenses permitted by law, provided that such award shall not diminish
the amount of the award to which Lessor would otherwise be entitled.
V.2 INSURANCE.
(a) The Lessee, at its own cost and expense, shall at all times
carry and maintain, or cause to be carried and maintained, the following
insurance:
(i) Insurance with respect to the Improvements against all
perils included within the classification "All Risk of Physical Loss",
covering such risks as shall be customarily insured against with respect to
improvements similar in construction, location and use including by way of
example, earthquake, flood, sprinkler leakage, debris removal, cost of
demolition, malicious mischief, water damage, boiler and machinery explosion
or damage and the like, with extended coverage, a deductible of $25,000 or
less, and in amounts not less than the greater of (x) 100% of the actual
replacement cost of the Improvements (exclusive of foundations and
excavations), without regard to depreciation, and (y) such other amount as is
necessary to prevent any reduction in such policy by reason of and to prevent
Lessor, the holder of any Fee Mortgage, any Leasehold Mortgagee or any other
insured thereunder from being deemed to be a co-insurer.
(ii) Comprehensive, commercial general liability
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insurance, including bodily injury, death and property damage liability, and
umbrella liability insurance against any and all claims arising out of or
connected with the possession, maintenance, use, occupancy, operation,
leasing or condition of the Property in an amount not less than $3,000,000
for a combined single limit and $10,000,000 for an aggregate limit; such
insurance shall include the Property and all sidewalks adjoining or
appurtenant to the Property, shall contain blanket contractual coverage and
shall also provide the following protection:
(1) completed operations;
(2) personal injury protection;
(3) sprinkler leakage-water damage legal liability;
(4) fire legal liability, if not otherwise covered
under the comprehensive form of public liability
insurance; and
(5) employees as additional insured coverage.
(iii) Statutory worker's compensation insurance with respect to
the operation of the Property and any work performed on or about the Property.
(iv) Insurance against loss or damage from (A) leakage of
sprinkler systems and (B) explosion of steam boilers, air conditioning
equipment, pressure vessels or similar apparatus now or hereafter installed
at the Property, in an amount not less than $1,000,000 or such greater amount
as Lessor may from time to time reasonably require and which are customarily
required with respect to similar properties similarly situated.
(v) Flood insurance in an amount equal to the full
Replacement Cost of the Improvements or the maximum amount available,
whichever is less, if all or any portion of the Improvements are located in
an area which has been designated by the Secretary of Housing and Urban
Development as having special flood hazards, and if flood insurance is
available under the National Flood Insurance Act.
(vi) Rent loss, business interruption or use and occupancy
insurance, in an amount not less than twelve (12) months' gross income from
the Property.
(vii) Such other insurance in such amounts as may from time
to time be reasonably required by Lessor or the holder of any Fee Mortgage
against such other insurable hazards as at the time are commonly insured
against in the case of prudent owners of like premises.
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(b) The Lessee will cause the Lessor, the holder of any Fee
Mortgage and any Leasehold Mortgagee to be named as additional insureds as
their respective interests may appear on all policies covering the insurance
referred to above (other than (x) the insurance referred to in Paragraph
5.2(a)(i), where the holder of any Fee Mortgage and any Leasehold Mortgagee
shall be named as mortgagees only, and (y) the insurance referred to in
Paragraph 5.2(a)(iii)), without the Lessor, the holder of any Fee Mortgage or
any Leasehold Mortgagee thereby having any obligation, including, without
limitation, the obligation to pay premiums. All insurance required by any
provision of this Lease shall be in such form as is reasonably acceptable to
Lessor and shall be issued by any insurance company licensed and authorized
to do business in the State of New York and having a Bests Insurance Reports
(or any successor publication of comparable standing) rating of A VII (or the
then equivalent of such rating) or better or by any other insurance company
consented to by Lessor. All policies referred to in this Lease shall be for
periods of not less than one (1) year. A duplicate original or certificate
of each such policy shall be delivered to Lessor, the holder of any Fee
Mortgage and any Leasehold Mortgagee within a reasonable period of time prior
to the commencement of the term of each such policy, except that if any
insurance carried by Lessee is effected by one or more blanket policies, then
with respect to such insurance, certified abstracted policies relating to the
Property shall be so delivered to Lessor, the holder of any Fee Mortgage and
any Leasehold Mortgagee. A certificate or other evidence reasonably
satisfactory to Lessor of the existence of any new or renewal policy that
replaces any policy expiring during the Term shall be delivered as aforesaid
at least thirty (30) days prior to the date of expiration, together with
proof reasonably satisfactory to Lessor that all premiums due have been paid
for at least the first year of the term of such policies.
(c) Every policy referred to in Paragraph 5.2(a) shall provide that
(i) it will not be canceled or amended except after 30 days' written notice to
Lessor, the holder of any Fee Mortgage and any Leasehold Mortgagee, and that it
shall not be invalidated by any act or negligence of Lessor or Lessee, nor by
occupancy or use of the Land or the Improvements for purposes more hazardous
than permitted by such policy, nor by any foreclosure or other proceedings
relating to the Land or the Improvements, nor by change in title to or ownership
of the Land or the Improvements and (ii) the insurer thereunder waives all
rights of subrogation against the Lessor and waives any right of setoff and
counterclaim and any other right of deduction, whether by attachment or
otherwise.
(d) The requirements of this Paragraph 5.2 shall not be construed
to negate or modify Lessee's obligations under Paragraph 5.4.
V.3 CASUALTY.
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(a) If the Property shall be damaged or destroyed by any casualty
during the Term hereof, this Lease shall continue in full effect without any
reduction in the Rental payable by Lessee hereunder and Lessee shall, at its
expense, promptly rebuild, replace or repair the Property in conformity with
the requirements of Section 4.3 so as to restore the Property to the
condition and fair market value thereof immediately prior to such occurrence,
subject to the following:
(i) Lessee shall settle any claim relating to such casualty
with the applicable insurance carrier, provided, however, that with respect
to any casualty involving a Restoration Cost (as hereinafter defined) in
excess of $500,000, such settlement shall be subject to the consent of
Lessor, which consent shall not be unreasonably withheld.
(ii) Prior to any such rebuilding, replacement or repair,
Lessee shall deliver its reasonable estimate of the cost thereof, which shall
be subject to the approval of Lessor, which approval shall not be
unreasonably withheld (the cost approved by Lessor, as updated from time to
time as provided below, is referred to as the "RESTORATION COST"). If the
repair constitutes a Material Alteration, the Restoration Cost must be
confirmed and periodically updated by an architect reasonably acceptable to
Lessor who is registered or licensed as such in the state in which the
Property is located, and if the Restoration Cost is, or is reasonably
anticipated to be, more than the amount of net insurance proceeds available
to Lessee for such restoration (less any cost to the Depository (as
hereinafter defined) of recovering and paying out such proceeds, including,
without limitation, reasonable attorneys', trustees' or escrow fees relating
thereto and out-of-pocket costs allocable to inspecting the work and the
plans and specifications therefor) (the "Net Proceeds"), Lessee shall deliver
or cause to be delivered to the Depository such security for the payment by
Lessee of such excess costs as shall be reasonably acceptable to the
Depository and Lessor. The Net Proceeds and any additional security posted
by Lessee hereunder shall be held and disbursed in accordance with the
provisions of this Lease by (i) the holder of any Fee Mortgage, to the extent
required by the terms thereof, or (ii) to the extent not required to be held
by the holder of a Fee Mortgage as provided above, a bank or other financial
institution selected by Lessor and reasonably acceptable to Lessee (the
holder of such Fee Mortgage or such bank or financial institution being
hereinafter referred to as the "Depository").
(iii) The Restoration Cost shall be paid first out of
Lessee's own funds to the extent that the Restoration Cost exceeds the Net
Proceeds payable in connection with such occurrence, after which expenditure
Lessee shall be entitled to receive the Net Proceeds, but only against
certificates of Lessee (and lien releases and other items generally and
reasonably required in connection with disbursement of construction loan or
insurance proceeds) delivered to Depository and Lessor from time
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to time as such work or rebuilding, replacement and repair progresses, each
such certificate describing the work for which Lessee is requesting payment
and the cost incurred by Lessee in connection therewith and stating that
Lessee has not theretofore received payment for such work, and stating that
the amount of the Net Proceeds remaining after such requested disbursement
shall be sufficient to satisfy the cost of completing such restoration. Any
Net Proceeds remaining after final payment has been made for such work shall
be returned to Lessee. If the cost of any rebuilding, replacement or repair
required to be made by Lessee pursuant to this Section 5.3 shall exceed the
amount of such Net Proceeds, the deficiency shall be paid by Lessee. Lessee
shall not be entitled to disbursements of the Net Proceeds if an Event of
Default has occurred and is continuing.
(b) The Rental payable under the provisions of this Lease shall
not be affected, altered or reduced by any casualty, and Lessee shall
continue to pay the full amount of the Rental provided in this Lease
notwithstanding any such casualty.
(c) The Net Proceeds shall be held by the Depository, to be paid
out from time to time to Lessee as the work progresses, subject to each of
the following conditions:
(i) Each request for payment shall be made on not less than
ten (10) business days' prior notice to the Depository and to Lessor and
shall be accompanied by an officer's certificate (or if such work is being
performed under the supervision of an architect, by a certificate of such
architect), stating (A) in the case of an officer's certificate only, that no
Event of Default exists hereunder, (B) that, based upon an inspection of the
Property, all of the work completed has been done in substantial compliance
with the approved plans and specifications, if required, (C) that the sum
requested is validly required to reimburse Lessee for payments by Lessee, or
is validly due to the contractor, subcontractors, materialmen, laborers,
engineers, architects or other persons rendering services or materials for
the work (giving a brief description of such services and materials), and
that when added to all sums previously paid out by the Depository does not
exceed the value of the work done to the date of such certificate, (D) if the
sum requested is to cover payment relating to repair and restoration of
personal property required or relating to the Property, that title to the
personal property items covered by the request for payment is vested in
Lessor or Lessee, as applicable, and (E) the remaining cost to complete such
work and that the remaining amount held by the Depository (together with any
amounts contemporaneously deposited by Lessee with the Depository) shall be
sufficient to cover such cost of completion; PROVIDED, HOWEVER, that if such
certificate is given by an architect, such architect shall certify as to
clause (B) above, and Lessee shall certify as to the remaining clauses above,
and provided, further, that the Depository shall not be obligated to disburse
such funds if the Depository determines, in its reasonable discretion, that
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Lessee shall not be in compliance with this Section 5.3. Additionally, each
request for payment shall contain a statement signed by Lessee approving both
the work done to date and the work covered by the request for payment in
question.
(ii) Each request for payment shall be accompanied by
waivers of lien satisfactory to Lessor and the Depository covering that part
of the work for which payment or reimbursement has been made as of the date
of the current request and, if required by Lessor or the Depository, a search
prepared by a title company or licensed abstractor, or by other evidence
satisfactory to Lessor or the Depository that there has not been filed with
respect to the Property any mechanics or other lien or instrument for the
retention of title relating to any part of the work not discharged of record.
(iii) Lessor and the Depository shall have the right to
inspect the work at all reasonable times upon reasonable prior notice and may
condition any disbursement of Net Proceeds upon the satisfactory completion
of any portion of the work for which payment or reimbursement is being
requested. Neither the approval by the Depository or Lessor of any required
plans and specifications for the work nor the inspection by the Depository or
Lessor of the work shall make the Depository or Lessor responsible for the
preparation of such plans and specifications or the compliance of such plans
and specifications, or of the work, with any applicable Legal Requirement,
covenant or agreement.
(iv) Net Proceeds shall not be disbursed more frequently
than once every thirty (30) days.
(d) If an Event of Default shall have occurred and be continuing
or if Lessee (i) shall fail to submit to Lessor for approval plans and
specifications (if required pursuant to Section 4.3 hereof) for the Work
(approved by the architect and by all governmental authorities whose approval
is required), (ii) after any such plans and specifications are approved by
all such governmental authorities, the architect and Lessor, shall fail to
commence promptly such Work, (iii) after the Depository has released the Net
Proceeds to the extent provided for hereunder, shall fail to diligently
prosecute such Work to completion, or (iv) fail in any other respect to
comply with the Work obligations under this Section 5.3, then in addition to
all other rights available hereunder, at law or in equity, Lessor, the
Depository or any receiver of the Property or any portion thereof, upon five
(5) days prior notice to Lessee (except in the event of emergency in which
case no notice shall be required), may (but shall have no obligation to)
perform or cause to be performed such Work, and may take such other steps as
such party deems advisable (but such performance shall not cure the default
of Lessee), including the restoration and repair of the Property, and the Net
Proceeds shall be released to reimburse such party for the cost thereof. In
addition, Lessee acknowledges that if
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this Lease has been terminated as a result of the occurrence of an Event of
Default and the Leasehold Mortgagee shall have (x) failed to cure such Event
of Default prior to the expiration of any notice and cure period applicable
to such Leasehold Mortgagee pursuant to Section 6.2 of this Lease, or (y)
failed to enter into a new lease for the Premises as provided in Section
6.2(e) of this Lease, the Depository may apply any Net Proceeds towards
payment of the applicable Fee Mortgage, which payment shall not relieve
Lessee of any of its obligations hereunder. Lessee hereby waives, for Lessee
and all others holding under or through Lessee, any claim, other than for
gross negligence or willful misconduct, against Lessor and the Depository and
any receiver arising out of any act or omission of such party pursuant
hereto, and Lessor or the Depository may apply all or any portion of the Net
Proceeds (without the need to fulfill any other requirements set forth in
this Section 5.3) to reimburse itself for all amounts incurred in connection
with the Work.
(e) Notwithstanding the foregoing, so long as the Master Lease is
in effect, Lessor's compliance with the insurance provisions thereof, as
tenant thereunder, shall be deemed to satisfy Lessee's obligation to maintain
insurance pursuant to this Section 5.3.
V.4 INDEMNIFICATION.
(a) Lessee shall not do or permit any act or thing to be done upon
the Premises or the Improvements which may subject Lessor to any liability or
responsibility for injury, damages to persons or property or to any liability
by reason of any violation of any Legal Requirement, and shall exercise such
control over the Property as to fully protect Lessor against any such
liability. Lessee hereby assumes liability for and shall pay, and shall
protect, defend, save, indemnify and hold the Lessor and the holder of any
Fee Mortgage and their respective affiliates, partners, directors,
shareholders, members, officers, employees, agents, successors and assigns
(the "Lessor Indemnified Parties") harmless from and against all liabilities,
suits, obligations, fines, damages, penalties, claims, costs, charges and
expenses, including, without limitation, reasonable engineers', architects',
experts', consultants, and attorneys' fees and disbursements (collectively,
the "Claims") arising from or in connection with any of the following: (i)
the performance or non-performance of any of the terms hereof by the Lessee,
(ii) the lease, sublease, possession, use, operation, maintenance, condition
or repair of the Property, (iii) any accident, injury to or death of persons
or loss of property occurring on or about the Property or any part thereof,
or the adjoining sidewalks, curbs, vaults and vault space, if any, streets or
ways, (iv) performance of any labor or services or the furnishing of any
materials or other property in respect of the Property or any part thereof,
(v) any negligence or wrongful act or omission of Lessee or any of its
subtenants, servants, agents, contractors, employees, licensees or invitees,
(vi) any
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contest conducted by the Lessee pursuant to Section 3.3 or (vii) any
violation of any Legal Requirement, including, without limitation, any
violation of environmental laws.
(b) The obligations of Lessee under this Section 5.4 shall not be
affected in any way by the absence in any case of covering insurance or by
the failure or refusal of any insurance carrier to perform any obligation on
its part under insurance policies affecting the Premises.
(c) The indemnified parties shall give notice to the indemnifying
party of any demand or claim that may result in an indemnified claim under
this Lease promptly after the indemnified parties have knowledge of same.
Notice shall be deemed to have been promptly given pursuant to this Section
5.4 if it is given within such time as is required to avoid prejudicing the
indemnifying party's defense to the claim or demand. Failure to give prompt
notice pursuant to the terms of this Section 5.4 shall not relieve the
indemnifying party of any liability or obligation under this Lease, but such
failure shall entitle the indemnifying party to compensation from the
indemnified parties for any cost, expense or liability it incurs as a direct
consequence of such late notice.
(d) The indemnifying party shall either (i) pay such claim within
thirty (30) days after such notice is given or (ii) subject to the provisions
of Subsection (e) of this Section 5.4, commence to compromise or defend such
claim within thirty (30) days after such notice is given, at its own expense
and by counsel of its own choosing (reasonably acceptable to the indemnified
parties), and shall notify the indemnified parties of such payment,
compromise or defense, subject to the terms and conditions hereof. The
indemnified parties shall cooperate, at the expense of the indemnifying
party, in the compromise or defense of such claim; provided that the
indemnifying party shall control such compromise or defense. The indemnified
parties shall have the right to be kept fully informed of the status of any
claim and to participate in the defense of a claim or demand at their sole
expense. If the indemnifying party does not pay or promptly commence to
compromise or defend against such claim as herein provided, or fails
diligently to pursue the compromise or defense of such claim, then the
indemnified parties may thereafter pay, compromise or defend against such
claim with counsel of their choosing, and all expenses incurred by the
indemnified parties in so doing shall be paid by the indemnifying party on
demand.
(e) If the indemnifying party wishes to enter into a settlement or
compromise with respect to a claim, it shall give notice to the indemnified
parties of the terms of the proposed settlement or compromise and any such
settlement or compromise shall be subject to the prior written consent of the
indemnified parties, which consent shall not be unreasonably withheld.
Without limiting the generality of the foregoing, it shall be
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reasonable to refuse consent to a settlement or compromise which would impose
upon the indemnified parties (or any of them) either (x) a financial
obligation which would not be satisfied by the indemnifying party at the time
of such settlement or compromise, or (y) any other material obligation
(including, without limitation, such obligation as may be imposed by
injunctive or other equitable relief) that would not be discharged by the
performance of the indemnifying party or such performance by the indemnifying
party is not assured by virtue of the financial condition of the indemnifying
party, the lack of security therefor or otherwise.
(f) The provisions of this Section 5.4 shall survive the
Expiration Date.
65535RT65535CLE VI
ASSIGNMENT, SUBLETTING AND LEASEHOLD MORTGAGES
VI.1 ASSIGNMENT AND SUBLETTING.
(a) Lessee may, without Lessor's consent, but subject to compliance
with the terms and conditions of this Lease:
(i) (x) after the term of the Master Lease has expired or
otherwise terminated, enter into subleases in the ordinary course of business
for occupancy of the Improvements, and (y) during the term of the Master Lease,
permit the lessee thereunder to enter into subleases in the ordinary course of
business as provided therein, provided in each case that any such sublease shall
comply with the requirements of Section 6.1(h) below;
(ii) assign this Lease to any purchaser of the Improvements
(including an assignment of this Lease to the Leasehold Mortgagee or any
Assignee which also acquires fee title to the Improvements pursuant to a
foreclosure or deed-in-lieu thereof), subject to compliance with the
requirements of Section 12.1 below and on prior written notice to Lessor; or
(iii) mortgage Lessee's interest in this Lease, in accordance
with the requirements of Section 6.2 below and on prior written notice to
Lessor.
(b) Except as provided in Section 6.1(a) above, Lessee shall not (i)
assign or otherwise transfer this Lease or the term and estate hereby granted,
(ii) sublet the Property or any part thereof, or (iii) mortgage, pledge,
encumber or otherwise hypothecate this Lease or the Property or any part
thereof, without in each instance obtaining the prior written consent of Lessor,
which may be given or withheld in Lessor's sole discretion, and any attempted
assignment, transfer, sublease, mortgage, pledge, encumbrance or hypothecation
which is not in compliance with the terms and conditions hereof shall be void
and of no force or effect.
(c) Any assignment or transfer permitted (or, to the extent required,
consented to in writing by Lessor) hereunder shall be made only if, and shall
not be effective until, the assignee shall execute, acknowledge and deliver to
Lessor an
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agreement in form and substance reasonably satisfactory to Lessor whereby the
assignee shall assume the obligations of this Lease on the part of Lessee to
be performed or observed and whereby the assignee shall agree that the
provisions in this Article VI shall, notwithstanding such assignment or
transfer, continue to be binding upon it in respect of all future assignments
and transfers.
(d) If this Lease is assigned, whether or not in violation of the
provisions of this Lease, Lessor may collect rent from the assignee. If the
Property or any part thereof is sublet or used or occupied by anybody other
than Lessee, whether or not in violation of this Lease, Lessor may, if an
Event of Default has occurred and is continuing, collect rent from the
subtenant or occupant (subject, after the expiration or termination of the
Master Lease, to the rights of the Leasehold Mortgagee pursuant to Section
6.2 below). In either event, Lessor shall apply the net amount collected to
the Rental herein reserved, but no such assignment, subletting, occupancy or
collection shall be deemed a waiver of any of the provisions of this Article
VI, or the acceptance of the assignee, subtenant or occupant as tenant, or a
release of Lessee from the performance by Lessee of Lessee's obligations
under this Lease. The consent by Lessor to an assignment or subletting or the
use or occupancy by others shall not in any way be considered to relieve
Lessee from obtaining the express written consent of Lessor to any other or
further assignment, or subletting or use or occupancy by others not expressly
permitted by this Article VI. Reference in this Lease to use or occupancy by
others (that is, anyone other than Lessee) shall not be construed as limited
to subtenants and those claiming under or through subtenants but as including
also licensees, concessionaires, operators and others claiming under or
through Lessee, immediately or remotely, a legal right of possession or
occupancy of the Property or any portion thereof (all such persons being
referred to individually in this Lease as a "Subtenant" and collectively as
"Subtenants", and the agreements pursuant to which such Subtenants occupy a
portion of the Property being referred to individually as a "Sublease" and
collectively as "Subleases").
(e) The joint and several liability of Lessee and any immediate or
remote successor in interest of Lessee and the due performance of the
obligations of this Lease on Lessee's part to be performed or observed shall
not be discharged, released or impaired in any respect by any agreement or
stipulation made by Lessor extending the time of, or modifying any of the
obligations of, this Lease, or by any waiver or failure of Lessor to enforce
any of the obligations of this Lease, except to the extent specifically set
forth in such agreement, stipulation or waiver.
(f) If Lessee shall at any time or times during the Term of this
Lease desire to assign this Lease or sublet all or part of the Property
(other than as provided in Section 6.1(a)), Lessee shall give prior notice
thereof to Lessor, which notice shall be accompanied by (i) a conformed or
photostatic copy of the proposed assignment or Sublease, the effective or
commencement date of which shall be at least fifteen (15) days
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after the giving of such notice and (ii) a statement setting forth in
reasonable detail the identity of the proposed assignee or Subtenant, the
nature of its business and its proposed use of the Property.
(g) Each sublease permitted (or, to the extent required, consented
to in writing by Lessor) pursuant to this Article VI shall expressly be
subject to all of the covenants, agreements, terms, provisions and conditions
contained in this Lease, except such as are inapplicable. Notwithstanding
any such subletting and/or acceptance of rent or additional rent by Lessor
from any Subtenant, Lessee shall and will remain fully liable for the payment
of all Rental due and to become due hereunder and for the performance of all
the covenants, agreements, terms, provisions and conditions contained in this
Lease on the part of Lessee to be performed and all acts and omissions of any
Subtenant or anyone claiming under or through any Subtenant which shall be in
violation of any of the obligations of this Lease, and any such violation
shall be deemed to be a violation by Lessee. Lessee further agrees that
notwithstanding any such subletting, no other or further subletting of the
Property or any part thereof by Lessee or any person claiming through or
under Lessee shall or will be made except upon compliance with and subject to
the provisions of this Article.
(h) With respect to each and every sublease permitted (or, to the
extent required, consented to in writing by Lessor) under the provisions of
this Lease, it is further agreed:
(i) No subletting shall be for a term (including renewal or
extension options) ending later than one day prior to the expiration of the
Term of this Lease, unless such subletting shall be consented to by Lessor in
writing.
(ii) No Subtenant shall take possession of the Property or
any part thereof until an executed counterpart of such sublease has been
delivered to Lessor.
(iii) Each sublease shall provide that it is subject and
subordinate to this Lease and to the matters to which this Lease is or shall
be subordinate, and that in the event of termination, re-entry or
dispossession by Lessor under this Lease Lessor may, at its option, take over
all of the right, title and interest of Lessee, as sublessor, under such
sublease, and such Subtenant shall, at Lessor's option, attorn to Lessor
pursuant to the then executory provisions of such sublease, or enter into a
direct lease on identical terms with Lessor for the balance of the unexpired
term of the sublease.
(i) At Lessee's request, Lessor shall enter into a non-disturbance
and attornment agreement, in the form annexed hereto as Schedule D (or on such
other form as shall be reasonably acceptable to Lessor), with respect to any
subtenant occupying 1 or more full floors at the Property (each, a "Major
Subtenant") under a sublease (a "Major Sublease"), provided that (x) Lessee
shall obtain Lessor's prior written approval of such Major Subtenant and such
Major Sublease, such approval not to be unreasonably withheld or delayed (it
being understood and agreed that such approval shall only be required if Lessor
is entering into a non-disturbance and attornment agreement with
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such Major Subtenant as provided hereunder), and (y) Lessee shall reimburse
Lessor, prior to the issuance of any such non-disturbance and attornment
agreement, or, if such non-disturbance and attornment agreement is not
granted, within ten (10) days after demand therefor, for the reasonable
out-of-pocket costs incurred by Lessor and the holder of any Fee Mortgage,
including, without limitation, reasonable attorneys fees, in reviewing any
such Major Sublease and non-disturbance and attornment agreement.
(j) At Lessee's request, Lessor shall request that the holder of
any Fee Mortgage enter into a subordination, non-disturbance and attornment
agreement, in such form as shall be reasonably acceptable to such holder,
with respect to any Major Subtenant under a Major Sublease, provided that (x)
the holder of such Fee Mortgage may grant or deny such request in such
holder's sole and absolute discretion, (y) Lessee shall (or, if during the
term of the Master Lease any such request shall result from a corresponding
request by Lessor as lessee under the Master Lease, Lessor shall) reimburse
the holder of such Fee Mortgage, prior to the issuance of any such
subordination, non-disturbance and attornment agreement, or, if such
subordination non-disturbance and attornment agreement is not granted, within
ten (10) days after demand therefor, for the reasonable out-of-pocket costs
incurred by such holder of any Fee Mortgage, including, without limitation,
reasonable attorneys fees, in reviewing any such Major Sublease and
subordination, non-disturbance and attornment agreement, and (z) Lessor's
sole obligation hereunder shall be to submit such request to the holder of
such Fee Mortgage, it being understood and agreed that Lessee's obligations
under this Lease shall not be affected in any manner whatsoever by the
refusal of any such holder of a Fee Mortgage to enter into any such
subordination, non-disturbance and attornment agreement.
