SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
of the Securities Exchange Act of 1934
Commission
For the Quarterly Period Ended September 30, 1998 File No. 33-76716
------------------ --------
General Media, Inc.
----------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 13-3750988
-------------------------------- ---------------------
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification Number)
277 Park Avenue, New York, NY 10172
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(Address of Principal Executive Offices) Zip Code
(212) 702-6000
--------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the Registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes |X| No |_|
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at November 13, 1998
----- --------------------------------
Common stock, $.01 par value 475,000
<PAGE>
GENERAL MEDIA, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
PAGE
----
PART I-FINANCIAL INFORMATION
Item 1. Financial Statements 3
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations 8
PART II- OTHER INFORMATION
Item 1. Legal Proceedings 19
Item 2. Changes in Securities N/A
Item 3. Defaults Upon Senior Securities N/A
Item 4. Submission of Matters to a Vote
of Security Holders N/A
Item 5. Other Information N/A
Item 6. Exhibits and Reports on Form 8-K 19
Signatures 20
Exhibit Index 21
2
<PAGE>
Item 1. Financial Statements
General Media, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(unaudited)
(amounts in thousands)
<TABLE>
<CAPTION>
Nine months ended Three months ended
September 30, September 30,
------------ ------------
1997 1998 1997 1998
-------- -------- -------- --------
(restated-note2) (restated-note2)
<S> <C> <C> <C> <C>
Net revenues
Publishing
Newsstand $ 34,272 $ 35,049 $ 11,048 $ 11,389
Advertising 19,490 19,907 $ 6,542 $ 6,456
Subscription 8,079 9,020 $ 2,571 $ 3,018
Other 2,963 2,551 $ 961 $ 745
Entertainment 11,034 15,136 $ 4,309 $ 4,315
-------- -------- -------- --------
75,838 81,663 25,431 25,923
-------- -------- -------- --------
Operating costs and expenses
Publishing-production, distribution and editorial 33,915 33,774 10,934 11,039
Entertainment- direct costs 4,979 2,043 1,687 570
Selling, general and administrative 31,404 38,295 10,661 13,008
Rent expense from affiliated companies 409 400 162 163
Depreciation and amortization 1,401 1,374 467 459
-------- -------- -------- --------
Total operating costs and expenses 72,108 75,886 23,911 25,239
-------- -------- -------- --------
Income from operations 3,730 5,777 1,520 684
-------- -------- -------- --------
Other income (expense)
Interest expense (7,430) (7,441) (2,476) (2,477)
Interest income 465 386 155 107
-------- -------- -------- --------
Net Loss (3,235) (1,278) (801) (1,686)
Accumulated deficit-beginning of period(see note 2) (73,299) (75,214) (75,733) (75,206)
-------- -------- -------- --------
Less: Cash dividend paid (400)
Accumulated deficit-end of period ($76,534) ($76,892) ($76,534) ($76,892)
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE>
General Media, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(unaudited)
(amounts in thousands)
<TABLE>
<CAPTION>
December 31, September 30,
1997 1998
----------- ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 7,308 $ 6,320
Accounts receivable, net of allowance
for doubtful accounts 9,177 9,777
Inventories 5,097 4,706
Prepaid expenses and other current assets 3,580 3,536
Due from affiliated companies 1,148 1,633
Loan to shareholder 732 868
-------- --------
Total current assets 27,042 26,840
PROPERTY AND EQUIPMENT - AT COST;
net of accumulated depreciation 3,793 3,592
OTHER ASSETS
Intangible assets, net 3,194 2,731
Deferred subscription aquisition costs 3,075 2,697
Deferred debt issuance costs, net 2,988 2,245
Loan to affiliated company 1,086 1,086
Other 1,449 3,651
-------- --------
11,792 12,410
-------- --------
$ 42,627 $ 42,842
======== ========
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES
Accounts payable $ 13,909 $ 12,618
Deferred subscription revenue 11,748 12,733
Other liabilities and accrued expenses 4,804 7,761
-------- --------
Total current liabilities 30,461 33,112
SENIOR SECURED NOTES 79,467 79,601
UNEARNED REVENUE 4,699 3,807
COMMITMENTS AND CONTINGENCIES
REDEEMABLE WARRANTS 1,791 1,791
STOCKHOLDERS' DEFICIENCY
Common stock, $.01 par value; 1,000,000
shares; issued and outstanding, 475,000 shares 5 5
Capital in excess of par value 1,418 1,418
Accumulated distributions, net of retained earnings (75,214) (76,892)
-------- --------
(73,791) (75,469)
-------- --------
$ 42,627 $ 42,842
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE>
General Media, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(unaudited)
(amounts in thousands)
Nine months ended
September 30,
-------------
1997 1998
------- -------
(restated-note2)
Cash flows from operating activities
Net loss ($3,235) ($1,278)
Adjustments to reconcile net loss to
cash used in operating activities
Depreciation and amortization 1,401 1,374
Amortization of debt issuance costs and discounts 875 877
Net change in operating assets and liabilities 4,844 (231)
------- -------
Net cash provided by operations 3,885 742
------- -------
Cash flows from investing activities
Capital expenditures (248) (709)
------- -------
Net cash used in investing activities (248) (709)
------- -------
Cash flows from financing activities
Advances to affiliated companies (515) (955)
Repayments by affiliated companies 470
Dividends paid (400)
Loan to shareholder (445) (136)
------- -------
Net cash used in financing activities (960) (1,021)
------- -------
Net (decrease)increase in cash and cash equivalents 2,677 (988)
Cash and cash equivalents at beginning of period 7,164 7,308
------- -------
Cash and cash equivalents at end of period $ 9,841 $ 6,320
======= =======
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE>
General Media, Inc. and Subsidiaries
Notes to Condensed Consolidated
Financial Statements (Unaudited)
(amounts in thousands)
1. Basis of Preparation
General Media, Inc. (the "Company") is a wholly-owned subsidiary of General
Media International, Inc. ("GMI"). The accompanying unaudited consolidated
financial statements have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments, consisting only of normal, recurring adjustments
considered necessary for a fair presentation, have been included. The balance
sheet information for December 31, 1997 has been derived from the audited
financial statements at that date.
2. Inventories
Inventories consist of the following:
December 31, September 30,
1997 1998
----------- ------------
Paper and printing $2,063 $1,713
Editorials and pictorial 2,210 2,143
Film and programming costs 824 850
------ ------
$5,097 $4,706
====== ======
In 1997, the Company changed its method of determining the cost of paper and
printing inventories from the LIFO method to the FIFO method. Under the current
economic environment of low inflation, the Company believes that the FIFO method
will result in a better measurement of operating results. This change has been
applied by retroactively restating the accompanying consolidated financial
statements. The effect of the restatement was to decrease net loss for the nine
months ended September 30, 1997 by $220,000.
3. Management Charge
The Company incurs shared common indirect expenses for the benefit of GMI and
affiliated companies, including accounting, personnel, management information
systems, employee relations and other administrative services. In addition, the
Company is charged by GMI and its subsidiaries for the benefit of other
corporate overhead costs, executive compensation and other costs which
principally relate to office space. These allocations are based on factors
determined by management of the Company to be appropriate for the particular
item, including estimated relative time commitments of managerial personnel,
relative number of employees and relative square footage of all space occupied.
Management believes that the allocation method and amounts are reasonable.
6
<PAGE>
General Media, Inc. and Subsidiaries
Notes to Condensed Consolidated
Financial Statements (Unaudited)
(amounts in thousands)
4. Senior Secured Notes
In December 1993, the Company issued $85 million of Senior Secured Notes (the
"Notes") at an issue price equal to 99.387% of the principal amount of the
Notes. The Notes mature on December 31, 2000 and bear interest at 10-5/8% per
annum, which is payable semiannually. In July 1995, the Company repurchased $5.0
million face amount of its outstanding Notes, including 5,000 warrants, for cash
of $4.1 million.
The Notes are fully and unconditionally guaranteed, jointly and severally, by
each of the Company's direct and indirect subsidiaries (the "Subsidiary
Guarantors"). Each of the Subsidiary Guarantors is a wholly-owned subsidiary of
the Company. The Company is a holding company with no separate assets,
liabilities or operations other than its investment in its subsidiaries and the
Notes. Financial statements of the Subsidiary Guarantors have not been presented
because the aggregate assets, liabilities, operations and equity of the
Subsidiary Guarantors are substantially equivalent to the assets, liabilities,
operations and equity of the Company on a consolidated basis.
The indenture for the Notes (the "Indenture") contains covenants which, among
other things, (i) restrict the ability of the Company to dispose of assets,
incur indebtedness, create liens and make certain investments, (ii) require the
Company to make an offer to purchase outstanding notes if it fails to maintain a
consolidated tangible net worth (deficiency) of no more than ($81.6) million for
two consecutive fiscal quarters, and (iii) limits the Company's ability to pay
dividends unless certain financial performance tests are met. The Subsidiary
Guarantors are permitted to pay intercompany dividends on their shares of common
stock. The ability of the Company and its subsidiaries to incur additional debt
is severely limited by such covenants. As of September 30, 1998, the Company was
in compliance with all such covenants.
Should the Company continue to incur losses, such that the Company's net worth
(deficiency) declines below ($81.6) million for two consecutive quarters, the
Company would be required to purchase on the last day of the next following
fiscal quarter, ten percent of the principal amount of the Notes then
outstanding at a price of 101% of the principal amount thereof.
5. Statement of Cash Flows
Cash payments made for interest during the nine months ended September 30, 1998
and 1997 were $4.4 million in each such period.
7
<PAGE>
Item 2.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Several of the Company's businesses can experience fluctuations in quarterly
performance. For example, newsstand revenues vary from issue to issue with
higher revenues for special and higher priced issues and any issue including
editorial or pictorial features that generate unusual public interest. In
addition, revenues from the licensing of the Company's trademarks, products and
videos vary with the timing of new agreements. As a result, the Company's
performance in any quarterly period is not necessarily reflective of full-year
results.
The Company is currently engaged in activities in two industry segments:
publishing and entertainment. The publishing segment of the Company is engaged
in the publication of Penthouse magazine and six affiliate magazines (the
"Affiliate Publications" and, together with Penthouse magazine, the "Mens
Magazines"), the licensing of the Penthouse brand name to publishers in foreign
countries and the publication of four specialty automotive magazines; Four
Wheeler, Stock Car Racing, Open Wheel and Drag Racing Monthly (the "Automotive
Magazines"). The entertainment segment of the Company produces a number of
adult-oriented entertainment products, including pay-per-call telephone lines,
videocassettes, pay-per-view programming, interactive products and internet
services.
Effective January 1, 1998, the Company changed its presentation of Management's
Discussion and Analysis of Financial Condition and Results of Operations,
whereby income from operations of each business unit excludes corporate
administrative expenses. Corporate administrative expenses includes executive,
human resources, finance and accounting, management information systems and
various other expenses. The 1997 periods have been restated to conform to the
1998 presentation.
Results of Operations (Three Months Ended September 30, 1998 vs. 1997)
The Company's revenues were $25.9 million for the three months ended September
30, 1998, compared to revenues of $25.4 million for the three months ended
September 30, 1997, an increase of $0.5 million. Newsstand revenues were $11.4
million and $11.0 million for the three months ended September 30, 1998 and
1997, respectively, an increase of $0.4 million. Newsstand revenues for Mens
Magazines were $10.2 and $9.9 million for the three months ended September 30,
1998 and 1997, respectively, an increase of $0.3 million. Newsstand revenues
from the Automotive Magazines were $1.1 million for the three months ended
September 30, 1998 and 1997. Advertising revenues were $6.5 million for the
three months ended September 30, 1998 and 1997. Advertising revenues from Mens
Magazines decreased $0.4 million and advertising revenues from Automotive
Magazines increased $0.4 million during the period. Subscription revenues were
$3.0 million and $2.6 million for the three months ended September 30, 1998 and
1997, respectively, an increase of $0.4 million. The increase in subscription
revenues is attributable to a $0.3 million increase in subscription revenues
from Mens Magazines and an increase of $0.1 million in Automotive Magazines.
Revenues for the Entertainment Segment were $4.3 million for the three months
ended September 30, 1998 and 1997. Revenues from the Company's video business
were $0.7 million for the three months ended September 30, 1998 and 1997.
Revenues from the Company's pay-per-call business were $0.5 million and $2.3
million for the three months ended September 30, 1998 and 1997, respectively, a
decrease of $1.8 million. Revenues from the Company's internet business were
$3.1 million and $1.3 million for the three months ended September 30, 1998 and
1997, respectively, an increase of $1.8 million.
8
<PAGE>
Item 2. (Continued)
Income from operations was $0.7 million for the three months ended September 30,
1998, compared to $1.5 million for the three months ended September 30, 1997.
Income from operations was positively impacted by increased revenues, as
discussed above. However, increased selling, general and administrative expenses
associated with increased sales, increased salary expense and increased
consulting and professional fees more than offset the increase in revenues
resulting in lower income from operations.
Net non-operating expenses were $2.3 million and $2.4 million for the three
months ended September 30, 1998 and 1997, respectively. Included in interest
expense is the amortization of debt issuance costs and discounts of $0.3 million
for the three months ended September 30, 1998 and 1997.
Net loss for the three months ended September 30, 1998 was ($1.7) million,
compared to ($0.8) million for the three months ended September 30, 1997, as a
result of the above discussed factors.
The net revenues and income from operations of the Company were as follows:
<TABLE>
<CAPTION>
Income
Net Revenue from operations
----------- ---------------
Three Three
Months Ended Months Ended
September 30, September 30,
----------------- --------------
1997 1998 1997 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Publishing Segment $ 21.1 $ 21.6 $ 3.5 $ 3.2
Entertainment Segment 4.3 4.3 1.7 2.2
------ ------ ----- -----
$ 25.4 $ 25.9 $ 5.2 $ 5.4
Corporate Administrative Expenses (3.7) (4.7)
------ ------ ----- -----
$ 25.4 $ 25.9 $ 1.5 $ 0.7
====== ====== ===== =====
</TABLE>
Publishing Segment
The net revenues and income from operations of the Publishing Segment were as
follows :
<TABLE>
<CAPTION>
Income
Net Revenues from operations
------------ ---------------
Three Three
Months Ended Months Ended
September 30, September 30,
----------------- --------------
1997 1998 1997 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Penthouse Magazine and
the Affiliate Publications $ 15.4 $ 15.5 $ 2.2 $ 2.2
Foreign edition licensing 0.6 0.5 0.4 0.4
Automotive Magazines 5.1 5.6 0.9 0.6
------ ------ ----- -----
$ 21.1 $ 21.6 $ 3.5 $ 3.2
====== ====== ===== =====
</TABLE>
9
<PAGE>
Item 2. (Continued)
Penthouse Magazine and the Affiliate Publications
Revenues for Penthouse magazine and the Affiliate Publications were $15.5
million and $15.4 million for the three months ended September 30, 1998 and
1997, respectively, an increase of $0.1 million. Newsstand revenue was $10.2
million and $9.9 million for the three months ended September 30, 1998 and 1997,
respectively, an increase of $0.3 million. The increase in newsstand revenue is
primarily attributable to a 16% increase in newsstand copies sold of Penthouse
magazine, partially offset by fewer issues of each Penthouse Comix, Penthouse
Letters and Girls of Penthouse magazines on sale during the 1998 period.
Advertising revenue was $3.1 million and $3.5 million for the three months ended
September 30, 1998 and 1997, respectively, a decrease of $0.4 million. The
decrease in advertising revenue is primarily attributable to a decrease in
advertising revenue in Penthouse magazine as well as decreased revenues due to
fewer issues of certain magazines on sale, as noted above, during the three
months ended September 30, 1998, as compared to the 1997 period. Subscription
revenue was $1.9 million and $1.6 million for the three months ended September
30, 1998 and 1997, respectively, an increase of $0.3 million. The increase in
subscription revenue is primarily attributable to increased copies sold during
the three months ended September 30, 1998, as compared to the 1997 period.
Publishing-production, distribution and editorial expenses were $8.2 million and
$8.3 million for the three months ended September 30, 1998 and 1997,
respectively, a decrease of $0.1 million. Paper costs were $3.2 million for the
three months ended September 30, 1998, compared to $3.1 million for the three
months ended September 30, 1997, an increase of $0.1 million. The increase is
due primarily to the increased cost of paper, partially offset by decreases due
to the reduced number of pages per issue and a decrease in copies printed of
certain publications as well as fewer issues of certain publications printed, as
discussed above, during the three months ended September 30, 1998, as compared
to the three months ended September 30, 1997. Print costs were $3.1 million for
the three months ended September 30, 1998 and 1997. Distribution costs were $1.2
million for the three months ended September 30, 1998, compared to $1.3 million
for the three months ended June 30, 1997, a decrease of $0.1 million. The
decrease is attributable to fewer copies being distributed . Editorial costs
were $0.8 million for the three months ended September 30, 1998 and 1997.
Selling, general and administrative expenses were $5.1 million for the three
months ended September 30, 1998, compared to $5.0 million for the three months
ended September 30, 1997, an increase of $0.1 million. The increase is primarily
attributable to the write off of an uncollectible advertising accounts
receivable of $0.4 million which arose through billings during the three months
ended September 30, 1998 in connection with the termination of the Company's
agreement with an advertising agency that had an exclusive arrangement to sell
audiotext advertising in the Company's magazines. The Company has entered into a
new agreement with another advertising agency on similar terms to that of the
prior agreement. Management believes the effects of the termination of the
advertising agency will have minimal effects on the results of the Company's
fourth quarter and future operations.
Foreign Edition Licensing
Revenues from licensing of foreign editions, which are included in other
revenue, were $0.5 million and $0.6 million for the three months ended September
30, 1998 and 1997, respectively, a decrease of $0.1 million. Selling, general
and administrative expenses were $0.1 million and $0.2 million for the three
month period ended September 30, 1998 and 1997, respectively.
10
<PAGE>
Item 2. (Continued)
Automotive Magazines
Revenues for the Automotive Magazines were $5.6 million and $5.1 million for the
three months ended September 30, 1998 and 1997, respectively, an increase of
$0.5 million. Newsstand revenues were $1.1 million for the three months ended
September 30, 1998 and 1997. Advertising revenues were $3.4 million and $3.1
million for the three months ended September 30, 1998 and 1997, respectively, an
increase of $0.3 million, resulting from an increase in advertising page rates,
as well as advertising revenue of $0.1 million generated from Four Wheeler
Television, which produced its first in a series of 13 cable television shows in
February 1998. Subscription revenues were $1.1 million and $1.0 million for the
three month period ended September 30, 1998 and 1997, respectively, an increase
of $0.1 million due to an increase in subscription copies sold.
Publishing-production, distribution and editorial expenses were $2.8 million and
$2.6 million for the three months ended September 30, 1998 and 1997,
respectively, an increase of $0.2 million. Paper costs were $1.2 million and
$1.0 million for the three months ended September 30, 1998 and September 30,
1997, respectively, an increase of $0.2 million. Paper costs increased due to an
increase in magazine copies printed, increased pages per copy and an increase in
the cost of paper. Print costs were $0.9 million and $1.0 million for the three
months ended September 30, 1998 and 1997, respectively, a decrease of $0.1
million. The decrease is primarily attributable to reduced printing costs in
1998 due to the renegotiation of the Company's printing contracts in the third
quarter of 1997. Distribution costs were $0.6 million and $0.5 million for the
three months ended September 30, 1998 and 1997, respectively, an increase of
$0.1 million due primarily to more magazine copies being distributed. Editorial
costs were $0.1 million for the three months ended September 30, 1998 and 1997.
Selling, general and administrative expenses were $2.1 million and $1.6 million
for the three months ended September 30, 1998 and 1997, respectively, an
increase of $0.5 million. The increase is primarily attributable to increased
subscription acquisition spending, increased salaries and promotional spending
during the three months ended September 30, 1998, as compared to the three
months ended September 30, 1997.
Entertainment Segment
Revenues from the Entertainment Segment were $4.3 million for the three months
ended September 30, 1998 and 1997. The Company's video business revenues were
$0.7 million for the three months ended September 30, 1998 and 1997. Revenues
from the Company's pay-per-call business were $0.5 million and $2.3 million for
the three months ended September 30, 1998 and 1997, respectively, a decrease of
$1.8 million. Effective January 1, 1998, the Company engaged a new service
bureau to process its pay-per-call business. Accordingly, revenues during 1998
were lower due to the transition and due to the arrangement with its new service
bureau whereby the Company receives a fixed rate per minute, on a net basis. The
arrangement with the Company's previous service bureau paid revenue on a gross
basis and the Company paid certain expenses directly. Under the new agreement
these expenses have been eliminated. The Company's internet business revenues
were $3.1 million and $1.3 million for the three months ended September 30, 1998
and 1997, respectively, an increase of $1.8 million. Internet revenues increased
due to increased revenues received from the sale of subscriptions to the
Company's "Private Collection", contained within the Company's internet site.
Revenues were also received from a new arrangement, whereby the Company receives
a minimum guaranteed revenue from another internet site "linked" to the
Company's internet site. Such arrangement began in April of 1997.
11
<PAGE>
Item 2. (Continued)
Direct costs were $0.5 million for the three months ended September 30, 1998,
compared to $1.6 million for the three months ended September 30, 1997, a
decrease of $1.1 million. The decrease is due to the change in service bureaus
processing the Company's pay-per-call business, as discussed above.
Selling, general and administrative expenses were $1.6 million and $1.0 million
for the three months ended September 30, 1998 and September 30, 1997,
respectively, an increase of $0.6 million. The increase is due primarily to
higher computer processing, personnel and commission expense relating to the
internet business increased revenues.
Corporate Administrative Expense
Corporate administrative expenses includes executive, human resources, finance
and accounting, management information systems and various other expenses.
Corporate administrative expenses were $4.7 million for the three months ended
September 30, 1998, compared to $3.7 million for the three months ended
September 30, 1997, an increase of $1.0 million. The increase is due to
increased salary expense of $0.5 million, increased legal and professional fees
of $0.4 million and increased insurance expense of $0.1 million.
Rent Expense From Affiliated Companies
Rent expense from affiliated companies represents charges from affiliated
companies for the use of the Company's executive offices. The charge is based
upon the Company's proportionate share of the operating expenses of such
offices. Rent expense from affiliated companies was $0.2 million for the three
months ended September 30, 1998 and 1997.
Results of Operations (Nine Months Ended September 30, 1998 vs. 1997)
The Company's revenues were $81.7 million for the nine months ended September
30, 1998, compared to revenues of $75.8 million for the nine months ended
September 30, 1997, an increase of $5.9 million. Newsstand revenues were $35.0
million and $34.3 million for the nine months ended September 30, 1998 and 1997,
respectively, an increase of $0.7 million. Newsstand revenues for Mens Magazines
were $31.3 and $30.7 million for the nine months ended September 30, 1998 and
1997, respectively, an increase of $0.6 million. Newsstand revenues from the
Automotive Magazines were $3.7 million and $3.5 million for the nine months
ended September 30, 1998 and 1997, respectively, an increase of $0.2 million.
Advertising revenues were $19.9 million and $19.5 million for the nine months
ended September 30, 1998 and 1997, respectively, an increase of $0.4 million.
Advertising revenues from Mens Magazines decreased $0.6 million and advertising
revenues from Automotive Magazines increased $1.0 million during the period.
Subscription revenues were $9.0 million and $8.1 million for the nine months
ended September 30, 1998 and 1997, respectively, an increase of $0.9 million.
The increase in subscription revenues is attributable to a $0.5 million increase
in subscription revenues from Mens Magazines and an increase of $0.4 million in
subscription revenues from Automotive Magazines. Revenues for the Entertainment
Segment were $15.1 million and $11.0 million for the nine months ended September
30, 1998 and 1997, respectively, an increase of $4.1 million. Revenues from the
Company's video business were $2.7 million and $2.3 million for the nine months
ended September 30, 1998 and 1997, respectively, an increase of $0.4 million.
Revenues from the Company's pay-per-call business were $2.1 million and $6.7
million for the nine months ended September 30, 1998 and 1997, respectively, a
decrease of $4.6 million. Revenues from the Company's internet business were
$10.3 million and $2.0 million for the nine months
12
<PAGE>
Item 2. (Continued)
ended September 30, 1998 and 1997, respectively, an increase of $8.3 million.
Income from operations was $5.8 million for the nine months ended September 30,
1998, compared to $3.7 million for the nine months ended September 30, 1997.
Income from operations was positively impacted by increased revenues, as
discussed above, which was partially offset by increased selling, general and
administrative expenses associated with increased sales and increased
advertising and promotional expenses.
Net non-operating expenses were $7.1 million and $7.0 million for the nine
months ended September 30, 1998 and 1997, respectively. Included in interest
expense is the amortization of debt issuance costs and discounts of $0.9 million
for the nine months ended September 30, 1998 and 1997.
Net loss for the nine months ended September 30, 1998 was ($1.3) million,
compared to ($3.2) million for the nine months ended September 30, 1997, as a
result of the above discussed factors.
The net revenues and income from operations of the Company were as follows:
<TABLE>
<CAPTION>
Income
Net Revenue from operations
----------- ---------------
Nine Nine
Months Ended Months Ended
September 30, September 30,
----------------- --------------
1997 1998 1997 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Publishing Segment $ 64.8 $ 66.5 $ 11.7 $ 9.8
Entertainment Segment 11.0 15.2 3.5 8.7
------ ------ ------ ------
$ 75.8 $ 81.7 $ 15.2 $ 18.5
Corporate Administrative Expenses (11.5) (12.7)
------ ------ ------ ------
$ 75.8 $ 81.7 $ 3.7 $ 5.8
====== ====== ====== ======
</TABLE>
Publishing Segment
The net revenues and income from operations of the Publishing Segment were as
follows :
<TABLE>
<CAPTION>
Income
Net Revenues from operations
------------ ---------------
Nine Nine
Months Ended Months Ended
September 30, September 30,
----------------- --------------
1997 1998 1997 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Penthouse Magazine and
the Affiliate Publications $ 47.3 $ 47.4 $ 7.1 $ 6.4
Foreign edition licensing 1.7 1.6 1.5 1.3
Automotive Magazines 15.8 17.5 3.1 2.1
------ ------ ------ -----
$ 64.8 $ 66.5 $ 11.7 $ 9.8
====== ====== ====== =====
</TABLE>
13
<PAGE>
Item 2. (Continued)
Penthouse Magazine and the Affiliate Publications
Revenues for Penthouse magazine and the Affiliate Publications were $47.4
million and $47.3 million for the nine months ended September 30, 1998 and 1997,
respectively, an increase of $0.1 million. Newsstand revenue was $31.3 million
and $30.7 million for the nine months ended September 30, 1998 and 1997,
respectively, an increase of $0.6 million. The increase in newsstand revenue is
primarily attributable to an increase in the number of newsstand copies sold of
Penthouse magazine. Advertising revenue was $9.4 million and $10.0 million for
the nine months ended September 30, 1998 and 1997, respectively, a decrease of
$0.6 million. The decrease in advertising revenue is primarily attributable to a
24% decrease in advertising pages sold in the Affiliate Publications during the
nine months ended September 30, 1998, compared to the 1997 period. Subscription
revenue was $5.9 million and $5.4 million for the nine months ended September
30, 1998 and 1997, respectively, an increase of $0.5 million. This increase is
attributable to an increase in subscription copies sold.