VI.2 LEASEHOLD MORTGAGES. Lessee is hereby given the right by Lessor to
mortgage its interest in this Lease from time to time, under a single
leasehold mortgage (as the same may be amended, modified, consolidated,
extended or refinanced, the "Leasehold Mortgage"), and assign this Lease, or
any part or parts thereof, as collateral security for the Leasehold Mortgage,
upon the condition that all rights acquired under or as a result of such
Leasehold Mortgage shall be subject and subordinate to each and all of the
covenants, conditions and restrictions set forth in this Lease, and to all
rights now or hereafter affecting the Premises or any portion thereof. If
Lessee shall mortgage this Lease, or any part or parts hereof, the holder of
such Leasehold Mortgage (the "Leasehold Mortgagee") shall provide Lessor
with notice of the Leasehold Mortgage (including a copy thereof) and the name
and address of the Leasehold Mortgagee. Lessor agrees that following receipt
of such notice by Lessor, and so long as the Leasehold Mortgage shall remain
unsatisfied of record or until written notice of satisfaction is given by the
Leasehold Mortgagee to Lessor, the following provisions shall apply:
(a) No termination (except in connection with a condemnation of all
or substantially all of the Property as
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described in Section 5.1 above), cancellation, surrender or modification of
this Lease (other than any amendment which confirms the amount of any Basic
Rent determinated in accordance with the provisions of Section 2.2 below or
any CPI Escalation as provided in Section 13.2) by Lessee, nor the waiver by
Lessee of any of the provisions of this Lease nor the giving by Lessee of any
consent shall be effective as to the Leasehold Mortgagee unless consented to
in writing by the Leasehold Mortgagee, which consent shall not be
unreasonably withheld or delayed.
(b) Lessor, upon providing Lessee any notice of (i) default under
this Lease, (ii) a termination of this Lease, or (iii) a matter on which
Lessor may predicate or claim a default, shall at the same time provide a
copy of such notice to the Leasehold Mortgagee of which Lessor has been
provided notice in accordance with the first paragraph of this Section 6.2.
Lessor shall have no liability for the failure to give any such notice,
except that no such notice by Lessor to Lessee shall be deemed to have been
duly given to Lessee or the Leasehold Mortgagee unless and until a copy
thereof has been so provided to the Leasehold Mortgagee of which Lessor has
been provided notice in accordance with the first paragraph of this Section
6.2. From and after the date such notice has been given to the Leasehold
Mortgagee, the Leasehold Mortgagee shall have the same period, after the
giving of such notice upon it, for remedying any default or acts or omissions
that are the subject matter of such notice, or causing the same to be
remedied, as is given Lessee after the giving of such notice to Lessee, plus
in each instance, the additional periods of time specified in subsections (c)
and (d) hereof to remedy, commence remedying or cause to be remedied the
defaults or acts or omissions that are specified in such notice and Lessor
shall accept such performance by or at the instigation of Leasehold Mortgagee
as if the same had been done by Lessee. Lessee authorizes the Leasehold
Mortgagee to take any action at the Leasehold Mortgagee's option and does
hereby authorize entry upon the Premises by the Leasehold Mortgagee for such
purpose.
(c) Anything contained in this Lease to the contrary
notwithstanding, if any default shall occur that entitles Lessor to terminate
this Lease, Lessor shall have no right to terminate this Lease unless Lessor
shall notify the Leasehold Mortgagee of Lessor's intent to so terminate at
least fifteen (15) days in advance of the proposed effective date of such
termination if such default is capable of being cured by the payment of
money, and at least thirty (30) days in advance of the proposed effective
date of such termination if such default is not capable of being cured by the
payment of money. The provisions of subsection (d) below shall apply only
if, during such 15 or 30-day termination notice period, the Leasehold
Mortgagee shall:
(i) Notify Lessor of Leasehold Mortgagee's desire to
nullify such notice; and
(ii) Pay or cause to be paid all Basic Rent and other
payments (A) then due and in arrears as specified in the termination notice
to Leasehold Mortgagee and (B) any of the same that become due during such 15
or 30-day period as and when they become due; and
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(iii) Comply, or with reasonable diligence and continuity,
commence in good faith to comply, with all non-monetary requirements of this
Lease then in default and reasonably susceptible of being complied with by
Leasehold Mortgagee.
(d) (i) If Lessor shall elect to terminate this Lease by reason
of any default of Lessee, and the Leasehold Mortgagee shall have proceeded in
the manner provided for by subsection (c) above, this Lease shall not be deemed
terminated so long as Leasehold Mortgagee shall:
(A) Pay or cause to be paid any monetary obligations
of Lessee under this Lease as the same become due, and continue its good faith
efforts to cure past non-monetary obligations then in default and reasonably
susceptible of being cured by Leasehold Mortgagee; and
(B) If not enjoined or stayed, take steps to acquire
or sell Lessee's interest in this Lease by foreclosure of the Leasehold Mortgage
or other appropriate means and prosecute the same with due diligence; provided,
however, that Leasehold Mortgagee shall be permitted to cure a default by Lessee
without taking such steps to foreclose one (1) time in any given 5 year period.
Nothing contained in this Section 6.2(d)(i) shall be construed to
extend this Lease beyond the original term hereof.
(ii) If the Leasehold Mortgagee is complying with
Section 6.2(d)(i) above, to the extent applicable, upon the acquisition of the
leasehold estate herein by an Assignee (as defined below) at a foreclosure sale
or by an assignment or transfer in-lieu thereof and the discharge of any lien,
charge or encumbrance against the Lessee's interest in this Lease or the
Premises which the Lessee is obligated to satisfy and discharge by reason of the
terms of this Lease, then this Lease shall continue in full force and effect as
if Lessee had not defaulted under this Lease, provided that such Assignee shall
promptly cure any default not previously cured due to Leasehold Mortgagee's
inability to obtain possession of the Premises and shall promptly complete the
cure of any defaults described in Section 6.2(d)(i)(A) which have not been
theretofore cured and which are susceptible to being cured by a party other than
the Lessee named herein. For the purposes of this Lease, "Assignee" shall mean
Leasehold Mortgagee or any other person or entity succeeding to the interest of
Lessee at a foreclosure sale or an assignment or transfer in-lieu thereof.
(iii) The making of the Leasehold Mortgage shall not
be deemed to constitute an assignment or transfer of this Lease or the
leasehold estate hereby created, nor shall Leasehold Mortgagee, as such, be
deemed to be an assignee or transferee of this Lease or of the leasehold
estate hereby created, so as to require Leasehold Mortgagee, as such, to
assume the performance of any of the terms, covenants or conditions on the
part of the Lessee to be performed hereunder, but the Assignee at any sale of
this Lease and of the leasehold estate hereby created in any proceedings for
the foreclosure of
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the Leasehold Mortgage, or the Assignee of this Lease and of the leasehold
estate hereby created under any instrument of assignment or transfer in lieu
of the foreclosure of the Leasehold Mortgage, shall be deemed to be an
assignee or transferee within the meaning of this Section 6.2(d) and shall be
deemed to have assumed and agreed to perform all of the terms, covenants and
conditions on the part of the Lessee to be performed hereunder.
(e) Except as provided in Section 5.1(b) above with respect to a
condemnation, if this Lease is terminated without the prior written consent
of the Leasehold Mortgagee, including, without limitation, as a result of
Lessee's default, and the Leasehold Mortgagee has failed to take the actions
required by Section 6.2(d) above, Lessor shall promptly, within a reasonable
time, provide the Leasehold Mortgagee with written notice that the Lease has
been terminated (the "New Lease Notice"), together with a statement of all
sums that would at that time be due under this Lease but for such
termination, and of all other defaults, if any, then known to Lessor. Lessor
agrees to enter into a new lease ("New Lease") of the Premises with the
Leasehold Mortgagee or its designee (which for all purposes hereof shall be
deemed to be an Assignee) for the remainder of the term of this Lease,
effective as of the date of termination, at the same Basic Rent and upon the
terms, covenants and conditions of this Lease provided:
(i) Leasehold Mortgagee shall make written request upon
Lessor for such New Lease within thirty (30) days after the date Leasehold
Mortgagee receives Lessor's New Lease Notice given pursuant to this
subsection (e).
(ii) Leasehold Mortgagee or an Assignee shall pay or cause
to be paid to Lessor at the time of the execution and delivery of such New
Lease, any and all sums that would at the time of execution and delivery
thereof be due pursuant to this Lease, including interest thereon at the
Rate, but for such termination and, in addition thereto, all reasonable
expenses, including reasonably attorneys' fees, which Lessor shall have
incurred by reason of such termination and the execution and delivery of the
New Lease and that have not otherwise been received by Lessor from Lessee or
other party in interest under Lessee.
(iii) Leasehold Mortgagee or such Assignee shall agree to
remedy any of Lessee's non-monetary defaults of which Leasehold Mortgagee was
notified by Lessor's New Lease Notice and that are reasonably capable of
being so cured by Leasehold Mortgagee or such Assignee, and Leasehold
Mortgagee or such Assignee shall diligently effect such remedy within thirty
(30) days (or, to the extent such default is not capable of being cured
within thirty (30) days, shall commence to cure such default within thirty
(30) days and shall diligently prosecute such cure to completion as soon as
practicable, but in any event within one hundred twenty (120) days).
(iv) Any New Lease made pursuant to this subsection (e) shall
have the same priority with respect to any mortgage or other lien, charge or
encumbrance on the Premises and
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the Improvements thereon as this Lease, and the tenant under such New Lease
shall have the same right, title and interest in and to the Premises and the
Improvements thereon as Lessee has under this Lease as of the date of the New
Lease.
(f) Nothing herein contained shall require the Leasehold Mortgagee
or an Assignee (x) to cure any default by Lessee, or (y) as a condition to
its exercise of rights hereunder, to cure any default of Lessee which by its
terms is not reasonably susceptible of being cured by the Leasehold Mortgagee
or such Assignee in order to comply with the provisions of subsection (c) or
(d), or as a condition of entering into the New Lease provided for by
subsection (e). No default, the cure of which, and no obligation of Lessee,
the performance of which, requires possession of the Premises shall be deemed
reasonably susceptible of cure or performance by the Leasehold Mortgagee or
successor to Lessee's interest under this Lease or a New Lease not in
possession of the Premises, provided such holder is complying with the
requirements described in Section 6.2(d)(i)(B) above, and upon obtaining
possession promptly proceeds to cure any such default then reasonably
susceptible of cure by the Leasehold Mortgagee or successor; nor shall the
Leasehold Mortgagee be required to cure the bankruptcy, insolvency or any
related or similar condition of Lessee.
(g) A standard mortgagee clause naming the Leasehold Mortgagee may
be added to any and all insurance policies carried by Lessee regardless of
whether such policies are required to be carried by Lessee hereunder on
condition that the insurance proceeds are to be applied in the manner, if
any, specified in this Lease and the Leasehold Mortgage shall so provide.
(h) So long as the Leasehold Mortgage is in existence, unless the
Leasehold Mortgagee shall otherwise expressly consent in writing, the fee title
to the Premises and the leasehold estate of Lessee therein created by this Lease
shall not merge but shall remain separate and distinct, notwithstanding the
acquisition of said fee title and said Leasehold Estate by Lessor or by Lessee
or by a third party, by purchase or otherwise.
(i) Notices from Lessor to the Leasehold Mortgagee shall be mailed to
the address furnished Lessor pursuant to this Section 6.2. and those from the
Leasehold Mortgagee to Lessor shall be mailed to the address designated pursuant
to the provisions of Paragraph 8.1 hereof. Such notices, demands and requests
shall be given in the manner described in Paragraph 8.1 and shall in all
respects be covered by the provisions of that Paragraph.
(j) Subject to compliance with the requirements of Section 12.1
below and, if applicable, Section 6.2, upon the acquisition of the leasehold
estate herein by an Assignee at a foreclosure sale or by an assignment or
transfer in-lieu thereof and the discharge of any lien, charge or encumbrance
against the Lessee's interest in this Lease or the Premises which the Lessee
is obligated to satisfy and discharge by reason of the terms of this Lease,
Lessor shall recognize the Assignee as the lessee hereunder, subject to each
and all of the covenants, conditions and restrictions set forth in this
Lease, and to all rights then
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affecting the Premises or any portion thereof.
65535RT65535CLE VII
LESSEE'S DEFAULT; CONDITION OF LIMITATION
VII.1 LESSEE'S DEFAULT. The occurrence of each of the following
events shall be an "Event of Default" hereunder:
(a) if (x) during the term of the Master Lease, Lessee shall fail
to pay any installment of any Basic Rent, or Impositions, or any part
thereof, when due and payable and such failure shall continue for five (5)
days after written notice that same have not been paid, or (y) after the
expiration or termination of the Master Lease, Lessee shall fail to pay any
installment of any Basic Rent, or Impositions, or any part thereof, when the
same shall become due and payable;
(b) if Lessee shall fail to make any payment of any Rental (other
than the categories of Rental listed in Section 7.1(a)) required to be paid
by Lessee hereunder when the same shall become due and payable, and such
failure shall continue for a period of fifteen (15) days after notice from
Lessor to Lessee to cure such Default;
(c) if Lessee shall fail to deliver to Lessor a certificate or
other evidence reasonably satisfactory to Lessor of the existence of any new
or renewal insurance policy required under this Lease on or prior to the date
the same is required to be delivered to Lessor hereunder;
(d) if Lessee shall be unable to, or shall admit in writing its
inability to, pay its debts as such debts become due, or if Lessee shall make
an assignment for the benefit of creditors;
(e) if Lessee shall commence or institute any case, proceeding or
other action (A) seeking relief on its behalf as debtor, or to adjudicate it a
bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
winding-up, liquidation, dissolution, composition or other relief with respect
to it or its debts under any existing or future law of any jurisdiction,
domestic or foreign, relating to bankruptcy, insolvency, reorganization or
relief of debtors, or (B) seeking appointment of a receiver, trustee, custodian
or other similar official for it or for all or any substantial part of its
property;
(f) if any case, proceeding or other action shall be commenced or
instituted against Lessee (A) seeking to have an order for relief entered
against it as debtor or to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation, dissolution,
composition or other relief with respect to it or its debts under any existing
or future law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors, or (B) seeking appointment of a
receiver, trustee, custodian or other similar official for it or for all or any
substantial part of its property, which in either of such cases is not dismissed
or denied within sixty (60) days after such commencement or institution;
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(g) if any case, proceeding or other action shall be commenced or
instituted against Lessee seeking issuance of a warrant of attachment,
execution, distraint or similar process against all or any substantial part of
its property which shall not have been dismissed within sixty (60) days from the
commencement thereof;
(h) if a trustee, receiver or other custodian is appointed for any
substantial part of the assets of Lessee which appointment is not vacated or
stayed within sixty (60) days;
(i) if Lessee shall take any action in furtherance of any action
described in Section 7.1(e) or 7.1(f)hereof, or indicating its consent to,
approval of, or acquiescence in, any of the acts set forth in such Sections;
(j) if this Lease or the estate of Lessee hereunder shall be
assigned, subleased or transferred, without compliance with the provisions of
this Lease applicable thereto;
(k) if this Lease or the estate of Lessee hereunder shall be
mortgaged or encumbered in violation of this Lease; or
(l) if Lessee shall fail to observe or perform one or more of the
other terms, conditions, covenants or agreements of this Lease and such failure
shall continue for a period of thirty (30) days after written notice thereof by
Lessor to Lessee specifying such failure (unless such failure requires work to
be performed, acts to be done, or conditions to be removed which cannot by their
nature reasonably be performed, done or removed, as the case may be, within such
thirty (30) day period, in which case no Event of Default shall be deemed to
exist as long as Lessee shall have commenced curing the same within such thirty
(30) day period and shall prosecute the same to completion with reasonable
diligence within ninety (90) days after Lessor's written notice of such
failure).
VII.2 PERFORMANCE BY LEASEHOLD MORTGAGEE. Lessor will accept
performance by the Leasehold Mortgagee, the tenant under the Master Lease or any
future sublessee under any sublease or either of them of any covenant, agreement
or obligation of Lessee contained in this Lease with the same effect as though
performed by Lessee.
VII.3 JUDICIAL PROCEEDINGS. If any Event of Default shall occur,
Lessor may elect to proceed by appropriate judicial proceedings, either at law
or in equity, to enforce the performance or observance by Lessee of the
applicable provisions of this Lease and/or to recover damages for breach
thereof.
VII.4 TERMINATION. If any Event of Default described in Section 7.1
(d), (e), (f), (g), (h) or (i) hereof shall occur, then to the extent permitted
by law, and subject to the provisions of Section 6.2 hereof, this Lease and the
Term and all rights of Lessee under this Lease shall expire and terminate on the
date on which such Event of Default occurs, as if such date were the date herein
definitely fixed for the expiration of the Term. If any other Event of Default
shall occur and Lessor, at any time thereafter during the continuance of such
Event of
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Default, at its option, gives written notice to Lessee stating that this
Lease and the Term shall expire and terminate on the date specified in such
notice, which date shall be not less than ten (10) days after the giving of
such notice, then this Lease and the Term and all rights of Lessee under this
Lease shall expire and terminate on the date specified in such notice as if
such date were the date herein definitely fixed for the expiration of the
Term. Upon such termination, Lessee immediately shall quit and surrender the
Premises and Lessee's interest in the Improvements, but Lessee shall remain
liable for damages as hereinafter provided. Anything contained herein to the
contrary notwithstanding, if such termination shall be stayed by order of any
court having jurisdiction over any proceeding described in Section 7.1(g)
hereof, or by federal or state statute, then, following the expiration of any
such stay, or if the trustee appointed in any such proceeding, Lessee or
Lessee as debtor-in-possession shall fail to assume Lessee's obligations
under this Lease within the period prescribed therefor by law or within sixty
(60) days after entry of the order for relief or as may be allowed by the
court, or if said trustee, Lessee or Lessee as debtor-in-possession shall
fail to provide adequate protection of Lessor's right, title and interest in
and to the Premises or adequate assurance of the complete and continuous
future performance of Lessee's obligations under this Lease as provided below,
Lessor, to the extent permitted by law or by leave of the court having
jurisdiction over such proceeding, shall have the right, at its election, to
terminate this Lease on five (5) days' notice to Lessee, Lessee as
debtor-in-possession or said trustee and upon the expiration of said five (5)
day period this Lease shall cease and expire as aforesaid and Lessee, Lessee
as debtor-in-possession and/or said trustee shall immediately quit and
surrender the Premises as aforesaid.
VII.5 RIGHT TO DISPOSSESS. If an Event of Default described in Section
7.1(a) or (b) shall occur (provided that Lessor shall have provided the notice
required by Section 6.2 hereof and such Event of Default is not being cured by
the Leasehold Mortgagee pursuant to Section 6.2 hereof), or if this Lease shall
be terminated as provided in Section 7.4, Lessor, without notice, may dispossess
Lessee by summary proceedings or by any suitable action or proceeding at law or
by force or otherwise.
VII.6 REJECTION IN BANKRUPTCY. If, at any time, Lessee rejects this
Lease under Section 365 of the Bankruptcy Code, or any corresponding provision
under applicable state law, then this Lease shall immediately terminate,
Lessee's entire right, title and interest in and to the Premises and this Lease
shall automatically and without further action on the part of any person vest in
Lessor and Lessee shall immediately surrender and deliver possession of the
Property to Lessor.
VII.7 RIGHTS UPON TERMINATION. If this Lease shall be terminated as
provided in Section 7.4 and/or Lessee shall be
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dispossessed as provided in Section 7.5, subject to the provisions of Section
6.2(e) hereof:
(a) Lessor or Lessor's agents or servants, may immediately or at any
time thereafter re-enter the Premises and remove therefrom Lessee, its agents,
employees, servants, licensees, and any subtenants and other persons holding or
claiming by, through or under Lessee, and all or any of its or their property,
without being liable to indictment, prosecution or damages therefor, and
repossess and enjoy the Premises, together with the Improvements;
(b) All of the right, title, estate and interest of Lessee in and to
(i) the Property, (ii) all rents, issues and profits of the Property, or any
part thereof, whether then accrued or to accrue and (iii) all insurance policies
and all insurance monies paid or payable thereunder, shall automatically pass
to, vest in and belong to Lessor, without further action on the part of either
party, free of any claim thereto by Lessee, and Lessor may instruct any
Subtenants at the Property to pay rent directly to Lessor or its designee rather
than to Lessee;
(c) Lessee shall pay to Lessor all Rental payable by Lessee under
this Lease to the date upon which this Lease and the Term shall have expired and
come to an end or to the date of re-entry upon the Premises by Lessor, as the
case may be;
(d) Lessor may repair and alter the Property in such manner as Lessor
may deem necessary or advisable without relieving Lessee of any liability under
this Lease or otherwise affecting any such liability, and/or let or relet the
Property or any parts thereof for the whole or any part of the remainder of the
Term or for a longer period, in Lessor's name or as agent of Lessee, and out of
any rent and other sums collected or received as a result of such reletting
Lessor shall: (i) first, pay to itself the reasonable cost and expense of
terminating this Lease, re-entering, retaking, repossessing, completing
construction of and repairing and/or altering the Property, or any part thereof,
and the reasonable cost and expense of removing all persons and property
therefrom, including in such costs reasonable brokerage commissions, legal
expenses and attorneys' fees and disbursements, (ii) second, pay to itself the
reasonable cost and expense sustained in securing any new tenants and other
occupants, including in such costs reasonable brokerage commissions, legal
expenses and attorneys' fees and disbursements and other expenses of preparing
the Property for reletting, and, if Lessor shall maintain and operate the
Property, the cost and expense of operating and maintaining the Property, and
(iii) third, pay to itself any balance remaining on account of the liability of
Lessee to Lessor. Lessor in no way shall be responsible or liable for any
failure to relet the Property or any part thereof, or for any failure to collect
any rent due on any such reletting, and no such failure to relet or to collect
rent shall operate to relieve Lessee of any liability under this Lease or to
otherwise affect any such liability; and in no event shall Lessee be entitled to
receive any excess of such annual rents over the sums payable by Lessee to
Lessor hereunder;
(e) Lessee shall be liable for and shall pay to
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Lessor, as damages, any deficiency ("Deficiency") between the Rental reserved
in this Lease for the period which otherwise would have constituted the
unexpired portion of the Term and the net amount, if any, of rents collected
under any reletting effected pursuant to the provisions of Section 7.7(d) for
any part of such period (which net amount shall be determined after deducting
from the rents collected under any such reletting all of the payments to
Lessor described in Section 7.7(d) hereof); any such Deficiency shall be paid
in installments by Lessee on the days specified in this Lease for payment of
installments of Rental, and Lessor shall be entitled to recover from Lessee
each Deficiency installment as the same shall arise, and no suit to collect
the amount of the Deficiency for any installment period shall prejudice
Lessor's right to collect the Deficiency for any subsequent installment
period by a similar proceeding; and
(f) Whether or not Lessor shall have collected any Deficiency
installments as aforesaid, Lessor shall be entitled to recover from Lessee, and
Lessee shall pay to Lessor, on demand, in lieu of any further Deficiencies, as
and for liquidated and agreed final damages (it being agreed that it would be
impracticable or extremely difficult to fix the actual damage), a sum equal to
the amount by which the Rental reserved in this Lease for the period which
otherwise would have constituted the unexpired portion of the Term exceeds the
then fair and reasonable rental value of the Premises for the same period, both
discounted to present worth at the rate of seven (7%) percent per annum, less
the aggregate amount of Deficiencies theretofore collected by Lessor pursuant to
the provisions of Section 7.7(e) for the same period; it being agreed that
before presentation of proof of such liquidated damages to any court, commission
or tribunal, if the Premises, or any substantial part thereof, shall have been
relet by Lessor for the period which otherwise would have constituted the
unexpired portion of the Term, or any part thereof, the amount of rent reserved
upon such reletting shall be deemed, prima facie, to be the fair and reasonable
rental value for the part or the whole of the Premises so relet during the term
of the reletting.
VII.8 NO RELIEF FROM LIABILITIES. No termination of this Lease
pursuant to this Article VII, and no taking possession of and/or reletting the
Premises, or any part thereof, pursuant to this Article VII, shall relieve
Lessee of its liabilities and obligations hereunder, all of which shall survive
such expiration, termination, repossession or reletting except as otherwise
specifically provided.
VII.9 WAIVER. To the extent not prohibited by law, Lessee hereby
waives and releases all rights now or hereafter conferred by statute or
otherwise which would have the effect of limiting or modifying any of the
provisions of this Article VII. Lessee shall execute, acknowledge and deliver
any instruments which Lessor may reasonably request, whether before or after the
occurrence of an Event of Default, evidencing such waiver or release.
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VII.10 LIEN. The Rental payable by Lessee hereunder and each and every
installment thereof, and all reasonable costs (including, without limitation,
reasonable attorneys' fees and disbursements) and other expenses which may be
incurred by Lessor in enforcing the provisions of this Lease or on account of
any delinquency of Lessee in carrying out the provisions of this Lease shall be
and they hereby are declared to constitute a valid lien upon the interest of
Lessee in this Lease, in the Premises and in the Improvements.
VII.11 SUITS. Suit or suits for the recovery of damages, or for a sum
equal to any installment or installments of Rental payable hereunder or any
Deficiencies or other sums payable by Lessee to Lessor pursuant to this Article
VII, or for conveyance of the Improvements, may be brought by Lessor from time
to time at Lessor's election, and nothing herein contained shall be deemed to
require Lessor to await the date whereon this Lease or the Term would have
expired had there been no Event of Default by Lessee and termination.
VII.12 NO PREJUDICE. Nothing contained in this Article VII shall limit
or prejudice the right of Lessor to prove and obtain as liquidated damages in
any bankruptcy, insolvency, receivership, reorganization or dissolution
proceeding an amount equal to the maximum allowed by a statute or rule of law
governing such proceeding and in effect at the time when such damages are to be
proved, whether or not such amount shall be greater than, equal to or less than
the amount of the damages referred to in any of the preceding Sections of this
Article VII.
VII.13 NO REINSTATEMENT. No receipt of moneys by Lessor from Lessee
after the termination of this Lease, or after the giving of any notice of the
termination of this Lease shall reinstate, continue or extend the Term or affect
any notice theretofore given to Lessee, or operate as a waiver of the right of
Lessor to enforce the payment of Rental payable by Lessee hereunder or
thereafter falling due, or operate as a waiver of the right of Lessor to recover
possession of the Premises by proper remedy, except as herein otherwise
expressly provided, it being agreed that after the service of notice to
terminate this Lease or the commencement of any suit or summary proceedings, or
after a final order or judgment for the possession of the Premises, Lessor may
demand, receive and collect any moneys due or thereafter falling due without in
any manner affecting such notice, proceeding, order, suit or judgment, all such
moneys collected being deemed payments on account of the use and occupation of
the Premises or, at the election of Lessor, on account of Lessee's liability
hereunder.
VII.14 WAIVER OF NOTICE. Except as otherwise expressly provided herein
or as prohibited by applicable law, Lessee hereby expressly waives the service
of any notice of intention to re-enter provided for in any statute, or of the
institution of
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legal proceedings to that end, and Lessee, for and on behalf of
itself and all persons claiming through or under Lessee, also waives any and all
right of redemption provided by any law or statute now in force or hereafter
enacted or otherwise, or re-entry or repossession or to restore the operation of
this Lease in case Lessee shall be dispossessed by a judgment or by warrant of
any court or judge or in case of re-entry or repossession by Lessor or in case
of any expiration or termination of this Lease, and Lessor and Lessee waive and
shall waive trial by jury in any action, proceeding or counterclaim brought by
either of the parties hereto against the other on any matter whatsoever arising
out of or in any way connected with this Lease, the relationship of Lessor and
Lessee, Lessee's use or occupancy of the Premises, or any claim of injury or
damage. The terms "enter", "re-enter", "entry" or "re-entry", as used in this
Lease are not restricted to their technical legal meaning.
VII.15 STRICT PERFORMANCE. No failure by Lessor to insist upon the
strict performance by Lessee of any covenant, agreement, term or condition of
this Lease or to exercise any right or remedy consequent upon a breach thereof,
and no payment or acceptance of full or partial Rental during the continuance of
any such breach, shall constitute a waiver of any such breach or of such
covenant, agreement, term or condition or of any such right or remedy. No
covenant, agreement, term or condition of this Lease to be performed or complied
with by Lessee, and no breach thereof, shall be waived, altered or modified
except by a written instrument executed by Lessor. No waiver by Lessor of any
breach shall affect or alter this Lease, but each and every covenant, agreement,
term and condition of this Lease shall continue in full force and effect with
respect to any other then existing or subsequent breach thereof.
VII.16 RIGHT TO ENJOIN. Except as expressly provided herein to the
contrary, in the event of any breach, or attempted or threatened breach, by
Lessee of any of the covenants, agreements, terms or conditions contained in
this Lease, Lessor shall be entitled to enjoin such breach or such attempted or
threatened breach, and shall have the right to a decree compelling specific
performance of any of the provisions hereof and to invoke any rights and
remedies allowed at law or in equity or by statute or otherwise as though
reentry, summary proceedings, and other remedies were not provided for in this
Lease.
VII.17 REMEDIES CUMULATIVE. Each right and remedy of Lessor provided
for in this Lease shall be cumulative and shall be in addition to every other
right or remedy provided for in this Lease or now or hereafter existing at law
or in equity or by statute or otherwise, and the exercise or beginning of the
exercise by Lessor of any one or more of the rights or remedies provided for in
this Lease or now or hereafter existing at law or in equity or by statute or
otherwise shall not preclude the simultaneous or later exercise by Lessor of any
or all other
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rights or remedies provided for in this Lease or now or hereafter existing at
law or in equity or by statute or otherwise.
VII.18 ADEQUATE PROTECTION AND ADEQUATE ASSURANCE. Lessee hereby
acknowledges that Lessor has an interest in the Property within the meaning of
Section 363(e) of the Bankruptcy Code. Accordingly, if an order for relief is
entered or if a stay of proceeding or other acts becomes effective in favor of
Lessee or Lessee's interest in this Lease, in any proceeding which is commenced
by or against Lessee, under the Bankruptcy Code or any future federal bankruptcy
code or any other present or future applicable federal, state or other statute
or law, Lessor shall be entitled to invoke any and all rights and remedies
available to it under such bankruptcy code, statute, law or this Lease,
including, without limitation, such rights and remedies as may be necessary to
adequately protect Lessor's right, title and interest in and to the Property or
any part thereof and/or adequately assure the complete and continuous future
performance of Lessee's obligations under this Lease. Adequate protection of
Lessor's right, title and interest in and to the Property and adequate assurance
of the complete and continuous future performance of Lessee's obligations under
this Lease, shall include, without limitation, the following requirements:
(a) that Lessee shall comply with all of its obligations under this
Lease;
(b) that Lessee shall pay to Lessor, on the first day of each month
occurring subsequent to the entry of such order or the effective date of such
stay, a sum equal to the amount by which the Premises diminished in value during
the immediately preceding monthly period, but, in no event, an amount which is
less than the aggregate Rental payable for such monthly period;
(c) that Lessee shall continue to use the Premises in the manner
required by this Lease;
(d) that Lessor shall be permitted to supervise the performance of
Lessee's obligations under this Lease;
(e) that Lessee shall hire, at its sole cost and expense, such
security personnel as may be necessary to insure the adequate protection and
security of the Premises;
(f) that Lessee pay to Lessor within thirty (30) days after entry of
such order or the effective date of such stay, as partial adequate protection
against future diminution in value of the Premises and adequate assurance of the
complete and continuous future performance of Lessee's obligations under this
Lease, a security deposit in an amount acceptable to Lessor, but in no event
less than the Rental payable hereunder for the then current lease year;
(g) that Lessee has and will continue to have unencumbered assets
after the payment of all secured obligations and administrative expenses to
assure Lessor that sufficient funds will be available to fulfill the obligations
of Lessee under this Lease;
(h) that Lessor be granted a security interest acceptable to Lessor
in property of Lessee to secure the performance of Lessee's obligations under
this Lease; and
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(i) that if Lessee's trustee, Lessee or Lessee as
debtor-in-possession assumes this Lease and proposes to assign the same
(pursuant to Section 365 of the Bankruptcy Code) to any person who shall have
made a bona fide offer to accept an assignment of this Lease on terms acceptable
to the trustee, Lessee or Lessee as debtor-in-possession, then notice of such
proposed assignment, setting forth (x) the name and address of such person, (y)
all of the terms and conditions of such offer, and (z) the adequate assurance to
be provided Lessor to assure such person's future performance under the Lease,
including, without limitation, the assurances referred to in Section 365 of the
Bankruptcy Code, shall be given to Lessor by the trustee, Lessee or Lessee as
debtor-in-possession no later than twenty (20) days after receipt by the
trustee, Lessee or Lessee as debtor-in-possession of such offer, but in any
event no later than ten (10) days prior to the date that the trustee, Lessee or
Lessee as debtor-in-possession shall make application to a court of competent
jurisdiction for authority and approval to enter into such assignment and
assumption, and Lessor shall thereupon have the prior right and option, to be
exercised by notice to the trustee, Lessee or Lessee as debtor-in-possession,
given at any time prior to the effective date of such proposed assignment, to
accept an assignment of this Lease upon the same terms and conditions and for
the same consideration, if any, as the bona fide offer made by such person, less
any brokerage commissions which may be payable out of the consideration to be
paid by such person for the assignment of this Lease.
VII.19 ADDITIONAL RIGHTS OF LESSOR.
(a) If Lessee shall be in default in the performance of any of its
obligations hereunder, Lessee shall pay to Lessor, on demand, all expenses
incurred by Lessor as a result thereof, including reasonable attorneys' fees and
expenses (including those incurred in connection with any appellate
proceedings). If Lessor shall be made a party to any litigation commenced
against Lessee and Lessee shall fail to provide Lessor with counsel approved by
Lessor and pay the expenses thereof, Lessee shall pay all costs and reasonable
attorneys' fees and expenses incurred by Lessor in connection with such
litigation (including such fees and expenses incurred in connection with any
appellate proceedings).
(b) If there shall be an Event of Default under this Lease, then
Lessor, without waiving or releasing Lessee from any obligation of Lessee
contained in this Lease, may (but shall be under no obligation to) perform such
obligations on Lessee's behalf.
(c) All reasonable sums paid by Lessor and all costs and expenses
(including, without limitation, reasonable attorneys' fees and disbursements)
incurred by Lessor in connection with its performance under Section 7.19(b) of
any of Lessee's obligations, shall be paid by Lessee to Lessor on demand as
additional Rental. Any payment or performance by Lessor pursuant to the
foregoing provisions of Section 7.19(b) shall not be or be deemed to be a waiver
or release of breach or default of
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Lessee with respect thereto or of the right of Lessor to terminate this
Lease, institute summary proceedings and/or take such other action as may be
permissible hereunder if an Event of Default by Lessee shall have occurred.
65535RT65535CLE VIII
NOTICES; ESTOPPEL CERTIFICATES; REPORTING REQUIREMENTS
VIII.1 NOTICES. All notices, demands, requests, consents, approvals,
reports or other communications required or permitted to be given pursuant to
this Lease shall be in writing and shall be deemed given: (i) when delivered by
hand (including, without limitation, delivery by any private or public courier
service); (ii) when delivered by first class, certified mail, return receipt
requested, postage prepaid (or when delivery is attempted if such delivery is
refused by recipient); or (iii) when sent by tested telex, telecopier or other
facsimile reproduction equipment, or e-mail to the following addresses (or such
other address as the recipient party may hereafter specify in the same manner):
If to Lessee, to it at:
c/o Steinway Musical Instruments, Inc.
800 South Street, Suite 425
Waltham, Massachussetts 02453-1472
Attention: Dennis M. Hanson, Esq.
Fax: (781) 894-9803
E-Mail: [email protected]
with a copy to:
Milbank, Tweed, Hadley & McCloy LLP
1 Chase Manhattan Plaza
New York, New York 10005
Attention: Barbara J. Briggs, Esq.
Fax: (212) 530-5219
E-Mail: [email protected]
and with a copy to any Leasehold Mortgagee, to the extent
required by Section 6.2 above.
If to Lessor, to it at:
c/o Wexford Management LLC
411 West Putnam Avenue
Greenwich, Connecticut 06830
Attention: Joseph M. Jacobs
Fax: (203) 862-7320
E-Mail: [email protected]
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with a copy to:
Proskauer Rose LLP
1585 Broadway
New York, New York 10036
Attention: Wendy J. Schriber, Esq.
Fax: (212) 969-2900
E-Mail: [email protected]
and with a copy of any notices of default to the holder of any
Fee Mortgage, as required by Section 1.4(e) above.
However, Lessor and Lessee shall have the right from time to time to change
their respective addresses and persons to whom copies of notices shall be sent
by not less than five (5) days written notice to the other party.
VIII.2 CERTIFICATES OF LESSOR AND LESSEE. Either party shall, within
twenty (20) days after each and every request by the other party, execute,
acknowledge and deliver to such requesting party a statement in writing:
(a) certifying that this Lease is unmodified and in full force and
effect (or if there have been modifications, that the same, as modified, is in
full force and effect and stating the modifications);
(b) stating whether or not to the best knowledge of the certifying
party (without independent investigation) (i) there is a continuing default by
the other party in the performance or observance of any covenant, agreement or
condition contained in this Lease to be performed or observed by such other
party, or (ii) there shall have occurred any event which, with the giving of
notice or passage of time or both, would become such a default, and, if so,
specifying each such default or occurrence of which such certifying party shall
have knowledge;
(c) stating whether or not such certifying party has received from
the other party a notice of default by such certifying party in the performance
or observance of any covenant, agreement or condition contained in this Lease to
be performed or observed by such certifying party;
(d) stating whether this Lease commenced and the Term;
(e) certifying that Rental obligations have commenced, and specifying
the dates through which the Basic Rent and all other Rentals have been paid;
(f) stating whether or not there is pending any action, arbitration
or proceeding between Lessor and Lessee arising under this Lease, and, if so,
the nature thereof;
(g) if the certifying party is Lessee, certifying that Lessee has no
counterclaims, defenses or right to offset against any amounts due to Lessor
under this Lease, and that Lessee is not entitled to any concessions, rebates or
any reductions in Basic Rent or other Rental under this Lease for whatever
reason as of the date the statement is given;
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(h) stating that the addresses for Notices are as set out in this
Lease or as stated in the statement; and
(i) certifying that the statement shall be binding upon such
certifying party and may be relied upon by (x) the holder of any Fee or
Leasehold Mortgage, (y) any assignee or purchaser of all or a portion of the
requesting party's interest in the Property or this Lease, and/or (z) any
purchaser of any partnership interest, stock or membership interest in the
requesting party.
VIII.3 REPORTING REQUIREMENTS; BOOKS AND RECORDS.
(a) From and after the expiration or earlier termination of the term
of the Master Lease, within ninety (90) days after the close of its fiscal year,
Lessee will deliver to Lessor annual financial statements for the Property for
such fiscal year, which financial statements shall be prepared using generally
accepted accounting principals, and shall include (i) a balance sheet, (ii) a
statement of profit and loss, (iii) a statement of sources and uses of funds,
(iv) a rent roll indicating the identity of the tenant, the square footage and
location of the space leased, the rent and escalations payable (with relevant
formulas and base years included), any special rights or obligations of landlord
and/or tenant under such leases, including, without limitation, any free rent,
landlord's work, tenant improvement allowances or other tenant inducements,
options to renew, expand, surrender or terminate and such other information as
Lessor shall reasonably request, and (v) such other financial statements as
Lessor shall reasonably request, setting forth, in each case, in comparative
form, figures for the preceding year. All such annual financial statements
shall be audited by an independent certified public accountant reasonably
satisfactory to Lessor, and shall be accompanied by the certificate of a
principal financial or accounting officer of Lessee (or if Lessee is a limited
liability company, of its managing member, or if Lessee is a partnership, of its
general partner) (each, an "Officer's Certificate"), dated within five (5) days
of the delivery of such statements to Lessor, stating that such financial
statements are true and correct in all material respects and stating that Lessee
knows of no Event of Default which has occurred and is continuing, or, if any
such Event of Default has occurred and is continuing, specifying the nature and
period of existence thereof and what action Lessee has taken or proposes to take
with respect thereto, and, except as otherwise specified, stating that to
Lessee's knowledge Lessee has fulfilled all its material obligations under this
Lease which are required to be fulfilled on or prior to the date of such
certificate. From and after the expiration or earlier termination of the term
of the Master Lease, Lessee will deliver to Lessor, from time to time, within
fifteen (15) days of Lessee's receipt thereof, copies of any such monthly,
quarterly or other interim financial statements and other financial information
with respect to the Property as shall be prepared by, or for the benefit of,
Lessee by Lessee, Lessee's property manager and/or Lessee's financial advisors.
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(b) From and after the expiration or earlier termination of the term
of the Master Lease, Lessor and its agents and designees may, upon reasonable
notice to Lessee and at reasonable times, examine Lessee's books and records
relating to the Premises, the Improvements and the operation, maintenance and
repair thereof.
65535RT65535CLE IX
SURRENDER AT THE END OF TERM
IX.1 CONDITION OF PREMISES; REVERSION.
(a) On the Expiration Date or earlier termination of this Lease,
Lessee shall at no cost or expense to Lessor, surrender and deliver to Lessor or
its designee the Property (including, without limitation, the Improvements) (a)
in such condition as the Property is required to be maintained pursuant to this
Lease, except for damage by fire or other casualty or condemnation or other
taking that Lessee is required under this Lease or in any other document,
instrument or agreement to repair or restore but, despite reasonable diligence,
has been unable to repair or restore (provided that all insurance and/or
condemnation proceeds which have not been applied to such restoration shall have
been paid to Lessor, plus any additional sums required to complete such
restoration) and (b) free and clear of any Leasehold Mortgage and all lettings,
occupancies, liens and encumbrances other than those, if any, existing at the
date hereof, created by Lessor or which lettings and occupancies by their
express terms and conditions extend beyond the Expiration Date and which Lessor
shall have consented and agreed, in writing, may extend beyond the end of the
Term, without any payment or allowance whatever by Lessor. Lessee hereby waives
any notice now or hereafter required by law with respect to vacating the
Property on any such termination date.
(b) The parties acknowledge and agree that on the Expiration Date or
earlier termination of this Lease, fee title to the Improvements shall
automatically revert to and vest in Lessor, free and clear of any Leasehold
Mortgage, without the requirement of any further instrument or documents to
evidence same. Notwithstanding the foregoing, Lessee shall execute and deliver
to Lessor any confirmatory deed or other instrument as Lessor shall reasonably
request in order to confirm such reversion.
IX.2 OTHER REQUIREMENTS. If Lessee delivers the Premises, together with
the Improvements, to Lessor pursuant to the provisions of Section 9.1, on the
last day of the Term or upon any earlier termination of this Lease, or upon
re-entry by Lessor upon the Premises pursuant to Article VII hereof, Lessee
shall deliver to Lessor, Lessee's executed counterparts of all Subleases and any
service and maintenance contracts then affecting the Property, true and complete
maintenance records for the Property for the twenty (20) year period immediately
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preceding the date of such surrender, all original licenses and permits then
pertaining to the Property, duly executed and acknowledged written instruments,
documents, assignments, forms and affidavits as Lessor shall reasonably request
in form and substance reasonably satisfactory to Lessor or its designee
surrendering to Lessor or its designee all of Lessee's right, title and interest
in and to the Improvements and any rights of Lessee with respect thereto, copies
of Lessee's relevant books and records relating to the Premises and the
operation, maintenance and repair thereof for the twenty (20) year period
immediately preceding the date of such surrender and, to the extent in Lessee's
possession or control, permanent or temporary Certificates of Occupancy then in
effect for the Improvements and all warranties and guarantees then in effect
which Lessee has received in connection with any work or services performed or
equipment installed in the Improvements, together with a duly executed
assignment thereof to Lessor.
IX.3 APPORTIONMENTS. The following shall be apportioned between Lessee and
Lessor with respect to the Premises as of 11:59 P.M. on the day immediately
preceding the date of the expiration or earlier termination of this Lease (other
than termination for any default by Lessee)(the "Apportionment Date"), and the
net amount thereof shall be paid by Lessor to Lessee or by Lessee to Lessor, as
the case may be, within ten (10) days after the Apportionment Date, to the
extent practicable, subject to reapportionment from time to time within six (6)
months after the Apportionment Date to the extent that any amount to be
apportioned hereunder cannot reasonably be determined on the Apportionment Date:
(a) real property taxes and assessments (or installments thereof), on
the basis of the fiscal year for which payable;
(b) water rates and charges, except those required to be paid
directly by tenants in occupancy of portions of the Premises to the entity
imposing same;
(c) sewer taxes and rents, except those required to be paid directly
by tenants in occupancy of portions of the Premises to the entity imposing same;
(d) annual permit, license and inspection fees, if any, on the basis
of the fiscal year for which levied, if the rights with respect thereto are
transferable to Lessor;
(e) fuel, if any, at the cost per gallon or cubic foot most recently
charged to Lessee, based on the supplier's measurements thereof, plus sales
taxes thereon;
(f) deposits on account with any utility company servicing the
Premises, to the extent transferred to Lessor;
(g) fixed, escalation and other rent of tenants in
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occupancy of the Premises, if, as, and when collected (the "Sublease Rents");
(h) amounts deposited with the holder of any Fee Mortgage for escrows
of real estate taxes and insurance premiums; and
(i) all other items customarily apportioned in connection with
similar properties similarly located.
IX.4 FISCAL YEAR OF ASSESSMENT. Apportionment of real property taxes,
water rates and charges and sewer taxes and rents shall be made on the basis of
the fiscal year for which assessed. If the Apportionment Date shall occur
before the real property tax rate, water rates and charges and sewer taxes and
rents are fixed, the apportionment of taxes shall be made on the basis of the
real property tax rate, water rates and charges and sewer taxes and rents for
the preceding year applied to the latest assessed valuation. After the real
property taxes, water rates and charges and sewer taxes and rents are finally
fixed, Lessor and Lessee shall make a recalculation of the apportionment of
same, and Lessor or Lessee, as the case may be, shall make an appropriate
payment to the other based upon such recalculation.
IX.5 COLLECTION OF RENTS AFTER TERM. If Lessee is entitled, in accordance
with the provisions of this Lease, to all or any portion of any arrearages
regarding the Sublease Rents, Lessee shall have the right to commence any and
all appropriate legal proceedings (other than any proceeding to terminate the
applicable sublease or otherwise recover possession of the space demised
thereunder) to collect such arrearages after the Apportionment Date and Lessor
shall cooperate with Lessee in connection with such proceedings (at no cost to
Lessor).
IX.6 SURVIVAL. The provisions of this Article 9 shall survive the
expiration or termination of this Lease and, in the case of Lessee's obligations
hereunder, shall not be limited as provided in Section 10.4.
65535RT65535CLE X
MISCELLANEOUS
X.1 NO MERGER. There shall be no merger of this Lease or of the leasehold
estate hereby created with the fee estate in the Premises by reason of the fact
that the same person acquires or holds, directly or indirectly, this Lease or
the leasehold estate hereby created or any interest herein or in such leasehold
estate as well as the fee estate in the Premises or any interest in such fee
estate.
X.2 SEPARABILITY; BINDING EFFECT. Each provision hereof shall be separate
and independent and the breach of any such provision by Lessor shall not
discharge or relieve Lessee from any of its obligations hereunder. Each
provision hereof shall be
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valid and shall be enforceable to the extent not prohibited by law. If any
provision hereof or the application thereof to any person or circumstance
shall to any extent be invalid or unenforceable, the remaining provisions
hereof, 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. All provisions contained in this Lease shall be binding
upon, inure to the benefit of, and be enforceable by, the respective
successors and assigns of Lessor and Lessee to the same extent as if each
such successor and assign were named as a party hereto. This Lease may not
be modified without the prior written consent of the holder of any Fee
Mortgage and the Leasehold Mortgagee (other than any amendment which confirms
the amount of any Basic Rent determinated in accordance with the provisions
of Section 2.2 below or any CPI Escalation as provided in Section 13.2).
This Lease shall be governed by and interpreted in accordance with the laws
of the State of New York.
X.3 HEADINGS. The headings to the various paragraphs and Schedules of
this Lease have been inserted for reference only and shall not to any extent
have the effect of modifying the express terms and provisions of this Lease.
X.4 IMMUNITY FROM LIABILITY.
(a) Notwithstanding anything to the contrary provided in this Lease,
each and every term, covenant, condition and provision of this Lease is hereby
made specifically subject to the provisions of this Paragraph 10.4, except as
expressly provided to the contrary in Section 9.6 and in Section 10.4(b) below.
It is specifically understood and agreed that (except to the extent of the
interest of Lessor or Lessee, as the case may be, in the Property and any rents,
issues, profits, proceeds or awards thereof or relating thereto) there shall be
no personal liability against Lessor (which shall for purposes of this Paragraph
10.4 include the holder of any Fee Mortgage as mortgagee or mortgagee in
possession) or Lessee (which shall for purposes of this Paragraph 10.4 include
the Leasehold Mortgagee as mortgagee or mortgagee in possession) or any partner,
member, shareholder, officer or director of Lessor or Lessee or any partner,
member, shareholder, officer or director of any such partner, member,
shareholder, officer or director or any successor in interest of any of the
foregoing, or any members or beneficial owners of Lessor or Lessee whether the
same be a corporation, individual, joint venture, tenancy in common, partnership
or otherwise, or against any officer, director, or shareholder thereof, or any
other person or entity for the performance of any term, covenant, condition or
provision of this Lease for any claim based therein or otherwise in respect
thereof. Lessor and Lessee shall look solely to the interest of the other in
the Property for the satisfaction of each and every remedy of such party in the
event of any breach of any of the terms, covenants and conditions of this Lease,
such exculpation of personal liability to be absolute and without any exception
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whatsoever.
(b) Notwithstanding anything in Section 10.4(a) above to the
contrary, in the event that Lessor or Lessee shall misapply, misappropriate or
otherwise fail to deliver to the party entitled to receive same under this
Lease, any insurance proceeds, condemnation awards or other similar funds, the
limitation on liability described in Section 10.4(a) shall not apply, and Lessor
or Lessee, as the case may be, shall be fully and personally liable to the other
party to the extent of any such funds so misapplied, misappropriated or
otherwise failed to be delivered to the party entitled thereto under this Lease.
X.5 COUNTERPARTS. This Lease may be executed in two or more counterparts
and shall be deemed effective when and only when one or more of such
counterparts shall have been signed by or on behalf of each of the parties
hereto (although it shall not be necessary that any single counterpart be signed
by or on behalf of each of the parties hereto, and all such counterparts shall
be deemed to constitute but one and the same instrument) and shall have been
delivered by each of the parties to the other.
X.6 RECORDATION. Lessor and Lessee, each upon the written request of the
other shall execute, acknowledge and deliver a memorandum of this Lease, and of
each modification of this Lease relating to a term set forth in any prior
memorandum, in proper form for recordation. Neither party shall record this
Lease without the prior consent of the other party.
X.7 TIME OF THE ESSENCE. Notwithstanding anything in this Lease to the
contrary, time shall be of the essence with respect to the performance by Lessor
and Lessee of all of the terms, conditions, covenants and obligations of Lessor
and Lessee hereunder.
65535RT65535CLE XI
ARBITRATION
XI.1 ARBITRATION.
(a) In the event that the fair market value (the "Fair Market Value")
of the Property, the Improvements, the Premises, the Master Lease or the
interest of Lessor and/or Lessee in and to any of the foregoing must be
determined by arbitration, as provided in Section 2.2, Section 5.1 or Section
12.3 of this Lease, as the case may be, the party desiring arbitration shall,
within twenty (20) days from the date that an appointment of an arbitrator is
required pursuant to such Sections above, appoint a disinterested person as
arbitrator on its behalf and give notice thereof to the other party who shall,
within twenty (20) days thereafter, appoint a second disinterested person as
arbitrator on its behalf and give written notice thereof to the first party. The
two (2) arbitrators shall within forty-five (45) days
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thereafter each make a determination of the relevant Fair Market Value. If
the determination by one arbitrator of the relevant Fair Market Value differs
from the determination of the other arbitrator, then the two (2) arbitrators
shall together appoint a third disinterested person within fifteen (15) days
thereafter, and the third arbitrator alone shall determine the matter and
render a decision as to the applicable Fair Market Value by reviewing the
determination of each of the two (2) arbitrators and selecting one (1) such
determination as the Fair Market Value, which determination shall be
conclusive and binding on all parties and judgment upon the award may be
entered in any court having jurisdiction. If a party who shall have the right
pursuant to the foregoing to appoint an arbitrator fails or neglects to do
so, then and in such event, the other party (or if the two (2) arbitrators
appointed by the parties shall fail to appoint a third arbitrator when
required hereunder, then either party) may apply to the American Arbitration
Association to appoint such arbitrator and the appointment of such arbitrator
shall be conclusive and binding upon the parties. The arbitration shall be
conducted in the City and County of New York and, to the extent applicable
and consistent with this Article XI, shall be in accordance with the
Commercial Arbitration Rules then provided for by the American Arbitration
Association or any successor body of similar function. The expenses of
arbitration and the fees and disbursements of the third arbitrator shall be
shared equally by Lessor and Lessee but each party shall be responsible for
the fees and disbursements of the arbitrator it appoints and its own
attorneys and the expenses of its own proof. Lessor and Lessee agree to sign
all documents, provide all relevant information, and do all other things
necessary to submit any such matter to arbitration and further agree to, and
hereby do, waive any and all rights they or either of them may at any time
have to revoke their agreement hereunder to submit to arbitration, to abide by
the decision rendered thereunder and to sign such documents as shall be
reasonably necessary to memorialize any determination of Basic Rent
calculated based upon the arbitrator's determination of Fair Market Value.