Publishing-production, distribution and editorial expenses were $25.1 million
and $26.2 million for the nine months ended September 30, 1998 and 1997,
respectively, a decrease of $1.1 million. Paper costs were $9.5 million and $9.4
million for the nine months ended September 30, 1998 and 1997, respectively, an
increase of $0.1 million. The increase is due to increased cost of paper offset
by the decrease in the number of pages per issue and copies printed of certain
publications. Print costs were $9.3 million for the nine months ended September
30, 1998, compared to $10.3 million for the nine months ended September 30,
1997, a decrease of $1.0 million. The decrease is due to the decrease in the
number of pages per issue and copies printed of certain publications, as well as
reduced printing costs due to the renegotiation of the Company's printing
contracts in the third quarter of 1997. Distribution costs were $3.7 million and
$3.9 million for the nine months ended September 30, 1998 and 1997,
respectively, a decrease of $0.2 million. The decrease is attributable to a
decrease in copies being distributed . Editorial costs were $2.6 million for the
nine months ended September 30, 1998 and 1997.
Selling, general and administrative expenses were $15.8 million for the nine
months ended September 30, 1998, compared to $13.9 million for the nine months
ended September 30, 1997, an increase of $1.9 million. The increase is primarily
attributable to the write off of an uncollectible advertising accounts
receivable of $2.4 million which arose through billings during the nine months
ended September 30, 1998 in connection with the termination of the Company's
agreement with an advertising agency that had an exclusive arrangement to sell
audiotext advertising in the Company's magazines. The Company has entered into a
new agreement with another advertising agency on similar terms to that of the
prior agreement. Management believes the effects of the termination of the
advertising agency will have minimal effects on the results of the Company's
fourth quarter and future operations.
Foreign Edition Licensing
Revenues from licensing of foreign editions, which are included in other
revenue, were $1.6 million and $1.7 million for the nine months ended September
30, 1998 and 1997, respectively, a decrease of $0.1 million. This decrease is
due primarily to the termination of certain contracts with foreign licensees of
Penthouse magazine.
Selling, general and administrative expenses were $0.3 million and $0.2 million
for the nine month period ended September 30, 1998 and 1997, respectively, an
increase of $0.1 million. In 1997, the Company received $0.1
14
<PAGE>
Item 2. (Continued)
million from a licensee whose receivable balance was previously written off as a
bad debt.
Automotive Magazines
Revenues for the Automotive Magazines were $17.5 million and $15.8 million for
the nine months ended September 30, 1998 and 1997, respectively, an increase of
$1.7 million. Newsstand revenues were $3.7 million and $3.5 million for the nine
months ended September 30, 1998 and 1997, respectively, an increase of $0.2
million. The increase is due primarily to increased cover price of Four Wheeler
and Stock Car magazines. Advertising revenues were $10.5 million and $9.5
million for the nine months ended September 30, 1998 and 1997, respectively, an
increase of $1.0 million, resulting from an increase in advertising page rates
and pages sold, as well as advertising revenue of $0.3 million generated from
Four Wheeler Television, which produced its first in a series of 13 cable
television shows in February 1998. Subscription revenues were $3.1 million and
$2.7 million for the nine month period ended September 30, 1998 and 1997,
respectively, an increase of $0.4 million due to an increase in subscription
copies sold.
Publishing-production, distribution and editorial expenses were $8.6 million and
$7.7 million for the nine months ended September 30, 1998 and 1997,
respectively, an increase of $0.9 million. Paper costs were $3.5 million and
$2.8 million for the nine months ended September 30, 1998 and September 30,
1997, respectively, an increase of $0.7 million. Paper costs increased due to an
increase in magazine copies printed, increased pages per copy and an increase in
the cost of paper. Print costs were $2.9 million for the nine months ended
September 30, 1998 and 1997. Distribution costs were $1.9 million and $1.6
million for the nine months ended September 30, 1998 and 1997, respectively, an
increase of $0.3 million, due to the increase in copies distributed. Editorial
costs were $0.3 million for the nine months ended September 30, 1998 and 1997.
In 1998, there were $0.3 million in production costs related to Four Wheeler
television.
Selling, general and administrative expenses were $6.4 million and $5.0 million
for the nine months ended September 30, 1998 and 1997, respectively, an increase
of $1.4 million. The increase is primarily attributable to subscription
acquisition spending ($0.6 million), increased salaries, benefits and sales
commissions ($0.4 million), increased advertising expense ($0.1 million) and
increased subscription fulfillment expense ($0.1 million) related to increased
subscription copies distributed during the nine months ended September 30, 1998,
as compared to the nine months ended September 30, 1997.
Entertainment Segment
Revenues from the Entertainment Segment were $15.2 million for the nine months
ended September 30, 1998, compared to $11.0 million for the nine months ended
September 30, 1997, an increase of $4.2 million. The Company's video business
revenues were $2.7 million for the nine months ended September 30, 1998 compared
to $2.3 million for the nine months ended September 30, 1997, an increase of
$0.4 million. The increase is due to revenue received from the sale of a
videocassette featuring a well know television personality, revenues received
for a pay-per-view joint venture and increased licensing revenue, offset by a
decline in sales through the Company's national wholesale distributor. Revenues
from the Company's pay-per-call business were $2.1 million and $6.7 million for
the nine months ended September 30, 1998 and 1997, respectively, a decrease of
$4.6 million. Effective January 1, 1998, the Company engaged a new service
bureau to process its pay-per-call business. Accordingly, revenues during 1998
were lower due to the transition and due to the arrangement with its new service
bureau whereby the Company receives a fixed rate per minute, on a net basis. The
arrangement
15
<PAGE>
Item 2. (Continued)
with the Company's previous service bureau paid revenue on a gross basis and the
Company paid certain expenses directly. Under the new agreement these expenses
have been eliminated. The Company's internet business revenues were $10.3
million and $2.0 million for the nine months ended September 30, 1998 and 1997,
respectively, an increase of $8.3 million. Internet revenues increased due to
increased revenues received from the sale of subscriptions to the Company's
"Private Collection", contained within the Company's internet site. Revenues
were also received from a new arrangement, whereby the Company receives a
minimum guaranteed revenue from another internet site "linked" to the Company's
internet site. Such arrangement began in April of 1997.
Direct costs were $1.7 million for the nine months ended September 30, 1998,
compared to $5.0 million for the nine months ended September 30, 1997, a
decrease of $3.3 million. The decrease is due primarily to the change in service
bureaus processing the Company's pay-per-call business, as discussed above.
Additionally, in 1997 the Company incurred $0.5 million in costs related to the
production of a feature motion picture.
Selling, general and administrative expenses were $4.7 million and $2.6 million
for the nine months ended September 30, 1998 and September 30, 1997,
respectively, an increase of $2.1 million. The increase is due primarily to
higher computer processing, personnel and commission expense relating to the
internet business increased revenues.
Corporate Administrative Expense
Corporate administrative expenses includes executive, human resources, finance
and accounting, management information systems and various other expenses.
Corporate administrative expenses were $12.7 million for the nine months ended
September 30, 1998, compared to $11.5 million for the nine months ended
September 30, 1997, an increase of $1.2 million, due primarily to increased
salary expense ($1.0 million) and increased consulting fees ($0.2 million).
Rent Expense From Affiliated Companies
Rent expense from affiliated companies represents charges from affiliated
companies for the use of the Company's executive offices. The charge is based
upon the Company's proportionate share of the operating expenses of such
offices. Rent expense from affiliated companies was $0.4 million for the nine
months ended September 30, 1998 and 1997.
Impact of Year 2000
The Company is in the process of reviewing its computer systems and operations
to identify and determine the extent to which any systems will be vulnerable to
potential errors and failures as a result of the "Year 2000" problem. The Year
2000 problem is the result of computer programs being written using two digits,
rather than four digits, to define the applicable year. Any of the Company's
programs that have time-sensitive software may recognize a date using "00" as
the year 1900 rather than the year 2000. This could result in a major system
failure or miscalculations, causing disruptions of operations including, among
other things, a temporary inability to process transactions, billing, customer
service or to engage in similar normal business activities.
The Company is conducting a comprehensive review of its computer systems to
ensure that all such systems are,
16
<PAGE>
Item 2. (Continued)
or prior to the end of 1999 will be, Year 2000 compliant. While the
comprehensive review is as now not yet complete, the Company presently believes
that the Year 2000 problem will not pose significant operational problems for
the Company's computer systems as such systems have generally been recently
implemented or upgraded. Additionally, the Company will occupy new executive
office facilities in December of 1998 and technology being acquired for that
facility will be Year 2000 compliant. The Company's plan for its Year 2000
project includes the following steps: (i) conducting a comprehensive inventory
of the Company's internal systems, including information technology systems and
non-information technology systems (which include, among other things,
telecommunications and electrical systems) and systems to be acquired by the
Company, (ii) assessing and prioritizing the required remediation, (iii)
remediating any problems by repairing or, if appropriate, replacing the
non-compliant systems and (iv) testing all remediated systems for Year 2000
compliance. The Company is in the process of retaining a Year 2000 solution
provider as a consultant to assist the Company in its assessment and remediation
projects.
In addition to assessing its own systems, the Company has sent questionnaires
its vendors and suppliers, including outside service providers and printers, to
determine their vulnerability to Year 2000 problems and any potential impact on
the Company. The Company is in the process of evaluating the responses to these
questionnaires. Based upon written responses already received, the Company
believes its national wholesale magazine distributor and its subscription
fulfillment company will be fully compliant by the end of 1999. Nevertheless,
there can be no assurance that problems experienced by external vendors,
suppliers and customers will not have a material adverse effect on the Company.
The Company expects to complete all steps of the process described above by June
30, 1999 and further expects that all of its critical computer systems will be
fully Year 2000 compliant before the end of 1999. There can be no assurance,
however, that the Company will achieve full Year 2000 compliance before the end
of 1999 or that effective contingency plans will be developed or implemented. A
failure of the Company's computer systems or the Company's vendors or customers
to effectively upgrade their software and systems for the transition to the year
2000 could have a material adverse effect on the Company's business, financial
position and results of operations.
The Company estimates that it will incur costs of between $1.5 million and $2.5
million to become Year 2000 compliance; although the Company's evaluation of the
Year 2000 problem is not yet complete and actual costs may be significantly
higher. Costs will be expensed or capitalized as they are incurred. As of
September 30, 1998 only nominal expenses have been incurred.
Following the completion of the Company's Year 2000 assessment, the Company
plans to determine the nature and extent of any contingency plans that may be
required. Even if the Company's assessment is completed without identifying any
additional non-compliant systems operated by, or in control of, the Company, or
of third parties, the most reasonable likely worst case scenario would be a
system failure beyond the control of the Company to remedy. Such a failure could
materially prevent the Company from operating its business. The Company believes
that such a failure would likely lead to lost revenues, increased operating
costs, loss of customers or other business interruptions of a material nature.
Liquidity and Capital Resources
At September 30, 1998, the Company had $6.3 million in cash and cash
equivalents, compared to $7.3 million at December 31, 1997. The decrease in cash
and cash equivalents during the nine months ended September 30,
17
<PAGE>
Item 2. (Continued)
1998 resulted from net cash flows provided by operating activities of $0.7
million, cash flows used in investing activities of $0.7 million, and cash flows
used in financing activities of $1.0 million.
Cash flows from operating activities
Net cash provided by operating activities was $0.7 million for the nine months
ended September 30, 1998, compared to net cash provided by operating activities
of $3.9 million for the nine months ended September 30, 1997. Net cash provided
by operating activities for the nine months ended September 30, 1998 was
primarily the result of income from operations for the period and increased
accounts payable balances due to timing of payments to vendors, offset by an
increase in other assets relating to a security deposit of $1.7 million on new
office space that the Company will occupy in December of 1998. Net cash provided
by operating activities for the nine months ended September 30, 1997 was
primarily the result of the income from operations for the period, decreased
paper inventory balances and increase accounts payable balances due to timing of
payments to vendors.
Cash flows from investing activities
Cash used in investing activities for capital expenditures was $0.2 million and
$0.7 million for the nine months ended September 30, 1998 and 1997,
respectively. The increase in capital spending in 1998 is due primarily to
leasehold improvements being made to new office space that the Company will
occupy in December of 1998.
Cash flows from financing activities
Cash flows used in financing activities were $1.0 million for the nine months
ended September 30, 1998 and 1997. Affiliated company investments and advances
at September 30, 1998 increased $0.5 million from the December 31, 1997 balance,
whereby the Company is owed $1.6 million by GMI as of September 30, 1998. These
balances regularly result from the impact of certain cost sharing and expense
allocation agreements with GMI and its subsidiaries, whereby certain costs, such
as shared corporate salaries and overhead, are paid by the Company and a portion
charged to GMI and its subsidiaries as incurred. These charges generally result
in amounts due to the Company, and are generally repaid sixty days after the end
of each quarter in accordance with the terms of an expense sharing agreement. On
June 30, 1998, the Company received as partial payment of the amount the
outstanding stock of a subsidiary of GMI, whose net assets have an appraised
value of approximately $0.5 million. The net assets of the subsidiary consist of
works of art. Management intends to sell such assets. The reimbursement by GMI,
in the amount of $1.6 million, has not been made by November 13, 1998. Demand
for payment has been made in writing. Management of the Company believes that
GMI and its subsidiaries have sufficient assets to enable the Company to
ultimately recover its advance through liquidation of certain of those assets or
through refinancing of GMI's debts. The ability of the Company to realize
repayment of its advance is dependant upon the success of GMI in refinancing its
existing debt obligations which are currently in default. The principal
shareholder of GMI has guaranteed the full amount due to the Company. At
September 30, 1998, the Company has a loan outstanding to the principal
shareholder of GMI of $0.9 million. The loan is evidenced by a promissory note,
bears interest at 13.25% per annum, and is payable on December 31, 1998.
The ability of the Company to incur additional debt is severely limited by the
terms of its Notes and the Indenture. Pursuant to the Indenture, the Company may
not declare a dividend on its common stock, subject to certain exceptions,
unless it meets certain financial covenants set forth therein. In May 1998, the
Company declared and paid a $0.4 million cash dividend to GMI in accordance with
the terms and conditions of the Indenture.
Future outlook
The Company's cash balance at September 30, 1998 was $6.3 million, compared to
$7.3 million at December
18
<PAGE>
Item 2. (Continued)
31, 1997. The Company is obligated to make a $4.2 million interest payment on
its Notes on December 31, 1998.
The Company's results from operations were negatively impacted by increased
operating expenses in the third quarter of 1998, which resulted in continued net
losses to the Company in 1998. While it is difficult to predict future results
of operations, it is unlikely that the Company can achieve profitable net income
in 1998. Furthermore, under the Indenture, should the Company incur additional
losses in the future, such that the Company's tangible net worth (deficiency)
declines from the amount at September 30, 1998 of ($78.2) million, below ($81.6)
million for two consecutive quarters, the Company would be required to purchase
on the last day of the next following fiscal quarter, ten percent of the
principal amount of the Notes then outstanding at a price of 101% of the
principal amount thereof.
Forward-Looking Statements
In addition to historical information, "Management's Discussion and Analysis of
Financial Condition and Results of Operations" contains forward-looking
statements. The forward-looking statements are subject to certain risks and
uncertainties and are based on certain assumptions, including that, as to the
Year 2000 problem, third parties respond fully and accurately to the Company's
inquires, and that, as to the Company's publications, there are no adverse
governmental regulations promulgated that could cause actual results to differ
materially from those reflected in such forward looking statements. Readers are
cautioned not to place undue reliance in these forward-looking statements, which
reflect management's opinions only as of the date hereof. The Company undertakes
no obligation to revise or publicly release the results of any revision to these
forward-looking statements.
Part II-Other Information
Item 1. Legal Proceedings
No change from that reported in the June 30, 1998 Form 10-Q.
Item 6. Exhibits and Reports on Form 8-K
(a) The exhibits listed in the "Exhibit Index" are filed as part of this
report.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the quarter ended September
30, 1998.
19
<PAGE>
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
General Media, Inc.
(Registrant)
Dated: November 13, 1998 By: /s/ John D. Orlando
---------------------------------------
Signature
John D. Orlando
Senior Vice President-Chief Financial Officer
(Duly Authorized Officer and
Principal Accounting Officer)
20
<PAGE>
EXHIBIT INDEX
Exhibit No. Item
- ----------- ----
*10.1 Printing Contract between Access Printing and General Media
Communications, Inc.
10.2 Agreement of Lease between M393 Associates LLC and General
Media, Inc
10.3 Assignment of Lease and Agreement between General Media, Inc.
and 277 Park Ave, LLC
27 Financial Data Schedule
- ----------
* Confidential Treatment has been requested with respect to certain
information contained in this exhibit.
21
EX.-10.1
Printing Contract Between Access Printing and General Media Communications Inc.
Dated August 15,1998
EXHIBIT 10.1 TO QUARTERLY CONFIDENTIAL INFORMATION OMITTED
REPORT ON FORM 10-Q OF WHERE INDICATED BY "[*]" AND FILED
GENERAL MEDIA INC. SEPARATELY WITH THE COMMISSION
PERSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT UNDER RULE
24b-2 OF THE SECURITIES EXCHANGE ACT
OF 1934
<PAGE>
PRINTING CONTRACT
BETWEEN: ACCESS PRINTING
(THE "PRINTER")
AND: GENERAL MEDIA COMMUNICATIONS INC.
(THE "CUSTOMER")
This contract shall become effective on August 15, 1998 and sets forth the
terms and conditions by which Access Printing, having its head office at 600
Access Road, Southern Pines, North Carolina 28387 (hereinafter referred to as
the "Printer), shall supply the products and services specified hereinafter to
General Media Communications Inc., having its head office at 277 Park Avenue,
New York, NY 10172-0003 (hereinafter referred to as the "Customer").
Additional terms and conditions of this contract are contained on pages 1,
2 and 3 and Schedule "A" initialized by the parties hereto.
THE PARTIES HERETO AGREE AS FOLLOWS:
1.0 TERMS AND CONDITIONS OF CONTRACT
1.1 The Initial term of this Contract shall be three (3) months
commencing on August 15th, 1998. The Customer shall have the right
in its sole discretion during any Term of this Contract to terminate
this contract on 30 days' notice if it determines that it is in the
Customer's best interest to terminate publication of Forum,
Variations and Specials.
1.2 The price structure in Schedule "A" shall be effective on January
1st, 1999 and for a period of one (1) year thereafter, except for
the changes described in Section 3.4.
1.3 Unless terminated as provided in Section 1.1 above or as otherwise
provided herein this Contract shall automatically renew at the end
of the Initial term for a renewal Term of nine (9) months and
thereafter shall renew for successive renewal Terms of one year
unless either party gives notice not to renew no less than sixty
(60) days prior to the expiration of such renewal Term.
1.4 In the event either of the parties should become insolvent or
bankrupt, the other party shall be entitled to terminate this
Contract on no less than thirty (30) days' notice this by written
notice to the other party or to its estate.
1
<PAGE>
1.5 Upon termination the Customer shall not be liable for any of the
Printer's costs: (a) incurred or ordered after notice; (b) which can
be canceled at no loss to the Printer, or (c) in excess of the
out-of-pocket loss to the Printer of any unused items sold to other
customers or third parties or returned to suppliers.
2.0 STATUS OF WORK
2.1 The Customer shall retain the services of the Printer to print
Forms, Variations and Specials (the "Magazines"). The Printer hereby
undertakes to perform all services necessary to print, bind, package
and ship the Magazines on the frequency set forth on Schedule "1"
attached in accordance with the Customer's specifications as
communicated in writing from time to time and as may be set forth in
the schedules to this Contract. Notwithstanding any other actual or
apparently conflicting language in this Contract, the Printer will
maintain at minimum the high graphic standards established by
General Media, as exemplified by the copy of each title which is
annexed to this Contract as an example.
2.2 This Contract shall apply exclusively to the printed products
mentioned in Section 2.1 hereof. Any other products published by the
Customer which are not included herein shall be negotiated between
the Printer and the Customer.
2.3 Printing shall be scheduled to take place during the Printer's
normal business hours, namely from 8:00 a.m. on Monday to 5:00 p.m.
on Friday.
2.4 The Customer will supply the paper to print the publications in
accordance with the paper usage chart provided in Schedule "B". The
Printer shall furnish to the Customer no later than the 15th of each
month a written accounting of all paper received from the Customer
and consumed during the previous month and all of the remaining
stocks. The Printer shall take a physical inventory every six months
that this Contract is in effect and shall supply the results in
writing to the Customer, which may audit such inventory report at
any time upon three (3) business days' notice to the Printer. Should
the paper consumption exceed that set forth in Schedule "B" the
Printer shall upon completion of such accounting, at Printer's
option, reimburse the Customer for such excess either in kind or at
the same price per pound, at a rate equal to the average cost of
said paper during the accounting period. In the event of a net under
consumption, the Customer agrees to pay the Printer an amount equal
to [*][*] computed at the same rates. The value of under
consumption, if any, of one kind or weight of the paper shall be
used as a credit against over consumption, if any, of other
kinds/weights of paper. Printer shall store up to three
2
<PAGE>
months' paper requirements for the printing of the Magazines on its
premises, at no cost to the Customer.
2.5 The Printer agrees to produce and maintain high quality standards of
reproduction consistent with industry SWOP standards. The Printer
shall bear the cost (including paper and ink) of make-goods caused
by any error or omission attributable to the Printer. Repeated
errors, or repeated failure to correct errors, will entitle the
Customer to cancel this Contract on thirty (30) days' notice.
3.0 PRICE AND PAYMENT
3.1 The Customer undertakes to comply with the terms and conditions of
sale described in Schedule "A".
3.2 The prices mentioned in Schedule "A" include plate making, printing,
binding, and mall preparation work and all other services necessary
to print, bind, package and ship the Magazine.
3.3 The Customer shall be invoiced based on the number of copies ordered
and delivered as described in Section 4.1.
3.4 Should there be an increase or reduction in the price of materials,
the Printer may increase or reduce the prices contained in Schedule
"A" as follows:
3.4.1 The increase in the Customer's costs shall not be greater than
the actual increase in the costs incurred by the Printer.
3.4.2 The Customer shall be notified thirty (30) days in advance.
3.4.3 The Printer shall provide all supporting documentation with
the notification provided for in section 3.4.2 above.
3.4.4 Labor and administrative costs shall be increased or decreased
every twelve (12) months, commencing January 1, 2000 based on
[*] of the Consumer Price Index. Each increase or decrease
shall have as its base the January 1 level of the preceding
year.
4.0 TERMS AND CONDITIONS
4.1 The Customer shall issue a purchase order for each issue including
the print run, the nature of the work, the final quantities and
provide shipping documentation. The Customer shall issue this
purchase order to the Printer no later than fifteen (15) days prior
to the scheduled press run start as agreed on by the parties.
3
<PAGE>
4.2 The Printer shall submit one invoice for each issue. The invoice
shall specify in detail satisfactory to the Customer the services
performed and the prices charged. The terms are net thirty (30)
days. The date of the invoice will be the last day of the shipping
cycle.
4.3 Production schedules shall be prepared and approved by both parties.
4.4 The Printer will store finished copies of the Magazine for thirty
(30) days following completion of shipping at no additional cost to
the Customer; thereafter, such copies shall be shipped at the
Customer's direction and expense to a facility designated by the
Customer. Failing the Customer's instructions the Printer may
destroy such copies but will give the Customer fifteen (15) days'
notice before doing so.
4.5 In furtherance and not in derogation of the Printer's obligation of
due care toward the Customer's property, the Printer shall cover by
insurance the values added by the Printer in the form of raw
materials, labor, and overhead, against fire, extended coverage
perils, vandalism, malicious mischief and sprinkler leakage. The
Customer will similarly insure its property while on the Printer's
premises. The Customer will also insure its paper throughout the
printing process (except waste paper). All waste paper shall become
the Printer's property.
4.6 Risk of loss or damage to the finished work shall pass to the
Customer upon delivery to a common carrier F.O.B. the Printer's
shipping dock.
4.7 Neither the Magazines nor any material furnished by the Customer
shall be subject to any lien(s) of the Printer or the Printer's
creditors of whatsoever kind or nature, and the Printer hereby
waives any rights under statute or otherwise to assert any liens on
or otherwise distrain the Customer's property, work in progress or
the finished product. The Printer will take all steps prescribed by
law to protect the Customer's interests as they may appear upon any
levy or attempted levy by the Printer's creditors on the Customer's
property or any finished work or work in progress; the Printer shall
expeditiously seek to remove any such lien and in any event shall
hold the Customer entirely harmless therefrom.
4.8 The Printer shall use its best efforts to keep confidential the
contents of each issue of the Magazine prior to general public
distribution.
5.0 LIABILITY FOR CONTENT
5.1 The Customer will indemnify and hold the Printer harmless from and
against any claims, demands, suits, actions, costs, loss or
4
<PAGE>
judgments, including reasonable attorneys' fees, for libel,
defamation of character, copyright or trademark infringement,
invasion of right of privacy or publicity, or patent infringement by
any person, firm or entity against the Printer arising out of any
material delivered by the Customer or supplied on its behalf to the
Printer and used by the Printer in producing the Magazine.
5.2 In like manner the Printer shall indemnify and hold the Customer
harmless from and against any claims, demands, suits, actions,
costs, loss or judgments, including reasonable attorneys' fees, for
libel, defamation of character, copyright or trademark infringement,
invasion of right of privacy or publicity, or patent infringement,
by any person, firm or entity against the Customer arising out of
any act or omission of the Printer in performing its services
hereunder.
5.3 No indemnification promised in sections 5.1 or 5.2 above shall be
effective unless the indemnified (indemnitee) party shall have given
prompt notice of any indemnifiable claim to the indemnifying
party ("indemnitor"). Thereafter the indemnifying party shall at its
sole cost and expense defend by counsel of its choosing reasonably
acceptable to the indemnified party or at its option to instruct the
indemnified party to defend but at the indemnifying party's expense.
Nothing herein shall prevent any indemnified party from retaining
its own counsel at its own expense to advise it or to elect to
defend with its own counsel but in such event such defense shall be
at the indemnified party's sole expense and risk liability. No
indemnitor shall conclude a settlement binding on an indemnitee
absent the consent of the indemnitee. Should an indemnitee elect to
settle or compromise any claim solely as to itself without
permission of the indemnitor, the indemnitor shall thereafter have
no further obligations toward the indemnitee.