The arbitrators shall have no power to vary or modify any of the provisions
of this Lease and their jurisdiction is limited accordingly. The arbitrators
shall be independent real estate appraisers who are members of the American
Appraisal Institute, or successor organization, having at least ten (10)
years' experience in the appraisal of commercial property in the borough of
Manhattan, and their appraisals must be performed (except to the extent
specifically provided to the contrary herein) in accordance with the rules of
the American Appraisal Institute, or any successor organization. The
provisions of this Article XI shall be effective notwithstanding that Lessee
is a party in any bankruptcy or insolvency proceeding.
(b) In determining the Fair Market Value of the
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Property, the parties, and, if applicable, the arbitrators, shall (x)
determine the Fair Market Value of the Property assuming that the Premises
and the Improvements were under common ownership, without taking into account
the existence, terms and conditions of this Lease, and otherwise free and
clear of all liens and encumbrances, other than leases to tenants for space
in the Improvements, and assuming that (A) the Property were to be sold on an
orderly basis with adequate time for such sale, (B) that neither the buyer
nor the seller thereof were under duress or compulsion to buy or sell, and
(C) that Lessee had complied with all obligations under this Lease,
including, without limitation, Lessee's obligations with respect to the
operation, maintenance, repair and restoration of the Property, (y) take into
account all relevant factors, including, without limitation, the sales prices
then being paid for comparable real property in comparable areas in the
midtown area of the Borough of Manhattan in New York City, and (z) in the
event that any space(s) in the Improvements are then leased to Lessee or any
party affiliated with Lessee on economic and/or other terms which would be
considered to be (i) in the case of economic terms, "below market", or (ii)
in the case of non economic terms, "more favorable than market", then for the
purposes of the valuation described herein, the arbitrators must assume that
such spaces(s) is(are) rented at the then current fair market rent for such
space(s) (which, with respect to the basement, ground floor and first floor
mezzanine space, shall be valued for retail use; and with respect to any
other space in the Property, shall be valued for office use) and otherwise on
terms and conditions and for a term which would be applicable to such
space(s) were such space(s) to be leased to unrelated third parties in
arms-length transactions at the time of such appraisal, taking into account
the then existing condition of such space(s), provided however that in no
event shall such assumed fair market rent be less than the rent currently
payable by the party affiliated with the Lessee.
(c) In determining the Fair Market Value of the Premises, the
parties, and, if applicable, the arbitrators, shall (x) determine the Fair
Market Value of the Premises taking into account the existence, terms and
conditions of this Lease, but otherwise free and clear of all liens and
encumbrances, and assuming (A) the Property were to be sold on an orderly basis
with adequate time for such sale, (B) that neither the buyer nor the seller
thereof were under duress or compulsion to buy or sell, and (C) that Lessee had
complied with all obligations under this Lease, including, without limitation,
Lessee's obligations with respect to the operation, maintenance, repair and
restoration of the Property, (y) take into account all relevant factors,
including, without limitation, the sales prices then being paid for comparable
real property in comparable areas in the midtown area of the Borough of
Manhattan in New York City, the value of the Property as provided for in clause
(b) above,
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and bona fide offers solicited by Lessor from third parties offering to
purchase the Premises, and (z) in the event that any space(s) in the
Improvements are then leased to Lessee or any party affiliated with Lessee on
economic and/or other terms which would be considered to be (i) in the case
of economic terms, "below market", or (ii) in the case of non economic terms,
"more favorable than market", then for the purposes of the valuation
described herein, the arbitrators must assume that such spaces(s) is(are)
rented at the then current fair market rent for such space(s) (which, with
respect to the basement, ground floor and first floor mezzanine space, shall
be valued for retail use; and with respect to any other space in the
Property, shall be valued for office use) and otherwise on terms and
conditions and for a term which would be applicable to such space(s) were
such space(s) to be leased to unrelated third parties in arms-length
transactions at the time of such appraisal, taking into account the then
existing condition of such space(s), provided however that in no event shall
such assumed fair market rent be less than the rent currently payable by the
party affiliated with the Lessee. Notwithstanding the foregoing, in no event
shall the Fair Market Value of the Premises be less than $30,000,000, except
to the extent expressly provided in Section 5.1 above with respect to a
condemnation.
(d) In determining the Fair Market Value of the Master Lease, the
parties, and, if applicable, the arbitrators, shall (x) determine the Fair
Market Value of the Master Lease taking into account the existence, terms and
conditions of such Master Lease, and assuming (A) the Master Lease were freely
saleable under its terms and as such were to be sold on an orderly basis with
adequate time for such sale, (B) that neither the buyer nor the seller thereof
were under duress or compulsion to buy or sell, and (C) that Lessee had complied
with all obligations under this Lease, including, without limitation, Lessee's
obligations with respect to the operation, maintenance, repair and restoration
of the Property, (y) take into account all relevant factors, including, without
limitation the prices paid for other similar leasehold positions, if any, and
the return on investment generally expected from an investment in such a
leasehold position.
(e) In determining the Fair Market Value of the Improvements, the
parties, and, if applicable, the arbitrators, shall first determine the Fair
Market Value of the Property, the Premises and the Master Lease (if such Master
Lease is then in effect) in accordance with Sections 11.1(b), (c) and (d)
hereof. The fair market value of the Improvements shall then be determined by
subtracting from the fair market value of the Property the fair market value of
the Premises and, if applicable, the fair market value of the Master Lease.
65535RT65535CLE XII
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RIGHTS OF FIRST OFFER; OPTION TO PURCHASE
XII.1 LESSOR'S RIGHT OF FIRST OFFER. Lessee agrees that if, at any
time during the term, Lessee intends to sell the Improvements to an independent
person or other entity other than (a) an affiliate, subsidiary or parent of
Lessee or to a partnership, limited liability company or other entity which is
controlled by or under common control with Lessee, or (b) any Leasehold
Mortgagee or any Assignee pursuant to a foreclosure or deed-in-lieu thereof (but
excluding any sale to a Leasehold Mortgagee or other independent person in a
transaction unrelated to the exercise of remedies pursuant to a Leasehold
Mortgage) and Lessor is not in default hereunder at the time of exercise by
Lessor of the right contained in this Section 12.1, Lessee shall notify Lessor
(the "Lessee Offer Notice") of its intention to sell the Improvements prior to
entering into negotiations with another person or entity for such sale. If
Lessor wishes to negotiate for the purchase of the Improvements as specified in
the Lessee Offer Notice, Lessor shall so notify Lessee within ten (10) days
after receipt of the Lessee Offer Notice, and Lessor and Lessee shall in good
faith negotiate for the sale of the Improvements to Lessor on terms and
conditions satisfactory to Lessee, in its sole and absolute discretion. It is
expressly understood and agreed that if Lessee shall commence negotiations with
Lessor as aforesaid, Lessee shall be required to negotiate with Lessor for a
reasonable period not to exceed thirty (30) days. If Lessor shall fail to
notify Lessee of its wish to negotiate for the purchase of the Improvements in
the time period specified above, or if Lessee and Lessor do not agree on the
terms of the sale of the Improvements in the time period specified above, Lessee
shall be free to sell the Improvements subject to this Lease to any other person
or entity without restriction and upon any terms and conditions, provided,
however, that Lessee must simultaneously assign this Lease to the purchaser of
the Improvements and such purchaser must simultaneously assume all of the
obligations of the lessee hereunder from and after the effective date of such
assignment, including, without limitation, the obligation to surrender the
Improvements to Lessor on the Expiration Date or earlier termination of this
Lease. Time shall be of the essence with respect to the delivery by Lessor of
notice of its desire to negotiate with Lessee.
XII.2 LESSEE'S RIGHT OF FIRST OFFER. Lessor agrees that if, at any
time during the term, Lessor intends to sell the Premises to an independent
person or other entity other than (a) an affiliate, subsidiary or parent of
Lessor or to a partnership, limited liability company or other entity which
is controlled by or under common control with Lessor, or (b) the holder of
any Fee Mortgage or any assignee of such holder pursuant to a foreclosure or
deed-in-lieu thereof (but excluding any sale to the holder of a Fee Mortgage
or other independent person in a transaction unrelated to the exercise of
remedies pursuant to a Fee Mortgage)
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and Lessee is not in default hereunder at the time of exercise by Lessee of
the right contained in this Section 12.2, Lessor shall notify Lessee (the
"Lessor Offer Notice") of its intention to sell the Premises prior to
entering into negotiations with another person or entity for such sale. If
Lessee wishes to negotiate for the purchase of the Premises as specified in
the Lessor Offer Notice, Lessee shall so notify Lessor within ten (10) days
after receipt of the Lessor Offer Notice, and Lessor and Lessee shall in good
faith negotiate for the sale of the Premises to Lessee on terms and
conditions satisfactory to Lessor, in its sole and absolute discretion. It
is expressly understood and agreed that if Lessor shall commence negotiations
with Lessee as aforesaid, Lessor shall be required to negotiate with Lessee
for a reasonable period not to exceed thirty (30) days. If Lessee shall fail
to notify Lessor of its wish to negotiate for the purchase of the Premises in
the time period specified above, or if Lessor and Lessee do not agree on the
terms of the sale of the Premises in the time period specified above, Lessor
shall be free to sell the Premises subject to this Lease to any other person
or entity, without restriction and upon any terms and conditions, provided,
however, that Lessor must simultaneously assign this Lease to the purchaser
of the Land and such purchaser must simultaneously assume all of the
obligations of the lessor hereunder from and after the effective date of such
assignment. Time shall be of the essence with respect to the delivery by
Lessee of notice of its desire to negotiate with Lessor.
XII.3 LESSEE'S OPTION TO PURCHASE.
(a) Lessor hereby grants to Lessee an option (the "FMV PURCHASE
OPTION") (exercisable only during an FMV Option Exercise Period, as hereafter
defined, and only if no monetary default by Lessee under this Lease remains
uncured at the time of exercise) to purchase the Premises for a purchase price
equal to the FMV Purchase Price (as hereinafter defined). The "FMV OPTION
EXERCISE PERIODS" shall be each of the calendar months during which the fiftieth
(50th), sixtieth (60th), seventieth (70th), eightieth (80th) and ninetieth
(90th) anniversaries of the Commencement Date shall occur, respectively (i.e.
March, 2049; March, 2059; March, 2069; March, 2079 and March, 2089). The FMV
Purchase Option may only be exercised by delivery during an FMV Option Exercise
Period from Lessee to Lessor of written notice (the "FMV OPTION NOTICE") of the
exercise of such FMV Purchase Option, time being of the essence. The FMV Option
Notice must be accompanied by Lessee's estimate of the Fair Market Value of the
Premises as of the date of such notice. The exercise of the FMV Purchase Option
by Lessee shall be irrevocable.
(b) Within thirty (30) days after Lessor's receipt of the FMV Option
Notice, Lessor shall notify Lessee whether Lessor accepts or rejects Lessee's
estimate. If Lessor accepts such estimate, or if Lessor fails to reject such
estimate within such thirty (30) day period, then the "FMV PURCHASE PRICE" shall
be the amount set forth in Lessee's estimate. If Lessor rejects Lessee's
estimate within such thirty (30) day period, the "FMV
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PURCHASE PRICE" shall be the then Fair Market Value of the Premises, as
determined by arbitration in accordance with Article XI of this Lease.
(c) Upon exercise of the FMV Purchase Option, the purchase shall be
consummated within thirty (30) days after the establishment of the FMV Purchase
Price, on a date mutually agreed upon by the parties (the "FMV PURCHASE OPTION
CLOSING DATE"). On the FMV Purchase Option Closing Date, the purchase of the
Premises shall be accomplished in accordance with the provisions of Section
12.4, including, without limitation, the payment of the FMV Purchase Price, the
payment of all other costs and expenses outlined in said Section 12.4, and the
delivery of the other items described in said Section 12.4. Upon payment of the
FMV Purchase Price and all other costs and expenses required to be paid by
Lessee as outlined in Section 12.4, and upon satisfaction of the other
requirements set forth in Section 12.4 with respect to the purchase of the
Premises by Lessee, this Lease shall terminate.
(d) In the event that Lessee does not deliver the FMV Option Notice
by the end of the final FMV Option Exercise Period, Lessee shall have waived its
right to exercise the FMV Purchase Option. In the event that Lessee shall
deliver the FMV Option Notice, and thereafter fail to consummate the purchase of
the Premises, Lessee shall forfeit any further right to exercise an FMV Option
pursuant to this Lease. In the event that Lessor shall default in its
obligation to transfer the Premises to Lessee under this Section 12.3, Lessee
shall be entitled to enforce such obligation by an action for specific
performance.
XII.4 PROCEDURE UPON PURCHASE.
(a) If Lessee shall purchase the Premises pursuant to Section 12.3 of
this Lease, Lessor shall convey the Premises to Lessee on the FMV Purchase
Option Closing Date free and clear of any Fee Mortgage and of liens and
encumbrances created by, through or under Lessor without the consent of Lessee
during the Term (other than Permitted Exceptions), but otherwise subject to such
exceptions to title as shall exist on such FMV Purchase Option Closing Date, and
Lessee or its designee shall accept such title.
(b) On the FMV Purchase Option Closing Date, Lessee shall, by wire
transfer of immediately available funds, pay to Lessor, or as Lessor may direct
in writing, the FMV Purchase Price, together with all Rental and other sums then
due and payable hereunder to and including such date of purchase, and there
shall be delivered to Lessee a bargain and sale deed without covenants for the
Premises and any other instruments reasonably necessary to convey the title
thereto described in this Section 12.4 and to assign any other property then
required to be assigned by Lessor pursuant hereto. In connection with such
conveyance and assignment, (i) Lessor shall pay the fees of Lessor's counsel and
fifty (50%) percent of any transfer taxes payable in connection with such
transaction, and (ii) Lessee shall pay, on an after-tax basis, all other charges
incident to such conveyance and assignment, including, without limitation,
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Lessee's counsel fees, the remaining fifty (50%) percent of the transfer
taxes, escrow fees, recording fees, title insurance premiums and all other
applicable taxes (other than any income, estate, franchise or other similar
taxes of Lessor) which may be imposed by reason of such conveyance and
assignment and the delivery of said deed or conveyance and other instruments.
65535RT65535CLE XIII
CPI ESCALATION
XIII.1 CALCULATION OF CPI ESCALATION. Notwithstanding anything in this
Lease to the contrary, any fixed dollar amount referred to in this Lease
(including, by way of example, any insurance requirement, threshold for Material
Alterations, minimum Fair Market Value for the Property or the Premises, etc.,
but specifically excluding the amount of any fixed Basic Rent payment provided
for herein) (each, a "Fixed Amount") shall be increased every five (5) years
during the term of this Lease, commencing on the fifth anniversary of the
Commencement Date and continuing on the date of each succeeding fifth year
anniversary (each, a "CPI Adjustment Date"), by multiplying such Fixed Amount by
the percentage increase, if any, in the Consumer Price Index from that in effect
on the Commencement Date to that in effect on the relevant CPI Adjustment Date.
For purposes hereof, "Consumer Price Index" shall mean the Consumer Price Index
for All Urban Consumers published by the Bureau of Labor Statistics of the
United States Department of Labor, New York, N.Y. - Northeastern N.J. Area, All
Items (1982-84 = 100), or any successor index thereto, appropriately adjusted.
In the event that the Consumer Price Index is converted to a different standard
reference base or otherwise revised, the determination of adjustments provided
for herein shall be made with the use of such conversion factor, formula or
table for converting the Consumer Price Index as may be published by the Bureau
of Labor Statistics or, if said Bureau shall not publish the same, then with the
use of such conversion factor, formula or table as may be published by
Prentice-Hall, Inc., or any other nationally recognized publisher of similar
statistical information. If the Consumer Price Index ceases to be published,
and there is no successor thereto, such other index as Lessor and Lessee shall
agree upon in writing shall be substituted for the Consumer Price Index. If
Lessor and Lessee are unable to agree as to such substituted index, such matter
shall be submitted to the American Arbitration Association or any successor
organization for determination in accordance with the regulations and procedures
thereof then obtaining for commercial arbitration.
XIII.2 CONFIRMATION OF CPI ESCALATIONS. Within thirty (30) days after
each CPI Adjustment Date, Lessor shall prepare, and Lessor and Lessee shall each
execute, a written amendment to this Lease setting forth the escalated amount of
each Fixed Amount and confirming the method of calculation thereof.
Notwithstanding the foregoing, the failure of either party to
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execute such amendment shall not affect the increase in each Fixed Amount
resulting from the increase in the Consumer Price Index as provided in
Section 13.1 above.
[END OF TEXT]
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[EXECUTION PAGE]
IN WITNESS WHEREOF, the parties hereto have caused this Ground Lease
to be executed as of the date first above written.
LESSOR:
111 WEST 57TH STREET ASSOCIATES, L.P.
By: JASIE, INC., General Partner
By: /s/ Wendy Schriber
------------------------------
Name: Wendy Schriber
Title: Vice President
LESSEE:
STEINWAY, INC.
By: /s/ Dennis M. Hanson
------------------------------
Name: Dennis M. Hanson
Title: V.P. and C.F.O.
<PAGE>
Exhibit 10.4
MASTER LEASE AGREEMENT, dated as of March 30, 1999 (this "Lease"),
between 111 WEST 57TH STREET ASSOCIATES, L.P., a New York limited partnership,
having an office c/o Wexford Management LLC, 411 West Putnam Avenue, Greenwich,
Connecticut 06830 ("Lessee"), and STEINWAY, INC., a Delaware corporation, having
an address at One Steinway Place, Long Island City, New York 11105 ("Lessor").
65535RT65535CLE I
DEMISE; TERM
I.1 LEASE OF PREMISES; TITLE AND CONDITION.
(a) In consideration of the rents and covenants herein stipulated to
be paid and performed by Lessee and upon the terms and conditions herein
specified, Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor,
the premises (the "Premises") consisting of (i) the parcel of land described in
SCHEDULE A annexed hereto and made a part hereof (such parcel hereinafter
referred to the "Land"), (ii) the easements, rights and appurtenances relating
to the Land, including, without limitation, the agreements, if any, set forth in
SCHEDULE B, annexed hereto and made a part hereof, and (iii) all buildings and
other improvements (including, without limitation, the attachments and other
affixed property) now or hereafter located on the Land, including, without
limitation, any additions, alterations, restorations and repairs to and
replacements of any of the foregoing (collectively referred to as the
"Improvements"). The Premises are leased to Lessee in their present condition
without representation or warranty by Lessor of any kind and subject to all
applicable Legal Requirements (as hereinafter defined) now or hereafter in
effect and to the existing state of title, including, without limitation, the
title matters listed in SCHEDULE C attached hereto and made a part hereof (the
"Permitted Exceptions"). Lessee has examined the Premises and title to the
Premises and has found all of the same to be satisfactory for all purposes.
(b) Lessee acknowledges and agrees that, except as otherwise
expressly set forth in this Lease, no representations, statements, or
warranties, express or implied, have been made by or on behalf of Lessor in
respect of the Premises, the status of title to the Premises, the zoning or
other laws, regulations, rules and orders applicable thereto, the nature and
extent of any Impositions (as hereinafter defined), or the use that may be made
of the Premises.
(c) Lessee agrees that, except as otherwise expressly set forth in
this Lease, no representations, statements or warranties, express or implied,
have been made by or on behalf of Lessor that would entitle or permit Lessee to
have any abatement, reduction, set-off, counterclaim, defense or deduction with
respect to any Rental (as hereinafter defined) or other sum payable hereunder,
that Lessee has relied on no such representations, statements or warranties and
that Lessor shall
<PAGE>
not in any event whatsoever be liable by reason of any claim
of representation or misrepresentation or breach of warranty with respect
thereto.
I.2 USE; COVENANT OF QUIET ENJOYMENT; RIGHT OF INSPECTION.
(a) Lessee may use the Premises for the maintenance and operation of
an office building, and for any lawful purpose appurtenant thereto. Lessor
covenants that, if and as long as Lessee shall faithfully perform the
agreements, terms, covenants and conditions hereof, Lessee and any person
claiming through or under Lessee shall and may (subject, however, to the
provisions, reservations, terms and conditions of this Lease) peaceably and
quietly have, hold and enjoy the Premises for the term hereby granted without
molestation or disturbance by or from Lessor or any person claiming through or
under Lessor. The foregoing does not, and shall not be deemed to, create or give
to any person claiming through or under Lessee or to any other person except
Lessee any claim or right of action against Lessor.
(b) Lessor and its agents and designees may, upon reasonable notice
and at reasonable times, and subject to the rights of any subtenants, licensees,
and guests, enter upon and examine the Premises and show the Premises to
prospective purchasers, mortgagees or lessees of the Premises or the interest of
Lessor therein, as long as such examination or showing shall not unreasonably
interfere with the business operations of Lessee at the Premises.
I.3 TERM. The Premises are leased for a term (the "Term") commencing on
March __, 1999 (the "Commencement Date") and ending on December 31, 2008 (the
"Expiration Date").
I.4 GROUND LEASE. Lessor and Lessee have simultaneously entered into a
certain Ground Lease, of even date herewith, pursuant to which Lessee, as
lessor, has leased to Lessor, as lessee, the Land and certain rights appurtenant
thereto (the "Ground Lease"). The parties acknowledge and agree that during the
Term hereof, Lessee's right, as lessor under the Ground Lease, to receive a
portion of the annual basic rent payable under the Ground Lease (the "Ground
Lease Basic Rent") in the amount of $270,000 per annum (the "Annual Subordinate
Rent Amount") shall be subordinate to Lessor's right to receive the Basic Rent
payable by Lessee to Lessor hereunder, such that to the extent that, and for so
long as, any portion of the Basic Rent is not paid by Lessee when due, Lessor
shall be permitted to deduct from the next payment(s) of Ground Lease Basic Rent
payable thereunder the amount of such Basic Rent, but in no event shall Lessor
be permitted to deduct in excess of $22,500 per month or the Annual Subordinate
Rent Amount from the Ground Lease Basic Rent payable in any given calendar year
during the term hereof, it being understood and agreed, however, that (x) upon
the earlier to occur of (i) the payment to Lessor of any such unpaid Basic Rent
(whether by application of the offset of Ground Lease Basic Rent as provided
above or otherwise), and (ii) the
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deduction by Lessor of the Annual Subordinate Rent Amount from the Ground
Lease Basic Rent, Lessor shall have no further right to any offset against
the rental provided in the Ground Lease with respect to any such unpaid Basic
Rent, (y) Lessee shall receive a credit against the Basic Rent payable
hereunder in the amount of any offset against the Ground Lease Basic Rent
taken by Lessor in accordance with the applicable provisions of the Ground
Lease, and (z) to the extent that Lessee shall pay any Basic Rent after
Lessor shall have taken an offset against Ground Lease Basic Rent with
respect thereto, Lessor shall make a corresponding payment of Ground Lease
Basic Rent under the Ground Lease.
I.5 LEASEHOLD MORTGAGES.
(a) The parties agree that Lessor shall be permitted to mortgage its
fee interest in the Improvements, its interest as lessee under the Ground Lease
and its interest as lessor under this Lease(each, a "Leasehold Mortgage"),
provided that (i) any such Leasehold Mortgage shall encumber all such interests
of Lessor in the Premises, and (ii) to the extent required by the holder of any
Fee Mortgage (each, a "Fee Mortgagee"), the holder of any such Leasehold
Mortgage (each, a "Leasehold Mortgagee"), shall consent and enter into an
agreement with such Fee Mortgagee pursuant to which a lockbox or other similar
arrangement is established for the collection of all rents due from any
Subtenant (a "Lockbox"), which agreement shall contain provisions consistent
with the terms described on SCHEDULE E annexed hereto and made a part hereof,
and which shall in all other respects be reasonably acceptable to the Fee
Mortgagee and the Leasehold Mortgagee. This Lease shall be subject and
subordinate to the terms and provisions of, and the lien of, any such Leasehold
Mortgage, provided that (i) such Leasehold Mortgage contains an express
provision to the effect that, if there shall be a foreclosure of the Leasehold
Mortgage, the holder of such Leasehold Mortgage will not evict Lessee, disturb
Lessee's possession under this Lease, or terminate or disturb Lessee's leasehold
estate or rights hereunder, and will recognize Lessee as the direct tenant of
such holder on the same terms and conditions as are contained in this Lease,
subject to the provisions hereinafter set forth, provided no Event of Default
shall have occurred and be continuing hereunder, or (ii) Lessee shall obtain a
separate subordination, non-disturbance and attornment agreement from the holder
of such Leasehold Mortgage, which agreement may be conditioned upon conditions
then ordinary and customary in subordination, non-disturbance and attornment
agreements entered into by lenders at that time. If, in connection with the
financing of the Premises by Lessor, any lending institution shall request
reasonable modifications of this Lease that do not increase Lessee's monetary
obligations under this Lease, or materially adversely affect or diminish the
rights, or materially increase the other obligations of Lessee under this Lease,
Lessee shall make such modifications.
(b) Unless expressly waived or modified therein, any nondisturbance
provision contained in a Leasehold Mortgage or any
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separate subordination, nondisturbance and attornment agreement delivered to
Lessee by the holder of any Leasehold Mortgage shall be deemed to have been
made on the condition that neither the holder of such Leasehold Mortgage nor
anyone claiming by, through or under such holder, including a purchaser at a
foreclosure sale, shall be:
(i) liable for any act or omission of any prior lessor
(including, without limitation, the then defaulting Lessor), except to the
extent arising or continuing after the Leasehold Mortgagee or such purchaser
shall have succeeded to the right and title of the defaulting lessor in the
Premises, or
(ii) subject to any defense or offsets which Lessee may have
against any prior lessor (including, without limitation, the then defaulting
Lessor), except to the extent arising or continuing after the Leasehold
Mortgagee or such purchaser shall have succeeded to the right and title of the
defaulting lessor in the Premises, or
(iii) bound by any payment of Rental which Lessee may have made
to any prior landlord (including, without limitation, the then defaulting
Lessor) more than thirty (30) days in advance of the date upon which such
payment was due, or
(iv) bound by any obligation to make any payment to or on
behalf of Lessee, except to the extent arising or continuing after the Leasehold
Mortgagee or such purchaser shall have succeeded to the right and title of the
defaulting lessor in the Premises, or
(v) bound by any obligation to perform any work or to make
improvements to the Premises, or
(vi) bound by any amendment or modification of this Lease made
after the date of its mortgage without its consent (other than any amendment
which confirms the amount of any CPI Escalation as provided in Section 11.2), or
(vii) bound to return any collateral delivered by Lessee to
Lessor in connection with Lessee's obligations under this Lease until such
collateral has come into its actual possession and Lessee would be entitled to
such collateral pursuant to the terms of this Lease.
(c) Within fifteen (15) days after request of Lessor, Lessee shall
execute and deliver such documents, agreements, instruments, assignments, forms
and affidavits which may be required in connection with any such superior
Leasehold Mortgage, and to confirm the subordination of this Lease to such
superior Leasehold Mortgage, including, without limitation, any subordination,
nondisturbance and attornment agreement contemplated by subparagraph (a) above.
I.6 FEE MORTGAGE; TRANSFER OF FEE INTEREST OR INTEREST IN LESSEE.
Notwithstanding anything in this Lease to the contrary, the parties acknowledge
and agree that (i) Joseph M. Jacobs ("Jacobs") is currently the sole shareholder
of the sole general partner of Lessee, (ii) Lessee is the current owner of the
fee title interest in the Land, and (iii) Lessee is permitted under the Ground
Lease to encumber Lessee's fee title interest in the Land with a Fee Mortgage
(as such term is defined in the
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Ground Lease). If (I) title to the Land and/or Lessee's interest as lessor
under the Ground Lease is assigned or otherwise conveyed to (a) the holder of
any Fee Mortgage pursuant to a foreclosure or deed-in-lieu thereof, or (b) to
an independent person or other entity (other than to an affiliate, subsidiary
or parent of Lessee or to a partnership, limited liability company or other
entity which has the same beneficial owners as Lessee and is controlled by or
under common control with Lessee or the partners or principals of Lessee), or
(II) any interest in Lessee is transferred (other than by reason of death)
such that Jacobs shall cease to control, directly or indirectly, the day to
day management of Lessee (each of the events described in clauses (I) and
(II) above being referred to as a "Change in Control"), this Lease and the
Term and all rights of Lessee under this Lease shall expire and terminate on
the effective date of such Change in Control, as if such date were the date
herein definitely fixed for the expiration of the Term. Lessee or Jacobs, as
the case may be, shall provide Lessor with written notice of such Change in
Control, in the manner and at the address provided below, (x) no less than
thirty (30) days prior to the proposed effective date of any such Change in
Control (or such shorter period as shall be reasonable, given the
circumstances surrounding such Change in Control), and (y) within ten (10)
days after the effective date of such Change in Control, confirming the
actual occurrence of same.
65535RT65535CLE II
RENT
II.1 BASIC RENT. Lessee shall pay to Lessor as basic rent ("Basic Rent")
an amount equal to $4,653,346 per annum ($387,778.83 per month) during the Term
hereof.
II.2 MONTHLY INSTALLMENTS. The Basic Rent shall be due and payable in
equal monthly installments in advance, on the Commencement Date and on the first
day of each month thereafter during the Term. If the Commencement Date occurs
on a day other than the first day of a calendar month or the Expiration Date
occurs on a day other than the last day of a calendar month, the monthly
installment of Basic Rent for such partial calendar month shall be prorated on
the basis of a thirty (30) day month.
II.3 OFFSET FOR GROUND LEASE BASIC RENT. Notwithstanding anything in this
Lease to the contrary, Lessee shall not be responsible for the payment of any
Ground Lease Basic Rent payable by Lessor as lessee under the Ground Lease, it
being expressly understood and agreed, however, that Lessee shall (a) deduct
from any monthly installment of Basic Rent hereunder the amount of the Ground
Lease Basic Rent payable by Lessor under the Ground Lease for such period, (b)
pay the amount of such Ground Lease Basic Rent directly to the party entitled to
receive such amount pursuant to the Ground Lease and (c) pay the remaining
portion of such installment of Basic Rent (after the deduction of
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the Ground Lease Basic Rent payment) to Lessor.
II.4 NET LEASE; NON-TERMINABILITY.
(a) This Lease is a net, net, net lease and Lessee's obligations
hereunder shall be absolute and unconditional. Except to the extent expressly
provided in Section 2.3 above, the Basic Rent, Impositions (as hereinafter
defined) and all other amounts payable by Lessee hereunder shall be absolutely
net to Lessor and shall be payable by Lessee without any notice, demand,
counterclaim or defense, and without any abatement, suspension, deferment,
diminution, setoff, deduction or reduction whatsoever, free from any charges,
assessments, impositions, expenses or deductions of any and every kind or nature
whatsoever, so that this Lease shall yield net to Lessor under all circumstances
and conditions (whether now or hereafter existing and whether or not within the
contemplation of the parties), the Basic Rent, Impositions and all other amounts
payable by Lessee hereunder. Lessee shall pay all costs, expenses and charges of
every kind and nature relating to the Premises and the operation, use,
occupancy, management, condition, maintenance and repair thereof, which arise or
become due or payable prior to, during or after (but, if payable after,
attributable to a period falling within) the Term (other than Ground Lease Basic
Rent and any payments of principal or interest, prepayment premiums, loan fees,
exit fees or any other amounts which may become due and payable by Lessor to any
Leasehold Mortgagee in connection with such Leasehold Mortgage or other
financing obtained by Lessor and which are not otherwise provided to be the
responsibility of Lessee pursuant to the terms of this Lease), and Lessee shall
indemnify Lessor against, and hold Lessor harmless from, such costs, expenses
and charges, and Lessee's liability for the payment of any of such costs,
expenses and charges which shall become payable after the Term as aforesaid is
hereby expressly provided to survive the Term.
(b) Except as expressly provided in Section 5.1(b), any present or
future law to the contrary notwithstanding, this Lease shall not terminate, nor
shall Lessee have any right to terminate, rescind or void this Lease or to be
released or discharged from any obligations or liability hereunder, nor shall
Lessee be entitled to any abatement or reduction, set-off, counterclaim, defense
or deduction with respect to any Rental or other sum payable hereunder, except
as expressly provided in Section 2.3, nor shall the obligations of Lessee
hereunder be affected under any circumstances for any reason, including, without
limitation: (i) any damage to or destruction of the Premises, (ii) any taking of
the Premises or any part thereof by condemnation or otherwise, (iii) any
prohibition, limitation, restriction or prevention of Lessee's use, occupancy or
enjoyment of the Premises, or any interference with such use, occupancy or
enjoyment by any Person (whether due to any defect in or failure of Lessor's
title to the Premises or otherwise), (iv) any action of any court,
administrative agency or other governmental authority, (v) any action, omission
or breach on the part of Lessor under this Lease or under any other agreement to
which Lessee and Lessor are parties, (vi) the impossibility of
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performance by Lessor or Lessee or both, or (vii) any other cause whatsoever,
whether similar or dissimilar to the foregoing. The obligations of Lessee
hereunder are and shall in all events be construed as separate and
independent covenants and agreements and shall continue unaffected unless
such obligations shall have been modified in writing (which writing shall be
executed by Lessor and Lessee) or terminated pursuant to an express provision
of this Lease. Lessee waives all rights to terminate or surrender this Lease,
or to abate or defer any Rental or other sums payable hereunder, except as
set forth in Section 2.3 hereof, or to claim that a constructive eviction has
occurred with respect to the Premises or any part thereof.
(c) Lessee shall remain obligated under this Lease in accordance with
its terms, and shall not take any action to terminate, rescind or void this
Lease as a result of any bankruptcy, insolvency, reorganization, liquidation,
dissolution or other proceeding affecting Lessor or any assignee of Lessor, or
any action with respect to this Lease which may be taken by any receiver,
trustee or liquidator or by any court. Except as otherwise expressly provided
herein, Lessee waives all rights at any time conferred by statute or otherwise
to quit, terminate or surrender this Lease or the Premises, or to any abatement
or deferment of any amount payable by Lessee hereunder.
(d) All amounts payable by Lessee pursuant to this Lease, including,
without limitation, the Basic Rent, Impositions, and all other amounts payable
by Lessee under this Lease (collectively, "Rental"), shall constitute rent under
this Lease, and all of the Rental to be paid to Lessor pursuant to the
provisions of this Lease shall be paid as provided in this Article II.
(e) Each item of Rental hereunder shall be obligations within the
meaning of Section 365(d)(3) of the Bankruptcy Code, including without
limitation, all amounts which are due and payable after the occurrence of any
bankruptcy or insolvency proceeding of Lessee.
(f) All Rental under this Lease shall be payable when due and, except
as otherwise expressly provided herein, without notice or demand and without any
abatement, deduction, counterclaim or offset whatsoever, by wire transfer of
immediately available funds, and shall be payable to a bank account or bank
accounts designated by Lessor in accordance with wire transfer instructions
provided by Lessor, from time to time, in a notice to Lessee, which designation
shall remain in effect until Lessee's receipt of any subsequent or modified
written instructions. All Rental paid under this Lease to Persons other than
Lessor shall be, and be construed as, payments made by Lessee for the benefit of
Lessor. Lessor shall have the right to direct Lessee to pay all or any part of
the Rental directly to the holder of a Leasehold Mortgage or any other third
party (other than the Ground Lease Basic Rent being paid directly to the lessor
under the Ground Lease pursuant to Section 2.3 above), and Lessee shall be
obligated to comply with such request.
(g) No payment by Lessee or receipt or acceptance by Lessor of a
lesser amount than the correct amount of any Rental
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shall be deemed to be other than a payment on account, nor shall any
endorsement or statement on any check or any letter accompanying any check or
payment be deemed an accord and satisfaction, and Lessor may accept such
check or payment without prejudice to Lessor's right to recover the balance
or pursue any other remedy in this Lease or at law provided.
(h) If any of the Basic Rent, Impositions or any other Rental payable
under the terms and provisions of this Lease shall be or become uncollectible,
reduced or required to be refunded because of any rent control or similar act or
law enacted by a governmental authority, Lessee shall enter into such
agreement(s) and take such other steps as Lessor may reasonably request and as
may be legally permissible to permit Lessor to collect the maximum rents or
other amounts which from time to time during the continuance of such legal rent
restriction may be legally permissible (and not in excess of the amounts
reserved therefor under this Lease). Upon the termination of such legal rent
restriction, (a) the Rental in question shall become and thereafter be payable
in accordance with the amounts reserved herein for the periods following such
termination, and (b) Lessee shall pay to Lessor, to the maximum extent legally
permissible, an amount equal to (i) the amount of the Rental in question which
would have been paid pursuant to this Lease but for such legal rent restriction
less (ii) the amounts with respect to such Rental paid by Lessee during the
period such legal rent restriction was in effect.
II.5 LATE PAYMENT OF RENTAL. Lessee shall pay to Lessor interest at a rate
(the "Rate") equal to (i) two (2%) percent in excess of the default rate of
interest per annum on any Fee Mortgage encumbering Lessee's interest in the
Land, or (ii) if no such Fee Mortgage is outstanding, the rate per annum equal
to eight (8%) percent above the "prime rate" (the "Prime Rate") announced from
time to time by The Chase Manhattan Bank, or, if such bank ceases to exist, a
bank of comparable stature (but in no event shall the Rate exceed the maximum
amount permitted by law), on all overdue Basic Rent and other Rental from the
due date thereof until paid and on all other overdue sums due hereunder from the
date of payment by Lessor until repaid by Lessee. In addition, if Lessee fails
to make any payment of Basic Rent to Lessor on the due date thereof, Lessee
shall pay a late charge equal to five percent (5%) of the amount past due.
65535RT65535CLE III
IMPOSITIONS; LIENS; PERMITTED CONTESTS
III.1 IMPOSITIONS.
(a) Lessee covenants and agrees to pay or cause to be paid, prior to
delinquency, to the governmental authority imposing the same, all of the
following items (collectively, the "Impositions"): (1) taxes, payments in lieu
of taxes, real property assessments and special assessments, and business
improvement district taxes and assessments, (2) personal property
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taxes, (3) occupancy and rent taxes, (4) water, water meter and sewer rents,
rates and charges, (5) excises, (6) levies, (7) license and permit fees, (8)
charges for fire alarm service, sprinkler supervisory service, gas,
electricity, steam, and other public utility or similar services, (9) fines,
penalties and other similar or like governmental charges applicable to the
foregoing and any interest or costs with respect thereto, and (10) all other
governmental charges, general and special, ordinary and extraordinary,
foreseen and unforeseen, which are at any time during the Term hereof, are
assessed, levied, confirmed, imposed upon, or would grow or become due and
payable out of or in respect of, or would be charged with respect to, (t) the
Premises, (u) the use and occupancy of the Premises by Lessee, (v)
encumbrances or liens on the Premises, (w) any vault, passageway or space in
or under the sidewalks or streets in front of or adjoining the Premises, (x)
any other appurtenances of the Premises, (y) the Improvements, or any
equipment, personal property or other facility used by Lessee or its manager
in the operation thereof, or (z) the Rental (or any portion thereof) payable
by Lessee hereunder. Lessee shall not be required to pay any franchise,
estate, inheritance, transfer, income or similar tax of Lessor unless such
tax is imposed, levied or assessed in substitution for any other tax,
assessment, charge or levy which Lessee is required to pay pursuant to this
Paragraph 3.1; provided, however, that if at any time during the Term of this
Lease, the method of taxation shall be such that there shall be assessed,
levied, charged or imposed on Lessor a capital levy or other tax directly on
the rents received therefrom, or upon the value of the Premises or any
present or any future improvement or improvements on the Premises, then all
such levies and taxes or the part thereof so measured or based shall be
payable by Lessee, but only to the extent that such levies or taxes would be
payable if the Premises were the only property of Lessor, and Lessee shall
pay and discharge the same as herein provided. Lessee will furnish to
Lessor, promptly after demand therefor, proof of payment of all items
referred to above which are payable by Lessee. If any such assessment may
legally be paid in installments, Lessee may pay such assessment in
installments; in such event, Lessee shall be liable only for installments
which become due and payable during the Term hereof.
(b) If required by the holder of any Fee Mortgage, Lessee shall
deposit with the holder of such Fee Mortgage, or, if not so required by the
terms of a Fee Mortgage but required by the terms of a Leasehold Mortgage, with
the Leasehold Mortgagee (any such mortgagee being referred to below as the
"Mortgagee"): (x) on the first day of each calendar month, one-twelfth of an
amount which would be sufficient to pay any Impositions payable, or estimated by
the Mortgagee to be payable, during the next ensuing 12 months, plus one-twelfth
of an amount which would be sufficient to pay the insurance premiums due for the
renewal of the coverage afforded by the policies required to be obtained by
Lessee hereunder upon the expiration thereof, and (y) to the extent deemed
necessary by the Mortgagee, an initial deposit in
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an amount necessary so that, when combined with the monthly payments
described in clause (x) above, sufficient funds exist to pay the next ensuing
payments of Impositions and insurance premiums thirty (30) days prior to the
due date thereof while still leaving an amount equal to one (1) full month's
payment (the amounts described in clauses (x) and (y) above, collectively,
the "Tax and Insurance Escrow Fund"). The Tax and Insurance Escrow Fund shall
be payable at the same time, and in the same manner, as the monthly
installments of Basic Rent hereunder. At the election of the Mortgagee, the
Tax and Insurance Escrow Fund may be divided into separate escrows for
Impositions and insurance premiums. The Mortgagee will make the payments of
Impositions and insurance premiums required to be made by Lessee pursuant to
this Lease, provided that (x) not later than 30 days (or such shorter period
as may be reasonable under the circumstances) prior to the due date therefor
Lessee shall have notified the holder of such Fee Mortgage of the scheduled
amount of Impositions or insurance premiums and the payee, payee's address
and due date therefor, and (y) if the amounts deposited in the Tax and
Insurance Escrow Fund are not sufficient to pay the items set forth in
clauses (x) and (y) above, Lessee shall promptly pay to the Mortgagee, upon
demand, an amount which is sufficient to make up the deficiency. Any Fee
Mortgage or Leasehold Mortgage will provide that the Mortgagee may not, under
any circumstances, use any amount in the Tax and Insurance Escrow Fund for
purposes other than the payment of Impositions and insurance premiums, as
described in this Section 3.1(b). If the amount of the Tax and Insurance
Escrow Fund shall exceed the amounts due for such Impositions and insurance
premiums, the Mortgagee shall, in its discretion, either return any excess to
Lessee or credit such excess against future payments to be made to the Tax
and Insurance Escrow Fund. To the extent permitted by applicable law, the
Tax and Insurance Escrow Fund shall not constitute a trust fund and may be
commingled with other monies held by the Mortgagee. No earnings or interest
on the Tax and Insurance Escrow Fund shall be payable to Lessee.
Notwithstanding anything in this Section 3.1(b) to the contrary, the
Mortgagee shall be permitted to adjust the monthly payments required hereunder
from time to time on notice to Lessor and Lessee as reasonably necessary to
ensure that there shall always be sufficient funds in the Tax and Insurance
Escrow Fund to pay the next ensuing payments of Impositions and insurance
premiums thirty (30) days prior to the due date thereof while still leaving
one (1) full month's payment in the Tax and Insurance Escrow Fund.
(c) Any Imposition, relating to a fiscal period of the imposing
governmental authority, a part of which period is included within the Term and a
part of which is included in a period of time after the Expiration Date (whether
or not such Imposition shall be assessed, levied, confirmed, imposed upon or in
respect of or become a lien upon the Premises, or shall become payable, during
the Term) shall be apportioned between Lessor and Lessee as of the Expiration
Date, so that Lessee shall pay that portion of such Imposition relating to that
part of such fiscal
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period included in the period of time before the Expiration
Date.
III.2 LIENS. Subject to the provisions of Paragraph 3.3, Lessee will
promptly remove and discharge any charge, lien, security interest or encumbrance
upon the Premises which arises for any reason, including all liens which arise
out of the possession, use, occupancy, construction, repair or rebuilding of the
Premises or by reason of labor or materials furnished or claimed to have been
furnished to Lessee or for the Premises, but not including (i) the Permitted
Exceptions, (ii) any sublease permitted by the terms of this Lease, and (iii)
any charge, lien, security interest or encumbrance affirmatively created by
Lessor in its capacity as fee owner of the Improvements or lessee under the
Ground Lease after the date hereof; provided that Lessee shall have no
obligation to discharge any mechanic's, laborer's, materialman's, supplier's or
vendor's lien if payment is being contested pursuant to Paragraph 3.3 hereof.
Nothing contained in this Lease shall be construed as constituting the consent
or request of Lessor, express or implied, to or for the performance by any
contractor, laborer, materialman, supplier or vendor of any labor or services or
for the furnishing of any materials for any construction, alteration, addition,
repair or demolition of or to the Premises or any part thereof. Notice is
hereby given that Lessor will not be liable for any labor, services or materials
furnished or to be furnished to Lessee, or to anyone (other than Lessor) holding
an interest in the Premises or any part thereof through or under Lessee, and
that no mechanic's or other liens for any such labor, services or materials
shall attach to or affect the interest of Lessor in and to the Premises.
III.3 PERMITTED CONTESTS. Notwithstanding any provision hereof to the
contrary, Lessee shall not be required, nor shall Lessor have the right to
require Lessee, to pay, discharge or remove any tax, assessment, levy, fee,
rent, charge, lien or encumbrance, or to comply with any Legal Requirements
applicable to the Premises or the use thereof, as long as Lessee shall contest,
diligently and in good faith, the existence, amount or validity thereof by
appropriate proceedings which shall prevent the collection of or other
realization upon the tax, assessment, levy, fee, rent, charge, lien or
encumbrance so contested, and which also shall prevent the sale, forfeiture or
loss of the Premises, or any part thereof, or any part of the rents, issues and
profits thereof, to satisfy the same or Legal Requirements, and which shall not
affect the payment of any sums required to be paid by Lessee hereunder, provided
that (i) Lessee provides Lessor with prior written notice of such contest, and
(ii) such contest shall not subject Lessor to the risk of any criminal liability
or civil liability. Lessee shall give such security as may be reasonably
requested by Lessor to insure ultimate payment of such tax, assessment, levy,
fee, rent, charge, lien or encumbrance and compliance with Legal Requirements
and to prevent any sale or forfeiture of the Premises or any portion thereof or
any part of the rents, issues and profits thereof and to
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otherwise protect the interests of Lessor in the Premises. In the event that
Lessor, in Lessor's good faith judgment, determines at any time that the
Premises or any portion thereof or any part of the rents, issues and profits
thereof are in danger of sale or forfeiture or that action is necessary to
otherwise protect the interests of Lessor in the Premises, Lessor may pay the
amount of such contested tax, assessment, levy, fee, rent, charge, lien or
encumbrance, or comply with any Legal Requirements applicable to the Premises
or the use thereof, and in such event, the amount expended by Lessor in
connection therewith shall be deemed to be additional Rental hereunder and
shall be payable by Lessee to Lessor within ten (10) days after demand
therefor by Lessor.
65535RT65535CLE IV
MAINTENANCE AND REPAIR; SERVICES; ALTERATION
IV.1 MAINTENANCE AND REPAIR; COMPLIANCE WITH LEGAL REQUIREMENTS.
(a) Lessee, at its own cost and expense, will maintain all parts of
the Premises in good repair and condition, will maintain and operate the
Premises in a manner customary for a first-class office property such as the
Premises, and will take all action and will make all foreseen and unforeseen and
ordinary and extraordinary changes and repairs which may be required to keep all
parts of the Premises in such condition, ordinary wear and tear excepted.
During the term of this Lease, Lessee shall obtain and maintain service and
maintenance contracts with respect to the HVAC systems and the elevators
servicing the Premises (other than any HVAC system or subsystem and/or elevator
servicing a Subtenant space which is the responsibility of such Subtenant to
maintain and repair). Lessor shall not be required to maintain or repair the
Premises, or to make any alteration, addition, change, improvement or
replacement with respect to the Premises. Lessee waives the right (x) to
require Lessor to maintain or repair the Premises, or to make any alteration,
addition, change, improvement or replacement with respect to the Premises, or
(y) to make repairs at the expense of Lessor pursuant to any applicable present
and future laws, rules, orders, ordinances, regulations, statutes, requirements,
codes, resolutions and executive orders (including, without limitation,
environmental laws ("Environmental Laws") of all governmental authorities now
existing or hereafter created, and of any and all of their departments and
bureaus, including, without limitation, any Board of Fire Underwriters or
similar body exercising similar functions, affecting the Premises or the use or
occupancy of the Premises (collectively, "Legal Requirements") or any contract,
agreement, covenant, condition or restriction at any time in effect.
(b) Throughout the Term, Lessee, at its sole cost and expense, shall
(i) timely obtain and thereafter keep in full force and effect all permits,
authorizations and approvals of governmental authorities required for the use,
occupancy,
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operation, maintenance, repair and insurability of the Premises, (ii)
promptly comply with, and discharge of record any violations of, any and all
applicable Legal Requirements affecting the Premises or the use or occupancy
of the Premises, whether or not such Legal Requirements shall necessitate
structural changes, improvements, interference with use and enjoyment of the
Premises, replacements or repairs, extraordinary as well as ordinary, and
Lessee shall so perform and comply, whether or not such Legal Requirements or
conditions shall now exist or shall hereafter be enacted or promulgated or
come to occur, and whether or not such Legal Requirements can be said to be
within the present contemplation of the parties hereto, and (iii) promptly
comply with the requirements of any Permitted Exception which encumbers the
Property (excluding the Ground Lease, any Leasehold Mortgage and the
Subleases).
(c) Lessee covenants and agrees that: (i) all use and operation of
the Property by Lessee shall be in compliance with all Environmental Laws and
required permits; (ii) there shall be no releases of hazardous materials
affecting the Property by Lessee, and Lessee shall use commercially reasonable
efforts to prevent any such releases by any Subtenant or other user of the
Property; (iii) Lessee shall not use or store, and shall use commercially
reasonable efforts to prevent any Subtenant or other user of the Property from
using or storing, hazardous materials at the Property except (A) routine office,
cleaning and janitorial supplies, (B) in compliance with all Environmental Laws,
and (C) with all required permits; (iv) Lessee shall keep the Property free and
clear of all liens and encumbrances imposed by any Environmental Laws due to any
act or omission by Lessee or any person within Lessee's control (the
"ENVIRONMENTAL LIENS"); (v) Lessee shall, at its sole expense, fully and
expeditiously cooperate in all activities described in Section 4.1(d) below,
including providing all relevant information and making knowledgeable persons
within Lessee's control available for interviews; (vi) Lessee shall, at its sole
expense, (A) perform any environmental site assessment or other investigation of
environmental conditions at the Property upon Lessor's request based on Lessor's
reasonable belief that the Property is not in compliance with all Environmental
Laws, (B) share with Lessor the results and reports and Lessor and the Lessor
Indemnified Parties (defined below) shall be entitled to rely on such results
and reports, and (C) complete any remediation of hazardous materials affecting
the Property or other actions required by any Environmental Laws; (vii) Lessee
shall not allow any Tenant or other user of the Property to violate any
Environmental Law; and (viii) Lessee shall promptly notify Lessor in writing
after it becomes aware of (A) the presence, release, or threatened release of
hazardous materials affecting the Property, (B) any non-compliance of the
Property with any Environmental Laws, (C) any actual or potential Environmental
Lien, (D) any required or proposed remediation of
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environmental conditions relating to the Property, or (E) any written
communication or notice from any person relating to hazardous materials which
comes into Lessee's possession.
(d) Subject to the rights of Subtenants, Lessor and any person
designated by Lessor may enter the Property to assess the environmental
condition of the Property and its use including (i) conducting any environmental
assessment or audit (the scope of which shall be determined by Lessor) and (ii)
taking samples of soil, groundwater or other water, air, or building materials,
and conducting other invasive testing at all reasonable times when (A) Lessor
reasonably believes that a release has occurred or the Property is not in
compliance with all Environmental Laws, or (B) such action is required by any
Leasehold Mortgage. Subject to the rights of Subtenants, Lessee shall cooperate
with and provide access to Lessor and such person.
IV.2 SERVICES. Lessor shall not be required to furnish any services,
utilities or facilities to the Premises. Lessee assumes sole responsibility for
obtaining all services, utilities and facilities required at the Premises, and
for the operation, repair, alteration, improvement, replacement, maintenance and
management of the Premises during the Term, and shall pay all costs relating to
any of the foregoing.
IV.3 ALTERATIONS.