6.0 DISPUTED INVOICES
6.1 The Customer shall not be obligated to pay any portion of any
invoice which it disputes in good faith. The Customer shall have
sixty (60) days from the receipt of such invoice to notify the
Printer in writing of any items which it disputes and shall specify
its grounds therefor. Thereafter the parties shall attempt during
the next thirty (30) days to attempt to resolve the dispute among
themselves in good faith, failing which the dispute shall be
submitted to arbitration in the City of New York by the American
Arbitration Association according to its rules then in effect.
Judgment of the arbitrators may be entered against the losing party
in any court of competent jurisdiction and enforced as provided by
law. In no event shall dispute of an invoice by the Customer be
deemed a breach of this Contract or entitle the Printer to stop
work.
5
<PAGE>
6.2 Notwithstanding anything in this Contract to the contrary, the
Printer's continued failure, for any reason expressly including
events of force majeure and/or matters not within the control or due
to the fault of the Printer, to produce the Magazine, to produce it
to the quality of the sample annexed to this Contract, or to produce
it timely in accordance with the production schedule submitted by
the Customer, shall entitle the Customer, on thirty (30) days'
notice, to terminate this Contract and take the work elsewhere.
7.0 MISCELLANEOUS
7.1 No amendments to this Contract shall be effective unless made, with
the written consent of the Printer and the Customer. This Contract
shall not be assigned by either party without the written consent of
both parties, except that the Customer may assign it to a wholly
owned subsidiary of the Customer or to an affiliate of the Customer
which is under common ownership and control with the Customer.
7.2 This Contract and the rights of the parties to it shall be governed
by the law of the State of New York, USA, applicable to contracts
made and wholly to be performed therein without regard to the
conflicts of laws rules thereof. No lawsuit arising out of the
execution, formation, terms, performance or breach of this Contract
shall be brought except in courts physically located in New York
County, New York, and the parties hereto expressly consent to the
jurisdiction of such courts over all such litigation and all matters
whatsoever relating to or arising out of this Contract. This
Contract and the attached schedules contain the sole understanding
and agreement of the parties concerning the subject matter hereof,
all prior negotiations, conversations, understandings and
agreements, whether oral or written, being merged herein.
7.3 Notice
All notice under this Agreement shall be given by any part via
first-class surface mail, postage prepaid, by courier/messenger
service, or by telefacsimile to the other at the respective
addresses and facsimile numbers set forth below or to such other
address/number as any party may advise the other of by notice in
accordance with the provisions of this paragraph. 7.3:
If to General Media:
General Media Communications, Inc.
277 Park Avenue, 4th Floor.
New York, New York 10172-0003
Facsimile:(212)702-6262
Att'n: Hal Halpner, Director of Manufacturing
Copy: Legal Department
6
<PAGE>
If to Access:
Access Printing
600 Access Road
Southern Pines, NC 28387
Facsimile:(910) 692-5914
Att'n: Vincent Cole, VP/ Director of Manufacturing
Notice shall be effective when sent except notice via surface mail
shall be effective three days from the date of mailing, not counting the first
day.
IN WITNESS WHEREOF the parties have signed in New York this 25th day of August,
1998.
ACCESS PRINTING
/s/ Charles Walls
---------------------------------------
Name Charlie Walls
Title President
GENERAL MEDIA COMMUNICATIONS, INC.
/s/ Patrick J Gavin
---------------------------------------
Name Patrick J Gavin
Title Exec. V.P., C.O.O.
/s/ Robert H. Altman
---------------------------------------
Name Robert H. Altman
Title President
7
<PAGE>
SCHEDULE A
ACCESS PRINTING
Variations
ACCESS PRINTING PRICE LIST
128 page + cover digest book
March 30, 1998
TOTAL BOOKS: [*] Size 5 1/4" X 8 1/8"
PREPARATION
ITEM QUANTITY COST TOTAL
DUPLICATE FILM PER NEGATIVE [*] [*] [*]
STRIP ADDITIONAL COLOR [*] [*] [*]
PICKUP REPEAT FULL PG AD PER COLOR [*] [*] [*]
SPLIT SPREADS [*] [*] [*]
STRIPPING 1/C LESS THAN A PAGE [*] [*] [*]
STRIPPING 4/C LESS THAN A PAGE [*] [*] [*]
STRIPPING PER NEGATIVE PAGE FILM [*] [*] [*]
---------
TOTAL PREPARATION [*]
---------
INK
ITEM QUANTITY COST TOTAL
FOUR COLOR PROCESS BODY (COATED) PG/M [*] [*] [*]
THREE COLOR PROCESS BODY (COATED) PG/M [*] [*] [*]
TWO COLOR PROCESS BODY (COATED) PG/M [*] [*] [*]
ONE COLOR PROCESS BODY (COATED) PG/M [*] [*] [*]
FOUR COLOR PROCESS BODY (UNCOATED) PG/M [*] [*] [*]
THREE COLOR PROCESS BODY (UNCOATED) PG/M [*] [*] [*]
TWO COLOR PROCESS BODY (UNCOATED) PG/M [*] [*] [*]
ONE COLOR PROCESS BODY (UNCOATED) PG/M [*] [*] [*]
PMS COLOR TEXT PG/M [*] [*] [*]
FOUR COLOR PROCESS COVER PG/M [*] [*] [*]
PMS COLOR COVER (FLOURESCENT 2X) PG/M [*] [*] [*]
---------
TOTAL INK [*]
---------
PRINTING
ITEM QUANTITY COST TOTAL
32 PG (4 C)2 UP [*] [*] [*]
RUN/M [*] [*] [*]
32 PG (6 UNITS) 2 UP [*] [*] [*]
RUN/M [*] [*] [*]
16 PG (4 C) 2 UP [*] [*] [*]
RUN/M [*] [*] [*]
PLATE CHANGES/EACH [*] [*] [*]
COVER 4 PG (5/4) 8 UP SHEETER [*] [*] [*]
RUN/M [*] [*] [*]
PLATE CHANGES/EACH [*] [*] [*]
---------
TOTAL PRINTING [*]
---------
Page 1
<PAGE>
ACCESS PRINTING
BINDERY
ITEM QUANTITY COST TOTAL
PERFECT BIND 6 POCKETS [*] [*] [*]
RUN/M [*] [*] [*]
PERFECT BIND CAN/UK VERSION CHANGE [*] [*] [*]
RUN/M [*] [*] [*]
HANDLING SUPPLIED MATERIAL [*] [*] [*]
POLYBAG ONE PIECE-CLEAR [*] [*] [*]
RUN/M [*] [*] [*]
WAFER TABS [*] [*] [*]
RUN/M [*] [*] [*]
---------
TOTAL BINDERY [*]
---------
---------
TOTAL [*]
---------
Page 2
<PAGE>
ACCESS PRINTING
Forum
ACCESS PRINTING PRICE LIST
128 page + cover digest book
March 30, 1998
TOTAL BOOKS: [*] Size 5 1/4" X 8 1/8"
PREPARATION
ITEM QUANTITY COST TOTAL
DUPLICATE FILM PER NEGATIVE [*] [*] [*]
STRIP ADDITIONAL COLOR [*] [*] [*]
PICKUP REPEAT FULL PG AD PER COLOR [*] [*] [*]
SPLIT SPREADS [*] [*] [*]
STRIPPING 1/C LESS THAN A PAGE [*] [*] [*]
STRIPPING 4/C LESS THAN A PAGE [*] [*] [*]
STRIPPING PER NEGATIVE PAGE FILM [*] [*] [*]
---------
TOTAL PREPARATION [*]
---------
INK
ITEM QUANTITY COST TOTAL
FOUR COLOR PROCESS BODY (COATED) PG/M [*] [*] [*]
THREE COLOR PROCESS BODY (COATED) PG/M [*] [*] [*]
TWO COLOR PROCESS BODY (COATED) PG/M [*] [*] [*]
ONE COLOR PROCESS BODY (COATED) PG/M [*] [*] [*]
FOUR COLOR PROCESS BODY (UNCOATED) PG/M [*] [*] [*]
THREE COLOR PROCESS BODY (UNCOATED) PG/M [*] [*] [*]
TWO COLOR PROCESS BODY (UNCOATED) PG/M [*] [*] [*]
ONE COLOR PROCESS BODY (UNCOATED) PG/M [*] [*] [*]
PMS COLOR TEXT PG/M [*] [*] [*]
FOUR COLOR PROCESS COVER PG/M [*] [*] [*]
PMS COLOR COVER (FLOURESCENT 2X) PG/M [*] [*] [*]
---------
TOTAL INK [*]
---------
PRINTING
ITEM QUANTITY COST TOTAL
32 PG (4 C)2 UP [*] [*] [*]
RUN/M [*] [*] [*]
32 PG (6 UNITS) 2 UP [*] [*] [*]
RUN/M [*] [*] [*]
16 PG (4 C) 2 UP [*] [*] [*]
RUN/M [*] [*] [*]
PLATE CHANGES/EACH [*] [*] [*]
COVER 4 PG (5/4) 8 UP SHEETER [*] [*] [*]
RUN/M [*] [*] [*]
PLATE CHANGES/EACH [*] [*] [*]
---------
TOTAL PRINTING [*]
---------
Page 1
<PAGE>
ACCESS PRINTING
BINDERY
ITEM QUANTITY COST TOTAL
PERFECT BIND 6 POCKETS [*] [*] [*]
RUN/M [*] [*] [*]
PERFECT BIND CAN/UK VERSION CHANGE [*] [*] [*]
RUN/M [*] [*] [*]
HANDLING SUPPLIED MATERIAL [*] [*] [*]
POLYBAG ONE PIECE-CLEAR [*] [*] [*]
RUN/M [*] [*] [*]
WAFER TABS [*] [*] [*]
RUN/M [*] [*] [*]
---------
TOTAL BINDERY [*]
---------
---------
TOTAL [*]
---------
Page 2
EX.-1O.2
Agreement of Lease Between M 393 Associates LLC and General Media, Inc
EXHIBIT 10.2 TO QUARTERLY REPORT ON FORM 1O-Q OF GENERAL MEDIA, INC.
<PAGE>
================================================================================
AGREEMENT OF LEASE
between
M 393 ASSOCIATES LLC
Landlord
and
GENERAL MEDIA, INC.
Tenant
Entire rentable area of the 12th Floor
11 Penn Plaza
New York, New York
PROSKAUER ROSE LLP
1585 Broadway
New York, New York 10036-8299
================================================================================
<PAGE>
TABLE OF CONTENTS
DEFINITIONS ................................................................. 1
ARTICLE 1- DEMISE, PREMISES, TERM, RENT ................................. 11
ARTICLE 2- USE AND OCCUPANCY ............................................ 14
ARTICLE 3- ALTERATIONS .................................................. 15
ARTICLE 4- REPAIRS-FLOOR LOAD ........................................... 22
ARTICLE 5- WINDOW CLEANING .............................................. 24
ARTICLE 6- REQUIREMENTS OF LAW .......................................... 24
ARTICLE 7- SUBORDINATION ................................................ 26
ARTICLE 8- RULES AND REGULATIONS ........................................ 30
ARTICLE 9- INSURANCE, PROPERTY LOSS OR DAMAGE;
REIMBURSEMENT ................................................ 30
ARTICLE 10- DESTRUCTION-FIRE OR OTHER CAUSE .............................. 33
ARTICLE 11- EMINENT DOMAIN ............................................... 36
ARTICLE 12- ASSIGNMENT, SUBLETTING, MORTGAGE, ETC. ....................... 38
ARTICLE 13- ELECTRICITY .................................................. 52
ARTICLE 14- ACCESS TO PREMISES ........................................... 58
ARTICLE 15- CERTIFICATE OF OCCUPANCY ..................................... 60
ARTICLE 16- DEFAULT ...................................................... 61
ARTICLE 17- REMEDIES AND DAMAGES ......................................... 64
ARTICLE 18- LANDLORD FEES AND EXPENSES ................................... 66
ARTICLE 19- NO REPRESENTATIONS BY LANDLORD ............................... 66
ARTICLE 20- END OF TERM .................................................. 68
ARTICLE 21- QUIET ENJOYMENT .............................................. 69
ARTICLE 22- FAILURE TO GIVE POSSESSION ................................... 69
ARTICLE 23- NO WAIVER .................................................... 69
ARTICLE 24- WAIVER OF TRIAL BY JURY ...................................... 71
ARTICLE 25- INABILITY TO PERFORM ......................................... 71
ARTICLE 26- BILLS AND NOTICES ............................................ 71
ARTICLE 27- ESCALATION ................................................... 72
ARTICLE 28- SERVICES ..................................................... 81
ARTICLE 29- PARTNERSHIP TENANT ........................................... 85
ARTICLE 30- VAULT SPACE .................................................. 86
ARTICLE 31- SECURITY ..................................................... 87
ARTICLE 32- CAPTIONS ..................................................... 88
ARTICLE 33- PARTIES BOUND ................................................ 88
ARTICLE 34- BROKER ....................................................... 89
ARTICLE 35- INDEMNITY .................................................... 89
ARTICLE 36- ADJACENT EXCAVATION-SHORING .................................. 90
ARTICLE 37- MISCELLANEOUS ................................................ 91
ARTICLE 38- RENT CONTROL ................................................. 94
ARTICLE 39 LANDLORD'S ACCESSORY PREMISES-
CANCELLATION OPTION .......................................... 94
<PAGE>
Schedule A - Rules and Regulations
Schedule B - Cleaning Specifications
Schedule C - HVAC Specifications
EXHIBIT "A-1" - Floor Plan of Office Premises
EXHIBIT "A-2" - Floor Plan of Accessory Premises
EXHIBIT "B" - Landlord's Work
EXHIBIT "C" - Approved Contractors with Respect to the
Initial Alterations
<PAGE>
AGREEMENT OF LEASE, made as of the 11th day of August, 1998, between
Landlord and Tenant.
W I T N E S S E T H :
The parties hereto, for themselves, their legal representatives,
successors and assigns, hereby covenant as follows.
DEFINITIONS
"Accessory Electricity Inclusion Factor" shall have the meaning set forth
in Section 13.3 hereof.
"Accessory Fixed Rent" shall have the meaning set forth in Section 1.1
hereof.
"Accessory Premises" shall mean, subject to the provisions of Section 14.5
hereof, the portion of the B-2 level of the Building known as "Unit D" as set
forth on the floor plan attached hereto and made a part hereof as Exhibit "A-2".
"Accessory Premises Cancellation Date" shall have the meaning set forth in
Article 39 hereof.
"Accessory Space Factor" shall mean Two Thousand Four Hundred Fifty-Three
(2,453) as the same may be increased or decreased pursuant to the terms hereof.
"Accessory Sublease Profit" shall have the meaning set forth in Section
12.7 hereof.
"Accessory Sublease Rent" shall have the meaning set forth in Section 12.7
hereof.
"ACM" shall have the meaning set forth in Section 19.3 hereof.
"Additional Related Costs" shall have the meaning set forth in Section 3.6
hereof.
"Additional Tenant Fund" shall have the meaning set forth in Section 3.6
hereof.
"Affiliate" shall mean a Person which shall (1) Control, (2) be under the
Control of, or (3) be under common Control with the Person in question.
1
<PAGE>
"Alteration Fee" shall have the meaning set forth in Section 3.2 hereof.
"Alterations" shall mean alterations, installations, improvements,
additions or other physical changes (other than decorations) in or about the
Premises.
"Application Rate" shall mean the lesser of (x) two (2) percentage points
above the then current Base Rate, and (y) the maximum rate permitted by
applicable law.
"Assessed Valuation" shall have the meaning set forth in Section 27.1
hereof.
"Assignment Proceeds" shall have the meaning set forth in Section 12.8
hereof.
"Assignment Statement" shall have the meaning set forth in Section 12.8
hereof.
"Bankruptcy Code" shall mean 11 U.S.C. Section 101 et seq., or any statute
of similar nature and purpose.
"Base Operating Expenses" shall have the meaning set forth in Section 27.1
hereof.
"Base Electric Rate" shall mean the Electric Rate as of the Commencement
Date.
"Base Operating Year" shall have the meaning set forth in Section 27.1
hereof.
"Base Rate" shall mean the rate of interest publicly announced from time
to time by The Chase Manhattan Bank, N.A., or its successor, as its "prime
lending rate" (or such other term as may be used by The Chase Manhattan Bank,
N.A., from time to time, for the rate presently referred to as its "prime
lending rate"), which rate was 8.50% on May 12, 1998.
"Base Taxes" shall have the meaning set forth in Section 27.1 hereof.
"Broker" shall have the meaning set forth in Article 34 hereof.
"Building" shall mean all the buildings, equipment and other improvements
and appurtenances of every kind and description now located or hereafter
erected, constructed or placed upon the land and any and all alterations, and
replacements thereof, additions thereto and substitutions therefor, known by the
address of 11 Penn Plaza, New York, New York.
"Building Systems" shall mean the mechanical, gas, electrical, sanitary,
heating, air conditioning, ventilating, elevator, plumbing, life-safety and
other service systems of the Building.
2
<PAGE>
"Business Days" shall mean all days, excluding Saturdays, Sundays and all
days observed by either the State of New York or the Federal Government and by
the labor unions servicing the Building as legal holidays.
"Commencement Date" shall have the meaning set forth in Section 1.1
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 Landlord and Tenant shall agree upon in
writing shall be substituted for the Consumer Price Index. If Landlord and
Tenant 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.
"Control" or "control" shall mean direct or indirect ownership of more
than fifty percent (50%) of the outstanding voting stock of a corporation or
other majority equity and control interest if not a corporation and the
possession, directly or indirectly, of power to direct or cause the direction of
the management and policy of such corporation or other entity, whether through
the ownership of voting securities, by statute or according to the provisions of
a contract.
"Current Year" shall have the meaning set forth in Section 27.4 hereof.
"Deficiency" shall have the meaning set forth in Section 17.2 hereof.
"8th Security Period" shall mean the period commencing on the date next
succeeding the expiration of the 7th Security Period and ending on the Fixed
Expiration Date.
"Electric Rate" shall have the meaning set forth in Section 13.3 hereof.
"Electricity Additional Rent" shall have the meaning set forth in Section
13.2 hereof.
"Electricity Fee" shall have the meaning set forth in Section 13.3 hereof.
"Electricity Inclusion Charge" shall have the meaning set forth in Section
13.3 hereof.
3
<PAGE>
"Electricity Statement" shall have the meaning set forth in Section 13.3
hereof.
"Escalation Rent" shall mean, individually or collectively, the Tax
Payment and the Operating Payment.
"Event of Default" shall have the meaning set forth in Section 16.1
hereof.
"Exchange Act" shall have the meaning set forth in Section 12.4 hereof.
"Existing Mortgagee" shall have the meaning set forth in Section 7.8
hereof.
"Expiration Date" shall mean the Fixed Expiration Date or such earlier
date on which the Term shall sooner end pursuant to any of the terms, conditions
or covenants of this Lease or pursuant to law.
"1st Rental Period" shall have the meaning set forth in Section 1.1
hereof.
"1st Security Period" shall mean the period commencing on the Commencement
Date and ending on the date which is two (2) months after the Rent Commencement
Date occurs.
"5th Security Period" shall mean the period commencing on the date next
succeeding the end of the 4th Security Period and ending on the date which is
four (4) years, two (2) months after the Rent Commencement Date occurs.
"Fixed Expiration Date" shall have the meaning set forth in Section 1.1
hereof.
"Fixed Rent" shall mean (a) with respect to the Office Premises, the
Office Fixed Rent, and (b) with respect to the Accessory Premises, the Accessory
Fixed Rent.
"4th Rental Period" shall have the meaning set forth in Section 1.1
hereof.
"4th Security Period" shall mean the period commencing on the date next
succeeding the end of the 3rd Security Period and ending on the date which is
three (3) years, two (2) months after the Rent Commencement Date occurs.
"Full Value" shall have the meaning set forth in Section 13.3 hereof.
"GAAP" shall mean generally accepted accounting principles, consistently
applied.
"Governmental Authority (Authorities)" shall mean the United States of
America, the State of New York, the City of New York, any political subdivision
thereof and any agency, department, commission, board, bureau or instrumentality
of any of the foregoing, or any
4
<PAGE>
quasi-governmental authority, now existing or hereafter created, having
jurisdiction over the Real Property or any portion thereof.
"HVAC" shall mean heat, ventilation and air conditioning.
"HVAC Systems" shall mean the Building Systems providing HVAC.
"Indemnities" shall mean Landlord, the partners comprising Landlord and
its and their members, partners, shareholders, officers, directors, employees,
agents and contractors, Lessors and Mortgagees.
"Initial Alterations" shall mean the Alterations to be made by Tenant to
initially prepare the Premises for Tenant's occupancy.
"Landlord" (i) on the date as of which this Lease is made, shall mean M
393 Associates LLC, a New York limited liability company, having an office c/o
MRC Management LLC, 330 Madison Avenue, New York, New York, and thereafter, as
long as the Agreement of Sublease, dated as of October 1, 1995 between Times
Mirror Company, as sublandlord, and M 393 Associates LLC, as subtenant, shall be
in effect, "Landlord" shall mean the subtenant under such sublease, and (ii)
commencing on the termination or expiration of such sublease, "Landlord" shall
mean Eleven Penn Plaza LLC, a New York limited liability company having an
office c/o MRC Management LLC, 330 Madison Avenue, New York, New York, or, at
any time that Eleven Penn Plaza LLC shall not be the fee owner of the Real
Property, "Landlord" shall mean only the fee owner of the Real Property or if
there shall exist a Superior Lease, the tenant thereunder.
"Landlord's Accessory Premises Cancellation Notice" shall have the meaning
set forth in Article 39 hereof.
"Landlord's Engineer" shall have the meaning set forth in Section 13.3
hereof.
"Landlord's Work" shall have the meaning set forth in Section 19.1 hereof.
"Lessor(s)" shall mean a lessor under a Superior Lease.
"Letter of Credit" shall have the meaning set forth in Article 31 hereof.
"Long Lead Work" shall mean any Item which is not a stock item and must be
specially manufactured, fabricated or installed or is of such an unusual,
delicate or fragile nature that there is a substantial risk that
(i) there will be a delay in its manufacture, fabrication, delivery
or installation, or
(ii) after delivery, such item will need to be reshipped or
redelivered or repaired
5
<PAGE>
so that in Landlord's reasonable judgment the item in question cannot be
completed when the standard items are completed even though the item of Long
Lead Work in question is (1) ordered together with the other items required and
(2) installed or performed (after the manufacture or fabrication thereof) in the
order and sequence that such Long Lead Work and other items are normally
installed or performed in accordance with good construction practice. In
addition, "Long Lead Work" shall include any standard item which in accordance
with good construction practice should be completed after the completion of any
item of work in the nature of the items described in the immediately preceding
sentence.
"Mortgage(s)" shall mean any trust indenture or mortgage which may now or
hereafter affect the Real Property, the Building or any Superior Lease and the
leasehold interest created thereby, and all renewals, extensions, supplements,
amendments, modifications, consolidations and replacements thereof or thereto,
substitutions therefor, and advances made thereunder.
"Mortgagee(s)" shall mean any trustee, mortgagee or holder of a Mortgage.
"Nondisturbance Agreement" shall have the meaning set forth in Section 7.7
hereof.
"Office Fixed Rent" shall have the meaning set forth in Section 1.1
hereof.
"Office Premises" shall mean, subject to the provisions of Section 14.5
hereof, the entire rentable area of the twelfth (12th) floor of the Building as
set forth on the floor plan attached hereto and made a part hereof as Exhibit
"A".
"Office Rent Per Square Foot" shall have the meaning set forth in Section
12.7 hereof.
"Office Space Factor" shall mean Forty-Eight Thousand Seven Hundred
Sixty-Eight (48,768) as the same may be increased or decreased pursuant to the
terms hereof.
"Office Sublease Profit" shall have the meaning set forth in Section 12.7
hereof.
"Operating Expenses" shall have the meaning set forth in Section 27.1
hereof.
"Operating Payment" shall have the meaning set forth in Section 27.4
hereof.
"Operating Statement" shall have the meaning set forth in Section 27.1
hereof.
"Operating Year" shall have the meaning set forth in Section 27.1 hereof.
"Operation of the Property" shall mean the maintenance, repair and
management of the Real Property and the curbs, sidewalks and areas adjacent
thereto.
"Overtime Periods" shall have the meaning set forth in Section 28.3
hereof.
6
<PAGE>
"Parties" shall have the meaning set forth in Section 37.2 hereof.
"Partner" or "partner" shall mean any partner of Tenant, any employee of
a professional corporation which is a partner comprising Tenant, and any
shareholder of Tenant if Tenant shall become a professional corporation.
"Partnership Tenant" shall have the meaning set forth in Article 29
hereof.
"Person(s) or person(s)" shall mean any natural person or persons, a
partnership, a corporation and any other form of business or legal association
or entity.
"Premises" shall mean, collectively, the Office Premises and the Accessory
Premises.
"Prevailing Rate" shall have the meaning set forth in Section 12.6 hereof.
"Real Property" shall mean the Building, together with the plot of land
upon which it stands.
"Recapture Space" shall have the meaning set forth in Section 12.6 hereof.
"Recapture Sublease" shall have the meaning set forth in Section 12.6
hereof.
"Related Costs" shall have the meaning set forth in Section 3.5 hereof.
"Related Equity" shall have the meaning set forth in Section 12.4 hereof.
"Rental" shall mean and be deemed to include Fixed Rent, Escalation Rent,
all additional rent and any other sums payable by Tenant hereunder.
"Rent Commencement Date" shall mean November 1, 1998.
"Replace Accessory Premises" shall have the meaning set forth in Section
37.12 hereof.
"Requirements" shall mean all present and future laws, rules, orders,
ordinances, regulations, statutes, requirements, codes and executive orders,
extraordinary as well as ordinary, of all Governmental Authorities now existing
or hereafter created, and of any and all of their departments and bureaus, and
of any applicable fire rating bureau, or other body exercising similar
functions, affecting the Real Property or any portion thereof, or any street,
avenue or sidewalk comprising a part of or in front thereof or any vault in or
under the same, or requiring removal of any encroachment, or affecting the
maintenance, use or occupation of the Real Property or any portion thereof.
7
<PAGE>
"Rules and Regulations" shall mean the rules and regulations annexed
hereto and made a part hereof as Schedule A, and such other and further
written rules and regulations which are nondiscriminatory as to Tenant with
respect to tenants who are similarly situated to Tenant (i.e. rules or
regulations with respect to tenants on specific floors of the Building where
such rules or regulations affect specific floors of the Building or rules or
regulations with respect to tenants with specific types of occupancy where such
rules and regulations affect specific types of occupancy) as Landlord or
Landlord's agents may from time to time adopt on such notice to be given as
Landlord may elect, subject to Tenant's right to dispute the reasonableness
thereof as provided in Article 8 hereof.
"2nd Security Period" shall mean the period commencing on the day next
succeeding the end of the 1st Security Period and ending on the date which is
one (1) year, two (2) months after the Rent Commencement Date occurs.
"2nd Rental Period" shall have the meaning set forth in Section 1.1
hereof.
"Security Amount" shall mean:
(a) One Million Seven Hundred Forty-Five Thousand Six Hundred Eighty
Dollars ($1,745,680) during the 1st Security Period,
(b) One Million Four Hundred Eighty-Five Thousand Five Hundred
Eighty-Four Dollars ($1,485,584) during the 2nd Security Period,
(c) One Million Four Hundred Three Thousand Nine Hundred
Thirty-Three and 34/100 Dollars ($1,403,933.34) during the 3rd Security Period,
(d) One Million Three Hundred Twenty-Two Thousand Two Hundred
Eighty-Two and 68/100 Dollars ($1,322,282.68) during the 4th Security Period,
(e) Nine Hundred Fifty-Six Thousand One Hundred Fifty-Two and 02/100
Dollars ($956,152.02) during the 5th Security Period,
(f) Eight Hundred Seventy-Four Thousand Five Hundred One and 36/100
Dollars ($874,501.36) during the 6th Security Period,
(g) Seven Hundred Ninety-Two Thousand Eight Hundred Fifty and 70/100
Dollars ($792,850.70) during the 7th Security Period, and
(h) Seven Hundred Eleven Thousand Two Hundred and 04/100 Dollars
($711,200.04) during the 8th Security Period,
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"7th Security Period" shall mean the period commencing on the date next
succeeding the end of the expiration of the 6th Security Period and ending on
the date which is six (6) years, two (2) months after the Rent Commencement Date
occurs.
"6th Security Period" shall mean the period commencing on the date next
succeeding the end of the expiration of the 5th Security Period and ending on
the date which is five (5) years, two (2) months after the Rent Commencement
Date occurs.
"Specialty Alterations" shall mean Alterations consisting of kitchens,
executive bathrooms, raised computer floors, computer installations, vaults,
libraries requiring structural reinforcement of the floor, internal staircases,
dumbwaiters, pneumatic tubes, vertical and horizontal transportation systems,
and other Alterations of a similar character.
"Sublease Expenses" shall have the meaning set forth in Section 12.7
hereof.
"Sublease Rent" shall have the meaning set forth in Section 12.7 hereof.
"Sublease Rent Per Square Foot" shall have the meaning set forth in
Section 12.7 hereof.
"Substantial Completion" or "Substantially Completed" or words of similar
import shall mean that Landlord's Work has been substantially completed; it
being agreed that Landlord's Work shall be deemed substantially complete
notwithstanding the fact that (a) minor or insubstantial details of construction
or demolition and/or mechanical adjustment and/or decorative items remain to be
performed, and (b) any Long Lead Work remains to be performed.
"Substitute Accessory Premises" shall have the meaning set forth in
Section 37.12 hereof.
"Substitute Date" shall have the meaning set forth in Section 37.12
hereof.
"Superior Lease(s)" shall mean all ground or underlying leases of the Real
Property or the Building and all renewals, extensions, supplements, amendments
and modifications thereof.
"Taxes" shall have the meaning set forth in Section 27.1 hereof.
"Tax Payment" shall have the meaning set forth in Section 27.2 hereof.
"Tax Statement" shall have the meaning set forth in Section 27.1 hereof.
"Tax Year" shall have the meaning set forth in Section 27.1 hereof.
"Tenant" on the date as of which this Lease is made, shall mean General
Media, Inc., a Delaware corporation, having an office at 277 Park Avenue, New
York, New York but thereafter "Tenant" shall mean only the tenant under this
Lease at the time in question; provided, however,
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that the originally named tenant and any assignee of this Lease shall not be
released from liability hereunder in the event of any assignment of this Lease.
"Tenant Fund" shall have the meaning set forth in Section 3.5 hereof.
"Tenant Statement" shall have the meaning set forth in Section 12.6
hereof.
"Tenant's Engineer" shall have the meaning set forth in Section 13.3
hereof.
"Tenant's Lavatory Work" shall have the meaning set forth in Section 3.6
hereof.
"Tenant's Property" shall mean Tenant's movable fixtures and movable
partitions, telephone, desktop personal computers and other equipment,
furniture, furnishings, decorations and other items of personal property.
"Tenant's Share" shall mean Four and Nine Thousand Eight Hundred
Seventy-Six ten thousandths percent (4.9876%) as the same may be increased or
decreased pursuant to the terms hereof. Landlord and Tenant have agreed that
solely for the purpose of calculating Tenant's Share, the rentable area of the
Building is conclusively deemed to be Nine Hundred Seventy-Seven Thousand Seven
Hundred Eighty (977,780) rentable square feet and the rentable area of the
Office Premises is conclusively deemed to be Forty-Eight Thousand Seven Hundred
Sixty-Eight (48,768) rentable square feet.
"Tentative Monthly Escalation Charge" shall have the meaning set forth in
Section 27.4 hereof.
"Term" shall mean a term which shall commence on the Commencement Date and
shall expire on the Expiration Date.
"Third Engineer" shall have the meaning set forth in Section 13.3 hereof.
"3rd Rental Period" shall have the meaning set forth in Section 1.1
hereof.
"3rd Security Period" shall mean the period commencing on the day next
succeeding the expiration of the 2nd Security Period and ending on the date
which is two (2) years, two (2) months after the Rent Commencement Date occurs.
"Three Month Average" shall have the meaning set forth in Section 13.3
hereof.
"Unavoidable Delays" shall have the meaning set forth in Article 25
hereof.
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ARTICLE 1
DEMISE, PREMISES, TERM, RENT
Section 1.1. (A) Landlord hereby leases to Tenant and Tenant hereby hires
from Landlord the Office Premises for the Term to commence on the date hereof
(the "Commencement Date") and to end on the date (the "Fixed Expiration Date")
which is the last day of the month in which the day immediately preceding the
date which is ten (10) years, seven (7) months after thc Commencement Date
occurs, at an annual rent (the "Office Fixed Rent") of;
(1) One Million Six Hundred Thirty-Two Thousand Seven Hundred
Eleven and 48/100 Dollars ($1,632,711.48) per annum for the period (the "1st
Rental Period") commencing on the Rent Commencement Date and ending on the day
immediately preceding the date which is two (2) months alter the Rent
Commencement Date occurs, or if the Rent Commencement Date shall occur other
than on the first day of the month, ending on the last day of the month in which
the date which is two (2) months after the Rent Commencement Date occurs payable
in equal monthly installments in advance of One Hundred Thirty-Six Thousand
Fifty-Nine and 29/100 Dollars ($136,059.29);
(2) One Million Six Hundred Seventy-Six Thousand Six Hundred
Forty-Three and 84/100 Dollars ($1,676,643.84) per annum for the period (the
"2nd Rental Period") commencing on the day next succeeding the end of the 1st
Rental Period and ending on the day immediately preceding the date which is
three (3) years, two (2) months after the Rent Commencement Date occurs, or if
the Rent Commencement Date shall occur other than on the first day of the month,
ending on the last day of the month in which the date which is three (3) years,
(2) months after the Rent Commencement Date occurs payable in equal monthly
installments of One Hundred Thirty-Nine Thousand Seven Hundred Twenty and 32/100
Dollars ($139,720.32);
(3) One Million Eight Hundred Twenty-Two Thousand Nine Hundred
Forty-Seven and 84/100 Dollars ($1,822,947.84) per annum for the period (the
"3rd Rental Period") commencing on the day next succeeding the end of the 2nd
Rental Period and ending on the day immediately preceding the date which is six
(6) years, two (2) months after the Rent Commencement Date occurs, or if the
Rent Commencement Date shall occur other than on the first day of the month,
ending on the last day of the month in which the date which is six (6) years,
two (2) months after the Rent Commencement Date occurs payable in equal monthly
installments in advance of One Hundred Fifty-One Thousand Nine Hundred Twelve
and 32/100 Dollars ($151,912.32), and
(4) One Million Eight Hundred Fifty-Three Thousand One Hundred
Eighty-Four Dollars ($1,853,184) per annum during the period (the "4th Rental
Period") commencing on the day next succeeding the end of the 3rd Rental Period
and ending on the
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Fixed Expiration Date payable in equal monthly installments in advance of One
Hundred Fifty-Four Thousand Four Hundred Thirty-Two Dollars ($154,432),
(B) Landlord hereby leases to Tenant and Tenant hereby hires from
Landlord the Accessory Premises for the Term to commence on the Commencement
Date and to end on the Fixed Expiration Date (subject to Landlord's rights to
substitute premises for the Accessory Premises as provided in Section 37.12
hereof and to cancel the Lease with respect to the Accessory Premises as
provided in Article 39 hereof), at a annual rent (the "Accessory Fixed Rent")
of:
(1) Thirty-Six Thousand Seven Hundred Ninety-Five Dollars
($36,795) per annum for the period commencing on the Rent Commencement Date and
ending on December 31, 1999 payable in equal monthly installments of Three
Thousand Sixty-Six and 25/100 Dollars ($3,066.25);
(2) Thirty-Seven Thousand Six Hundred Fifty-Three and 55/100
Dollars ($37,653.55) per annum during the period commencing on January 1, 2000
and ending on December 31, 2000 payable in equal monthly installments of Three
Thousand One Hundred Thirty-Seven and 80/100 Dollars ($3,137.80);
(3) Thirty-Eight Thousand Five Hundred Thirty-Three and 56/100
Dollars ($38,533.56) per annum during the period commencing on January 1, 2001
and ending on December 31, 2001 payable in equal monthly installments of Three
Thousand Two Hundred Eleven and 13/100 Dollars ($3,211.13);
(4) Thirty-Nine Thousand Four Hundred Thirty-Five and 58/100
Dollars ($39,435.58) per annum during the period commencing on January 1, 2002
and ending on December 31, 2002 payable in equal monthly installments of Three
Thousand Two Hundred Eighty-Six and 30/100 Dollars ($3,286.30);
(5) Forty Thousand Three Hundred Sixty and 14/100 Dollars
($40,360.14) per annum during the period commencing on January 1, 2003 and
ending on December 31, 2003 payable in equal monthly installments of Three
Thousand Three Hundred Sixty-Three and 35/100 Dollars ($3,363.35);
(6) Forty-One Thousand Three Hundred Seven and 82/100 Dollars
($55,184.55) per annum during the period commencing on January 1, 2004 and
ending on December 31, 2004 payable in equal monthly installments of Three
Thousand Four Hundred Forty-Two and 32/100 Dollars ($3,442.32);
(7) Forty-Two Thousand Two Hundred Seventy-Nine and 19/100
Dollars ($56,502.84) per annum during the period commencing on January 1, 2005
and ending
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on December 31, 2005 payable in equal monthly installments of Three Thousand
Five Hundred Twenty-Three and 27/100 Dollars ($3,523.27);
(8) Forty-Three Thousand Two Hundred Seventy-Four and 85/100
Dollars ($43,274.85) per annum during the period commencing on January 1, 2006
and ending on December 31, 2006 payable in equal monthly installments of Three
Thousand Six Hundred Six and 24/100 ($3,606.24);
(9) Forty-Four Thousand Two Hundred Ninety-Five and 39/100
Dollars ($44,295.39) per annum during the period commencing on January 1, 2007
and ending on December 31, 2007 payable in equal monthly installments of Three
Thousand Six Hundred Ninety-One and 28/100 Dollars ($3,691.28);
(10) Forty-Five Thousand Three Hundred Forty-One and 45/100
Dollars ($45,341.45) per annum during the period commencing on January 1, 2008
and ending on December 31, 2008 payable in equal monthly installments of Three
Thousand Seven Hundred Seventy-Eight and 45/100 Dollars ($3,778.45);
(11) Forty-Six Thousand Four Hundred Thirteen and 66/100
Dollars ($46,413.66) per annum during the period commencing on January 1, 2009
and ending on the Fixed Expiration Date payable in equal monthly installments of
Three Thousand Eight Hundred Sixty-Seven and 81/100 ($3,867.81), and, in each
case, which Tenant agrees to pay in lawful money of the United States which
shall be legal tender in payment of all debts and dues, public and private, at
the time of payment, in advance, on the first (1st) day of each calendar month
during the Term commencing on the Rent Commencement Date, at the office of
Landlord or such other place as Landlord may designate, without any set-off,
offset, abatement or deduction whatsoever (except as expressly provided herein),
except that Tenant shall pay the first full monthly installment on account of
the entire Premises on the execution hereof.
Section 1.2. Tenant shall pay to Landlord, as additional rent, on account
of electricity consumed at the Accessory Premises the sum of Two Hundred Four
and 42/100 Dollars ($204.42) per month during the period commencing on the date
on which Tenant first occupies the Office Premises for the conduct of its
business and ending on the day immediately preceding the Rent Commencement Date.
If such period shall commence or end on a date other than the first (1st) day of
a calendar month, such monthly amount on account of electricity consumed at the
Accessory Premises shall be appropriately adjusted.
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ARTICLE 2
USE AND OCCUPANCY
Section 2.1. Tenant shall use and occupy the Office Premises as general
and executive offices, and, to the extent permitted by applicable Requirements
and the certificate of occupancy for the Building, incidental and ancillary to
such use as general and executive offices, for computer/data center operations
in connection with Tenant's electronic and computer "desktop publishing" portion
of its business, uses incidental thereto and for no other purpose. Tenant
expressly acknowledges and agrees that Landlord has made no representation or
assurances in any manner whatsoever that any such incidental and ancillary use
is permitted by applicable Requirements. Tenant shall use and occupy the
Accessory Premises for storage purposes by Tenant incidental to Tenant's use of
the Office Premises and for no other purpose.
Section 2.2. (A) Tenant shall not use the Premises or any part thereof, or
permit the Premises or any part thereof to be used, (1) for the business of
photographic, multilith or multigraph reproductions or offset printing, except
in connection with, either directly or indirectly, Tenant's own business and/or
activities, (2) for a banking, trust company, depository, guarantee or safe
deposit business, (3) as a savings bank, a savings and loan association, or as a
loan company, (4) for the sale of travelers checks, money orders, drafts,
foreign exchange or letters of credit or for the receipt of money for
transmission, (5) as a stockbroker's or dealer's office or for the underwriting
or sale of securities, (6) by the United States government, the City or State of
New York, any foreign government, the United Nations or any agency or department
of any of the foregoing or any other Person having sovereign or diplomatic
immunity, (7) as a restaurant or bar or for the sale of confectionery, soda or
other beverages, sandwiches, ice cream or baked goods or for the preparation,
dispensing or consumption of food or beverages in any manner whatsoever, except
for consumption by Tenant's officers, employees and business guests, (8) as an
employment agency, executive search firm or similar enterprise, labor union,
school, or vocational training center (except for the training of employees of
Tenant intended to be employed at the Premises), or (9) as a barber shop or
beauty salon.
(B) In connection with, and incidental to, Tenant's use of the
Office Premises for general and executive offices as provided in this Article 2,
Tenant, at its sole cost and expense and upon compliance with all applicable
Requirements, may install a "dwyer" or similar unit in the Office Premises for
the purpose of warming food for the officers, employees and business guests of
Tenant (but not for use as a public restaurant), provided that Tenant shall
obtain all permits required by any Governmental Authorities for the operation
thereof and such installation shall comply with the provisions of this Lease,
including, without limitation, Article 3 hereof. Tenant may also install, at its
sole cost and expense and subject to and in compliance with the provisions of
Articles 3 and 4 hereof, vending machines for the exclusive use of the officers,
employees and business guests of Tenant, each of which vending machines (if it
dispenses any beverages or other liquids or refrigerates) shall have a
waterproof pan located thereunder, connected to a drain.
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ARTICLE 3
ALTERATIONS
Section 3.1. (A) Except as provided in Section 3.4 hereof, Tenant shall
not make any Alterations without Landlord's prior consent. Landlord shall not
unreasonably withhold or delay its consent to any proposed nonstructural
Alterations, provided that such Alterations (i) are not visible from the outside
of the Building, (ii) do not affect any part of the Building other than the
Premises or require any alterations, installations, improvements, additions or
other physical changes to be performed in or made to any portion of the Building
or the Real Property other than the Premises, (iii) do not affect any service
required to be furnished by Landlord to Tenant or to any other tenant or
occupant of the Building, (iv) do not affect the proper functioning of any
Building System, and (v) do not affect the certificate of occupancy for the
Building or the Premises.
(B) (1) Prior to making any Alterations, including, without
limitation, the Initial Alterations, Tenant shall (i) submit to Landlord
detailed plans and specifications (including layout, architectural, mechanical
and structural drawings) for each proposed Alteration and shall not commence any
such Alteration without first obtaining Landlord's approval of such plans and
specifications (except with respect to any nonstructural Alteration referred to
in Section 3.4 hereof for which Landlord's approval is not required or with
respect to any Alteration of such scope that plans and specifications are not
required by any Requirements and would not be customarily requested in
accordance with good construction practice), which, in the case of nonstructural
Alterations which meet the criteria set forth in Section 3.1(A) above, shall not
be unreasonably withheld or delayed, (ii) at Tenant's expense, obtain all
permits, approvals and certificates required by any Governmental Authorities, it
being agreed that (x) Landlord shall cooperate with Tenant as provided in
Section 3.3 hereof in connection with the same, and (y) all filings with
Governmental Authorities to obtain such permits, approvals and certificates
shall be made, at Tenant's expense, by a Person designated by Landlord, and
(iii) furnish to Landlord duplicate original policies or certificates thereof of
worker's compensation (covering all persons to be employed by Tenant, and
Tenant's contractors and subcontractors in connection with such Alteration) and
comprehensive public liability (including property damage coverage) insurance in
such form, with such companies, for such periods and in such amounts as Landlord
may reasonably approve, naming Landlord and its agents, any Lessor and any
Mortgagee, as additional insureds. Upon completion of such Alteration, Tenant,
at Tenant's expense, shall obtain certificates of final approval of such
Alteration required by any Governmental Authority and shall furnish Landlord
with copies thereof, together with the "as-built" plans and specifications for
such Alterations, it being agreed that all filings with Governmental Authorities
to obtain such permits, approvals and certificates shall be made, at Tenant's
expense, by a Person designated by Landlord. All Alterations shall be made and
performed substantially in accordance with the plans and specifications therefor
as approved by Landlord, all Requirements, the Rules and Regulations, and all
rules and regulations relating to Alterations promulgated by Landlord in its
reasonable judgment. All materials and equipment to be incorporated in the
Premises as a result of any Alterations or a part thereof shall be first
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quality and no such materials or equipment (other than Tenant's Property) shall
be subject to any lien, encumbrance, chattel mortgage or title retention or
security agreement. In addition, if Tenant shall be General Media, Inc. and cost
for labor and materials (as reasonably estimated by Landlord's architect,
engineer or contractor) of the Initial Alterations with respect to the Office
Premises exceeds One Million Nine Hundred Fifty Thousand Seven Hundred Twenty
Dollars ($1,950,720), such Initial Alterations shall not be undertaken prior to
Tenant's delivering to Landlord either (i) a performance bond and labor and
materials payment bond (issued by a surety company and in form reasonably
satisfactory to Landlord), each in an amount equal to 120% of the amount equal
to the excess of (x) such estimated cost over (y) One Million Nine Hundred Fifty
Thousand Seven Hundred Twenty Dollars ($1,950,720), or (ii) such other security
as shall be reasonably satisfactory to Landlord or required by any Mortgagee or
Lessor. Further, if Tenant shall be General Media, Inc., all Alterations (other
than the Initial Alterations) at a cost for labor and materials (as reasonably
estimated by Landlord's architect, engineer or contractor) in excess of Four
Hundred Thousand Dollars ($400,000) (which amount shall be increased on the
third (3rd) anniversary of the Commencement Date and annually thereafter by the
annual percentage increase, if any, in the Consumer Price Index), either
individually or in the aggregate with any other Alteration constructed in any
twelve (12) month period, shall not be undertaken prior to Tenant's delivering
to Landlord either (i) a performance bond and labor and materials payment bond
(issued by a surety company and in form reasonably satisfactory to Landlord),
each in an amount equal to 120% of such estimated cost, or (ii) such other
security as shall be reasonably satisfactory to Landlord or required by any
Mortgagee or Lessor. If Tenant shall not be General Media, Inc., no Alteration
shall be undertaken prior to Tenant's delivery to Landlord either (z) a
performance bond and labor and materials payment bond (issued by a surety
company and in form reasonably satisfactory to Landlord), each in an amount
equal to 120% of such estimate cost, or (ii) such other security as shall be
reasonably satisfactory to Landlord or required by any Mortgagee or Lessor. If,
as a result of any Alterations performed by Tenant, including, without
limitation, the Initial Alterations, any alterations, installations,
improvements, additions or other physical changes are required to be performed
or made to any portion of the Building or the Real Property other than the
Premises in order to comply with any Requirement(s), which alterations,
installations, improvements, additions or other physical changes would not
otherwise have had to be performed or made pursuant to applicable Requirement(s)
at such time as such Alterations are being performed, Landlord, at Tenant's sole
cost and expense, may perform or make such alterations, installations,
improvements, additions or other physical changes and take such actions as
Landlord shall deem reasonably necessary in order to comply with Requirements
and Tenant, within five (5) days after demand therefor by Landlord, shall
provide Landlord with such security as Landlord shall reasonably require, in an
amount equal to 120% of the cost of such alterations, installations,
improvements, additions or other physical changes, as reasonably estimated by
Landlord's architect, engineer or contractor. Upon completion by Landlord of
such alterations, installations, improvements, additions or other physical
changes in order to comply with Requirements, Landlord shall return such
security to Tenant less only the actual out-of-pocket costs incurred by Landlord
in connection with such alterations, installations, improvements, additions or
other physical changes. All Alteration(s) requiring the consent of Landlord
shall be performed only under the supervision of an
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independent licensed architect approved by Landlord, which approval shall not be
unreasonably withheld.
(2) If Landlord shall fail to disapprove Tenant's final plans
and specifications for any Alteration within twenty (20) Business Days, or
within ten (10) Business Days (with respect to any resubmission of disapproved
plans), after Landlord's receipt thereof (provided in each instance the same
shall be of a scope and scale reasonably susceptible of review in such periods),
Landlord shall be deemed to have approved such plans and specifications. Any
disapproval given by Landlord shall be accompanied by a statement of the reasons
for such disapproval. Landlord reserves the right to disapprove any plans and
specifications in part, to reserve approval of items shown thereon pending its
review and approval of other plans and specifications, and to condition its
approval upon Tenant making revisions to the plans and specifications or
supplying additional information. Any review or approval by Landlord of any
plans and/or specifications or any preparation or design of any plans by
Landlord's architect or engineer (or any architect or engineer designated by
Landlord) with respect to any Alteration is solely for Landlord's benefit, and
without any representation or warranty whatsoever to Tenant or any other Person
with respect to the compliance thereof with any Requirements, the adequacy,
correctness or efficiency thereof or otherwise.
(C) Tenant shall be permitted to perform Alterations during the
hours of 8:00 A.M. to 6:00 P.M. on Business Days, provided that such work shall
not interfere with or interrupt the operation and maintenance of the Building or
unreasonably interfere with or interrupt the use and occupancy of the Building
by other tenants in the Building. Otherwise, Alterations shall be performed at
such times and in such manner as Landlord may from time to time reasonably
designate. All Tenant's Property installed by Tenant and all Alterations in and
to the Premises which may be made by Tenant at its own cost and expense prior to
and during the Term, shall remain the property of Tenant. Upon the Expiration
Date, Tenant shall remove Tenant's Property from the Premises and, at Tenant's
option, Tenant also may remove, at Tenant's cost and expense, all Alterations
made by Tenant to the Premises, provided, however, in any case, that Tenant
shall repair and restore in a good and workerlike manner to good condition any
damage to the Premises or the Building caused by such removal. Notwithstanding
the foregoing, however, Landlord, upon notice given at least thirty (30) days
prior to the Fixed Expiration Date or upon such shorter notice as is reasonable
under the circumstances upon the earlier expiration of the Term, may require
Tenant to remove any Specialty Alterations, and to repair and restore in a good
and workerlike manner to good condition any damage to the Premises or the
Building caused by such removal. Landlord and Tenant each hereby agree that
Tenant shall not be obligated to remove on the Expiration Date the "dwyer" unit
installed as part of the Initial Alterations.
(D) (1) All Alterations shall be performed, at Tenant's sole cost
and expense, by Landlord's contractor(s) or by contractors, subcontractors or
mechanics approved by Landlord. Prior to making an Alteration, at Tenant's
request, Landlord shall furnish Tenant with a list of contractors who may
perform Alterations to the Premises on behalf of Tenant (it being
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agreed that the list of contractors approved by Landlord with respect to the
performance of the Initial Alterations is attached hereto and made a part hereof
as Exhibit "C"). If Tenant engages any contractor set forth on the list, Tenant
shall not be required to obtain Landlord's consent for such contractor unless,
prior to the earlier of (a) entering into a contract with such contractor, and
(b) the commencement of work by such contractor, Landlord shall notify Tenant
that such contractor has been removed from the list.
(2) Notwithstanding the foregoing, with respect to any
Alteration affecting any Building System, (i) Tenant shall select a contractor
from a list of approved contractors furnished by Landlord to Tenant (containing
at least three (3) contractors) and (ii) the Alteration shall, at Tenant's cost
and expense, be designed by Landlord's engineer for the relevant Building System
(provided the rates of such engineer are commercially competitive, it being
understood and agreed that, as of the date hereof, Landlord's engineer for the
Building is Goldman Copeland Associates, P.C. Consulting Engineers).
(E) Any mechanic's lien filed against the Premises or the Real
Property for work claimed to have been done for, or materials claimed to have
been furnished to, Tenant shall be discharged by Tenant within thirty (30) days
after Tenant shall have received notice thereof (or such shorter period if
required by the terms of any Superior Lease or Mortgage), at Tenant's expense,
by payment or filing the bond required by law. Tenant shall not, at any time
prior to or during the Term, directly or indirectly employ, or permit the
employment of, any contractor, mechanic or laborer in the Premises, whether in
connection with any Alteration or otherwise, if such employment would interfere
or cause any conflict with other contractors, mechanics or laborers engaged in
the construction, maintenance or operation of the Building by Landlord, Tenant
or others, or of any adjacent property owned by Landlord. In the event of any
such interference or conflict, Tenant, upon demand of Landlord, shall cause all
contractors, mechanics or laborers causing such interference or conflict to
leave the Building immediately.
(F) Tenant shall complete the Initial Alterations on or before the
date which is the first (1st) anniversary of the Commencement Date (subject to
extension due to force majeure).
Section 3.2. Tenant shall pay to Landlord or to Landlord's agent, as
additional rent, all actual third party out-of pocket costs and expenses
incurred by Landlord or Landlord's agent in connection with the review of plans
and specifications for any Alterations, including, without limitation, the
Initial Alterations (the "Alteration Fee"). The Alteration Fee shall be paid by
Tenant within ten (10) Business Days after demand therefor together with a
reasonably detailed invoice setting forth such costs and expenses. Tenant also
shall pay any fee charged by any Lessor or Mortgagee in reviewing the plans and
specifications for such Alterations or inspecting the progress of completion of
the same.