(a) Lessee may, at its expense, make additions to and alterations
of the Improvements, and construct additional Improvements on the Premises
(collectively, "Alterations"), provided that (i) the fair market value,
utility and useful life of the Premises shall not be reduced or lessened
thereby, and the character and use of the Property as a first-class office
building shall not be altered or impaired,(ii) such Alterations shall be
expeditiously completed in a good and workmanlike first-class manner, free
and clear of liens and encumbrances, and in compliance with all applicable
Legal Requirements, the requirements of all insurance policies required to be
maintained by Lessee hereunder and the terms and provisions of this Lease,
(iii) Lessee shall not make any Alterations in violation of the terms of any
Fee Mortgage, restriction, easement, condition, covenant or other matter
affecting title to or use of the Premises (other than any Leasehold
Mortgage), and (iv) no Material Alterations, as hereafter defined, shall be
made unless Lessor's prior written consent shall have been obtained, which
consent shall not be unreasonably withheld, delayed or conditioned, unless an
Event of Default shall have occurred and be continuing in which case such
consent may be withheld by Lessor in its sole discretion. "Material
Alteration" is defined as an Alteration which exceeds a total Estimated Cost
of $1,000,000. "Estimated Cost" is defined as the estimated cost of
materials, construction and labor (not including architects, engineers or
other professionals), as estimated
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by a licensed architect (or if not required by the terms hereof to be
estimated by an architect, as reasonably estimated by Lessor), which estimate
together with a complete description of the Work (as hereinafter defined) and
all related work shall in any case be delivered to, and such estimate and
description reasonably approved by, Lessor, and to the extent required by any
Leasehold Mortgage, by the holder thereof, before the commencement of any
Work hereunder, whether or not such Work shall constitute a Material
Alteration. In addition to the limitations set forth in (i) through (iv)
above, Lessee agrees that all Alterations, restoration, repair and any other
work which Lessee shall be required or permitted to do under the provisions
of this Lease (hereinafter collectively called the "Work") shall be performed
in each case subject to the following:
(i) Lessee shall not perform any Work which shall have an adverse
effect on the structural portions of the Premises or on the building systems,
as operated by Lessee as of the date hereof. Any Work when completed shall
be of such a character as not to reduce the value of the Premises below its
value immediately prior to the commencement of such Work or damage to the
Premises necessitating such Work or change.
(ii) No Work shall be performed by Lessee if the same would
materially reduce the usable square footage of the Improvements, or reduce
the permitted uses thereof under applicable zoning laws or impair other
amenities of the Premises.
(iii) No Material Alterations shall be commenced until detailed
plans and specifications (including layout, architectural, mechanical and
structural drawings), prepared by a licensed architect shall have been
submitted to and approved by Lessor, and no such Work pursuant to a Material
Alteration shall be undertaken except under the supervision of the architect.
(iv) If the Work shall constitute a Material Alteration, the
reasonable out-of-pocket cost and expense of Lessor's, and to the extent
required by any Leasehold Mortgage, the holder thereof's respective (A)
review of any plans and specifications required to be furnished pursuant to
this Lease or (B) review/supervision of any such Work, shall be paid by
Lessee to Lessor, within ten (10) days after demand. Such review and/or
supervision by Lessor and/or the holder of any Leasehold Mortgage may be
conducted by an engineer, architect or similar professional retained by
Lessor and/or such holder, it being understood and agreed, however, that if
Lessor and the holder of any Leasehold Mortgage shall obtain separate
consultants to perform the same function, Lessor may only seek reimbursement
from Lessee for the cost of one (1) such consultant.
(v) All Work shall be commenced only after all required municipal
and other governmental permits, authorizations and approvals for Work
permitted under this Lease shall have been obtained by Lessee, at its own
cost and expense, and copies thereof delivered to Lessor. Lessor will, on
Lessee's written request, promptly execute any documents necessary to be
signed by Lessor to obtain any such permits, authorizations and approvals,
provided that Lessee shall bear any out-of-pocket expense or liability of
Lessor in connection therewith; provided that none
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of the foregoing shall, in any manner, result in a change in zoning or
otherwise have an adverse affect on the ability to use the Premises as
currently operated by Lessee.
(vi) All Work shall be commenced only after Lessee shall have
delivered to Lessor insurance policies or certificates therefor issued by
responsible insurers, bearing notations evidencing the payment of premiums or
accompanied by other evidence satisfactory to Lessor of such payment, for
"Builders All Risk" course of construction insurance, worker's compensation
insurance covering all persons employed in connection with the Work and with
respect to whom death or bodily injury claims could be asserted against
Lessor, Lessee or the Premises, and owner's protective liability insurance
expressly covering the additional hazards resulting from the Work with limits
not less than those, and otherwise subject to the same conditions and
requirements, set forth in Article V of this Lease with respect to the
liability insurance required thereunder. If under the provisions of any
fire, liability or other insurance policy or policies then covering the
Premises or any part thereof any consent to such Alteration by said insurance
company or companies issuing such policy or policies shall be required to
continue and keep such policy or policies in full force and effect, Lessee
shall obtain such consents and pay any additional premiums or charges
therefor that may be imposed by said insurance company or companies.
(vii) If the Work shall constitute a Material Alteration, it shall
not be commenced until Lessee shall have obtained and delivered to Lessor
such security for the performance of Lessee's obligations hereunder as shall
be reasonably satisfactory to Lessor.
(viii) All Work shall be performed in accordance with any plans and
specifications therefor which shall have been approved by Lessor. All Work
shall be commenced and completed in a commercially reasonable manner.
(ix) Upon completion of any Work, Lessee, at Lessee's expense,
shall obtain certificates of final approval of such Work and certificates of
occupancy required by any governmental or quasi-governmental authority and
shall furnish Lessor with copies thereof, and, if the Work constituted
Material Alterations, together with "as-built" plans and specifications for
such Work.
(x) Upon two (2) business days' advance notice (except in the
event of an emergency, for which no notice shall be required), any Work shall
be subject to inspection at any time and from time to time by any of Lessor
or the holder of any Fee Mortgage or Leasehold Mortgage, their respective
architect(s), or their duly authorized representatives. If the Work is not
being performed in accordance with the provisions of this Section 4.3 or the
plans and specifications (if plans and specifications are required as a
result of a Material Alteration), or if any of the materials or workmanship
are not first-class or are unsound or improper, Lessee shall correct any such
failure and shall replace any unsound or improper materials or workmanship.
(xi) All agreements with any contractor performing work or
supplying labor or materials in connection with any
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Material Alteration shall provide that such agreements shall be conditionally
assigned to the following parties, in the following order of priority: (1)
the holder of any Fee Mortgage, (2) the Leasehold Mortgagee, and (3) Lessor,
and that upon written notice to the contractor by any such party that a
default hereunder has occurred, such contractor shall attorn to such
requesting party and perform the remaining obligations of contractor pursuant
to such agreement for such party's benefit on the same terms and conditions
provided therein. Lessee shall execute and deliver to any such party such
collateral assignments of such agreements as such party shall reasonably
request.
(xii) All Alterations installed in or upon the Premises at
any time during the Term shall become part of the Improvements and shall be
the property of Lessor, subject to the terms of this Lease.
(b) Lessee may, at its cost and expense, install, or place
upon or reinstall, or replace and remove from the Premises any personal
property of Lessee, provided that Lessee repairs any damage to the
Improvements caused thereby.
65535RT65535CLE V
CASUALTY AND CONDEMNATION; INSURANCE; INDEMNIFICATION
V.1 CONDEMNATION; LEASE TERMINATION.
(a) If at any time during the Term, all or any part of the Premises
shall be taken for any public or quasi-public purpose by any lawful power or
authority by the exercise of the right of condemnation or eminent domain or by
agreement among Lessor, Lessee and those authorized to exercise such right, the
entire award for the Premises shall be allocable to Lessor and Lessee in
proportion to the fair market value of their respective interests in the
Premises (including, without limitation, Lessee's interest as the owner of the
Land and the lessor under the Ground Lease), provided, however, that if the
parties cannot agree on such fair market values, the fair market value of each
party's respective interest in the Premises shall be determined by arbitration,
as provided in Article XI of the Ground Lease, it being understood and agreed,
however, that in no event shall the portion of such award allocable to Lessee's
interest in the Premises be less than $25,000,000 for such purposes.
Notwithstanding anything in this Section 5.1 to the contrary, neither Lessor nor
Lessee shall be permitted to settle any condemnation award or other similar
payment relating to the Premises with the applicable condemning authority
without the prior written consent of the other party, which consent shall not be
unreasonably withheld. To the extent that the applicable condemning authority
makes any separate award or other compensation to Lessor or Lessee which is
inconsistent with the provisions of this Section 5.1, Lessor and Lessee each
hereby irrevocably assigns to the other the portion of any such award or other
compensation which is in excess of the amount which such party shall be entitled
to hereunder in connection with any such taking. Each of the parties agrees to
execute and deliver any
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and all documents that may be reasonably required in order to facilitate the
settlement and collection of such awards in accordance with the provisions of
this Section 5.1.
(b) If all or substantially all of the Premises shall be taken as
provided in this Section 5.1, this Lease and the Term shall terminate and expire
on the date of such taking and the Rental payable by Lessee hereunder shall be
paid to and apportioned as of the date of such taking. For purposes of this
Section 5.1, (x) "substantially all of the Premises" shall be deemed to mean
such portion of the Premises as, when so taken, would render the untaken portion
of the Premises unusable for the purpose for which the same were being used
immediately prior to the taking, and (y) the "date of taking" shall be deemed to
be the earlier of (i) the date on which actual possession of the whole or
substantially all of the Premises, or a part thereof, as the case may be, is
acquired by any lawful power or authority pursuant to the provisions of the
applicable federal or New York State law, or (ii) the date on which title to the
Premises or the aforesaid portion thereof shall have vested in any lawful power
or authority pursuant to the provisions of the applicable federal or New York
State law.
(c) If less than substantially all of the Premises shall be taken as
provided in this Section 5.1, then this Lease and the Term shall continue
without abatement of the Rental or diminution of any of Lessee's obligations
hereunder, and Lessee shall promptly restore, to the extent practicable, any
damage to the remaining portion of the Premises caused by such taking. The
portion of any award with respect to such taking allocable to Lessee's interest
under this Lease (but not any portion of such award allocable to Lessee's
interest as the owner of the Land and the lessor under the Ground Lease) (the
"Lessee's Master Lease Award") shall be paid to and held by the Depository (as
hereinafter defined) and shall be disbursed by the Depository to Lessee in the
manner set forth in Section 5.3 below for the disbursement of insurance proceeds
for Restoration Costs. If Lessee's Master Lease Award shall be insufficient to
complete any restoration of the Premises which Lessee is required to perform
hereunder, after Lessee has expended the entire amount of Lessee's Master Lease
Award, there shall be paid to the Depository for disbursement as described above
(a) such portion of the award otherwise payable to Lessor hereunder in an amount
reasonably necessary to pay the excess cost of restoration of any remaining part
of the Premises not so taken (the "Excess Restoration Cost"), and (b) if such
portion of the award otherwise payable to Lessor is not sufficient to pay the
entire Excess Restoration Cost, after completely disbursing same, such portion
of the award otherwise payable to Lessee pursuant to the Ground Lease for
Lessee's interest as the owner of the Land and the lessor under the Ground
Lease, in an amount reasonably necessary to pay any remaining Excess Restoration
Cost.
(d) If the temporary use of the whole or any part of the Premises
shall be taken at any time during the Term for any public or quasi-public
purpose by any lawful power or authority by the exercise of the right of
condemnation or eminent domain or
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by agreement between Lessee and those authorized to exercise such right, the
Term shall not be reduced or affected in any way and Lessee shall continue to
pay in full the Rental payable by Lessee hereunder without reduction or
abatement, and Lessee shall be entitled to receive for itself any award or
payments for such use, provided, however, that if the taking is for a period
extending beyond the Term such award or payment shall be apportioned between
Lessor and Lessee as of the last day of the Term.
(e) In case of any governmental action not resulting in the taking or
condemnation of any portion of the Premises but creating a right to compensation
therefor, such as the changing of the grade of any street upon which the
Premises abut, then this Lease shall continue in full force and effect without
reduction or abatement of Rental. In such event, the entire award applicable to
the Premises shall be allocable to Lessor and Lessee in proportion to the fair
market value of their respective interests in the Premises (including, without
limitation, Lessee's interest as the owner of the Land and the lessor under the
Ground Lease), provided, however, that if the parties cannot agree on such fair
market values, the fair market value of each party's respective interest in the
Premises shall be determined by arbitration, as provided in Article XI of the
Ground Lease.
(f) Notwithstanding anything which may be to the contrary in this
Section 5.1, in connection with any taking, to the extent that Lessee is
actually occupying the Premises, Lessee shall be entitled to make a separate
claim, and to prove and receive an award for moving allowance and other expenses
permitted by law, provided that such award shall not diminish the amount of the
award to which Lessor would otherwise be entitled.
V.2 INSURANCE.
(a) The Lessee, at its own cost and expense, shall at all times carry
and maintain, or cause to be carried and maintained, the following insurance:
(i) Insurance with respect to the Improvements against all
perils included within the classification "All Risk of Physical Loss", covering
such risks as shall be customarily insured against with respect to improvements
similar in construction, location and use including by way of example,
earthquake, flood, sprinkler leakage, debris removal, cost of demolition,
malicious mischief, water damage, boiler and machinery explosion or damage and
the like, with extended coverage, a deductible of $25,000 or less, and in
amounts not less than the greater of (x) 100% of the actual replacement cost of
the Improvements (exclusive of foundations and excavations), without regard to
depreciation, and (y) such other amount as is necessary to prevent any reduction
in such policy by reason of and to prevent Lessor, the holder(s) of any
Leasehold Mortgage and/or Fee Mortgage or any other insured thereunder from
being deemed to be a co-insurer.
(ii) Comprehensive, commercial general liability insurance,
including bodily injury, death and property damage liability, and umbrella
liability insurance against any and all
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claims arising out of or connected with the possession, maintenance, use,
occupancy, operation, leasing or condition of the Premises in an amount not
less than $3,000,000 for a combined single limit and $10,000,000 for an
aggregate limit; such insurance shall include the Premises and all sidewalks
adjoining or appurtenant to the Premises, shall contain blanket contractual
coverage and shall also provide the following protection:
(1) completed operations;
(2) personal injury protection;
(3) sprinkler leakage-water damage legal liability;
(4) fire legal liability, if not otherwise covered
under the comprehensive form of public liability
insurance; and
(5) employees as additional insured coverage.
(iii) Statutory worker's compensation insurance with respect to
the operation of the Premises and any work performed on or about the Premises.
(iv) Insurance against loss or damage from (A) leakage of
sprinkler systems and (B) explosion of steam boilers, air conditioning
equipment, pressure vessels or similar apparatus now or hereafter installed at
the Premises, in an amount not less than $1,000,000 or such greater amount as
Lessor may from time to time reasonably require and which are customarily
required with respect to similar properties similarly situated.
(v) Flood insurance in an amount equal to the full
Replacement Cost of the Improvements or the maximum amount available, whichever
is less, if all or any portion of the Improvements are located in an area which
has been designated by the Secretary of Housing and Urban Development as having
special flood hazards, and if flood insurance is available under the National
Flood Insurance Act.
(vi) Rent loss, business interruption or use and occupancy
insurance, in an amount not less than twelve (12) months' gross income from the
Premises.
(vii) Such other insurance in such amounts as may from time to
time be reasonably required by Lessor or the holder of any Leasehold Mortgage
against such other insurable hazards as at the time are commonly insured against
in the case of prudent owners of like premises.
(b) The Lessee will cause the Lessor and the holder(s) of any
Leasehold Mortgage and/or Fee Mortgage to be named as additional insureds as
their respective interests may appear on all policies covering the insurance
referred to above (other than (x) the insurance referred to in Paragraph
5.2(a)(i), where the holder of any Fee Mortgage and any Leasehold Mortgagee
shall be named as mortgagees only, and (y) the insurance referred to in
Paragraph 5.2(a)(iii)), without the Lessor or the holder(s) of any Leasehold
Mortgage and/or Fee Mortgage thereby having any obligation, including,
without limitation, the obligation to pay premiums. All insurance required
by any provision of this Lease shall be in such form as is reasonably
acceptable to Lessor and shall be issued by any insurance company licensed
and authorized
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to do business in the State of New York and having a Bests
Insurance Reports (or any successor publication of comparable standing)
rating of A VII (or the then equivalent of such rating) or better or by any
other insurance company consented to by Lessor. All policies referred to in
this Lease shall be for periods of not less than one (1) year. A duplicate
original or certificate of each such policy shall be delivered to Lessor and
the holder of any Leasehold Mortgage and/or Fee Mortgage within a reasonable
period of time prior to the commencement of the term of each such policy,
except that if any insurance carried by Lessee is effected by one or more
blanket policies, then with respect to such insurance, certified abstracted
policies relating to the Premises shall be so delivered to Lessor and the
holder of any Leasehold Mortgage and/or Fee Mortgage. A certificate or other
evidence reasonably satisfactory to Lessor of the existence of any new or
renewal policy that replaces any policy expiring during the Term shall be
delivered as aforesaid at least thirty (30) days prior to the date of
expiration, together with proof reasonably satisfactory to Lessor that all
premiums due have been paid for at least the first year of the term of such
policies.
(c) Every policy referred to in Paragraph 5.2(a) shall provide that
(i) it will not be canceled or amended except after 30 days' written notice to
Lessor and the holder of any Leasehold Mortgage and/or Fee Mortgage, and that it
shall not be invalidated by any act or negligence of Lessor or Lessee, nor by
occupancy or use of the Premises for purposes more hazardous than permitted by
such policy, nor by any foreclosure or other proceedings relating to the
Premises, nor by change in title to or ownership of the Land or the Improvements
and (ii) the insurer thereunder waives all rights of subrogation against the
Lessor and waives any right of setoff and counterclaim and any other right of
deduction, whether by attachment or otherwise.
(d) The requirements of this Paragraph 5.2 shall not be construed to
negate or modify Lessee's obligations under Paragraph 5.4.
V.3 CASUALTY.
(a) If the Premises shall be damaged or destroyed by any casualty
during the Term hereof, this Lease shall continue in full effect without any
reduction in the Rental payable by Lessee hereunder and Lessee shall, at its
expense, promptly rebuild, replace or repair the Premises in conformity with the
requirements of Section 4.3 so as to restore the Premises to the condition and
fair market value thereof immediately prior to such occurrence, subject to the
following:
(i) Lessee shall settle any claim relating to such casualty
with the applicable insurance carrier, provided, however, that with respect to
any casualty involving a Restoration Cost (as hereinafter defined) in excess of
$500,000, such settlement shall be subject to the consent of Lessor, which
consent shall not be unreasonably withheld.
(ii) Prior to any such rebuilding, replacement or repair,
Lessee shall deliver its reasonable estimate of the cost thereof, which shall be
subject to the approval of Lessor, which
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approval shall not be unreasonably withheld (the cost approved by Lessor, as
updated from time to time as provided below, is referred to as the
"Restoration Cost"). If the repair constitutes a Material Alteration, the
Restoration Cost must be confirmed and periodically updated by an architect
reasonably acceptable to Lessor who is registered or licensed as such in the
state in which the Premises is located, and if the Restoration Cost is, or is
reasonably anticipated to be, more than the amount of net insurance proceeds
available to Lessee for such restoration (less any cost to the Depository (as
hereinafter defined) of recovering and paying out such proceeds, including,
without limitation, reasonable attorneys', trustees' or escrow fees relating
thereto and out-of-pocket costs allocable to inspecting the work and the
plans and specifications therefor) (the "Net Proceeds"), Lessee shall deliver
or cause to be delivered to the Depository such security for the payment by
Lessee of such excess costs as shall be reasonably acceptable to the
Depository and Lessor. The Net Proceeds and any additional security posted
by Lessee hereunder shall be held and disbursed in accordance with the
provisions of this Lease by (i) the holder of any Fee Mortgage, to the extent
required by the terms thereof, or (ii) to the extent not required to be held
by the holder of a Fee Mortgage as provided above, a bank or other financial
institution selected by Lessor and reasonably acceptable to Lessee (the
holder of such Fee Mortgage or such bank or financial institution being
hereinafter referred to as the "Depository").
(iii) The Restoration Cost shall be paid first out of Lessee's
own funds to the extent that the Restoration Cost exceeds the Net Proceeds
payable in connection with such occurrence, after which expenditure Lessee shall
be entitled to receive the Net Proceeds, but only against certificates of Lessee
(and lien releases and other items generally and reasonably required in
connection with disbursement of construction loan or insurance proceeds)
delivered to Depository and Lessor from time to time as such work or rebuilding,
replacement and repair progresses, each such certificate describing the work for
which Lessee is requesting payment and the cost incurred by Lessee in connection
therewith and stating that Lessee has not theretofore received payment for such
work, and stating that the amount of the Net Proceeds remaining after such
requested disbursement shall be sufficient to satisfy the cost of completing
such restoration. Any Net Proceeds remaining after final payment has been made
for such work shall be returned to Lessee. If the cost of any rebuilding,
replacement or repair required to be made by Lessee pursuant to this Section 5.3
shall exceed the amount of such Net Proceeds, the deficiency shall be paid by
Lessee. Lessee shall not be entitled to disbursements of the Net Proceeds if an
Event of Default has occurred and is continuing.
(b) The Rental payable under the provisions of this Lease shall not
be affected, altered or reduced by any casualty, and Lessee shall continue to
pay the full amount of the Rental provided in this Lease notwithstanding any
such casualty.
(c) The Net Proceeds shall be held by the Depository, to be paid out
from time to time to Lessee as the work
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progresses, subject to each of the following conditions:
(i) Each request for payment shall be made on not less than
ten (10) business days' prior notice to the Depository and to Lessor and shall
be accompanied by an officer's certificate (or if such work is being performed
under the supervision of an architect, by a certificate of such architect),
stating (A) in the case of an officer's certificate only, that no Event of
Default exists hereunder, (B) that, based upon an inspection of the Premises,
all of the work completed has been done in substantial compliance with the
approved plans and specifications, if required, (C) that the sum requested is
validly required to reimburse Lessee for payments by Lessee, or is validly due
to the contractor, subcontractors, materialmen, laborers, engineers, architects
or other persons rendering services or materials for the work (giving a brief
description of such services and materials), and that when added to all sums
previously paid out by the Depository does not exceed the value of the work done
to the date of such certificate, (D) if the sum requested is to cover payment
relating to repair and restoration of personal property required or relating to
the Premises, that title to the personal property items covered by the request
for payment is vested in Lessor or Lessee, as applicable, and (E) the remaining
cost to complete such work and that the remaining amount held by the Depository
(together with any amounts contemporaneously deposited by Lessee with the
Depository) shall be sufficient to cover such cost of completion; PROVIDED,
HOWEVER, that if such certificate is given by an architect, such architect shall
certify as to clause (B) above, and Lessee shall certify as to the remaining
clauses above, and provided, further, that the Depository shall not be obligated
to disburse such funds if the Depository determines, in its reasonable
discretion, that Lessee shall not be in compliance with this Section 5.3.
Additionally, each request for payment shall contain a statement signed by
Lessee approving both the work done to date and the work covered by the request
for payment in question.
(ii) Each request for payment shall be accompanied by waivers
of lien satisfactory to Lessor and the Depository covering that part of the work
for which payment or reimbursement has been made as of the date of the current
request and, if required by the Depository, a search prepared by a title company
or licensed abstractor, or by other evidence satisfactory to the Depository that
there has not been filed with respect to the Premises any mechanics or other
lien or instrument for the retention of title relating to any part of the work
not discharged of record. Additionally, as to any personal property covered by
the request for payment, Lessor and the Depository shall be furnished with
evidence of payment therefor and such further evidence satisfactory to assure
the Leasehold Mortgagee of its valid first lien on and security interest in the
personal property.
(iii) Lessor and the Depository shall have the right to inspect
the work at all reasonable times upon reasonable prior notice and may condition
any disbursement of Net Proceeds upon the satisfactory completion of any portion
of the work for
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which payment or reimbursement is being requested. Neither the approval by
the Depository or Lessor of any required plans and specifications for the
work nor the inspection by the Depository or Lessor of the work shall make
the Depository or Lessor responsible for the preparation of such plans and
specifications or the compliance of such plans and specifications, or of the
work, with any applicable Legal Requirement, covenant or agreement.
(iv) Net Proceeds shall not be disbursed more frequently than
once every thirty (30) days.
(d) If an Event of Default shall have occurred and be continuing
or if Lessee (i) shall fail to submit to Lessor for approval plans and
specifications (if required pursuant to Section 4.3 hereof) for the Work
(approved by the architect and by all governmental authorities whose approval
is required), (ii) after any such plans and specifications are approved by
all such governmental authorities, the architect, Lessor and the Depository,
shall fail to commence promptly such Work, (iii) after the Depository or
Lessor has released the Net Proceeds to the extent provided for hereunder,
shall fail to diligently prosecute such Work to completion, or (iv) fail in
any other respect to comply with the Work obligations under this Section 5.3,
then in addition to all other rights available hereunder, at law or in
equity, Lessor, the Depository, any Leasehold Mortgagee or any receiver of
the Premises or any portion thereof, upon five (5) days prior notice to
Lessee (except in the event of emergency in which case no notice shall be
required), may (but shall have no obligation to) perform or cause to be
performed such Work, and may take such other steps as such party deems
advisable (but such performance shall not cure the default of Lessee),
including the restoration and repair of the Premises, and the Net Proceeds
shall be released to reimburse such party for the cost thereof. In addition,
Lessee acknowledges that if an Event of Default shall have occurred and be
continuing, the Depository may apply any Net Proceeds towards payment of the
Fee Mortgage, to the extent permitted by Section 5.3 of the Ground Lease,
which payment shall not relieve Lessee of any of its obligations hereunder.
Lessee hereby waives, for Lessee and all others holding under or through
Lessee, any claim, other than for gross negligence or willful misconduct,
against Lessor and the Depository and any receiver arising out of any act or
omission of such party pursuant hereto, and Lessor or the Depository may
apply all or any portion of the Net Proceeds (without the need to fulfill any
other requirements set forth in this Section 5.3) to reimburse itself for all
amounts incurred in connection with the Work.
V.4 INDEMNIFICATION.
(a) Lessee shall not do or permit any act or thing to be done upon
the Premises which may subject Lessor to any liability or responsibility for
injury, damages to persons or property or to any liability by reason of any
violation of any Legal Requirement, and shall exercise such control over the
Premises as to fully protect Lessor against any such liability.