Section 3.3. Upon the request of Tenant, Landlord, at Tenant's cost and
expense, shall join in any applications for any permits, approvals or
certificates required to be obtained by
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Tenant in connection with any permitted Alteration (provided that the provisions
of the applicable Requirement shall require that Landlord join in such
application) and shall otherwise cooperate with Tenant in connection therewith,
provided that Landlord shall not be obligated to incur any cost or expense,
including, without limitation, attorneys' fees and disbursements, or suffer any
liability in connection therewith.
Section 3.4. Anything contained in this Lease to the contrary
notwithstanding, Landlord's consent shall not be required with respect to any
nonstructural Alteration, provided that (a) consent for such Alteration is not
required under the terms of any Superior Lease or Mortgage, and (b) such
Alteration (i) is not visible from the outside of the Building, (ii) does not
affect any part of the Building other than the Premises or require any
alterations, installations, improvements, additions or other physical changes to
be performed in or made to any portion of the Building or the Real Property
other than the Premises, (iii) does not affect any service required to be
furnished by Landlord to any other tenant or occupant of the Building, (iv) does
not affect the proper functioning of any Building System, (v) does not affect or
violate the provisions of the certificate of occupancy for the Building or the
Premises, and (vi) the estimated cost of the labor and materials for which,
either individually or in the aggregate with other nonstructural Alterations
constructed within any twelve (12) month period, shall not exceed Two Hundred
Thousand Dollars ($200,000), which amount shall be increased on the first (1st)
anniversary of the Commencement Date and annually thereafter by the annual
percentage increase, if any, in the Consumer Price Index from that in effect on
the date immediately preceding the Commencement Date; provided, however, that at
least ten (10) days prior to making any such nonstructural Alteration, Tenant
shall submit to Landlord for informational purposes only the detailed plans and
specifications for such Alteration, to the extent required by Section
3.1(B)(1)(i) hereof, and any such Alteration shall otherwise be performed in
compliance with the provisions of this Article 3.
Section 3.5. (A) Landlord shall contribute an amount not to exceed One
Million Nine Hundred Fifty Thousand Seven Hundred Twenty Dollars ($1,950,720)
(the "Tenant Fund") toward (i) the "hard" cost of the Initial Alterations with
respect to the Office Premises, and (ii) architect's and engineering fees,
permit fees, expediter's fees and designers' fees in connection with the Initial
Alterations (such "soft costs" and related costs referred to in this clause (ii)
incurred by Tenant in connection with the Initial Alterations with respect to
the Office Premises being collectively referred to herein as "Related Costs").
(B) Landlord shall disburse a portion of the Tenant Fund to Tenant
from time to time, within thirty (30) days after receipt of the items set forth
in Section 3.5(C) hereof, provided that on the date of a request and on the date
of disbursement from the Tenant Fund no Event of Default shall have occurred and
be continuing. Disbursements from the Tenant Fund shall not be made more
frequently than monthly, and shall be in an amount equal to the aggregate
amounts theretofore paid or payable (as certified by (i) either (x) Patrick J.
Gavin, (Executive Vice President and Chief Financial Officer of Tenant), or (y)
any other officer of Tenant of the rank of Vice President or above authorized to
make such certification, and (ii) Tenant's
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independent, licensed architect) to Tenant's contractors, subcontractors and
materialmen which have not been the subject of a previous disbursement from the
Tenant Fund multiplied by a fraction, the numerator of which is One Million Nine
Hundred Fifty Thousand Seven Hundred Twenty Dollars ($1,950,720) and the
denominator of which is the total cost of the Initial Alterations with respect
to the Office Premises as estimated by Tenant's independent licensed architect
and as verified by Landlord, which fraction shall be subject to readjustment as
provided by Section 3.5(C) hereof (but in no event shall such fraction be
greater than one (1)); provided, however, that (i) in no event shall Tenant be
entitled to a disbursement from the Tenant Fund on account of Related Costs in
excess of One Hundred Forty-Six Thousand Three Hundred Four Dollars ($146,304)
unless and until Tenant shall have received its first disbursement of the Tenant
Fund for the cost of the Initial Alterations with respect to the Office Premises
(other than Related Costs), and (ii) in no event shall disbursements of the
Tenant Fund on account of Related Costs exceed Two Hundred Ninety-Two Thousand
Six Hundred Eight Dollars ($292,608).
(C) Landlord's obligation to make disbursements from the Tenant Fund
shall be subject to Landlord's verification of the total cost of the Initial
Alterations with respect to the Office Premises as estimated by Tenant's
independent licensed architect and receipt of: (a) a request for such
disbursement from Tenant signed by either (i) (Patrick J. Gavin (Executive Vice
President and Chief Financial Officer of Tenant) or (ii) any other officer of
Tenant of the rank of Vice President or above authorized to make such
certification, together with the certification required by Section 3.5(B)
hereof, (b) copies of all receipts, invoices and bills for the work completed
and materials furnished in connection with the Initial Alterations with respect
to the Office Premises and incorporated in the Office Premises which are to be
paid from the requested disbursement or which have been paid by Tenant and for
which Tenant is seeking reimbursement, (c) copies of all contracts, work orders,
change orders and other materials relating to the work or materials which are
the subject of the requested disbursement or reimbursement, (d) if requested by
Landlord, waivers of lien from all contractors, subcontractors and materialmen
involved in the performance of the Initial Alterations with respect to the
Office Premises relating to the portion of the Initial Alterations with respect
to the Office Premises theretofore performed and materials theretofore provided
and for which previous disbursements and/or the requested disbursement has been
or is to be made (except to the extent such waivers of lien were previously
furnished to Landlord upon a prior request), (e) a certificate of Tenant's
independent licensed architect stating (i) that, in his opinion, the portion of
the Initial Alterations with respect to the Office Premises theretofore
completed and for which the disbursement is requested was performed in a good
and workerlike manner and substantially in accordance with the final detailed
plans and specifications for such Initial Alterations with respect to the Office
Premises, as approved by Landlord, (ii) the percentage of completion of the
Initial Alterations with respect to the Office Premises as of the date of such
certificate, and (iii) the revised estimated total cost to complete the Initial
Alterations with respect to the Office Premises and (f) the amount of the
Alteration Fee then payable pursuant to Section 3.2 hereof. If the revised
estimated total cost of the Initial Alterations with respect to the Office
Premises increases above the original estimated total cost of the Initial
Alterations with respect to the Office Premises by
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more than five percent (5%), then the denominator of the fraction referred to in
Section 3.5(B) hereof shall be adjusted appropriately.
(D) In no event shall the aggregate amount paid by Landlord to
Tenant under this Section 3.5 exceed the amount of the Tenant Fund. Upon the
completion of the Initial Alterations with respect to the Office Premises and
satisfaction of the conditions set forth in Section 3.5(E) hereof, any amount of
the Tenant Fund which has not been previously disbursed shall be retained by
Landlord. Upon the disbursement of the entire Tenant Fund (or the portion
thereof if upon completion of the Initial Alterations with respect to the Office
Premises the Tenant Fund is not exhausted), Landlord shall have no further
obligation or liability whatsoever to Tenant for further disbursement of any
portion of the Tenant Fund to Tenant. It is expressly understood and agreed that
Tenant shall complete, at its sole cost and expense, the Initial Alterations
with respect to the Office Premises, whether or not the Tenant Fund is
sufficient to fund such completion. Any costs to complete the Initial
Alterations with respect to the Office Premises in excess of the Tenant Fund
shall be the sole responsibility and obligation of Tenant.
(E) Within thirty (30) days alter completion of the Initial
Alterations with respect to the Office Premises, Tenant shall deliver to
Landlord general releases and waivers of lien from all contractors,
subcontractors and materialmen involved in the performance of the Initial
Alterations with respect to the Office Premises and the materials furnished in
connection therewith (unless same previously were furnished pursuant to Section
3.5(C) hereof), and a certificate from Tenant's independent licensed architect
certifying that (i) in his opinion the Initial Alterations with respect to the
Office Premises have been performed in a good and workerlike manner and
completed substantially in accordance with the final detailed plans and
specifications for such Initial Alterations with respect to the Office Premises
as approved by Landlord and (ii) all contractors, subcontractors and materialmen
have been paid for the Initial Alterations with respect to the Office Premises
and materials furnished through such date.
(F) Tenant warrants and covenants that it shall incur costs and
expenses in excess of One Million Nine Hundred Fifty Thousand Seven Hundred
Twenty Dollars ($1,950,720) toward the "hard" cost of the Initial Alterations
with respect to the Office Premises.
Section 3.6. Landlord shall contribute an amount not to exceed Ninety-Five
Thousand Dollars ($95,000) (the "Additional Tenant Fund") toward the reasonable
costs and expenses incurred in connection with the installation of a unisex
lavatory and/or renovation by Tenant of lavatories located in the Premises in
accordance with the Americans with Disabilities Act to the extent applicable
("Tenant's Lavatory Work"). Landlord shall disburse the Additional Tenant Fund
to Tenant on the same terms and conditions as provided in Section 3.5 hereof
with respect to the Tenant Fund, except that whenever the term "Tenant Fund" is
used therein, the term "Additional Tenant Fund" shall be substituted therefor
and whenever the term "Related Costs" is used therein, the term "Additional
Related Costs" shall be substituted therefor. In no event shall disbursements of
the Additional Tenant Fund on account of Additional Related Costs exceed
Fourteen Thousand Two Hundred Fifty Dollars ($14,250). Tenant warrants and
covenants that it
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shall (a) install and/or renovate lavatories located in the Premises in
accordance with the Americans with Disabilities Act to the extent applicable,
and (b) incur costs and expenses in excess of Eighty Thousand Seven Hundred
Fifty Dollars ($80,750) in connection with the "hard" costs of Tenant's Lavatory
Work.
ARTICLE 4
REPAIRS-FLOOR LOAD
Section 4.1. Landlord shall operate, maintain and make all necessary
repairs (both structural and nonstructural) to the part of Building Systems
which provide service to the Premises (but not to the distribution portions of
such Building Systems located within the Premises) and the public portions of
the Building, both exterior and interior, in conformance with standards
applicable to non-institutional first class office buildings in Manhattan.
Tenant, at Tenant's sole cost and expense, shall take good care of the Premises
and the fixtures, equipment and appurtenances therein and the distribution
systems and shall make all nonstructural repairs thereto as and when needed to
preserve them in good working order and condition, except for reasonable wear
and tear, obsolescence and damage for which Tenant is not responsible pursuant
to the provisions of Article 10 hereof. Notwithstanding the foregoing, all
damage or injury to the Premises or to any other part of the Building and
Building Systems, or to its fixtures, equipment and appurtenances, whether
requiring structural or nonstructural repairs, to the extent caused by or
resulting from omission (where this Lease or applicable law imposes a duty to
act), neglect or improper conduct of, or Alterations made by, Tenant, Tenant's
agents, employees, invitees or licensees, shall be repaired at Tenant's sole
cost and expense, by Tenant to the reasonable satisfaction of Landlord (if the
required repairs are nonstructural in nature and do not affect any Building
System), or by Landlord (if the required repairs are structural in nature or
affect any Building System). All of the aforesaid repairs shall be of a quality
and of a class consistent with non-institutional first class office building
work or construction and shall be made in accordance with the provisions of
Article 3 hereof. If Tenant fails after ten (10) days' notice (or such shorter
period as Landlord may be permitted pursuant to any Superior Lease or Mortgage
or such shorter period as may be required due to an emergency) to proceed with
due diligence to make repairs required to be made by Tenant, the same may be
made by Landlord at the expense of Tenant, and the expenses thereof incurred by
Landlord, with interest thereon at the Applicable Rate, shall be paid to
Landlord as additional rent within twenty (20) days after rendition of a bill or
statement therefor. Tenant shall give Landlord prompt notice of any defective
condition in the Building or in any Building System, located in, servicing or
passing through the Premises.
Section 4.2. Tenant shall not place a load upon any floor of the Premises
exceeding one hundred twenty (120) pounds per square foot "live load". Tenant
shall not move any safe, heavy machinery, heavy equipment, business machines,
freight, bulky matter or fixtures into or out of the Building without Landlord's
prior consent, which consent shall not be unreasonably withheld, conditioned or
delayed and shall make payment to Landlord of Landlord's costs in connection
therewith. If such safe, machinery, equipment, freight, bulky matter or fixtures
requires special
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handling, Tenant shall employ only persons holding a Master Rigger's license to
do said work. All work in connection therewith shall comply with all
Requirements and the Rules and Regulations, and shall be done during such hours
as Landlord may reasonably designate. Business machines and mechanical equipment
shall be placed and maintained by Tenant at Tenant's expense in settings
sufficient in Landlord's reasonable judgment to absorb and prevent vibration,
noise and annoyance. Except as expressly provided in this Lease, there shall be
no allowance to Tenant for a diminution of rental value and no liability on the
part of Landlord by reason of inconvenience, annoyance or injury to business
arising from Landlord, Tenant or others making, or failing to make, any repairs,
alterations, additions or improvements in or to any portion of the Building or
the Premises, or in or to fixtures, appurtenances or equipment thereof.
Section 4.3. Landlord shall use its reasonable efforts to minimize
interference with Tenant's use and occupancy of the Premises in making any
repairs, alterations, additions or improvements; provided, however, that
Landlord shall have no obligation to employ contractors or labor at so-called
overtime or other premium pay rates or to incur any other overtime costs or
expenses whatsoever, except that Landlord, at its expense but subject to
recoupment pursuant to Article 27 hereof, shall employ contractors or labor at
so-called overtime or other premium pay rates if necessary to make any repair
required to be made by it hereunder to remedy any condition that either (i)
results in a denial of access to the Premises, (ii) threatens the health or
safety of any occupant of the Premises, or (iii) except in the case of a fire or
other casualty, materially interferes with Tenant's ability to conduct its
business in the Premises. In all other cases, at Tenant's request, Landlord
shall employ contractors or labor at so-called overtime or other premium pay
rates and incur any other overtime costs or expenses in making any repairs,
alterations, additions or improvements, and Tenant shall pay to Landlord, as
additional rent, within ten (10) Business Days after demand therefor accompanied
by reasonably detailed backup documentation, an amount equal to the difference
between the overtime or other premium pay rates and the regular pay rates for
such labor and any other overtime costs or expenses so incurred.
Section 4.4. If any floor of the Office Premises shall be occupied by more
than one (1) occupant (as a result of a subletting or occupancy arrangement, if
any, in accordance with Article 12 hereof which legally demises separate
premises to another occupant), then both the design and decoration of the
elevator areas of each entire floor of the Office Premises and the public
corridors of any floor of the Premises shall be subject to Landlord's approval,
which approval shall not be unreasonably withheld, and such elevator areas and
public corridors shall be maintained and kept clean by Tenant to Landlord's
reasonable satisfaction. Nothing contained in the foregoing sentence, however,
shall vitiate Landlord's obligation to clean the Office Premises as provided in
Section 28.4 hereof.
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ARTICLE 5
WINDOW CLEANING
Tenant shall not clean, nor require, permit, suffer or allow any window in
the Premises to be cleaned from the outside in violation of Section 202 of the
Labor Law, or any other Requirement, or of the rules of the Board of Standards
and Appeals, or of any other board or body having or asserting jurisdiction.
ARTICLE 6
REQUIREMENTS OF LAW
Section 6.1. (A) Tenant, at its sole cost and expense, shall comply with
all Requirements applicable to the use and occupancy of the Premises, including,
without limitation, those applicable to the making of any Alterations therein or
the result of the making thereof and those applicable by reason of the nature or
type of business operated by Tenant in the Premises except that (other than with
respect to the making of Alterations or the result of the making thereof) Tenant
shall not be under any obligation to make any Alteration in order to comply with
any Requirement applicable to the mere general "office" use (as opposed to the
manner of use) of the Office Premises or mere general "storage" use (as opposed
to the manner of use) of the Accessory Premises, as the case may be, unless
otherwise expressly required herein. Tenant shall not do or permit to be done
any act or thing upon the Premises which will invalidate or be in conflict with
a standard "all-risk" insurance policy; and shall not do, or permit anything to
be done in or upon the Premises, or bring or keep anything therein, except as
now or hereafter permitted by the New York City Fire Department, New York Board
of Fire Underwriters, the Insurance Services Office or other authority having
jurisdiction and then only in such quantity and manner of storage as not to
increase the rate for fire insurance applicable to the Building, or use the
Office Premises in a manner (as opposed to mere use as general "offices") or use
the Accessory Premises in a manner (as opposed to mere use as general "storage")
which shall increase the rate of fire insurance on the Building or on property
located therein, over that in similar type buildings or in effect on the
Commencement Date. If by reason of Tenant's failure to comply with the
provisions of this Article, the fire insurance rate shall be higher than it
otherwise would be, then Tenant shall desist from doing or permitting to be done
any such act or thing and shall reimburse Landlord, as additional rent
hereunder, for that part of all fire insurance premiums thereafter paid by
Landlord which shall have been charged because of such failure by Tenant, and
shall make such reimbursement within twenty (20) days after demand by Landlord.
In any action or proceeding wherein Landlord and Tenant are parties, a schedule
or "make up" of rates for the Building or the Premises issued by the Insurance
Services Office, or other body fixing such fire insurance rates, shall be
conclusive evidence of the facts therein stated and of the several items and
charges in the fire insurance rates then applicable to the Building.
(B) Landlord, at its sole cost and expense (but subject to
recoupment as provided in Article 27 hereof), shall comply with all Requirements
applicable to the Premises
<PAGE>
and the Building which affect Tenant's use or occupancy of the Premises other
than those Requirements with respect to which Tenant or other tenants or
occupants of the Building shall be required to comply, subject to Landlord's
right to contest the applicability or legality thereof.
Section 6.2. Tenant, at its sole cost and expense and after notice to
Landlord, may contest by appropriate proceedings prosecuted diligently and in
good faith, the legality or applicability of any Requirement affecting the
Premises, provided that (a) Landlord (or any Indemnitee) shall not be subject to
imprisonment or to prosecution for a crime, nor shall the Real Property or any
part thereof be subject to being condemned or vacated, nor shall the certificate
of occupancy for the Premises or the Building be suspended or threatened to be
suspended by reason of non-compliance or by reason of such contest; (b) before
the commencement of such contest, if Landlord or any Indemnitee may be subject
to any civil fines or penalties or other criminal penalties or if Landlord may
be liable to any independent third party as a result of such noncompliance,
Tenant shall furnish to Landlord either (i) a bond of a surety company
satisfactory to Landlord, in form and substance reasonably satisfactory to
Landlord, and in an amount equal to one hundred twenty percent (120%) of the sum
of (A) the cost of such compliance, (B) the criminal or civil penalties or fines
that may accrue by reason of such non-compliance (as reasonably estimated by
Landlord), and (C) the amount of such liability to independent third parties (as
reasonably estimated by Landlord), and shall indemnify Landlord (and any
Indemnitee) against the cost of such compliance and liability resulting from or
incurred in connection with such contest or non-compliance (except that Tenant
shall not be required to furnish such bond to Landlord if it has otherwise
furnished any similar bond required by law to the appropriate Governmental
Authority and has named Landlord as a beneficiary thereunder) or (ii) other
security reasonably satisfactory in all respects to Landlord; (c) such
non-compliance or contest shall not constitute or result in a violation (either
with the giving of notice or the passage of time or both) of the terms of any
Mortgage or Superior Lease, or if such Superior Lease or Mortgage shall
condition such non-compliance or contest upon the taking of action or furnishing
of security by Landlord, such action shall be taken or such security shall be
furnished at the expense of Tenant (but without duplication for security in
clause (b) above); and (d) Tenant shall keep Landlord regularly advised as to
the status of such proceedings. Without limiting the applicability of the
foregoing, Landlord (or any Indemnitee) shall be deemed subject to prosecution
for a crime if Landlord (or any Indemnitee), a Lessor, a Mortgagee or any of
their officers, directors, partners, shareholders, agents or employees is
charged with a crime of any kind whatsoever as a result of, or in connection
with, Tenant's contest of or non-compliance with a Requirement, unless such
charges are withdrawn ten (10) days before Landlord (or any Indemnitee), such
Lessor or such Mortgagee or such officer, director, partner, shareholder, agent
or employee, as the case may be, is required to plead or answer thereto.
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ARTICLE 7
SUBORDINATION
Section 7.1. This Lease shall be subject and subordinate to each and every
Superior Lease and to each and every Mortgage. This clause shall be
self-operative and no further instrument of subordination shall be required from
Tenant to make the interest of any Lessor or Mortgagee superior to the interest
of Tenant hereunder; however, Tenant shall execute and deliver promptly any
instrument, in recordable form, that Landlord, any Mortgagee or Lessor may
request to evidence and confirm such subordination. If the date of expiration of
any Superior Lease shall be the same day as the Expiration Date, the Term shall
end and expire twelve (12) hours prior to the expiration of the Superior Lease.
Tenant shall not knowingly do anything that would constitute a default under any
Superior Lease or Mortgage, or omit to do anything that Tenant is obligated to
do under the terms of this Lease so as to cause Landlord to be in default
thereunder. If, in connection with the financing of the Real Property, the
Building or the interest of the lessee under any Superior Lease, or if in
connection with the entering into of a Superior Lease, any lending institution
or Lessor shall request reasonable modifications of this Lease that do not
increase Tenant's monetary obligations under this Lease, or adversely affect or
diminish the rights (other than to a de minimis extent), or increase the other
obligations of Tenant under this Lease (other than to a de minimis extent), or
reduce Landlord's obligations under this Lease (other than to a de minimis
extent), or increase Landlord's rights under this Lease (other than to a de
minimis extent), Tenant shall make such modifications.
Section 7.2. If at any time prior to the expiration of the Term, any
Superior Lease shall terminate or be terminated for any reason or any Mortgagee
comes into possession of the Real Property or the Building or the estate created
by any Superior Lease by receiver or otherwise, Tenant agrees, at the election
and upon demand of any owner of the Real Property or the Building, or of the
Lessor, or of any Mortgagee in possession of the Real Property or the Building,
to attorn, from time to time, to any such owner, Lessor or Mortgagee or any
person acquiring the interest of Landlord as a result of any such termination,
or as a result of a foreclosure of the Mortgage or the granting of a deed in
lieu of foreclosure, upon the then executory terms and conditions of this Lease,
subject to the provisions of Section 7.1 hereof and this Section 7.2, for the
remainder of the Term, provided that such owner, Lessor or Mortgagee, or
receiver caused to be appointed by any of the foregoing, as the case may be,
shall then be entitled to possession of the Premises and provided further that
such owner, Lessor or Mortgagee, as the case may be, or anyone claiming by,
through or under such owner, Lessor or Mortgagee, as the case may be, including
a purchaser at a foreclosure sale, shall not be:
(1) liable for any act or omission of any prior landlord
(including, without limitation, the then defaulting landlord), or
(2) subject to any defense or offsets (other than rights to an
abatement expressly set forth in this Lease) which Tenant may have against any
prior landlord (including, without limitation, the then defaulting landlord), or
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(3) bound by any payment of Rental which Tenant may have made
to any prior landlord (including, without limitation, the then defaulting
landlord) more than thirty (30) days in advance of the date upon which such
payment was due, or
(4) bound by any obligation to make any payment to or on
behalf of Tenant, including, without limitation, payments on account of any
Tenant Fund, or
(5) bound by any obligation to perform any work or to make
improvements to the Premises, except for (i) repairs and maintenance pursuant to
the provisions of Article 4, the need for which repairs and maintenance first
arises or continues after the date upon which such owner, Lessor, or Mortgagee
shall be entitled to possession of the Premises, (ii) repairs to the Premises or
any part thereof as a result of damage by fire or other casualty pursuant to
Article 10 hereof, but only to the extent that such repairs can be reasonably
made from the net proceeds of any insurance actually made available to such
owner, Lessor or Mortgagee, and (iii) repairs to the Premises as a result of a
partial condemnation pursuant to Article II hereof, but only to the extent that
such repairs can be reasonably made from the net proceeds of any award made
available to such owner, Lessor or Mortgagee, or
(6) bound by any amendment or modification of this Lease made
without its consent, or
(7) bound to return Tenant's security deposit, if any, until
such deposit has come into its actual possession and Tenant would be entitled to
such security deposit pursuant to the terms of this Lease.
The provisions of this Section 7.2 shall inure to the benefit of any such owner,
Lessor or Mortgagee, shall apply notwithstanding that, as a matter of law, this
Lease may terminate upon the termination of any Superior Lease, shall be
self-operative upon any such demand, and no further instrument shall be required
to give effect to said provisions. Tenant, however, upon demand of any such
owner, Lessor or Mortgagee, shall execute, at Tenant's expense, from time to
time, instruments, in recordable form, in confirmation of the foregoing
provisions of this Section 7.2, satisfactory to any such owner, Lessor or
Mortgagee, acknowledging such attornment and setting forth the terms and
conditions of its tenancy. Nothing contained in this Section 7.2 shall be
construed to impair any right otherwise exercisable by any such owner, Lessor or
Mortgagee. Notwithstanding the provisions of this Section 7.2, this Lease shall
not terminate by reason of the termination of any Superior Lease without the
prior written consent of the Mortgagee of the Mortgage which is a first mortgage
on Landlord's interest in the Real Property or the leasehold estate created by
such Superior Lease.
Section 7.3. From time to time, within seven (7) days next following
request by Landlord, any Mortgagee or any Lessor, Tenant shall deliver to
Landlord, such Mortgagee or such Lessor a written statement executed by Tenant,
in form satisfactory to Landlord, such Mortgagee or such Lessor, (1) stating
that this Lease is then in full force and effect and has not
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been modified (or if modified, setting forth all modifications), (2) setting
forth the date to which the Fixed Rent, Escalation Rent and other items of
Rental have been paid, (3) stating whether or not, to the best knowledge of
Tenant, Landlord is in default under this Lease, and, if Landlord is in default,
setting forth the specific nature of all such defaults, and (4) as to any other
matters reasonably requested by Landlord, such Mortgagee or such Lessor and
related to this Lease. Tenant acknowledges that any statement delivered pursuant
to this Section 7.3 may be relied upon by any purchaser or owner of the Real
Property or the Building, or Landlord's interest in the Real Property or the
Building or any Superior Lease, or by any Mortgagee, or by an assignee of any
Mortgagee, or by any Lessor.
Section 7.4. From time to time, within seven (7) days next following
request by Tenant, Landlord shall deliver to Tenant a written statement executed
by Landlord (i) stating that this Lease is then in full force and effect and has
not been modified (or if modified, setting forth all modifications), (ii)
setting forth the date to which the Fixed Rent, Escalation Rent and any other
items of Rental have been paid, (iii) stating whether or not, to the best
knowledge of Landlord, Tenant is in default under this Lease, and, if Tenant is
in default, setting forth the specific nature of all such defaults, and (iv) as
to any other matters reasonably requested by Tenant and related to this Lease.