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Lessee hereby assumes liability for and shall pay, and shall protect, defend,
save, indemnify and hold the Lessor and the holder of any Leasehold Mortgage
and/or Fee Mortgage and their respective affiliates, partners, directors,
shareholders, members, officers, employees, agents, successors and assigns
(the "Lessor Indemnified Parties") harmless from and against all liabilities,
suits, obligations, fines, damages, penalties, claims, costs, charges and
expenses, including, without limitation, reasonable engineers', architects',
experts', consultants, and attorneys' fees and disbursements (collectively,
the "Claims") arising from or in connection with any of the following: (i)
the performance or non-performance of any of the terms hereof by the Lessee,
(ii) the lease, sublease, possession, use, operation, maintenance, condition
or repair of the Premises, (iii) any accident, injury to or death of persons
or loss of property occurring on or about the Premises or any part thereof,
or the adjoining sidewalks, curbs, vaults and vault space, if any, streets or
ways, (iv) performance of any labor or services or the furnishing of any
materials or other property in respect of the Premises or any part thereof,
(v) any negligence or wrongful act or omission of Lessee or any of its
subtenants, servants, agents, contractors, employees, licensees or invitees,
(vi) any contest conducted by the Lessee pursuant to Section 3.3 or (vii) any
violation of any Legal Requirement, including, without limitation, any
violation of environmental laws, regardless of whether such violation arises
before or during the Term.
(b) The obligations of Lessee under this Section 5.4 shall not be
affected in any way by the absence in any case of covering insurance or by the
failure or refusal of any insurance carrier to perform any obligation on its
part under insurance policies affecting the Premises.
(c) The indemnified parties shall give notice to the indemnifying
party of any demand or claim that may result in an indemnified claim under this
Lease promptly after the indemnified parties have knowledge of same. Notice
shall be deemed to have been promptly given pursuant to this Section 5.4 if it
is given within such time as is required to avoid prejudicing the indemnifying
party's defense to the claim or demand. Failure to give prompt notice pursuant
to the terms of this Section 5.4 shall not relieve the indemnifying party of any
liability or obligation under this Lease, but such failure shall entitle the
indemnifying party to compensation from the indemnified parties for any cost,
expense or liability it incurs as a direct consequence of such late notice.
(d) The indemnifying party shall either (i) pay such claim within
thirty (30) days after such notice is given or (ii) subject to the provisions of
Subsection (e) of this Section 5.4, commence to compromise or defend such claim
within thirty (30) days after such notice is given, at its own expense and by
counsel of its own choosing (reasonably acceptable to the indemnified parties),
and shall notify the indemnified parties of such payment, compromise or defense,
subject to the terms and conditions hereof. The indemnified parties shall
cooperate, at
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the expense of the indemnifying party, in the compromise or defense of such
claim; provided that the indemnifying party shall control such compromise or
defense. The indemnified parties shall have the right to be kept fully
informed of the status of any claim and to participate in the defense of a
claim or demand at their sole expense. If the indemnifying party does not
pay or promptly commence to compromise or defend against such claim as herein
provided, or fails diligently to pursue the compromise or defense of such
claim, then the indemnified parties may thereafter pay, compromise or defend
against such claim with counsel of their choosing, and all expenses incurred
by the indemnified parties in so doing shall be paid by the indemnifying
party on demand.
(e) If the indemnifying party wishes to enter into a settlement or
compromise with respect to a claim, it shall give notice to the indemnified
parties of the terms of the proposed settlement or compromise and any such
settlement or compromise shall be subject to the prior written consent of the
indemnified parties, which consent shall not be unreasonably withheld. Without
limiting the generality of the foregoing, it shall be reasonable to refuse
consent to a settlement or compromise which would impose upon the indemnified
parties (or any of them) either (x) a financial obligation which would not be
satisfied by the indemnifying party at the time of such settlement or
compromise, or (y) any other material obligation (including, without limitation,
such obligation as may be imposed by injunctive or other equitable relief) that
would not be discharged by the performance of the indemnifying party or such
performance by the indemnifying party is not assured by virtue of the financial
condition of the indemnifying party, the lack of security therefor or otherwise.
(f) The provisions of this Section 5.4 shall survive the Expiration
Date.
65535RT65535CLE VI
ASSIGNMENT, SUBLETTING AND LEASEHOLD MORTGAGES
VI.1 ASSIGNMENT AND SUBLETTING.
(a) During the term of this Lease, Lessee shall endeavor to keep the
rentable space at the Premises leased at reasonable occupancy levels in light of
the then current market conditions, and, with respect to any space at the
Premises not occupied by Lessor, Lessee or any affiliate of the foregoing
parties, at then current market rents and on then current market terms. In
furtherance of the foregoing, Lessee may, without Lessor's consent, but subject
to compliance with the terms and conditions of this Lease, enter into subleases
in the ordinary course of business for occupancy of the Premises, provided that
any such sublease shall comply with the requirements of Section 6.1(h) below.
(b) Except as provided in Section 6.1(a) above, Lessee shall not (i)
assign or otherwise transfer this Lease or the term and estate hereby granted,
(ii) sublet the Premises or any part
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thereof, or (iii) mortgage, pledge, encumber or otherwise hypothecate this
Lease or the Premises or any part thereof (other than an encumbrance on
Lessee's fee title to the Land in connection with a Fee Mortgage permitted by
the Ground Lease), without in each instance obtaining the prior written
consent of Lessor, which may be given or withheld in Lessor's sole
discretion, and any attempted assignment, transfer, sublease, mortgage,
pledge, encumbrance or hypothecation which is not in compliance with the
terms and conditions hereof shall be void and of no force or effect.
(c) Any assignment or transfer consented to in writing by Lessor
hereunder shall be made only if, and shall not be effective until, the assignee
shall execute, acknowledge and deliver to Lessor an agreement in form and
substance reasonably satisfactory to Lessor whereby the assignee shall assume
the obligations of this Lease on the part of Lessee to be performed or observed
and whereby the assignee shall agree that the provisions in this Article VI
shall, notwithstanding such assignment or transfer, continue to be binding upon
it in respect of all future assignments and transfers.
(d) If this Lease is assigned, whether or not in violation of the
provisions of this Lease, Lessor may collect rent from the assignee, subject to
the rights of the holder of any Fee Mortgage with respect to any Lockbox. If the
Premises or any part thereof is sublet or used or occupied by anybody other than
Lessee, whether or not in violation of this Lease, Lessor may, if an Event of
Default has occurred and is continuing, collect rent from the subtenant or
occupant, subject to the rights of the holder of any Fee Mortgage with respect
to any Lockbox. In either event, Lessor shall apply the net amount collected to
the Rental herein reserved, but no such assignment, subletting, occupancy or
collection shall be deemed a waiver of any of the provisions of this Article VI,
or the acceptance of the assignee, subtenant or occupant as tenant, or a release
of Lessee from the performance by Lessee of Lessee's obligations under this
Lease. The consent by Lessor to an assignment or subletting or the use or
occupancy by others shall not in any way be considered to relieve Lessee from
obtaining the express written consent of Lessor to any other or further
assignment, or subletting or use or occupancy by others not expressly permitted
by this Article VI. Reference in this Lease to use or occupancy by others (that
is, anyone other than Lessee) shall not be construed as limited to subtenants
and those claiming under or through subtenants but as including also licensees,
concessionaires, operators and others claiming under or through Lessee,
immediately or remotely, a legal right of possession or occupancy of the
Premises or any portion thereof (all such persons being referred to individually
in this Lease as a "Subtenant" and collectively as "Subtenants", and the
agreements pursuant to which such Subtenants occupy a portion of the Premises
being referred to individually as a "Sublease" and collectively as "Subleases").
(e) The joint and several liability of Lessee and any immediate or
remote successor in interest of Lessee and the due
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performance of the obligations of this Lease on Lessee's part to be performed
or observed shall not be discharged, released or impaired in any respect by
any agreement or stipulation made by Lessor extending the time of, or
modifying any of the obligations of, this Lease, or by any waiver or failure
of Lessor to enforce any of the obligations of this Lease, except to the
extent specifically set forth in such agreement, stipulation or waiver.
(f) If Lessee shall at any time or times during the Term of this
Lease desire to sublet all or part of the Premises (other than as provided in
Section 6.1(a)), Lessee shall give prior notice thereof to Lessor, which
notice shall be accompanied by (i) a conformed or photostatic copy of the
proposed sublease, the effective or commencement date of which shall be at
least fifteen (15) days after the giving of such notice and (ii) a statement
setting forth in reasonable detail the identity of the proposed Subtenant,
the nature of its business and its proposed use of the Premises.
(g) Each sublease permitted (or, to the extent required, consented to
in writing by Lessor) pursuant to this Article VI shall expressly be subject to
all of the covenants, agreements, terms, provisions and conditions contained in
this Lease, except such as are inapplicable. Notwithstanding any such subletting
and/or acceptance of rent or additional rent by Lessor from any Subtenant,
Lessee shall and will remain fully liable for the payment of all Rental due and
to become due hereunder and for the performance of all the covenants,
agreements, terms, provisions and conditions contained in this Lease on the part
of Lessee to be performed and all acts and omissions of any Subtenant or anyone
claiming under or through any Subtenant which shall be in violation of any of
the obligations of this Lease, and any such violation shall be deemed to be a
violation by Lessee. Lessee further agrees that notwithstanding any such
subletting, no other or further subletting of the Premises or any part thereof
by Lessee or any person claiming through or under Lessee shall or will be made
except upon compliance with and subject to the provisions of this Article.
(h) With respect to each and every sublease permitted (or, to the
extent required, consented to in writing by Lessor) under the provisions of this
Lease, it is further agreed:
(i) No subletting shall be for a term (including renewal or
extension options) ending later than one day prior to the expiration of the Term
of this Lease without the prior written consent of Lessor, it being understood
and agreed that if Lessee desires to enter into a sublease which would extend
beyond the Term, Lessor and Lessee shall negotiate in good faith with respect to
the allocation of the cost of any tenant improvements, free rent or other tenant
inducements.
(ii) No Subtenant shall take possession of the Premises or any
part thereof until an executed counterpart of such sublease has been delivered
to Lessor.
(iii) Each sublease shall provide that it is subject and
subordinate to this Lease and to the matters to which this Lease is or shall be
subordinate, and that in the event of
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termination, re-entry or dispossession by Lessor under this Lease Lessor may,
at its option, take over all of the right, title and interest of Lessee, as
sublessor, under such sublease, and such Subtenant shall, at Lessor's option,
attorn to Lessor pursuant to the then executory provisions of such sublease,
or enter into a direct lease on identical terms with Lessor for the balance
of the unexpired term of the sublease.
(i) At Lessee's request, Lessor shall enter into a non-disturbance
and attornment agreement, in the form annexed hereto as Schedule D (or on
such other form as shall be reasonably acceptable to Lessor), with respect to
any subtenant occupying 1 or more full floors at the Premises (each, a "Major
Subtenant") under a sublease (a "Major Sublease"), provided that (x) Lessee
shall obtain Lessor's prior written approval of such Major Subtenant and such
Major Sublease, such approval not to be unreasonably withheld or delayed (it
being understood and agreed that such approval shall only be required if
Lessor is entering into a non-disturbance and attornment agreement with such
Major Subtenant as provided hereunder), and (y) Lessee shall reimburse
Lessor, prior to the issuance of any such non-disturbance and attornment
agreement, or, if such non-disturbance and attornment agreement is not
granted, within ten (10) days after demand therefor, for the reasonable
out-of-pocket costs incurred by Lessor and the holder of any Leasehold
Mortgage, including, without limitation, reasonable attorneys fees, in
reviewing any such Major Sublease and non-disturbance and attornment
agreement.
(j) At Lessee's request, Lessor shall request that holder of any
Leasehold Mortgage enter into a subordination, non-disturbance and attornment
agreement, in such form as shall be reasonably acceptable to such holder,
with respect to any Major Subtenant under a Major Sublease, provided that (x)
the holder of such Leasehold Mortgage may grant or deny such request in such
holder's sole and absolute discretion, (y) Lessee shall reimburse the holder
of such Leasehold Mortgage, prior to the issuance of any such subordination,
non-disturbance and attornment agreement, or, if such subordination,
non-disturbance and attornment agreement is not granted, within ten (10) days
after demand therefor, for the reasonable out-of-pocket costs incurred by
such holder of any Leasehold Mortgage, including, without limitation,
reasonable attorneys fees, in reviewing any such Major Sublease and
subordination, non-disturbance and attornment agreement, and (z) Lessor's
sole obligation hereunder shall be to submit such request to the holder of
such Leasehold Mortgage, it being understood and agreed that Lessee's
obligations under this Lease shall not be affected in any manner whatsoever
by the refusal of any such holder of a Leasehold Mortgage to enter into any
such subordination, non-disturbance and attornment agreement.
65535RT65535CLE VII
LESSEE'S DEFAULT; CONDITION OF LIMITATION
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VII.1 LESSEE'S DEFAULT. The occurrence of each of the following events
shall be an "Event of Default" hereunder:
(a) if Lessee shall fail to pay any installment of any Basic Rent, or
Impositions, or any part thereof, when the same shall become due and payable;
(b) if Lessee shall fail to make any payment of any Rental (other
than the categories of Rental listed in Section 7.1(a)) required to be paid by
Lessee hereunder when the same shall become due and payable, and such failure
shall continue for a period of fifteen (15) days after notice from Lessor to
Lessee to cure such Default;
(c) if Lessee shall fail to deliver to Lessor a certificate or other
evidence reasonably satisfactory to Lessor of the existence of any new or
renewal insurance policy required under this Lease on or prior to the date the
same is required to be delivered to Lessor hereunder;
(d) if Lessee shall be unable to, or shall admit in writing its
inability to, pay its debts as such debts become due, or if Lessee shall make an
assignment for the benefit of creditors;
(e) if Lessee shall commence or institute any case, proceeding or
other action (A) seeking relief on its behalf as debtor, or to adjudicate it a
bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
winding-up, liquidation, dissolution, composition or other relief with respect
to it or its debts under any existing or future law of any jurisdiction,
domestic or foreign, relating to bankruptcy, insolvency, reorganization or
relief of debtors, or (B) seeking appointment of a receiver, trustee, custodian
or other similar official for it or for all or any substantial part of its
property;
(f) if any case, proceeding or other action shall be commenced or
instituted against Lessee (A) seeking to have an order for relief entered
against it as debtor or to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation, dissolution,
composition or other relief with respect to it or its debts under any existing
or future law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors, or (B) seeking appointment of a
receiver, trustee, custodian or other similar official for it or for all or any
substantial part of its property, which in either of such cases is not dismissed
or denied within sixty (60) days after such commencement or institution;
(g) if any case, proceeding or other action shall be commenced or
instituted against Lessee seeking issuance of a warrant of attachment,
execution, distraint or similar process against all or any substantial part of
its property which shall not have been dismissed within sixty (60) days from the
commencement thereof;
(h) if a trustee, receiver or other custodian is appointed for any
substantial part of the assets of Lessee which appointment is not vacated or
stayed within sixty (60) days;
(i) if Lessee shall take any action in furtherance of any action
described in Section 7.1(e) or 7.1(f) hereof, or
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indicating its consent to, approval of, or acquiescence in, any of the acts
set forth in such Sections;
(j) if this Lease or the estate of Lessee hereunder shall be
assigned, subleased or transferred, without compliance with the provisions of
this Lease applicable thereto;
(k) if this Lease or the estate of Lessee hereunder shall be
mortgaged or encumbered in violation of this Lease;
(l) if Lessee shall fail to observe or perform one or more of the
other terms, conditions, covenants or agreements of this Lease and such failure
shall continue for a period of thirty (30) days after written notice thereof by
Lessor to Lessee specifying such failure (unless such failure requires work to
be performed, acts to be done, or conditions to be removed which cannot by their
nature reasonably be performed, done or removed, as the case may be, within such
thirty (30) day period, in which case no Event of Default shall be deemed to
exist as long as Lessee shall have commenced curing the same within such thirty
(30) day period and shall prosecute the same to completion with reasonable
diligence within ninety (90) days after Lessor's written notice of such
failure).
VII.2 [INTENTIONALLY OMITTED]
VII.3 JUDICIAL PROCEEDINGS. If any Event of Default shall occur,
Lessor may elect to proceed by appropriate judicial proceedings, either at law
or in equity, to enforce the performance or observance by Lessee of the
applicable provisions of this Lease and/or to recover damages for breach
thereof.
VII.4 TERMINATION. If any Event of Default described in Section 7.1
(d), (e), (f), (g), (h) or (i) hereof shall occur, then to the extent permitted
by law this Lease and the Term and all rights of Lessee under this Lease shall
expire and terminate on the date on which such Event of Default occurs, as if
such date were the date herein definitely fixed for the expiration of the Term.
If any other Event of Default shall occur and Lessor, at any time thereafter
during the continuance of such Event of Default, at its option, gives written
notice to Lessee stating that this Lease and the Term shall expire and terminate
on the date specified in such notice, which date shall be not less than ten (10)
days after the giving of such notice, then this Lease and the Term and all
rights of Lessee under this Lease shall expire and terminate on the date
specified in such notice as if such date were the date herein definitely fixed
for the expiration of the Term. Upon such termination, Lessee immediately shall
quit and surrender the Premises and Lessee's interest in the Improvements, but
Lessee shall remain liable for damages as hereinafter provided. Anything
contained herein to the contrary notwithstanding, if such termination shall be
stayed by order of any court having jurisdiction over any proceeding described
in Section 7.1(g) hereof, or by federal or state statute, then, following the
expiration of any such stay, or if the trustee appointed in any such proceeding,
Lessee or Lessee as debtor-in-possession shall fail to assume Lessee's
obligations
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under this Lease within the period prescribed therefor by law or within sixty
(60) days after entry of the order for relief or as may be allowed by the
court, or if said trustee, Lessee or Lessee as debtor-in-possession shall
fail to provide adequate protection of Lessor's right, title and interest in
and to the Premises or adequate assurance of the complete and continuous
future performance of Lessee's obligations under this Lease as provided
below, Lessor, to the extent permitted by law or by leave of the court having
jurisdiction over such proceeding, shall have the right, at its election, to
terminate this Lease on five (5) days' notice to Lessee, Lessee as
debtor-in-possession or said trustee and upon the expiration of said five (5)
day period this Lease shall cease and expire as aforesaid and Lessee, Lessee
as debtor-in-possession and/or said trustee shall immediately quit and
surrender the Premises as aforesaid.
VII.5 RIGHT TO DISPOSSESS. If an Event of Default described in Section
7.1(a) or (b) shall occur, or if this Lease shall be terminated as provided in
Section 7.4, Lessor, without notice, may dispossess Lessee by summary
proceedings or by any suitable action or proceeding at law or by force or
otherwise.
VII.6 REJECTION IN BANKRUPTCY. If, at any time, Lessee rejects this
Lease under Section 365 of the Bankruptcy Code, or any corresponding provision
under applicable state law, then this Lease shall immediately terminate,
Lessee's entire right, title and interest in and to the Premises and this Lease
shall automatically and without further action on the part of any person vest in
Lessor and Lessee shall immediately surrender and deliver possession of the
Premises to Lessor.
VII.7 RIGHTS UPON TERMINATION. If this Lease shall be terminated as
provided in Section 7.4 and/or Lessee shall be dispossessed as provided in
Section 7.5:
(a) Lessor or Lessor's agents or servants, may immediately or at any
time thereafter re-enter the Premises and remove therefrom Lessee, its agents,
employees, servants, licensees, and any subtenants and other persons holding or
claiming by, through or under Lessee, and all or any of its or their property,
without being liable to indictment, prosecution or damages therefor, and
repossess and enjoy the Premises, together with the Improvements;
(b) All of the right, title, estate and interest of Lessee in and to
(i) the Premises, (ii) all rents, issues and profits of the Premises, or any
part thereof, whether then accrued or to accrue and (iii) all insurance policies
and all insurance monies paid or payable thereunder, shall automatically pass
to, vest in and belong to Lessor, without further action on the part of either
party, free of any claim thereto by Lessee, and Lessor may instruct any
Subtenants at the Premises to pay rent directly to Lessor or its designee,
rather than to Lessee or any Lockbox;
(c) Lessee shall pay to Lessor all Rental payable by Lessee under
this Lease to the date upon which this Lease and the
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Term shall have expired and come to an end or to the date of re-entry upon
the Premises by Lessor, as the case may be;
(d) Lessor may repair and alter the Premises in such manner as Lessor
may deem necessary or advisable without relieving Lessee of any liability under
this Lease or otherwise affecting any such liability, and/or let or relet the
Premises or any parts thereof for the whole or any part of the remainder of the
Term or for a longer period, in Lessor's name or as agent of Lessee, and out of
any rent and other sums collected or received as a result of such reletting
Lessor shall: (i) first, pay to itself the reasonable cost and expense of
terminating this Lease, re-entering, retaking, repossessing, completing
construction of and repairing and/or altering the Premises, or any part thereof,
and the reasonable cost and expense of removing all persons and property
therefrom, including in such costs reasonable brokerage commissions, legal
expenses and attorneys' fees and disbursements, (ii) second, pay to itself the
reasonable cost and expense sustained in securing any new tenants and other
occupants, including in such costs reasonable brokerage commissions, legal
expenses and attorneys' fees and disbursements and other expenses of preparing
the Premises for reletting, and, if Lessor shall maintain and operate the
Premises, the cost and expense of operating and maintaining the Premises, and
(iii) third, pay to itself any balance remaining on account of the liability of
Lessee to Lessor. Lessor in no way shall be responsible or liable for any
failure to relet the Premises or any part thereof, or for any failure to collect
any rent due on any such reletting, and no such failure to relet or to collect
rent shall operate to relieve Lessee of any liability under this Lease or to
otherwise affect any such liability; and in no event shall Lessee be entitled to
receive any excess of such annual rents over the sums payable by Lessee to
Lessor hereunder;
(e) Lessee shall be liable for and shall pay to Lessor, as damages,
any deficiency ("Deficiency") between the Rental reserved in this Lease for the
period which otherwise would have constituted the unexpired portion of the Term
and the net amount, if any, of rents collected under any reletting effected
pursuant to the provisions of Section 7.7(d) for any part of such period (which
net amount shall be determined after deducting from the rents collected under
any such reletting all of the payments to Lessor described in Section 7.7(d)
hereof); any such Deficiency shall be paid in installments by Lessee on the days
specified in this Lease for payment of installments of Rental, and Lessor shall
be entitled to recover from Lessee each Deficiency installment as the same shall
arise, and no suit to collect the amount of the Deficiency for any installment
period shall prejudice Lessor's right to collect the Deficiency for any
subsequent installment period by a similar proceeding; and
(f) Whether or not Lessor shall have collected any Deficiency
installments as aforesaid, Lessor shall be entitled to recover from Lessee, and
Lessee shall pay to Lessor, on demand, in lieu of any further Deficiencies, as
and for liquidated and agreed final damages (it being agreed that it would be
impracticable or extremely difficult to fix the actual damage), a
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sum equal to the amount by which the Rental reserved in this Lease for the
period which otherwise would have constituted the unexpired portion of the
Term exceeds the then fair and reasonable rental value of the Premises for
the same period, both discounted to present worth at the rate of seven (7%)
percent per annum, less the aggregate amount of Deficiencies theretofore
collected by Lessor pursuant to the provisions of Section 7.7(e) for the same
period; it being agreed that before presentation of proof of such liquidated
damages to any court, commission or tribunal, if the Premises, or any
substantial part thereof, shall have been relet by Lessor for the period
which otherwise would have constituted the unexpired portion of the Term, or
any part thereof, the amount of rent reserved upon such reletting shall be
deemed, prima facie, to be the fair and reasonable rental value for the part
or the whole of the Premises so relet during the term of the reletting.
VII.8 NO RELIEF FROM LIABILITIES. No termination of this Lease
pursuant to this Article VII, and no taking possession of and/or reletting the
Premises, or any part thereof, pursuant to this Article VII, shall relieve
Lessee of its liabilities and obligations hereunder, all of which shall survive
such expiration, termination, repossession or reletting except as otherwise
specifically provided.
VII.9 WAIVER. To the extent not prohibited by law, Lessee hereby
waives and releases all rights now or hereafter conferred by statute or
otherwise which would have the effect of limiting or modifying any of the
provisions of this Article VII. Lessee shall execute, acknowledge and deliver
any instruments which Lessor may reasonably request, whether before or after the
occurrence of an Event of Default, evidencing such waiver or release.
VII.10 LIEN. The Rental payable by Lessee hereunder and each and every
installment thereof, and all reasonable costs (including, without limitation,
reasonable attorneys' fees and disbursements) and other expenses which may be
incurred by Lessor in enforcing the provisions of this Lease or on account of
any delinquency of Lessee in carrying out the provisions of this Lease shall be
and they hereby are declared to constitute a valid lien upon the interest of
Lessee in this Lease, in the Premises and in the Improvements.
VII.11 SUITS. Suit or suits for the recovery of damages, or for a sum
equal to any installment or installments of Rental payable hereunder or any
Deficiencies or other sums payable by Lessee to Lessor pursuant to this Article
VII, or for conveyance of the Improvements, may be brought by Lessor from time
to time at Lessor's election, and nothing herein contained shall be deemed to
require Lessor to await the date whereon this Lease or the Term would have
expired had there been no Event of Default by Lessee and termination.
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VII.12 NO PREJUDICE. Nothing contained in this Article VII shall limit
or prejudice the right of Lessor to prove and obtain as liquidated damages in
any bankruptcy, insolvency, receivership, reorganization or dissolution
proceeding an amount equal to the maximum allowed by a statute or rule of law
governing such proceeding and in effect at the time when such damages are to be
proved, whether or not such amount shall be greater than, equal to or less than
the amount of the damages referred to in any of the preceding Sections of this
Article VII.
VII.13 NO REINSTATEMENT. No receipt of moneys by Lessor from Lessee
after the termination of this Lease, or after the giving of any notice of the
termination of this Lease shall reinstate, continue or extend the Term or affect
any notice theretofore given to Lessee, or operate as a waiver of the right of
Lessor to enforce the payment of Rental payable by Lessee hereunder or
thereafter falling due, or operate as a waiver of the right of Lessor to recover
possession of the Premises by proper remedy, except as herein otherwise
expressly provided, it being agreed that after the service of notice to
terminate this Lease or the commencement of any suit or summary proceedings, or
after a final order or judgment for the possession of the Premises, Lessor may
demand, receive and collect any moneys due or thereafter falling due without in
any manner affecting such notice, proceeding, order, suit or judgment, all such
moneys collected being deemed payments on account of the use and occupation of
the Premises or, at the election of Lessor, on account of Lessee's liability
hereunder.
VII.14 WAIVER OF NOTICE. Except as otherwise expressly provided herein
or as prohibited by applicable law, Lessee hereby expressly waives the service
of any notice of intention to re-enter provided for in any statute, or of the
institution of legal proceedings to that end, and Lessee, for and on behalf of
itself and all persons claiming through or under Lessee, also waives any and all
right of redemption provided by any law or statute now in force or hereafter
enacted or otherwise, or re-entry or repossession or to restore the operation of
this Lease in case Lessee shall be dispossessed by a judgment or by warrant of
any court or judge or in case of re-entry or repossession by Lessor or in case
of any expiration or termination of this Lease, and Lessor and Lessee waive and
shall waive trial by jury in any action, proceeding or counterclaim brought by
either of the parties hereto against the other on any matter whatsoever arising
out of or in any way connected with this Lease, the relationship of Lessor and
Lessee, Lessee's use or occupancy of the Premises, or any claim of injury or
damage. The terms "enter", "re-enter", "entry" or "re-entry", as used in this
Lease are not restricted to their technical legal meaning.