Section 7.5. As long as any Superior Lease or Mortgage shall exist, Tenant
shall not seek to terminate this Lease by reason of any act or omission of
Landlord until Tenant shall have given written notice of such act or omission to
all Lessors and Mortgagees at such addresses as shall have been furnished to
Tenant by such Lessors and Mortgagees and, if any such Lessor or Mortgagee, as
the case may be, shall have notified Tenant within ten (10) Business Days
following receipt of such notice of its intention to remedy such act or
omission, until a reasonable period of time shall have elapsed following the
giving of such notice, during which period such Lessors and Mortgagees shall
have the right, but not the obligation, to remedy such act or omission.
Section 7.6. Tenant hereby irrevocably waives any and all right(s) it may
have in connection with any zoning lot merger or transfer of development rights
with respect to the Real Property including, without limitation, any rights it
may have to be a party to, to contest, or to execute, any Declaration of
Restrictions (as such term is defined in Section 12-10 of the Zoning Resolution
of The City of New York effective December 15, 1961, as amended) with respect to
the Real Property, which would cause the Premises to be merged with or unmerged
from any other zoning lot pursuant to such Zoning Resolution or to any document
of a similar nature and purpose, and Tenant agrees that this Lease shall be
subject and subordinate to any Declaration of Restrictions or any other document
of similar nature and purpose now or hereafter affecting the Real Property. In
confirmation of such subordination and waiver, Tenant shall execute and deliver
promptly any certificate or instrument that Landlord reasonably may request.
Section 7.7. (A) Landlord shall use its reasonable efforts to obtain (a)
from each Mortgagee, an agreement in form and substance satisfactory to such
Mortgagee to the effect that,
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if there shall be a foreclosure of its Mortgage, such Mortgagee will not make
Tenant a party defendant to such foreclosure, evict Tenant, disturb Tenant's
possession under this Lease, or terminate or disturb Tenant's leasehold estate
or rights hereunder, and will recognize Tenant as the direct tenant of such
Mortgagee on the same terms and conditions as are contained in this Lease
(subject to the provisions of Section 7.2 hereof) provided no Event of Default
shall have occurred and be continuing hereunder, and (b) from each Lessor, an
agreement in form and substance satisfactory to such Lessor to the effect that
if its Superior Lease shall terminate or be terminated for any reason, Lessor
will not evict Tenant, disturb Tenant's possession under this Lease, or
terminate or disturb Tenant's leasehold estate or rights hereunder, and will
recognize Tenant as the direct tenant of such Lessor on the same terms and
conditions as are contained in this Lease (subject to the provisions of Section
7.2 hereof) and Lessor shall not make Tenant a party in any action to terminate
such Superior Lease or to remove or evict Tenant from the Premises provided no
Event of Default shall have occurred and be continuing (any such agreement, or
any agreement of similar import, from a Mortgagee or a Lessor, as the case may
be, being hereinafter referred to as a "Nondisturbance Agreement").
(B) Landlord shall have no liability to Tenant for its failure to
obtain any Nondisturbance Agreement (it being expressly agreed that nothing
contained in this sentence shall affect Landlord's obligations to use reasonable
efforts hereunder). Landlord's agreement to use reasonable efforts hereunder
shall not impose any obligation upon Landlord (i) to incur any cost or expense
(other than reasonable attorneys' fees and disbursements) or (ii) to institute
any legal or other proceeding in connection with obtaining such Nondisturbance
Agreement.
(C) If required by the Mortgagee or the Lessor, within seven (7)
days after notice thereof, Tenant shall join in any Nondisturbance Agreement to
indicate its concurrence with the provisions thereof to attorn to such Mortgagee
or Lessor, as the case may be, as Tenant's landlord hereunder on the terms and
conditions set forth in such Nondisturbance Agreement.
Section 7.8. Landlord represents that, on the date on which this Lease is
unconditionally executed and delivered by Landlord and Tenant, there is no
Superior Lease and the Mortgagee is Connecticut General Life insurance Company
(the "Existing Mortgagee").
Section 7.9. Anything contained herein to the contrary notwithstanding,
simultaneously with the execution and unconditional delivery of this Lease by
Landlord and Tenant, Landlord has delivered to Tenant a Nondisturbance Agreement
in favor of Tenant, executed, acknowledged and delivered by the Existing
Mortgagee and Tenant has delivered to Landlord a copy of such Nondisturbance
Agreement executed, acknowledged and delivered by the Existing Mortgagee and
Tenant.
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ARTICLE 8
RULES AND REGULATIONS
Tenant and Tenant's contractors, employees, agents, visitors, invitees and
licensees shall comply with the Rules and Regulations. Tenant shall have the
right to dispute the reasonableness of any additional Rule or Regulation
hereafter adopted by Landlord. If Tenant disputes the reasonableness of any
additional Rule or Regulation hereafter adopted by Landlord, the dispute shall
be determined by arbitration in the City of New York in accordance with the
rules and regulations then obtaining of the American Arbitration Association or
its successor. Any such determination shall be final and conclusive upon the
parties hereto. The right to dispute the reasonableness of any additional Rule
or Regulation upon Tenant's part shall be deemed waived unless the same shall be
asserted by service of a notice upon Landlord within thirty (30) days after
receipt by Tenant of notice of the adoption of any such additional Rule or
Regulation. Nothing in this Lease contained shall be construed to impose upon
Landlord any duty or obligation to enforce the Rules and Regulations or terms,
covenants or conditions in any other lease against any other tenant, and
Landlord shall not be liable to Tenant for violation of the same by any other
tenant, its employees, agents, visitors or licensees, except that Landlord shall
not enforce any Rule or Regulation against Tenant which Landlord shall not then
be enforcing against all other office tenants in the Building (other than
Landlord or its Affiliates).
ARTICLE 9
INSURANCE, PROPERTY LOSS OR DAMAGE; REIMBURSEMENT
Section 9.1. (A) Any Building employee to whom any property shall be
entrusted by or on behalf of Tenant shall be deemed to be acting as Tenant's
agent with respect to such property and neither Landlord nor its agents shall be
liable for any damage to property of Tenant or of others entrusted to employees
of the Building, nor for the loss of or damage to any property of Tenant by
theft or otherwise. Neither Landlord nor its agents shall be liable for any
injury (or death) to persons or damage to property, or interruption of Tenant's
business, resulting from fire or other casualty; nor shall Landlord or its
agents be liable for any such injury (or death) to persons or damage caused by
other tenants or persons in the Building or caused by construction of any
private, public or quasi-public work; nor shall Landlord be liable for any
injury (or death) to persons or damage to property or improvements, or
interruption of Tenant's business, resulting from any latent defect in the
Premises or in the Building (provided that the foregoing shall not relieve
Landlord from its obligations, if any, to repair such latent defect pursuant to
the provisions of Article 4 hereof or affect Tenant's right, if any, regarding
an abatement of the Fixed Rent and Escalation Rent as set forth in Section 14.2
hereof). Anything in this Article 9 to the contrary notwithstanding, except as
set forth in Articles 4, 10, 13,28 and 35 of this Lease and otherwise as
expressly provided herein, Landlord shall not be relieved from responsibility
directly to Tenant for any loss or damage caused directly to Tenant wholly or in
part by the negligent acts or omissions of Landlord. Nothing in the foregoing
sentence shall affect any right
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of Landlord to the indemnity from Tenant to which Landlord may be entitled under
Article 35 hereof in order to recoup for payments made to compensate for losses
of third parties.
(B) If at any time any windows of the Premises are temporarily
closed, darkened or bricked-up due to any Requirement or by reason of repairs,
maintenance, alterations, or improvements to the Building, or any of such
windows are permanently closed, darkened or bricked-up due to any Requirement,
Landlord shall not be liable for any damage Tenant may sustain thereby and
Tenant shall not be entitled to any compensation therefor, nor abatement or
diminution of Fixed Rent or any other item of Rental, nor shall the same release
Tenant from its obligations hereunder, nor constitute an actual or constructive
eviction, in whole or in part, by reason of inconvenience or annoyance to
Tenant, or injury to or interruption of Tenant's business, or otherwise, nor
impose any liability upon Landlord or its agents. If at any time the windows of
the Premises are temporarily closed, darkened or bricked-up, as aforesaid, then,
unless Tenant is required pursuant to the Lease to perform the repairs,
maintenance, alterations, or improvements, or to comply with the Requirements,
which resulted in such windows being closed, darkened or bricked-up, Landlord
shall perform such repairs, maintenance, alterations or improvements and comply
with the applicable Requirements with reasonable diligence and otherwise take
such action as may be reasonably necessary to minimize the period during which
such windows are temporarily closed, darkened, or bricked-up. Tenant expressly
acknowledges that the windows of the Premises on the easterly side of the
Building are "lot line" windows and therefore may have to be temporarily or
permanently closed, darkened or bricked up during the Term.
(C) Tenant shall immediately notify Landlord of any fire or accident
in the Premises.
Section 9.2. Tenant shall obtain and keep in full force and effect (i) an
"all risk" insurance policy for Tenant's Specialty Alterations and Tenant's
Property at the Premises in an amount equal to one hundred percent (100%) of the
replacement value thereof, and (ii) a policy of commercial general liability and
property damage insurance on an occurrence basis, with a broad form contractual
liability endorsement. Such policies shall provide that Tenant is named as the
insured. Landlord, Landlord's managing agent, Landlord's agents and any Lessors
and any Mortgagees (whose names shall have been furnished to Tenant) shall be
added as additional insureds, as their respective interests may appear, with
respect to the insurance required to be carried pursuant to clauses (i) and (ii)
above. Such policy with respect to clause (ii) above shall include a provision
under which the insurer agrees to indemnify, defend and hold Landlord,
Landlord's managing agent, Landlord's agents and such Lessors and Mortgagees
harmless from and against, subject to the limits of liability set forth in this
Section 9.2, all cost, expense and liability arising out of, or based upon, any
and all claims, accidents, injuries and damages mentioned in Article 35. In
addition, the policy required to be carried pursuant to clause (ii) above shall
contain a provision that (a) no act or omission of Tenant shall affect or limit
the obligation of the insurer to pay the amount of any loss sustained and (b)
the policy shall be non-cancelable with respect to Landlord, Landlord's managing
agent, Landlord's agents and such Lessors and Mortgagees (whose names and
addresses shall have been furnished to Tenant) unless
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thirty (30) days' prior written notice shall have been given to Landlord by
certified mail, return receipt requested, which notice shall contain the policy
number and the names of the insured and additional insureds. In addition, upon
receipt by Tenant of any notice of cancellation or any other notice from the
insurance carrier which may adversely affect the coverage of the insureds under
such policy of insurance, Tenant shall immediately deliver to Landlord and any
other additional insured hereunder a copy of such notice. The minimum amounts of
liability under the policy of insurance required to be carried pursuant to
clause (ii) above shall be a combined single limit with respect to each
occurrence in an amount of $3,000,000 for injury (or death) to persons and
damage to property, which amount shall be increased from time to time to that
amount of insurance which in Landlord's reasonable judgment is then being
customarily required by prudent landlords of non-institutional first class
buildings in New York City. All insurance required to be carried by Tenant
pursuant to the terms of this Lease shall be effected under valid and
enforceable policies issued by reputable and independent insurers permitted to
do business in the State of New York, and rated in Best's Insurance Guide, or
any successor thereto (or if there be none, an organization having a national
reputation) as having a general policyholder rating of "A" and a financial
rating of at least "XIII".
Section 9.3. Landlord shall obtain and keep in full force and effect
insurance against loss or damage by fire and other casualty to the Building,
including Tenant's Alterations (exclusive of Specialty Alterations), as may be
insurable under then available standard forms of "all-risk" insurance policies,
in an amount equal to one hundred percent (100%) of the replacement value
thereof or in such lesser amount as will avoid co-insurance (including an
"agreed amount" endorsement). Notwithstanding the foregoing, Landlord shall not
be liable to Tenant for any failure to insure, replace or restore any
Alterations unless, if Landlord's insurer shall require notice of the completion
of such Alterations and the maintenance of adequate records in connection
therewith, Tenant shall have notified Landlord of the completion of such
Alterations and of the cost thereof, and shall have maintained adequate records
with respect to such Alterations to facilitate the adjustment of any insurance
claims with respect thereto. Tenant shall cooperate with Landlord and Landlord's
insurance companies in the adjustment of any claims for any damage to the
Building or such Alterations.
Section 9.4. On or prior to the Commencement Date, each party shall
deliver to the other party appropriate certificates of insurance, including
evidence of waivers of subrogation required pursuant to Section 10.5 hereof,
required to be carried by each party pursuant to this Article 9. Evidence of
each renewal or replacement of a policy shall be delivered by each party to the
other party at least twenty (20) days prior to the expiration of such policy.
Section 9.5. Tenant acknowledges that Landlord shall not carry insurance
on, and shall not be responsible for damage to, Tenant's Property or Specialty
Alterations, and that Landlord shall not carry insurance against, or be
responsible for any loss suffered by Tenant due to, interruption of Tenant's
business; it being expressly understood and agreed that the foregoing shall not
affect Tenant's right, if any, regarding an abatement of the Fixed Rent and
Escalation Rent pursuant to Section 14.2 hereof.
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Section 9.6. If notwithstanding the recovery of insurance proceeds by
Landlord or Tenant for loss, damage or destruction of its respective property
(or rental value or business interruptions) either party is liable to the other
party with respect thereto or is obligated under this Lease to make replacement,
repair or restoration, then, at the option of the party having such liability,
either the amount of the net proceeds of the other party's insurance against
such loss, damage or destruction (i) shall be offset against such party's
liability to the other party therefor, or (ii) shall be made available to the
party having such liability to pay for replacement, repair or restoration.
Landlord and Tenant hereby agree to look to the insurance which they are each
required to maintain hereunder prior to making a claim against the other.
ARTICLE 10
DESTRUCTION-FIRE OR OTHER CAUSE
Section 10.1. (A) If the Premises (including Alterations other than
Specialty Alterations) shall be damaged by fire or other casualty, Tenant shall
give prompt notice thereof to Landlord and the damage, with such modifications
as shall be required in order to comply with Requirements shall be diligently
repaired by and at the expense of Landlord to substantially the condition prior
to the damage, and until such repairs which are required to be performed by
Landlord (excluding Long Lead Work) shall be substantially completed (of which
substantial completion Landlord shall promptly notify Tenant) the Fixed Rent,
Escalation Rent, Office Space Factor and Accessory Space Factor (as applicable
and taking into account which portion of the Premises is damage or rendered
unusable and making adjustment for the fact that the Fixed Rent per rentable
square foot is different with respect to the Office Premises and the Accessory
Premises and that Tenant's Share has been calculated without taking into account
the Accessory Premises) shall be reduced in the proportion which the area of the
part of the Premises which is not usable and is actually not used by Tenant,
bears to the total area of the Premises immediately prior to such casualty (it
being understood and agreed that Tenant's Share has been determined with respect
to the Office Premises only and that Tenant is not obligated to pay Operating
Payments or Tax Payments with respect to the Accessory Premises). Upon the
substantial completion of such repairs (excluding Long Lead Work), Landlord
shall diligently prosecute to completion any items of Long Lead Work remaining
to be completed. Landlord shall have no obligation to repair any damage to, or
to replace, any Specialty Alterations or Tenant's Property, which Tenant shall
complete promptly after substantial completion of Landlord's repair obligations
under this Article 10. In addition, Landlord shall not be obligated to repair
any damage to, or to replace, any Alterations unless, if Landlord's insurers
shall require notice of the completion of such Alterations and the maintenance
of adequate records in connection therewith, Tenant shall have notified Landlord
of the completion of such Alterations and the cost thereof, and shall have
maintained adequate records with respect to such Alterations. Tenant shall make
all necessary repairs to the Specialty Alterations and same shall be completed
promptly after substantial completion of Landlord's repair obligations under
this Article 10. Landlord shall use its reasonable efforts to minimize
interference with Tenant's use and occupancy in making any repairs pursuant to
this Section. Anything contained herein to the contrary notwithstanding, if
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the Premises (including any Alterations) are damaged by fire or other casualty
at any time prior to the completion of the Initial Alterations, Landlord's
obligation to repair the Premises (and any Alterations) shall be limited to
repair of the part of the Building Systems serving the Premises on the
Commencement Date, but not the distribution portions of such Building Systems
located within the Premises, the floor and ceiling slabs of the Premises and the
exterior walls of the Premises, all to substantially the same condition which
existed on the Commencement Date, with such modifications as shall be required
in order to comply with Requirements.
(B) Prior to the substantial completion of Landlord's repair
obligations set forth in Section 10.1(A) hereof, Landlord shall provide Tenant
and Tenant's contractor, subcontractors and materialmen access to the Premises
to perform Specialty Alterations (or Alterations, if Landlord is not obligated
to repair same pursuant to the provisions hereof), on the following terms and
conditions (but not to occupy the same for the conduct of business):
(1) Tenant shall not commence work in any portion of the
Premises until the date specified in a notice from Landlord to Tenant stating
that the repairs required to be made by Landlord have been or will be completed
to the extent reasonably necessary, in Landlord's reasonable discretion, to
permit the commencement of the Specialty Alterations (or Alterations, if
Landlord is not obligated to repair same pursuant to the provisions hereof) then
prudent to be performed in accordance with good construction practice in the
portion of the Premises in question without interference with, and consistent
with the performance of, the repairs remaining to be performed.
(2) Such access by Tenant shall be deemed to be subject to all
of the applicable provisions of this Lease, including, without limitation,
Tenant's obligation to pay to Landlord the Electricity Additional Rent, the
Electricity Fee and/or the Electricity Inclusion Charge, as the case may be,
except that there shall be no obligation on the part of Tenant solely because of
such access to pay any Fixed Rent or Escalation Rent with respect to the
affected portion of the Premises for any period prior to substantial completion
of the repairs.
(3) It is expressly understood that if Landlord shall be
delayed from substantially completing the repairs due to any acts of Tenant, its
agents, servants, employees or contractors, including, without limitation, by
reason of the performance of any Specialty Alteration (or Alteration, if
Landlord is not obligated to repair same pursuant to the provisions hereof), by
reason of Tenant's failure or refusal to comply or to cause its architects,
engineers, designers and contractors to comply with any of Tenant's obligations
described or referred to in this Lease, or if such repairs are not completed
because under good construction scheduling practice such repairs should be
performed after completion of any Specialty Alteration (or Alteration, if
Landlord is not obligated to repair same pursuant to the provisions hereof),
then such repairs shall be deemed substantially complete on the date when the
repairs would have been substantially complete but for such delay and the
expiration of the abatement of the Tenant's obligations hereunder shall not be
postponed by reason of such delay. Any additional
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costs to Landlord to complete any repairs occasioned by such delay shall be paid
by Tenant to Landlord within ten (10) days after demand, as additional rent.
Section 10.2. Anything contained in Section 10.1 hereof to the contrary
notwithstanding, if the Building shall be so damaged by fire or other casualty
that, in Landlord's opinion, substantial alteration, demolition, or
reconstruction of the Building shall be required (whether or not the Premises
shall have been damaged or rendered untenantable), then Landlord, at Landlord's
option, may, not later than ninety (90) days following the damage, give Tenant a
notice in writing terminating this Lease, provided that if the Premises are not
substantially damaged or rendered substantially untenantable, Landlord may not
terminate this Lease unless it shall elect to terminate leases (including this
Lease), affecting at least fifty percent (50%) of the rentable area of the
Building (excluding any rentable area occupied by Landlord or its Affiliates).
If Landlord elects to terminate this Lease, the Term shall expire upon a date
set by Landlord, but not sooner than the sixtieth (60th) day after such notice
is given, and Tenant shall vacate the Premises and surrender the same to
Landlord in accordance with the provisions of Article 20 hereof. Upon the
termination of this Lease under the conditions provided for in this Section
10.2, the Fixed Rent and Escalation Rent shall be apportioned and any prepaid
portion of Fixed Rent and Escalation Rent for any period after such date shall
be refunded by Landlord to Tenant.
Section 10.3. (A) Within forty-five (45) days after notice to Landlord of
any damage described in Section 10.1 hereof, Landlord shall deliver to Tenant a
statement prepared by a reputable contractor setting forth such contractor's
estimate as to the time required to repair such damage, exclusive of time
required to repair any Specialty Alterations (which are Tenant's obligation to
repair) or to perform Long Lead Work. If the estimated time period exceeds
twelve (12) months from the date of such statement, Tenant may elect to
terminate this Lease by notice to Landlord not later than thirty (30) days
following receipt of such statement. If Tenant makes such election, the Term
shall expire upon the thirtieth (30th) day after notice of such election is
given by Tenant, and Tenant shall vacate the Premises and surrender the same to
Landlord in accordance with the provisions of Article 20 hereof. If Tenant shall
not have elected to terminate this Lease pursuant to this Article 10 (or is not
entitled to terminate this Lease pursuant to this Article 10), the damages shall
be diligently repaired by and at the expense of Landlord as set forth in Section
10.1 hereof.
(B) Notwithstanding the foregoing, if the Premises shall be
substantially damaged during the last year of the Term, Landlord or Tenant may
elect by notice, given within thirty (30) days after the occurrence of such
damage, to terminate this Lease and if either party makes such election, the
Term shall expire upon the thirtieth (30th) day after notice of such election is
given by such party and Tenant shall vacate the Premises and surrender the same
to Landlord in accordance with the provisions of Article 20 hereof.
(C) Except as expressly set forth in this Section 10.3, Tenant shall
have no other options to cancel this Lease under this Article 10.
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Section 10.4. This Article 10 constitutes an express agreement governing
any case of damage or destruction of the Premises or the Building by fire or
other casualty, and Section 227 of the Real Property Law of the State of New
York, which provides for such contingency in the absence of an express
agreement, and any other law of like nature and purpose now or hereafter in
force shall have no application in any such case.
Section 10.5. The parties hereto shall procure an appropriate clause in,
or endorsement on, any fire or extended coverage insurance covering the
Premises, the Building and personal property, fixtures and equipment located
thereon or therein, pursuant to which the insurance companies waive subrogation
or consent to a waiver of right of recovery and having obtained such clauses or
endorsements of waiver of subrogation or consent to a waiver of right of
recovery, will not make any claim against or seek to recover from the other for
any loss or damage to its property or the property of others resulting from fire
or other hazards covered by such fire and extended coverage insurance, provided,
however, that the release, discharge, exoneration and covenant not to sue herein
contained shall be limited by and be coextensive with the terms and provisions
of the waiver of subrogation clause or endorsements or clauses or endorsements
consenting to a waiver of right of recovery. If the payment of an additional
premium is required for the inclusion of such waiver of subrogation provision,
each party shall advise the other of the amount of any such additional premiums
and the other party at its own election may, but shall not be obligated to, pay
the same. If such other party shall not elect to pay such additional premium,
the first party shall not be required to obtain such waiver of subrogation
provision. If either party shall be unable to obtain the inclusion of such
clause even with the payment of an additional premium, then such party shall
attempt to name the other party as an additional insured (but not a loss payee)
under the policy. If the payment of an additional premium is required for naming
the other party as an additional insured (but not a loss payee), each party
shall advise the other of the amount of any such additional premium and the
other party at its own election may, but shall not be obligated to, pay the
same. If such other party shall not elect to pay such additional premium or if
it shall not be possible to have the other party named as an additional insured
(but not loss payee), even with the payment of an additional premium, then (in
either event) such party shall so notify the first party and the first party
shall not have the obligation to name the other party as an additional insured.
Tenant acknowledges that Landlord shall not carry insurance on and shall not be
responsible for damage to, Tenant's Property or Specialty Alterations or any
other Alteration prior to the completion of the Initial Alterations, and that
Landlord shall not carry insurance against, or be responsible for any loss
suffered by Tenant due to, interruption of Tenant's business.
ARTICLE II
EMINENT DOMAIN
Section 11.1. If the whole of the Real Property, the Building or the
Premises shall be acquired or condemned for any public or quasi-public use or
purpose, this Lease and the Term shall end as of the date of the vesting of
title with the same effect as if said date were the
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Expiration Date. If only a part of the Real Property and not the entire Premises
shall be so acquired or condemned then, (1) except as hereinafter provided in
this Section 11.1, this Lease and the Term shall continue in force and effect,
but, if only a part of the Premises is included in the part of the Real Property
so acquired or condemned, from and after the date of the vesting of title, the
Fixed Rent, the Office Space Factor and Accessory Space Factor as applicable and
taking into account which portion of the Premises is so taken and making
adjustment for the fact that the Fixed Rent per rentable square foot is
different with respect to the Office Premises and the Accessory Premises) shall
be reduced in the proportion which the area of the part of the Premises so
acquired or condemned bears to the total area of the Premises immediately prior
to such acquisition or condemnation and Tenant's Share shall be redetermined
based upon the proportion in which the ratio between the rentable area of the
Premises remaining after such acquisition or condemnation bears to the rentable
area of the Building remaining after such acquisition or condemnation; (2)
whether or not the Premises shall be affected thereby, Landlord, at Landlord's
option, may give to Tenant, within sixty (60) days next following the date upon
which Landlord shall have received notice of vesting of title, a thirty (30)
days' notice of termination of this Lease if Landlord shall elect to terminate
leases (including this Lease), affecting at least fifty percent (50%) of the
rentable area of the Building (excluding any rentable area leased by Landlord or
its Affiliates); and (3) if the part of the Real Property so acquired or
condemned shall contain more than fifteen percent (15%) of the total area of the
Premises immediately prior to such acquisition or condemnation, or if, by reason
of such acquisition or condemnation, Tenant no longer has reasonable means of
access to the Premises, Tenant, at Tenant's option, may give to Landlord, within
sixty (60) days next following the date upon which Tenant shall have received
notice of vesting of title, a thirty (30) days' notice of termination of this
Lease. If any such thirty (30) days' notice of termination is given by Landlord
or Tenant, this Lease and the Term shall come to an end and expire upon the
expiration of said thirty (30) days with the same effect as if the date of
expiration of said thirty (30) days were the Expiration Date. If a part of the
Premises shall be so acquired or condemned and this Lease and the Term shall not
be terminated pursuant to the foregoing provisions of this Section 11.1,
Landlord, at Landlord's expense, shall restore that part of the Premises not so
acquired or condemned to a self-contained rental unit inclusive of Tenant's
Alterations (other than Specialty Alterations), except that if such acquisition
or condemnation occurs prior to completion of the Initial Alterations, Landlord
shall only be required to restore that part of the Premises not so acquired or
condemned to a self-contained rental unit exclusive of Tenant's Alterations.
Upon the termination of this Lease and the Term pursuant to the provisions of
this Section 11.1, the Fixed Rent and Escalation Rent shall be apportioned and
any prepaid portion of Fixed Rent and Escalation Rent for any period after such
date shall be refunded by Landlord to Tenant.
Section 11.2. In the event of any such acquisition or condemnation of all
or any part of the Real Property, Landlord shall be entitled to receive the
entire award for any such acquisition or condemnation, Tenant shall have no
claim against Landlord or the condemning authority for the value of any
unexpired portion of the Term and Tenant hereby expressly assigns to Landlord
all of its right in and to any such award. Nothing contained in this Section
11.2 shall be deemed
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to prevent Tenant from making a separate claim in any condemnation proceedings
for the then value of any Tenant's Property included in such taking, and for any
moving expenses.
Section 11.3. If the whole or any part of the Premises shall be acquired
or condemned temporarily during the Term for any public or quasi-public use or
purpose, Tenant shall give prompt notice thereof to Landlord and the Term shall
not be reduced or affected in any way and Tenant shall continue to pay in full
all items of Rental payable by Tenant hereunder without reduction or abatement,
and Tenant shall be entitled to receive for itself any award or payments for
such use, provided, however, that:
(i) if the acquisition or condemnation is for a period
not extending beyond the Term and if such award or payment is made
less frequently than in monthly installments, the same shall be paid
to and held by Landlord as a fund which Landlord shall apply from
time to time to the Rental payable by Tenant hereunder, except that,
if by reason of such acquisition or condemnation changes or
alterations are required to be made to the Premises which would
necessitate an expenditure to restore the Premises, then a portion
of such award or payment considered by Landlord as appropriate to
cover the expenses of the restoration shall be retained by Landlord,
without application as aforesaid, and applied toward the restoration
of the Premises as provided in Section 11.1 hereof; or
(ii) if the acquisition or condemnation is for a period
extending beyond the Term, such award or payment shall be
apportioned between Landlord and Tenant as of the Expiration Date;
Tenant's share thereof, if paid less frequently than in monthly
installments, shall be paid to Landlord and applied in accordance
with the provisions of clause (i) above, provided, however, that the
amount of any award or payment allowed or retained for restoration
of the Premises shall remain the property of Landlord if this Lease
shall expire prior to the restoration of the Premises.
ARTICLE 12
ASSIGNMENT, SUBLETTING, MORTGAGE, ETC.
Section 12.1. (A) Except as expressly permitted herein, Tenant, without
the prior consent of Landlord in each instance, shall not (a) assign its rights
or delegate its duties under this Lease (whether by operation of law, transfers
of interests in Tenant or otherwise), mortgage or encumber its interest in this
Lease, in whole or in part, (b) sublet, or permit the subletting of, the
Premises or any part thereof, or (c) permit the Premises or any part thereof to
be occupied or used for desk space, mailing privileges or otherwise, by any
Person other than Tenant.
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(B) If this Lease is assigned to any person or entity pursuant to
the provisions of the Bankruptcy Code, any and all monies or other consideration
payable or otherwise to be delivered in connection with such assignment shall be
paid or delivered to Landlord, shall be and remain the exclusive property of
Landlord and shall not constitute property of Tenant or of the estate of Tenant
within the meaning of the Bankruptcy Code. Any and all monies or other
consideration constituting Landlord's property under the preceding sentence not
paid or delivered to Landlord shall be held in trust for the benefit of Landlord
and shall be promptly paid to or turned over to Landlord.
Section 12.2. (A) If Tenant's interest in this Lease is assigned in
violation of the provisions of this Article 12, such assignment shall be void
and of no force and effect against Landlord; provided, however, that Landlord
may collect an amount equal to the then Fixed Rent plus any other item of Rental
from the assignee as a fee for its use and occupancy, and shall apply the net
amount collected to the Fixed Rent and other items of Rental reserved in this
Lease. If the Premises or any part thereof are sublet to, or occupied by, or
used by, any Person other than Tenant, whether or not in violation of this
Article 12, Landlord, after default by Tenant under this Lease, including,
without limitation, a subletting or occupancy in violation of this Article 12,
may collect any item of Rental or other sums paid by the subtenant, user or
occupant as a fee for its use and occupancy, and shall apply the net amount
collected to the Fixed Rent and other items of Rental reserved in this Lease. No
such assignment, subletting, occupancy or use, whether with or without
Landlord's prior consent, nor any such collection or application of Rental or
fee for use and occupancy, shall be deemed a waiver by Landlord of any term,
covenant or condition of this Lease or the acceptance by Landlord of such
assignee, subtenant, occupant or user as tenant hereunder. The consent by
Landlord to any assignment, subletting, occupancy or use shall not relieve
Tenant from its obligation to obtain the express prior consent of Landlord to
any further assignment, subletting, occupancy or use.
(B) Tenant shall reimburse Landlord on demand for any actual, third
party out-of-pocket costs that may be incurred by Landlord in connection with
any proposed assignment of Tenant's interest in this Lease or any proposed
subletting of the Premises or any part thereof, including, without limitation,
any reasonable processing fee, reasonable attorneys' fees and disbursements and
the reasonable costs of making investigations as to the acceptability of the
proposed subtenant or the proposed assignee.
(C) Neither any assignment of Tenant's interest in this Lease nor
any subletting, occupancy or use of the Premises or any part thereof by any
Person other than Tenant, nor any collection of Rental by Landlord from any
Person other than Tenant as provided in this Section 12.2, nor any application
of any such Rental as provided in this Section 12.2 shall, in any circumstances,
relieve Tenant of its obligations under this Lease on Tenant's part to be
observed and performed.
(D) Any Person to which this Lease is assigned pursuant to the
provisions of the Bankruptcy Code shall be deemed without further act or deed to
have assumed all of the
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obligations arising under this Lease on and after the date of such assignment.
Any such assignee shall execute and deliver to Landlord upon demand an
instrument confirming such assumption. No assignment of this Lease shall relieve
Tenant of its obligations hereunder and, subsequent to any assignment, Tenant's
liability hereunder shall continue notwithstanding any subsequent modification
or amendment hereof or the release of any subsequent tenant hereunder from any
liability, to all of which Tenant hereby consents in advance.
Section 12.3. (A) If Tenant assumes this Lease and proposes to assign the
same pursuant to the provisions 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 Tenant, then notice of such proposed assignment shall be given to
Landlord by Tenant no later than twenty (20) days after receipt by Tenant, but
in any event no later than ten (10) days prior to the date that Tenant shall
make application to a court of competent jurisdiction for authority and approval
to enter into such assignment and assumption. Such notice shall set forth (a)
the name and address of such Person, (b) all of the terms and conditions of such
offer, and (c) adequate assurance of future performance by such Person under the
Lease as set forth in Paragraph (B) below, including, without limitation, the
assurance referred to in Section 365(b)(3) of the Bankruptcy Code. Landlord
shall have the prior right and option, to be exercised by notice to Tenant 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 would otherwise be payable by Tenant out of the
consideration to be paid by such Person in connection with the assignment of
this Lease.
(B) The term "adequate assurance of future performance" as used in
this Lease shall mean that any proposed assignee shall, among other things, (a)
deposit with Landlord on the assumption of this Lease the sum of the then Fixed
Rent as security for the faithful performance and observance by such assignee of
the terms and obligations of this Lease, which sum shall be held by Landlord in
accordance with the provisions of Article 31 hereof, (b) furnish Landlord with
financial statements of such assignee for the prior three (3) fiscal years, as
finally determined after an audit and certified as correct by a certified public
accountant, which financial statements shall show a net worth of at least six
(6) times the then Fixed Rent for each of such three (3) years, (c) grant to
Landlord a security interest in such property of the proposed assignee as
Landlord shall deem necessary to secure such assignee's future performance under
this Lease, and (d) provide such other information or take such action as
Landlord, in its reasonable judgment shall determine is necessary to provide
adequate assurance of the performance by such assignee of its obligations under
the Lease.
Section 12.4. (A) As long as General Media, Inc. or a Related Entity of
General Media, Inc. is Tenant, Tenant shall have the privilege, subject to the
terms and conditions hereinafter set forth, without the consent of Landlord but
subject to Tenant's satisfaction of conditions set forth in clauses (1), (4) and
(5) of Section 12.8(A) hereof, and without Landlord having the right granted in
Section 12.8(B) hereof to recapture, to assign its interest in this Lease (i) to
any
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corporation which is a successor to Tenant either by merger or consolidation,
(ii) to a purchaser of all or substantially all of Tenant's assets (provided
such purchaser shall have also assumed substantially all of Tenant's
liabilities) or (iii) to a Person which shall (1) Control, (2) be under the
Control of, or (3) be under common Control with Tenant (any such Person referred
to in this clause (iii) being a "Related Entity"). As long as General Media,
Inc. or a Related Entity of General Media, Inc. is Tenant, Tenant also shall
have the privilege, subject to the terms and conditions hereinafter set forth,
without the consent of Landlord but subject to Tenant's satisfaction of
conditions set forth in clauses (3), (6) through (8) and (10) of Section 12.6(A)
and without Landlord having the right granted in Section 12.6(B) hereof to
recapture, to sublease all or any portion of the Premises to a Related Entity.
Any assignment or subletting described above may only be made upon the condition
that (a) any such assignee or subtenant shall continue to use the Premises in
accordance with all of the terms of this Lease, (b) the principal purpose of
such assignment or sublease is not the acquisition of Tenant's interest in this
Lease or to circumvent the provisions of Section 12.1 of this Article (except if
such assignment or sublease is made to a Related Entity and is made for a valid
intracorporate business purpose and is not made to circumvent the provisions of
Section 12.1 of this Article), and (c) in the case of an assignment, any such
assignee shall have a net worth and annual income and cash flow, determined in
accordance with generally accepted accounting principles, consistently applied,
after giving effect to such assignment, equal to not less than ten (10) times
the amount of the sum of the then annual Fixed Rent and Escalation Rent. Tenant
shall, within ten (10) Business Days after execution thereof, deliver to
Landlord either (x) a duplicate original instrument of assignment in form and
substance reasonably satisfactory to Landlord, duly executed by Tenant, together
with an instrument in form and substance reasonably satisfactory to Landlord,
duly executed by the assignee, in which such assignee shall assume observance
and performance of, and agree to be personally bound by, all of the terms,
covenants and conditions of this Lease on Tenant's part to be observed and
performed, or (y) a duplicate original sublease in form and substance reasonably
satisfactory to Landlord, duly executed by Tenant and the subtenant.
(B) If Tenant is a partnership, the admission of new Partners, the
withdrawal, retirement, death, incompetency or bankruptcy of any Partner, or the
reallocation of partnership interests among the Partners shall not constitute an
assignment of this Lease, provided the principal purpose of any of the foregoing
is not to circumvent the restrictions on assignment set forth in the provisions
of this Article 12. The reorganization of Tenant from a professional corporation
into a partnership or the reorganization of a Tenant from a partnership into a
professional corporation or the reorganization of Tenant from a corporation to a
limited liability company, or the reorganization of Tenant from a partnership to
a limited liability partnership, shall not constitute an assignment of this
Lease, provided that immediately following such reorganization the Partners of
Tenant shall be substantially the same as the shareholders of Tenant existing
immediately prior to such reorganization, or the shareholders of Tenant shall be
substantially the same as the Partners of Tenant existing immediately prior to
such reorganization, as the case may be. If Tenant shall become a professional
corporation, each individual shareholder in Tenant and each employee of a
professional corporation which is a shareholder in Tenant shall have the same
personal liability as such individual or employee
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would have under this Lease if Tenant were a partnership and such individual or
accountant-employee were a Partner in Tenant. If any individual Partner in
Tenant is or becomes an employee of a professional corporation, such individual
shall have the same personal liability under this Lease as such individual would
have if he and not the professional corporation were a Partner of Tenant.
(C) Except as set forth above, either a transfer (including the
issuance of treasury stock or the creation and issuance of new stock or a new
class of stock) of a controlling interest in the shares of Tenant or of any
entity which holds an interest in Tenant through one or more intermediaries (if
Tenant or such entity is a corporation or trust) or a transfer of a majority of
the total interest in Tenant or of any entity which holds an interest in Tenant
through one or more intermediaries (if Tenant or such entity is a partnership or
other entity) at any one time or over a period of time through a series of
transfers, shall be deemed an assignment of this Lease and shall be subject to
all of the provisions of this Article 12, including, without limitation, the
requirement that Tenant obtain Landlord's prior consent thereto. The transfer of
shares of Tenant or of any entity which holds an interest in Tenant through one
(1) or more intermediaries (if Tenant or such entity is a corporation or trust)
for purposes of this Section 12.4 shall not include the sale of shares by
persons other than those deemed "insiders" within the meaning of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), which sale is effected
through the "over-the-counter market" or through any recognized stock exchange.
Section 12.5. If, at any time after the originally named Tenant herein may
have assigned Tenant's interest in this Lease, this Lease shall be disaffirmed
or rejected in any proceeding of the types described in paragraph (E) of Section
16.1 hereof (other than a proceeding described in paragraph (E) of Section 16.1
with respect to Landlord or its designee in the event of a recapture of the
Premises pursuant to Section 12.8(B) hereof), or in any similar proceeding, or
in the event of termination of this Lease by reason of any such proceeding or by
reason of lapse of time following notice of termination given pursuant to said
Article 16 based upon any of the Events of Default set forth in such paragraph,
any prior Tenant, including, without limitation, the originally named Tenant,
upon request of Landlord given within thirty (30) days next following any such
disaffirmance, rejection or termination (and actual notice thereof to Landlord
in the event of a disaffirmance or rejection or in the event of termination
other than by act of Landlord), shall (1) pay to Landlord all Fixed Rent,
Escalation Rent and other items of Rental due and owing by the assignee to
Landlord under this Lease to and including the date of such disaffirmance,
rejection or termination, and (2) as "tenant", enter into a new lease with
Landlord of the Premises for a term commencing on the effective date of such
disaffirmance, rejection or termination and ending on the Expiration Date,
unless sooner terminated as in such lease provided, at the same Fixed Rent and
upon the then executory terms, covenants and conditions as are contained in this
Lease, except that (a) Tenant's rights under the new lease shall be subject to
the possessory rights of the assignee under this Lease and the possessory rights
of any person claiming through or under such assignee or by virtue of any
statute or of any order of any court, (b) such new lease shall require all
defaults existing under this Lease to be cured by Tenant with due diligence, and
(c) such new lease shall require Tenant to pay all Escalation Rent reserved in
this Lease which,
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had this Lease not been so disaffirmed, rejected or terminated, would have
accrued under the provisions of Article 27 hereof after the date of such
disaffirmance, rejection or termination with respect to any period prior
thereto. If any such prior Tenant shall default in its obligation to enter into
said new lease for a period of ten (10) days next following Landlord's request
therefor, then, in addition to all other rights and remedies by reason of such
default, either at law or in equity, Landlord shall have the same rights and
remedies against such Tenant as if such Tenant had entered into such new lease
and such new lease had thereafter been terminated as of the commencement date
thereof by reason of such Tenant's default thereunder.
Section 12.6. (A) Notwithstanding the provisions of Section 12.1 hereof,
if Landlord shall not exercise its rights pursuant to paragraph (B) of this
Section 12.6, Landlord shall not unreasonably withhold its consent to any
subletting of the Premises, provided that:
(1) the Premises shall not, without Landlord's prior consent,
have been listed or otherwise publicly advertised for subletting at a rental
rate less than the greater of (i) the Rent Per Square Foot with respect to the
portion of the Premises proposed to be sublet hereunder and (ii) the prevailing
rental rate set by Landlord for comparable space in the Building or if there is
no comparable space the prevailing rental rate reasonably determined by Landlord
(the "Prevailing Rate"); provided the foregoing shall not prohibit Tenant from
listing the Premises with brokers (if being understood and agreed that Tenant
shall have the right to consummate a sublease at a rental rate less than the
Prevailing Rate);
(2) Intentionally Omitted Prior to Execution;
(3) no Event of Default shall have occurred and be continuing;
(4) upon the date Tenant delivers the Tenant Statement to
Landlord and upon the date immediately preceding the commencement date of any
sublease approved by Landlord, the proposed subtenant shall have a financial
standing (taking into consideration the obligations of the proposed subtenant
under the sublease) reasonable satisfactory to Landlord, be of a character, be
engaged in a business, and propose to use the Premises in a manner in keeping
with the standards in such respects of the other tenancies in the Building;
(5) the proposed subtenant (or any Person who directly or
indirectly, Controls, is Controlled by or is under common Control with the
proposed subtenant) shall not be a tenant or subtenant of any space in the
Building, nor shall the proposed subtenant (or any Person who directly or
indirectly, Controls, is Controlled by or is under common Control with the
proposed subtenant) be a Person with whom Landlord is negotiating or discussing
to lease space in the Building; if Tenant shall propose to sublease space and is
about to commence negotiations with a tenant, subtenant or prospective
subtenant, Tenant shall advise Landlord of the identity of such prospective
subtenant and Landlord shall promptly advise Tenant if the execution of a
sublease with such tenant, subtenant or prospective subtenant would violate the
provisions of this clause (5);
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(6) the character of the business to be conducted or the
proposed use of the Premises by the proposed subtenant shall not (a) be likely
to increase (by more than a de minimis amount) Landlord's operating expenses
beyond that which would be incurred for use by Tenant or for use in accordance
with the standards of use of other tenancies in the Building; (b) increase (by
more than a de minimis amount) the burden on existing cleaning services or
elevators over the burden prior to such proposed subletting; (c) violate any
provision or restrictions herein relating to the use or occupancy of the
Premises; (d) require any alterations, installations, improvements, additions or
other physical changes to be performed in or made to any portion of the Building
or the Real Property other than the Premises; or (e) violate any provision or
restrictions in any other lease for space in the Building or in any Superior
Lease or Mortgage;
(7) the subletting shall be expressly subject to all of the
terms, covenants, conditions and obligations on Tenant's part to be observed and
performed under this Lease and the further condition and restriction that the
sublease shall not be modified without the prior written consent of Landlord,
which consent shall not be unreasonably withheld, conditioned or delayed, or
assigned (by operation of law or otherwise; for purposes of this clause (7), the
transfer of a majority of the issued and outstanding capital stock of any
corporate subtenant or the transfer of a majority of the total interest in a
subtenant (if a partnership or other entity), however accomplished, whether in a
single transaction or in a series of related or unrelated transactions, shall be
deemed an assignment of the sublease, except that the transfer of the
outstanding capital stock of a corporate subtenant shall be deemed not to
include the sale of such stock by persons other than those deemed "insiders"
within the meaning of the Exchange Act, which sale is effected through the
"over-the-counter market" or through any recognized stock exchange) encumbered
or otherwise transferred or the subleased premises further sublet by the
subtenant in whole or in part, or any part thereof suffered or permitted by the
subtenant to be used or occupied by others, without the prior written consent of
Landlord in each instance;
(8) the subletting shall end no later than one (1) day before
the Expiration Date and shall not be for a term of less than two (2) years
unless it commences less than two (2) years before the Expiration Date;
(9) no subletting shall be for less than Four Thousand (4,000)
contiguous rentable square feet and at no time shall there be more than five (5)
occupants, including Tenant, in the Premises; and
(10) such sublease shall expressly provide that in the event
of termination, re-entry or dispossess of Tenant by Landlord under this Lease,
Landlord may, at its option, take over all of the right, title and interest of
Tenant, as sublessor under such sublease, and such subtenant, at Landlord's
option, shall attorn to Landlord pursuant to the then executory provisions of
such sublease, except that Landlord shall not be:
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(i) liable for any act or omission of Tenant under such
sublease, or
(ii) subject to any defense or offsets (other than
rights to an abatement expressly set forth in the sublease) which such subtenant
may have against Tenant, or
(iii) bound by any previous payment which such subtenant
may have made to Tenant more than thirty (30) days in advance of the date upon
which such payment was due, unless previously approved by Landlord, or
(iv) bound by any obligation to make any payment to or
on behalf of such subtenant except as expressly set forth in the sublease, or
(v) bound by any obligation to perform any work or to
make improvements to the Premises, or portion thereof demised by such sublease,
except to the extent such obligation continues after Landlord succeeds to the
interest of the defaulting Tenant, or
(vi) bound by any amendment or modification of such
sublease made without its consent, or
(vii) bound to return such subtenant's security deposit,
if any, until such deposit has come into its actual possession and such
subtenant would be entitled to such security deposit pursuant to the terms of
such sublease.
(11) any subletting of the Accessory Premises must be of the
entire Accessory Premises and must be made to a Person who is then a subtenant
of, or is then subleasing, all or a portion of the Office Premises.
If Tenant proposes to sublet a portion of the Office Premises then, unless the
context otherwise requires, references in this Section 12.6 to the Office
Premises shall be deemed to refer to the portion of the Office Premises proposed
to be sublet by Tenant.
(B) At least fifteen (15) Business Days prior to any proposed
subletting of all or any portion of the Premises, Tenant shall submit a
statement to Landlord (a "Tenant Statement") containing the following
information: (a) the name and address of the proposed subtenant, (b) a
description of the portion of the Premises to be sublet, (c) the terms and
conditions of the proposed subletting, including, without limitation, the rent
payable and the value (including cost, overhead and supervision) of any
improvements (including any demolition to be performed) to the Premises for
occupancy by such subtenant, (d) the nature and character of the business of the
proposed subtenant, and (e) any other information that Landlord may reasonably
request, together with a statement specifically directing Landlord's attention
to the
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provisions of this Section 12.6(B) requiring Landlord to respond to Tenant's
request within fifteen (15) Business Days after Landlord's receipt of the Tenant
Statement. If as a result of the proposed subleasing, Tenant shall have sublet
(in one (1) or more sublettings) all or portions of the Office Premises which,
in the aggregate are comprised of Twenty Thousand (20,000) or more rentable
square feet, Landlord shall have the right, exercisable within fifteen (15)
Business Days after Landlord's receipt of the Tenant Statement, to sublet (in
its own name or that of its designee) such portion of the Premises ("Recapture
Space") from Tenant on the terms and conditions set forth in the Tenant
Statement, subject to the further provisions of paragraph (C) of this Section
12.6. If Landlord shall fall to notify Tenant within said fifteen (15) Business
Day period of Landlord's intention to exercise its rights pursuant to this
Section 12.6(B) or of Landlord's consent to or disapproval of the proposed
subletting pursuant to the Tenant Statement as contemplated by Section 12.6(A)
hereof, or if Landlord shall have consented to such subletting as provided in
Section 12.6(A) hereof, Tenant shall have the right to sublease that portion of
the Premises to such proposed subtenant on the same terms and conditions set
forth in the Tenant Statement in all material respects, subject to the terms and
conditions of this Lease, including paragraph (A) of this Section 12.6. If
Tenant shall not enter into such sublease within one hundred eighty (180) days
after the delivery of the Tenant Statement to Landlord, then the provisions of
Section 12.1 hereof and this Section 12.6 shall again be applicable to any other
proposed subletting. If Tenant shall enter into such sublease within one hundred
eighty (180) days as aforesaid, Tenant shall deliver a true, complete and fully
executed counterpart of such sublease to Landlord within five (5) days after
execution thereof.
(C) If Landlord exercises its option to sublet the Recapture Space,
such sublease to Landlord or its designee as subtenant (each, a "Recapture
Sublease") shall:
(1) be at a rental equal to the lesser of (x) the Rent Per
Square Foot multiplied by the number of rentable square feet of the Recapture
Space and (y) the sublease rent set forth in the Tenant Statement, and otherwise
be upon the same terms and conditions as those contained in this Lease (as
modified by the Tenant Statement, except such as are irrelevant or inapplicable
and except as otherwise expressly set forth to the contrary in this paragraph
(C));
(2) give the subtenant the unqualified and unrestricted right,
without Tenant's permission, to assign such sublease and to further sublet the
Recapture Space or any part thereof and to make any and all changes,
alterations, and improvements in the Recapture Space;
(3) provide in substance that, any such changes, alterations,
and improvements made in the Recapture Space by Landlord or its designee as
subtenant shall be removed and any damage caused thereby shall be repaired prior
to or upon the expiration or other termination of the Recapture Sublease (it
being agreed that in no event shall Tenant have any obligation to remove any
such changes, alterations or improvements made by Landlord or designee as
subtenant under the Recapture Sublease);
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(4) provide that (i) the parties to such Sublease expressly
negate any intention that any estate created under such Sublease be merged with
any other estate held by either of said parties, (ii) prior to the commencement
of the term of the Recapture Sublease, Tenant, at its sole cost and expense (to
the extent the Tenant is obligated pursuant to the provisions of the Tenant
Statement), shall make such alterations as may be required or reasonably deemed
necessary by the subtenant to physically separate the Recapture Space, if such
Recapture Space constitutes a portion of the Premises, from the balance of the
Premises and to provide appropriate means of ingress to and egress thereto and
to the public portions of the balance of the floor such as toilets, janitor's
closets, telephone and electrical closets, fire stairs, elevator lobbies, etc.,
(iii) at the expiration of the term of such Recapture Sublease (subject to the
provisions of clause (3) of this Section 12.6(C), Tenant shall accept the
Recapture Space in its then existing condition, broom clean; and
(5) provide that the subtenant or occupant may use and occupy
the Recapture Space for any lawful purpose (without regard to any limitation set
forth in the Tenant Statement).
(D) Performance by Landlord, or its designee, under a Recapture
Sublease shall be deemed performance by Tenant of any similar obligation under
this Lease and Tenant shall not be liable for any default under this Lease or
deemed to be in default hereunder if such default is occasioned by or arises
from any act or omission of the subtenant under the Recapture Sublease or is
occasioned by or arises from any act or omission of any occupant under the
Recapture Sublease.
(E) If Landlord is unable to give Tenant possession of the Recapture
Space at the expiration of the term of the Recapture Sublease by reason of the
holding over or retention of possession of any tenant or other occupant, then
(w) Landlord shall continue to pay all charges previously payable, and comply
with all other obligations, under the Recapture Sublease until the date upon
which Landlord shall give Tenant possession of the Recapture Space free of
occupancies, (x) neither the Expiration Date nor the validity of this Lease
shall be affected, (y) Tenant waives any rights under Section 223-a of the Real
Property Law of New York, or any successor statute of similar import, to rescind
this Lease and further waives the right to recover any damages from Landlord
which may result from the failure of Landlord to deliver possession of the
Recapture Space at the end of the term of the Recapture Sublease, and (z)
Landlord, at Landlord's expense, shall use its reasonable efforts to deliver
possession of the Recapture Space to Tenant and in connection therewith, if
necessary, shall institute and diligently and in good faith prosecute holdover
and any other appropriate proceedings against the occupant of such Space; if
Landlord fails to prosecute such proceedings in such manner and such failure
continues after reasonable notice thereof by Tenant, Tenant may (but shall not
be obligated to) prosecute such proceedings in Landlord's name and at Landlord's
expense.
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(F) The failure by Landlord to exercise its option under Section
12.6(B) with respect to any subletting shall not be deemed a waiver of such
option with respect to any extension of such subletting or any subsequent
subletting of the Premises affected thereby.
Section 12.7. (A) In connection with any subletting of all or any portion
of the Premises, Tenant shall pay to Landlord an amount equal to fifty percent
(50%) of any Office Premises Sublease Profit and Accessory Premises Sublease
Profit derived therefrom. Anything contained herein to the contrary
notwithstanding Tenant shall not be entitled to any proceeds derived from or
relating to (directly or indirectly) any subletting of the Recapture Space by
Landlord or its designee to a subtenant. All sums payable hereunder by Tenant
shall be calculated on an annualized basis, but shall be paid to Landlord, as
additional rent, within twenty (20) days after receipt thereof by Tenant.