VII.15 STRICT PERFORMANCE. No failure by Lessor to insist upon the
strict performance by Lessee of any covenant, agreement, term or condition of
this Lease or to exercise any right or remedy consequent upon a breach thereof,
and no payment
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or acceptance of full or partial Rental during the continuance of any such
breach, shall constitute a waiver of any such breach or of such covenant,
agreement, term or condition or of any such right or remedy. No covenant,
agreement, term or condition of this Lease to be performed or complied with
by Lessee, and no breach thereof, shall be waived, altered or modified except
by a written instrument executed by Lessor. No waiver by Lessor of any breach
shall affect or alter this Lease, but each and every covenant, agreement,
term and condition of this Lease shall continue in full force and effect with
respect to any other then existing or subsequent breach thereof.
VII.16 RIGHT TO ENJOIN. Except as expressly provided herein to the
contrary, in the event of any breach, or attempted or threatened breach, by
Lessee of any of the covenants, agreements, terms or conditions contained in
this Lease, Lessor shall be entitled to enjoin such breach or such attempted or
threatened breach, and shall have the right to a decree compelling specific
performance of any of the provisions hereof and to invoke any rights and
remedies allowed at law or in equity or by statute or otherwise as though
reentry, summary proceedings, and other remedies were not provided for in this
Lease.
VII.17 REMEDIES CUMULATIVE. Each right and remedy of Lessor provided
for in this Lease shall be cumulative and shall be in addition to every other
right or remedy provided for in this Lease or now or hereafter existing at law
or in equity or by statute or otherwise, and the exercise or beginning of the
exercise by Lessor of any one or more of the rights or remedies provided for in
this Lease or now or hereafter existing at law or in equity or by statute or
otherwise shall not preclude the simultaneous or later exercise by Lessor of any
or all other rights or remedies provided for in this Lease or now or hereafter
existing at law or in equity or by statute or otherwise.
VII.18 ADEQUATE PROTECTION AND ADEQUATE ASSURANCE. Lessee hereby
acknowledges that Lessor has an interest in the Premises within the meaning of
Section 363(e) of the Bankruptcy Code. Accordingly, if an order for relief is
entered or if a stay of proceeding or other acts becomes effective in favor of
Lessee or Lessee's interest in this Lease, in any proceeding which is commenced
by or against Lessee, under the Bankruptcy Code or any future federal bankruptcy
code or any other present or future applicable federal, state or other statute
or law, Lessor shall be entitled to invoke any and all rights and remedies
available to it under such bankruptcy code, statute, law or this Lease,
including, without limitation, such rights and remedies as may be necessary to
adequately protect Lessor's right, title and interest in and to the Premises or
any part thereof and/or adequately assure the complete and continuous future
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performance of Lessee's obligations under this Lease. Adequate protection of
Lessor's right, title and interest in and to the Premises and adequate assurance
of the complete and continuous future performance of Lessee's obligations under
this Lease, shall include, without limitation, the following requirements:
(a) that Lessee shall comply with all of its obligations under this
Lease;
(b) that Lessee shall pay to Lessor, on the first day of each month
occurring subsequent to the entry of such order or the effective date of such
stay, a sum equal to the amount by which the Premises diminished in value during
the immediately preceding monthly period, but, in no event, an amount which is
less than the aggregate Rental payable for such monthly period;
(c) that Lessee shall continue to use the Premises in the manner
required by this Lease;
(d) that Lessor shall be permitted to supervise the performance of
Lessee's obligations under this Lease;
(e) that Lessee shall hire, at its sole cost and expense, such
security personnel as may be necessary to insure the adequate protection and
security of the Premises;
(f) that Lessee pay to Lessor within thirty (30) days after entry of
such order or the effective date of such stay, as partial adequate protection
against future diminution in value of the Premises and adequate assurance of the
complete and continuous future performance of Lessee's obligations under this
Lease, a security deposit in an amount acceptable to Lessor, but in no event
less than the Rental payable hereunder for the then current lease year;
(g) that Lessee has and will continue to have unencumbered assets
after the payment of all secured obligations and administrative expenses to
assure Lessor that sufficient funds will be available to fulfill the obligations
of Lessee under this Lease;
(h) that Lessor be granted a security interest acceptable to Lessor
in property of Lessee to secure the performance of Lessee's obligations under
this Lease; and
(i) that if Lessee's trustee, Lessee or Lessee as
debtor-in-possession assumes this Lease and proposes to assign the same
(pursuant to Section 365 of the Bankruptcy Code) to any person who shall have
made a bona fide offer to accept an assignment of this Lease on terms acceptable
to the trustee, Lessee or Lessee as debtor-in-possession, then notice of such
proposed assignment, setting forth (x) the name and address of such person, (y)
all of the terms and conditions of such offer, and (z) the adequate assurance to
be provided Lessor to assure such person's future performance under the Lease,
including, without limitation, the assurances referred to in Section 365 of the
Bankruptcy Code, shall be given to Lessor by the trustee, Lessee or Lessee as
debtor-in-possession no later than twenty (20) days after receipt by the
trustee, Lessee or Lessee as debtor-in-possession of such offer, but in any
event no later than ten (10) days prior to the date that the trustee, Lessee or
Lessee as debtor-in-possession shall make application to a court of competent
jurisdiction for authority and approval to enter into such assignment and
assumption, and Lessor shall thereupon have the prior right and option, to be
exercised by notice to the trustee, Lessee or Lessee as debtor-in-possession,
given at any time prior to the
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effective date of such proposed assignment, to accept an assignment of this
Lease upon the same terms and conditions and for the same consideration, if
any, as the bona fide offer made by such person, less any brokerage
commissions which may be payable out of the consideration to be paid by such
person for the assignment of this Lease.
VII.19 ADDITIONAL RIGHTS OF LESSOR.
(a) If Lessee shall be in default in the performance of any of its
obligations hereunder, Lessee shall pay to Lessor, on demand, all expenses
incurred by Lessor as a result thereof, including reasonable attorneys' fees and
expenses (including those incurred in connection with any appellate
proceedings). If Lessor shall be made a party to any litigation commenced
against Lessee and Lessee shall fail to provide Lessor with counsel approved by
Lessor and pay the expenses thereof, Lessee shall pay all costs and reasonable
attorneys' fees and expenses incurred by Lessor in connection with such
litigation (including such fees and expenses incurred in connection with any
appellate proceedings).
(b) If there shall be an Event of Default under this Lease, then
Lessor, without waiving or releasing Lessee from any obligation of Lessee
contained in this Lease, may (but shall be under no obligation to) perform such
obligations on Lessee's behalf.
(c) All reasonable sums paid by Lessor and all costs and expenses
(including, without limitation, reasonable attorneys' fees and disbursements)
incurred by Lessor in connection with its performance under Section 7.19(b) of
any of Lessee's obligations, shall be paid by Lessee to Lessor on demand as
additional Rental. Any payment or performance by Lessor pursuant to the
foregoing provisions of Section 7.19(b) shall not be or be deemed to be a waiver
or release of breach or default of Lessee with respect thereto or of the right
of Lessor to terminate this Lease, institute summary proceedings and/or take
such other action as may be permissible hereunder if an Event of Default by
Lessee shall have occurred.
65535RT65535CLE VIII
NOTICES; ESTOPPEL CERTIFICATES; REPORTING REQUIREMENTS
VIII.1 NOTICES. All notices, demands, requests, consents, approvals,
reports or other communications required or permitted to be given pursuant to
this Lease shall be in writing and shall be deemed given: (i) when delivered
by hand (including, without limitation, delivery by any private or public
courier service); (ii) when delivered by first class, certified mail, return
receipt requested, postage prepaid (or when delivery is attempted if such
delivery is refused by recipient); or (iii) when sent by tested telex,
telecopier or other facsimile reproduction equipment, or e-mail to the
following addresses (or such other address as the recipient party may
hereafter specify
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in the same manner):
If to Lessor, to it at:
c/o Steinway Musical Instruments, Inc.
800 South Street, Suite 425
Waltham, Massachussetts 02453-1472
Attention: Dennis M. Hanson, Esq.
Fax: (781) 894-9803
E-Mail: [email protected]
with a copy to:
Milbank, Tweed, Hadley & McCloy LLP
1 Chase Manhattan Plaza
New York, New York 10005
Attention: Barbara J. Briggs, Esq.
Fax: (212) 530-5219
E-Mail: [email protected]
If to Lessee, to it at:
c/o Wexford Management LLC
411 West Putnam Avenue
Greenwich, Connecticut 06830
Attention: Joseph M. Jacobs
Fax: (203) 862-7320
E-Mail: [email protected]
with a copy to:
Proskauer Rose LLP
1585 Broadway
New York, New York 10036
Attention: Wendy J. Schriber, Esq.
Fax: (212) 969-2900
E-Mail: [email protected]
However, Lessor and Lessee shall have the right from time to time to change
their respective addresses and persons to whom copies of notices shall be sent
by not less than five (5) days written notice to the other party.
VIII.2 CERTIFICATES OF LESSOR AND LESSEE. Either party shall, within
twenty (20) days after each and every request by the other party, execute,
acknowledge and deliver to such requesting party a statement in writing:
(a) certifying that this Lease is unmodified and in full force and
effect (or if there have been modifications, that the same, as modified, is in
full force and effect and stating the modifications);
(b) stating whether or not to the best knowledge of the certifying
party (without independent investigation) (i)
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there is a continuing default by the other party in the performance or
observance of any covenant, agreement or condition contained in this Lease to
be performed or observed by such other party, or (ii) there shall have
occurred any event which, with the giving of notice or passage of time or
both, would become such a default, and, if so, specifying each such default
or occurrence of which such certifying party shall have knowledge;
(c) stating whether or not such certifying party has received from
the other party a notice of default by such certifying party in the performance
or observance of any covenant, agreement or condition contained in this Lease to
be performed or observed by such certifying party;
(d) stating whether this Lease commenced and the Term;
(e) certifying that Rental obligations have commenced, and specifying
the dates through which the Basic Rent and all other Rentals have been paid;
(f) stating whether or not there is pending any action, arbitration
or proceeding between Lessor and Lessee arising under this Lease, and, if so,
the nature thereof;
(g) if the certifying party is Lessee, certifying that Lessee has no
counterclaims, defenses or right to offset against any amounts due to Lessor
under this Lease, and that Lessee is not entitled to any concessions, rebates or
any reductions in Basic Rent or other Rental under this Lease for whatever
reason as of the date the statement is given;
(h) stating that the addresses for Notices are as set out in this
Lease or as stated in the statement; and
(i) certifying that the statement shall be binding upon such
certifying party and may be relied upon by (x) the holder of any Fee or
Leasehold Mortgage, (y) any assignee or purchaser of all or a portion of the
requesting party's interest in the Premises or this Lease, and/or (z) any
purchaser of any partnership interest, stock or membership interest in the
requesting party.
VIII.3 REPORTING REQUIREMENTS; BOOKS AND RECORDS.
(a) During the Term of this Lease, within ninety (90) days after the
close of its fiscal year, Lessee will deliver to Lessor annual financial
statements for the Premises for such fiscal year, which financial statements
shall be prepared using generally accepted accounting principals, and shall
include (i) a balance sheet, (ii) a statement of profit and loss, (iii) a
statement of sources and uses of funds, (iv) a rent roll indicating the identity
of the tenant, the square footage and location of the space leased, the rent and
escalations payable (with relevant formulas and base years included), any
special rights or obligations of landlord and/or tenant under such leases,
including, without limitation, any free rent, landlord's work, tenant
improvement allowances or other tenant inducements, options to renew, expand,
surrender or terminate and such other information as Lessor shall reasonably
request, and (v) such other financial statements as Lessor shall reasonably
request, setting forth, in each case, in comparative form, figures for the
preceding year. All such annual financial statements shall be
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audited by an independent certified public accountant reasonably satisfactory
to Lessor, and shall be accompanied by the certificate of a principal
financial or accounting officer of Lessee (or if Lessee is a limited
liability company, of its managing member, or if Lessee is a partnership, of
its general partner) (each, an "Officer's Certificate"), dated within five
(5) days of the delivery of such statements to Lessor, stating that such
financial statements are true and correct in all material respects and
stating that Lessee knows of no Event of Default which has occurred and is
continuing, or, if any such Event of Default has occurred and is continuing,
specifying the nature and period of existence thereof and what action Lessee
has taken or proposes to take with respect thereto, and, except as otherwise
specified, stating that to Lessee's knowledge Lessee has fulfilled all its
material obligations under this Lease which are required to be fulfilled on
or prior to the date of such certificate. During the Term of this Lease,
Lessee will deliver to Lessor, from time to time, within fifteen (15) days of
Lessee's receipt thereof, copies of any such monthly, quarterly or other
interim financial statements and other financial information with respect to
the Premises as shall be prepared by, or for the benefit of, Lessee by
Lessee, Lessee's property manager and/or Lessee's financial advisors.
(b) From and after the expiration or earlier termination of the term
of this Master Lease, Lessor and its agents and designees may, upon reasonable
notice to Lessee and at reasonable times, examine Lessee's books and records
relating to the Premises, the Improvements and the operation, maintenance and
repair thereof.
65535RT65535CLE IX
SURRENDER AT THE END OF TERM
IX.1 CONDITION OF PREMISES. On the Expiration Date or earlier termination
of this Lease, Lessee shall at no cost or expense to Lessor, surrender and
deliver to Lessor or its designee the Premises (a) in such condition as the
Premises is required to be maintained pursuant to this Lease, except for damage
by fire or other casualty or condemnation or other taking that Lessee is
required under this Lease or in any other document, instrument or agreement to
repair or restore but, despite reasonable diligence, has been unable to repair
or restore (provided that all insurance and/or condemnation proceeds which have
not been applied to such restoration shall have been paid to Lessor, plus any
additional sums required to complete such restoration) and (b) free and clear of
all lettings, occupancies, liens and encumbrances other than those, if any,
existing at the date hereof, created by Lessor or which lettings and occupancies
by their express terms and conditions extend beyond the Expiration Date and
which Lessor shall have consented and agreed, in writing, may extend beyond the
end of the Term, without any payment or allowance whatever by Lessor. Lessee
hereby waives any notice now or hereafter required by law with
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respect to vacating the Premises on any such termination date.
IX.2 OTHER REQUIREMENTS. If Lessee delivers the Premises to Lessor
pursuant to the provisions of Section 9.1, on the last day of the Term or upon
any earlier termination of this Lease, or upon re-entry by Lessor upon the
Premises pursuant to Article VII hereof, Lessee shall deliver to Lessor,
Lessee's executed counterparts of all Subleases and any service and maintenance
contracts then affecting the Premises, true and complete maintenance records for
the Premises, all original licenses and permits then pertaining to the Premises,
duly executed and acknowledged written instruments, documents, assignments,
forms and affidavits as Lessor shall reasonably request in form and substance
reasonably satisfactory to Lessor or its designee surrendering to Lessor or its
designee all of Lessee's right, title and interest in and to the Improvements
and any rights of Lessee with respect thereto, copies of Lessee's relevant books
and records relating to the Premises and the operation, maintenance and repair
thereof and, to the extent in Lessee's possession or control, permanent or
temporary Certificates of Occupancy then in effect for the Improvements and all
warranties and guarantees then in effect which Lessee has received in connection
with any work or services performed or equipment installed in the Improvements,
together with a duly executed assignment thereof to Lessor.
IX.3 APPORTIONMENTS. The following shall be apportioned between Lessee and
Lessor with respect to the Premises as of 11:59 P.M. on the day immediately
preceding the date of the expiration or earlier termination of this Lease (other
than termination for any default by Lessee) (the "Apportionment Date"), and the
net amount thereof shall be paid by Lessor to Lessee or by Lessee to Lessor, as
the case may be, within ten (10) days after the Apportionment Date, to the
extent practicable, subject to reapportionment from time to time within six (6)
months after the Apportionment Date to the extent that any amount to be
apportioned hereunder cannot reasonably be determined on the Apportionment Date:
(a) real property taxes and assessments (or installments thereof), on
the basis of the fiscal year for which payable;
(b) water rates and charges, except those required to be paid
directly by tenants in occupancy of portions of the Premises to the entity
imposing same;
(c) sewer taxes and rents, except those required to be paid directly
by tenants in occupancy of portions of the Premises to the entity imposing same;
(d) annual permit, license and inspection fees, if any, on the basis
of the fiscal year for which levied, if the rights with respect thereto are
transferable to Lessor;
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(e) fuel, if any, at the cost per gallon or cubic foot most recently
charged to Lessee, based on the supplier's measurements thereof, plus sales
taxes thereon;
(f) deposits on account with any utility company servicing the
Premises, to the extent transferred to Lessor;
(g) fixed, escalation and other rent of tenants in occupancy of the
Premises, if, as, and when collected (the "Sublease Rents"
(h) amounts deposited with the holder of any Fee Mortgage or any
Leasehold Mortgagee for escrows of real estate taxes and insurance premiums; and
(i) all other items customarily apportioned in connection with
similar properties similarly located.
IX.4 FISCAL YEAR OF ASSESSMENT. Apportionment of real property taxes,
water rates and charges and sewer taxes and rents shall be made on the basis of
the fiscal year for which assessed. If the Apportionment Date shall occur
before the real property tax rate, water rates and charges and sewer taxes and
rents are fixed, the apportionment of taxes shall be made on the basis of the
real property tax rate, water rates and charges and sewer taxes and rents for
the preceding year applied to the latest assessed valuation. After the real
property taxes, water rates and charges and sewer taxes and rents are finally
fixed, Lessor and Lessee shall make a recalculation of the apportionment of
same, and Lessor or Lessee, as the case may be, shall make an appropriate
payment to the other based upon such recalculation.
IX.5 COLLECTION OF RENTS AFTER TERM. If Lessee is entitled, in accordance
with the provisions of this Lease, to all or any portion of any arrearages
regarding the Sublease Rents, Lessee shall have the right to commence any and
all appropriate legal proceedings (other than any proceeding to terminate the
applicable sublease or otherwise recover possession of the space demised
thereunder) to collect such arrearages after the Apportionment Date and Lessor
shall cooperate with Lessee in connection with such proceedings (at no cost to
Lessor).
IX.6 SURVIVAL. The provisions of this Article 9 shall survive the
expiration or termination of this Lease and, in the case of Lessee' obligations
hereunder, shall not be limited as provided in Section 10.4.
65535RT65535CLE X
MISCELLANEOUS
X.1 NO MERGER.
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(a) There shall be no merger of this Lease or of the leasehold estate
hereby created with the fee estate in the Land by reason of the fact that the
same person acquires or holds, directly or indirectly, this Lease or the
leasehold estate hereby created or any interest herein or in such leasehold
estate as well as the fee estate in the Land or any interest in such fee estate.
(b) There shall be no merger of this Lease or of the leasehold estate
hereby created with the leasehold estate created by any Sublease entered into
between Lessor and Lessee by reason of the fact that the same person acquires or
holds, directly or indirectly, this Lease or the leasehold estate hereby created
or any interest herein or in such leasehold estate as well as the interest of
the Subtenant under such Sublease, it being understood and agreed that the
provisions of this Agreement shall not diminish or otherwise effect the
responsibilities of Lessor, as lessee under any such Sublease.
X.2 SEPARABILITY; BINDING EFFECT. Each provision hereof shall be separate
and independent and the breach of any such provision by Lessor shall not
discharge or relieve Lessee from any of its obligations hereunder. Each
provision hereof shall be valid and shall be enforceable to the extent not
prohibited by law. If any provision hereof or the application thereof to any
person or circumstance shall to any extent be invalid or unenforceable, the
remaining provisions hereof, 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. All provisions contained in this Lease shall be
binding upon, inure to the benefit of, and be enforceable by, the respective
successors and assigns of Lessor and Lessee to the same extent as if each such
successor and assign were named as a party hereto. This Lease may not be
modified without the prior written consent of the holder of any Fee Mortgage and
any Leasehold Mortgage (other than any amendment which confirms the amount of
any CPI Escalation as provided in Section 11.2). This Lease shall be governed
by and interpreted in accordance with the laws of the State of New York.
X.3 HEADINGS. The headings to the various paragraphs and Schedules of
this Lease have been inserted for reference only and shall not to any extent
have the effect of modifying the express terms and provisions of this Lease.
X.4 IMMUNITY FROM LIABILITY.
(a) Notwithstanding anything to the contrary provided in this Lease,
each and every term, covenant, condition and provision of this Lease is hereby
made specifically subject to the provisions of this Paragraph 10.4, except as
expressly provided to the contrary in Section 9.6 and in Section 10.4(b) below.
It is specifically understood and agreed that (except to the extent of the
interest of Lessor or Lessee, as the case may be, in the Premises and any rents,
issues, profits, proceeds or awards thereof or relating thereto, other than, in
the case of
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Lessee, any such interest of Lessee which arises solely by Lessee's
interest as fee owner of the Land and lessor under the Ground Lease) there shall
be no personal liability against Lessor (which shall for purposes of this
Paragraph 10.4 include the holder of any Leasehold Mortgage as mortgagee or
mortgagee in possession) or Lessee or any partner, member, shareholder, officer
or director of Lessor or Lessee or any partner, member, shareholder, officer or
director of any such partner, member, shareholder, officer or director or any
successor in interest of any of the foregoing, or any members or beneficial
owners of Lessor or Lessee whether the same be a corporation, individual, joint
venture, tenancy in common, partnership or otherwise, or against any officer,
director, or shareholder thereof, or any other person or entity for the
performance of any term, covenant, condition or provision of this Lease for any
claim based therein or otherwise in respect thereof. Lessor and Lessee shall
look solely to the interest of the other in the Premises for the satisfaction of
each and every remedy of such party in the event of any breach of any of the
terms, covenants and conditions of this Lease, such exculpation of personal
liability to be absolute and without any exception whatsoever.
(b) Notwithstanding anything in Section 10.4(a) above to the
contrary, in the event that Lessor or Lessee shall misapply, misappropriate or
otherwise fail to deliver to the party entitled to receive same under this
Lease, any insurance proceeds, condemnation awards or other similar funds, the
limitation on liability described in Section 10.4(a) shall not apply, and Lessor
or Lessee, as the case may be, shall be fully and personally liable to the other
party to the extent of any such funds so misapplied, misappropriated or
otherwise failed to be delivered to the party entitled thereto under this Lease.
X.5 COUNTERPARTS. This Lease may be executed in two or more counterparts
and shall be deemed effective when and only when one or more of such
counterparts shall have been signed by or on behalf of each of the parties
hereto (although it shall not be necessary that any single counterpart be signed
by or on behalf of each of the parties hereto, and all such counterparts shall
be deemed to constitute but one and the same instrument) and shall have been
delivered by each of the parties to the other.
X.6 RECORDATION. Lessor and Lessee, each upon the written request of the
other shall execute, acknowledge and deliver a memorandum of this Lease, and of
each modification of this Lease relating to a term set forth in any prior
memorandum, in proper form for recordation. Neither party shall record this
Lease without the prior consent of the other party.
X.7 TIME OF THE ESSENCE. Notwithstanding anything in this Lease to the
contrary, time shall be of the essence with respect to the performance by Lessor
and Lessee of all of the terms, conditions, covenants and obligations of Lessor
and Lessee hereunder.
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X.8 DEEMED CONSENT OF GROUND LESSOR. Notwithstanding anything in this
Lease to the contrary, if Lessee requests the consent or approval of Lessor to
any matter pursuant to this Lease for which the consent of Lessee, as the lessor
under the Ground Lease, shall also be required, Lessee's submission of such
request for consent or approval to Lessor shall be deemed, for all purposes
hereunder, to constitute Lessee's consent or approval, as lessor under the
Ground Lease, to such matter.
65535RT65535CLE XI
CPI ESCALATION
XI.1 CALCULATION OF CPI ESCALATION. Notwithstanding anything in this Lease
to the contrary, any fixed dollar amount referred to in this Lease (including,
by way of example, any insurance requirement, threshold for Material
Alterations, minimum Fair Market Value for the Premises, etc., but specifically
excluding the amount of any fixed Basic Rent payment provided for herein) (each,
a "Fixed Amount") shall be increased on the fifth anniversary of the
Commencement Date (the "CPI Adjustment Date"), by multiplying such Fixed Amount
by the percentage increase, if any, in the Consumer Price Index from that in
effect on the Commencement Date to that in effect on the CPI Adjustment Date.
For purposes hereof, "Consumer Price Index" shall mean the Consumer Price Index
for All Urban Consumers published by the Bureau of Labor Statistics of the
United States Department of Labor, New York, N.Y. - Northeastern N.J. Area, All
Items (1982-84 = 100), or any successor index thereto, appropriately adjusted.
In the event that the Consumer Price Index is converted to a different standard
reference base or otherwise revised, the determination of adjustments provided
for herein shall be made with the use of such conversion factor, formula or
table for converting the Consumer Price Index as may be published by the Bureau
of Labor Statistics or, if said Bureau shall not publish the same, then with the
use of such conversion factor, formula or table as may be published by
Prentice-Hall, Inc., or any other nationally recognized publisher of similar
statistical information. If the Consumer Price Index ceases to be published,
and there is no successor thereto, such other index as Lessor and Lessee shall
agree upon in writing shall be substituted for the Consumer Price Index. If
Lessor and Lessee are unable to agree as to such substituted index, such matter
shall be submitted to the American Arbitration Association or any successor
organization for determination in accordance with the regulations and procedures
thereof then obtaining for commercial arbitration.
XI.2 CONFIRMATION OF CPI ESCALATIONS. Within thirty (30) days after the
CPI Adjustment Date, Lessor shall prepare, and Lessor and Lessee shall each
execute, a written amendment to this Lease setting forth the escalated amount of
each Fixed Amount and
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confirming the method of calculation thereof.
Notwithstanding the foregoing, the failure of either party to execute such
amendment shall not affect the increase in each Fixed Amount resulting from the
increase in the Consumer Price Index as provided in Section 11.1 above.
[END OF TEXT]
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[EXECUTION PAGE]
IN WITNESS WHEREOF, the parties hereto have caused this Master Lease
to be executed as of the date first above written.
LESSEE:
111 WEST 57TH STREET ASSOCIATES, L.P.
By: JASIE, INC., General Partner
By: /s/ Wendy Schriber
---------------------------------
Name: Wendy Schriber
Title: Vice President
LESSOR:
STEINWAY, INC.
By: /s/ Dennis M. Hanson
----------------------------------
Name: Dennis M. Hanson
Title: V.P. and C.F.O.