(B) For purposes of this Lease:
(1) "Office Rent Per Square Foot" shall mean the sum of the
then Fixed Rent, Escalation Rent and Electricity Additional Rent divided by the
Office Space Factor.
(2) "Office Premises Sublease Profit" shall mean the product
of (x) the Sublease Rent Per Square Foot less the Office Rent Per Square Foot,
and (y) the number of rentable square feet constituting the portion of the
Office Premises sublet by Tenant.
(3) "Sublease Rent" shall mean any rent or other consideration
paid to Tenant directly or indirectly by any subtenant or any other amount
received by Tenant from or in connection with any subletting of the Office
Premises (including, but not limited to, sums paid for the sale or rental, or
consideration received on account of any contribution, of Tenant's Property or
sums paid in connection with the supply of electricity or HVAC) less the
Sublease Expenses attributable to the Office Premises so sublet.
(4) "Sublease Expenses" shall mean: (i) in the event of a sale
of Tenant's Property, the then unamortized or undepreciated cost thereof
determined on the basis of Tenant's federal income tax returns, (ii) the
reasonable out-of-pocket costs and expenses of Tenant in making such sublease,
such as brokers' fees, attorneys' fees, and advertising fees paid to unrelated
third parties, (iii) any sums paid to Landlord pursuant to Section 12.2(B)
hereof, (iv) the cost of improvements or alterations made by Tenant expressly
and solely for the purpose of preparing that portion of the Premises for such
subtenancy, and (v) the unamortized or undepreciated cost of any Tenant's
Property leased to and used by such subtenant. In determining Sublease Rent, the
costs set forth in clauses (ii), (iii) and (iv) shall be amortized on a
straight-line basis over the term of such sublease and the costs set forth in
clause (v) shall be amortized on a straight line basis over the greater of the
longest useful life of such improvements, alterations or Property (as permitted
pursuant to the Internal Revenue Code of 1986, as amended) and the term of such
sublease.
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(5) "Sublease Rent Per Square Foot" shall mean the Sublease
Rent divided by the rentable square feet of the Office Premises space demised
under the sublease in question.
(6) "Accessory Sublease Profit" shall mean the excess of (i)
the Sublease Rent over (ii) the term Accessory Fixed Rent.
(7) "Accessory Sublease Rent" shall mean any rent or other
consideration paid to Tenant directly or indirectly by any subtenant or any
other amount received by Tenant from or in connection with any subletting of the
Accessory Premises (including, but not limited to, sums paid for the sale or
rental, or consideration received on account of any contribution, of Tenant's
Property or sums paid in connection with the supply of electricity or HVAC) less
the Sublease Expenses attributable to the Accessory Premises so sublet.
(8) Office Premises Sublease Profit and/or Accessory Sublease
Profit, as the case may be, shall be recalculated from time to time to reflect
any corrections in the prior calculation thereof due to (i) subsequent payments
received or made by Tenant, (ii) the final adjustment of payments to be made by
or to Tenant, and (iii) mistake. Promptly after receipt or final adjustment of
any such payments or discovery of any such mistake, Tenant shall submit to
Landlord a recalculation of the Office Premises Sublease Profit and/or Accessory
Sublease Profit, as the case may be, and an adjustment shall be made between
Landlord and Tenant, on account of prior payments made or credits received
pursuant to this Section 12.7.
Section 12.8. (A) Notwithstanding the provisions of Section 12.1 hereof,
if Landlord shall not exercise its rights pursuant to paragraph (B)(2) of this
Section 12.8, Landlord shall not unreasonably withhold, condition or delay its
consent to an assignment of this Lease in its entirety provided that:
(1) no Event of Default shall have occurred and be continuing;
(2) upon the date Tenant delivers the Assignment Statement to
Landlord and upon the date immediately preceding the date of any assignment
approved by Landlord, the proposed assignee shall have a financial standing
(taking into consideration the obligations of the proposed assignee under this
Lease) satisfactory to Landlord, be of a character, be engaged in a business,
and propose to use the Premises in a manner in keeping with the standards in
such respects of the other tenancies in the Building;
(3) the proposed assignee (or any Person who directly or
indirectly, Controls, is Controlled by or is under common Control with the
proposed assignee) shall not be a person or entity with whom Landlord is
actively negotiating to lease space in the Building at the time of receipt of an
Assignment Statement;
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(4) the character of the business to be conducted or the
proposed use of the Premises by the proposed assignee shall not (a) be likely to
increase (by more than a de minimis amount) Landlord's operating expenses beyond
that which would be incurred for use by Tenant or for use in accordance with the
standards of use of other tenancies in the Building; (b) increase (by more than
a de minimis amount) the burden on existing cleaning services or elevators over
the burden prior to such proposed assignment; (c) violate any provision or
restrictions herein relating to the use or occupancy of the Premises; (d)
require any alterations, installations, improvements, additions or other
physical changes to be performed in or made to any portion of the Building or
the Real Property other than the Premises; or (e) violate any provision or
restrictions in any other lease for space in the Building or in any Superior
Lease or Mortgage; and
(5) the assignee shall agree to assume all of the obligations
of Tenant under this Lease from and after the date of the assignment.
(B) (1) At least fifteen (15) Business Days prior to any proposed
assignment, Tenant shall submit a statement to Landlord (the "Assignment
Statement") containing the following information: (i) the name and address of
the proposed assignee, (ii) the essential terms and conditions of the proposed
assignment, including, without limitation, the consideration payable for such
assignment and the value (including cost, overhead and supervision) of any
improvements (including any demolition to be performed) to the Premises proposed
to be made by Tenant to prepare the Premises for occupancy by such assignee,
(iii) the nature and character of the business of the proposed assignee, and
(iv) any other information that Landlord may reasonably request, together with a
statement specifically directing Landlord's attention to the provisions of this
Section 12.8(B) requiring Landlord to respond to Tenant's request within fifteen
(15) Business Days after Landlord's receipt of the Assignment Statement. The
Assignment Statement shall be executed by Tenant and the proposed assignee and
shall indicate both parties' intent (but not necessarily binding obligation) to
enter into an assignment agreement conforming to the terms and conditions of the
Assignment Statement and on such other terms and conditions to which the parties
may agree which are not inconsistent with the essential terms set forth in the
Assignment Statement.
(2) Landlord shall have the right, exercisable within fifteen
(15) Business Days after Landlord's receipt of the Assignment Statement, to take
an assignment of this Lease (in its own name or that of its designee) for the
same consideration payable to Tenant pursuant to the terms of the Assignment
Statement (less the amount of any brokerage commission which would have been
payable on account of the assignment pursuant to the Assignment Statement),
provided Landlord shall take possession of the Premises "as is" in its condition
as of the date of such assignment and shall be entitled to a credit against the
consideration otherwise payable in the amount, if any, of the value of any
improvements, work or demolition proposed to be provided or performed by Tenant
pursuant to the Assignment Statement.
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(3) If Landlord shall fail to notify Tenant within said
fifteen (15) Business Day period of Landlord's intention to exercise its rights
pursuant to paragraph (B)(2) of this Section 12.8 or of Landlord's consent to or
disapproval of the proposed assignment pursuant to the Assignment Statement, or
if Landlord shall have consented to such assignment as provided in Section
12.8(A) hereof, Tenant shall be free to assign the Lease to such proposed
assignee on the same terms and conditions set forth in the Assignment Statement
in all material respects. If Tenant shall not enter into such assignment within
one hundred eighty (180) days after the delivery of the Assignment Statement to
Landlord, then the provisions of this Section 12.8 shall again be applicable in
their entirety to any proposed assignment.
(4) If Tenant shall propose to assign this Lease and is about
to commence negotiations with a prospective assignee, Tenant shall advise
Landlord of the identity of such prospective assignee and Landlord shall, within
five (5) Business Days, advise Tenant if the execution of an assignment
agreement with such prospective assignee would violate the provisions of
paragraph (A)(3) of this Section 12.8.
(C) If Tenant shall assign this Lease, Tenant shall deliver to
Landlord, within five (5) days after execution thereof, (x) a duplicate original
instrument of assignment in form and substance reasonably satisfactory to
Landlord, duly executed by Tenant, and (y) an instrument in form and substance
reasonably satisfactory to Landlord, duly executed by the assignee, in which
such assignee shall assume observance and performance of, and agree to be
personally bound by, all of the terms, covenants and conditions of this Lease on
Tenant's part to be observed and performed.
(D) Tenant shall pay to Landlord, upon receipt thereof, an amount
equal to fifty percent (50%) of all Assignment Proceeds. For purposes of this
paragraph (D), "Assignment Proceeds" shall mean all consideration payable to
Tenant, directly or indirectly, by any assignee, including Landlord pursuant to
paragraph (B) of this Section 12.8, or any other amount received by Tenant from
or in connection with any assignment (including, but not limited to, sums paid
for the sale or rental, or consideration received on account of any
contribution, of Tenant's Property) after deducting therefrom: (i) in the event
of a sale (or contribution) of Tenant's Property, the then unamortized or
undepreciated cost thereof determined on the basis of Tenant's federal income
tax returns, (ii) the reasonable out-of-pocket costs and expenses of Tenant in
making such assignment, such as brokers' fees, attorneys' fees, and advertising
fees paid to unrelated third parties, (iii) any payments required to be made by
Tenant in connection with the assignment of its interest in this Lease pursuant
to Article 31-B of the Tax law of the State of New York or any real property
transfer tax of the United States or the City or State of New York (other than
any income tax), (iv) any sums paid by Tenant to Landlord pursuant to Section
12.2(B) hereof, (v) the cost of improvements or alterations made by Tenant
expressly and solely for the purpose of preparing the Premises for such
assignment, as determined by Tenant's federal income tax returns, (vi) the
unamortized or undepreciated cost of any Tenant's Property leased to and used by
such assignee, and (vii) the then unamortized or undepreciated cost of the
Alterations determined on the basis of Tenant's federal income tax
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returns less the Tenant Fund. If the consideration paid to Tenant for any
assignment shall be paid in installments, then the expenses specified in this
paragraph (D) shall be amortized over the period during which such installments
shall be payable. If Landlord exercises its right to take an assignment of this
Lease pursuant to the provisions of Section 12.8(B) hereof, in no event shall
Tenant be entitled to any proceeds derived from or relating to (directly or
indirectly) any lease or sublease of the Premises by Landlord or further
assignment of the Lease.
Section 12.9. Notwithstanding any other provision of this Lease, neither
Tenant nor any direct or indirect assignee or subtenant of Tenant may enter into
any lease, sublease, license, concession or other agreement for use, occupancy
or utilization of space in the Premises which provides for a rental or other
payment for such use, occupancy or utilization based in whole or in part on the
net income or profits derived by any person from the property leased, occupied
or utilized, or which would require the payment of any consideration which would
not fall within the definition of "rents from real property", as that term is
defined in Section 856(d) of the Internal Revenue Code of 1986, as amended.
ARTICLE 13
ELECTRICITY
Section 13.1. Tenant shall at all times comply with the rules,
regulations, terms and conditions applicable to service, equipment, wiring and
requirements of the public utility supplying electricity to the Building. The
risers serving the Office Premises shall be capable of supplying eight (8) watts
of electricity per rentable square foot of the Premises and Tenant shall not use
any electrical equipment which, in Landlord's reasonable judgment, would exceed
such capacity or which will overload such installations or interfere with the
electrical service to other tenants of the Building. In the event that, in
Landlord's sole judgment, Tenant's electrical requirements necessitate
installation of an additional riser, risers or other proper and necessary
equipment, Landlord shall so notify Tenant of same. Within five (5) Business
Days after receipt of such notice, Tenant shall either cease such use of such
additional electricity or shall request that additional electrical capacity
(specifying the amount requested) be made available to Tenant. Landlord, in
Landlord's reasonable judgment (taking into consideration the potential needs of
present and future tenants of the Building and the Building itself) shall
determine whether to make available such additional electrical capacity to
Tenant and the amount of such additional electrical capacity to be made
available. If Landlord shall agree to make available additional electrical
capacity and the same necessitates installation of an additional riser, risers
or other proper and necessary equipment, including, without limitation, any
switchgear, the same shall be installed by Landlord. Any such installation shall
be made at Tenant's sole cost and expense, and shall be chargeable and
collectible as additional rent and paid within twenty (20) days after the
rendition of a bill to Tenant therefor. Landlord shall not be liable in any way
to Tenant for any failure or defect in the supply or character of electric
service furnished to the Premises by reason of any requirement, act or omission
of the utility serving the Building or for any other reason not
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attributable to the negligence of Landlord, whether electricity is provided by
public or private utility or by any electricity generation system owned and
operated by Landlord.
Section 13.2. (A) Unless Landlord is required by Requirements of the
public utility or alternative electricity provider serving the Office Premises
to have Tenant obtain electricity from the public utility company furnishing
electricity to the Building pursuant to the provisions of Section 13.4 hereof,
subject to the provisions of Section 13.3 hereof, electricity shall be furnished
by Landlord to the Office Premises and Tenant shall pay to Landlord, as
additional rent for such service, during the Term, an amount (the "Electricity
Additional Rent") equal to (i) the amount Landlord actually pays to the utility
company to provide electricity to the Office Premises, including all applicable
surcharges, demand charges, time-of-day charges, energy charges, fuel adjustment
charges, rate adjustment charges, taxes and other sums payable in respect
thereof and net of any rebates or credits actually received by Landlord in
respect of such electricity supplied to the Office Premises, based on Tenant's
demand and/or consumption of electricity (and/or any other method of quantifying
Tenant's use of or demand for electricity as set forth in the utility company's
tariff) as registered on a meter or submeter (installed by Landlord at
Landlord's sole cost and expense) for purposes of measuring such demand,
consumption and/or other method of quantifying Tenant's use of or demand for
electricity (it being agreed that such meter or submeter measure demand and
consumption, and off-peak and on-peak use, in either case to the extent such
factors are relevant in making the determination of Landlord's cost) plus (ii)
an amount equal to two percent (2%) of the amount set forth in clause (i) above
as Landlord's administrative charge for overhead and supervision. Tenant, from
time to time, shall have the right to review Landlord's meter readings, and
Landlord's calculation of the Electricity Additional Rent, at reasonable times
and on reasonable prior notice, by giving notice thereof to Landlord on or prior
to the ninetieth (90th) day after the date when Landlord gives Tenant a bill or
statement for the for the Electricity Additional Rent.
(B) Where more than one meter measures the electricity supplied to
Tenant, the electricity rendered through each meter may be computed and billed
separately in accordance with the provisions hereinabove set forth. Bills for
the Electricity Additional Rent shall be rendered to Tenant at such time as
Landlord may elect (but not more often than once per month), and Tenant shall
pay the amount shown thereon to Landlord within twenty (20) days after receipt
of such bill. Tenant expressly acknowledges that in connection with the
installation of the meters or submeters, the electricity being supplied to the
Office Premises shall be temporarily interrupted. Landlord shall use reasonable
efforts to minimize interference with the conduct of Tenant's business in
connection with such installation; provided, however, that Landlord shall have
no obligation to employ contractors or labor at so-called overtime or other
premium pay rates or to incur any other overtime costs or expenses whatsoever.
Section 13.3. (A) (1) (a) If prior to Landlord's installation of meters or
submeters and such meters or submeters becoming operational for the purpose of
measuring Tenant's consumption of electricity in the Office Premises (which
meters Landlord agrees to promptly order, and upon receipt to promptly commence
and install with due diligence), Tenant shall be
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provided access to the Office Premises or portion thereof for the purpose of
performing Tenant's Initial Alterations, Tenant shall pay to Landlord a fee (the
"Electricity Fee") in consideration of Landlord furnishing electricity to the
Office Premises for construction lighting and for power for normal construction
tools. The Electricity Fee shall only be payable with respect to the period
prior to Landlord's installation of meters and submeters in the Office Premises
and such meters or submeters becoming operational. Upon such installation by
Landlord, and thereafter, Tenant shall pay Electricity Additional Rent based
upon the demand and consumption shown on such meters or submeters, as more
particularly set forth in Section 13.2 hereof. The Electricity Fee shall be an
amount equal to the product of (x) One Hundred Thirty-Three and 61/100 Dollars
($133.61) (provided, however, that if Landlord shall provide Tenant with access
to less than the entire Office Premises, the Electricity Fee shall be
proportionately reduced based on the area of the Premises to which Tenant has
been given access), and (y) the number of calendar days on which Tenant shall
have access to the Premises or portion thereof for the purpose of performing
Tenant's Initial Alterations with respect to the Office Premises. Landlord shall
render a bill to Tenant for such Electricity Fee from time to time, but not more
frequently than monthly, and Tenant shall pay such Electricity Fee to Landlord,
as additional rent, within twenty (20) days after receipt of such bill.
(b) If Tenant shall occupy the Office Premises, or any
portion thereof, for the conduct of its business (as opposed to for the
performance of Initial Alterations with respect to the Office Premises) prior to
Landlord's installation of such meters or submeters in any portion of the Office
Premises so occupied and such meters or submeters becoming operational, Tenant
shall pay the Electricity Inclusion Charge, rather than the Electricity Fee, for
such portion of the Office Premises with respect to the period prior to the date
such meters or submeters are installed and operational. Upon such installation
by Landlord, and thereafter and such meters or submeters becoming operational,
Tenant shall pay Electricity Additional Rent pursuant to Section 13.2 hereof.
(2) If prior to the installation of the electric meters or
submeters in the Office Premises and such meters or submeters becoming
operational, Tenant shall occupy all or any portion of the Office Premises for
the conduct of business, Landlord shall furnish electric current to the Office
Premises on a "rent inclusion" basis, until said meters or submeters are
installed and operational. The Fixed Rent set forth in this Lease does not
include a charge for such electric service. Accordingly, Tenant shall pay to
Landlord on the first day of each month during such inclusion period, in the
same manner as Fixed Rent is payable hereunder, an amount equal to Eight
Thousand One Hundred Twenty-Eight Dollars ($8,128) (the "Electricity Inclusion
Charge"). If such inclusion period shall commence on a date other than the first
(1st) day of any calendar month, Tenant shall pay to Landlord on the date such
inclusion period commences an amount equal to the product of (i) Two Hundred
Sixty-Seven and 22/100 Dollars ($267.22), and (ii) the number of calendar days
in the period from the beginning of such inclusion period to the last day of the
month in which such date shall occur, both dates inclusive. If Landlord is
supplying electricity to only a portion of the Office Premises on a "rent
inclusion" basis as aforesaid, the Electricity Inclusion Charge shall be
proportionately reduced based on the area of
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the Office Premises being supplied with electricity on a "rent inclusion" basis.
The parties agree that although the charge for furnishing electrical energy is
reflected in the Electricity Inclusion Charge on a so called "rent inclusion"
basis, the value to Tenant of such service may not be accurately reflected in
such Electricity Inclusion Charge. Accordingly, Landlord and Tenant agree that
after the meters and/or submeters are installed and operational and electricity
is being furnished to such portion of the Premises pursuant to Section 13.2
hereof for a three (3) month period, the Electricity Inclusion Charge shall be
adjusted based on the average of the Electricity Additional Rent ("Three Month
Average") payable by Tenant for such three (3) month period with respect to the
portion of the Office Premises which was previously being furnished with
electricity on a "rent inclusion" basis. If the Three Month Average shall exceed
the Electricity Inclusion Charge, Tenant, within ten (10) Business Days after
demand therefor, shall pay such excess to Landlord, and if the Electricity
Inclusion Charge shall exceed the Three Month Average, Landlord, at its option,
shall either promptly refund to Tenant such excess or shall credit such excess
against immediately subsequent monthly installments of Fixed Rent next becoming
due and payable hereunder.
(B) (1) The provisions of this Section 13.3(B) shall be applicable
with respect to the Accessory Premises. Unless Landlord elects to supply
electricity to the Accessory Premises pursuant to Section 13.2 or Landlord is
required by Requirements or by the public utility or alternative electricity
provider serving the Premises to have Tenant obtain electricity from the public
utility furnishing electricity to the Building pursuant to the provisions of
Section 13.4 hereof, Landlord shall furnish electric current to the Accessory
Premises for the use of Tenant for the operation of the overhead lighting
fixtures only in the Accessory Premises on a "rent inclusion" basis, that is,
there shall be no separate charge to Tenant for such electric current by way of
measuring such electricity service on any meter. The Accessory Fixed Rent set
forth in this Lease includes an annual charge for electricity service of Two
Thousand Four Hundred Fifty-Three Dollars ($2,453.00) (such amount, as it may be
increased pursuant to the provisions of this Lease, being referred to as the
"Accessory Electricity Inclusion Factor"). The parties agree that although the
charge for furnishing electrical energy is included in the Accessory Fixed Rent
on a so-called "rent inclusion" basis, the value to Tenant of such service may
not be fully reflected in the Accessory Fixed Rent. Accordingly, Tenant agrees
that Landlord, at Landlord's option, may cause a reputable and independent
electrical engineer or electrical consulting firm, selected by Landlord (such
engineer or consulting firm being hereinafter referred to as "Landlord's
Engineer"), to make a determination, following the commencement of Tenant's
normal business activities in the Accessory Premises, of the Full Value of such
service to Tenant. As used herein, the "Full Value" to Tenant of such service
shall mean the product obtained by multiplying the demand and consumption of
electric energy at the Accessory Premises by the Electric Rate. Landlord's
Engineer shall certify such determination in writing to Landlord and Tenant. If
the Full Value to Tenant is in excess of the Accessory Electricity Inclusion
Factor, the Accessory Electricity Inclusion Factor and the Accessory Fixed Rent
shall be increased by such excess. However, if it shall be so determined that
the Full Value to Tenant of such service does not exceed the Accessory
Electricity Inclusion Factor, there shall nevertheless be no decrease in the
Accessory Electricity Inclusion Factor or in the Accessory Fixed Rent.
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(2) If during the Term the Electric Rate shall increase over
the Base Electric Rate, the Accessory Electricity Inclusion Factor (and
therefore the Fixed Rent) shall be proportionately increased.
(3) (a) Landlord, from time to time during the Term, may cause
Landlord's Engineer to survey the demand and consumption of electrical energy at
the Accessory Premises. If the then Full Value shall exceed the then Accessory
Electricity Inclusion Factor, the Accessory Electricity Inclusion Factor (and
therefore the Accessory Fixed Rent), shall be proportionately increased, based
on the increased demand and consumption and the then prevailing Electric Rate.
(b) Landlord shall furnish to Tenant a written statement
(an "Electricity Statement") setting forth Landlord's determination of any
increase which has occurred in the Full Value and the Electricity Inclusion
Factor (and therefore the Fixed Rent) pursuant to the provisions of either
Sections 13.3(B)(1), (B)(2), or (B)(3)(a). Any such increase in the Accessory
Electricity Inclusion Factor and the Accessory Fixed Rent shall be effective as
of the date of such increase in the Electric Rate or the consumption and demand
of electric energy by Tenant and shall be retroactive to such dates if
necessary. Any retroactive increase shall be paid by Tenant within ten (10) days
after demand and such amount shall be collectible by Landlord as Accessory Fixed
Rent hereunder.
(c) Each such Electricity Statement given by Landlord
pursuant to Section 13.3(B)(3)(b) above, shall be conclusive and binding upon
Tenant, unless within thirty (30) days after the receipt of such Electricity
Statement, Tenant shall notify Landlord that it disputes the correctness of the
Electricity Statement. If such dispute is based on Tenant's demand and
consumption of electric current, Tenant shall submit a survey and determination
of such adjustment, made at its sole cost and expense, by a reputable and
independent electrical engineer or electrical consulting firm ("Tenant's
Engineer"), within thirty (30) days after receipt of such Electricity Statement.
If Landlord and Tenant are unable to resolve the dispute differences between
them within thirty (30) days after receipt by Landlord of a copy of the
determination of Tenant's Engineer, the dispute shall be decided by a third
reputable and independent electrical engineer or electrical consulting firm
("Third Engineer"). If the parties shall fail to agree upon the designation of
the Third Engineer within forty (40) days after the receipt by Landlord of the
determination of Tenant's Engineer, then either party may apply to the American
Arbitration Association or any successor thereto for the designation of the
Third Engineer. The Third Engineer shall conduct such hearings as he deems
appropriate. The Third Engineer, within thirty (30) days after his designation,
shall select the determination of either Landlord's Engineer or Tenant's
Engineer and such determination shall be conclusive and binding upon the parties
whether or not a judgment shall be entered in any court. The fees of the Third
Engineer and the costs of arbitration shall be paid equally by the parties,
except that each party shall pay its own counsel fees and expenses, if any, in
connection with the arbitration. Pending the resolution of such dispute by
agreement or arbitration as aforesaid, Tenant shall pay the increase in the
Accessory Electricity Inclusion Factor in accordance with the Electricity
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Statement, without prejudice to Tenant's position, as herein provided. If the
dispute shall be resolved in Tenant's favor, Landlord, at its option, shall
either credit the amount of such overpayment against subsequent monthly
installments of Fixed Rent hereunder or pay to Tenant the amount of such
overpayment.
(4) Landlord's failure during the Term to prepare and deliver
any Electricity Statement, or bills, or Landlord's failure to make a demand,
under this Article or any other provisions of this Lease, shall not in any way
be deemed to be a waiver of, or cause Landlord to forfeit or surrender, its
rights to collect any portion of the increase in the Electricity Inclusion
Factor (and therefore the Fixed Rent) which may have become due pursuant to this
Article 13 during the Term. Tenant's liability for the amounts due under this
Article 13 shall survive the expiration or sooner termination of this Lease and
Landlord's obligation, if any, to refund any payments by Tenant in excess of the
amounts required to be paid by Tenant to Landlord pursuant to this Article 13
shall survive the expiration or sooner termination of this Lease. The preceding
sentence shall not, however, be construed as limiting or restricting, in any
manner whatsoever, Landlord's right pursuant to this Lease or pursuant to law to
offset any such overpayments by Tenant against any amounts which may be due and
payable as provided in this Lease.
(5) In no event shall any adjustment of the payments made or
to be made hereunder result in a decrease in Accessory Fixed Rent or additional
rent payable pursuant to any other provision of this Lease, or in the amount
paid for electricity for the prior year.
(6) The Electricity Inclusion Factor shall be collectible by
Landlord in the same manner as Accessory Fixed Rent.
(7) For the purposes of this Section 13.3, Landlord and Tenant
agree that "Electric Rate" (including all applicable surcharges, demand charges,
energy charges, fuel adjustment charges, time of day charges, taxes and other
sums payable in respect thereof) shall mean the service classification pursuant
to which Landlord purchases electricity from the utility company servicing the
Building.
(8) If Landlord discontinues furnishing electricity to Tenant
pursuant to this Section 13.3, the Accessory Fixed Rent shall be decreased by
the Accessory Electricity Inclusion Factor effective as of the date Landlord
discontinues the provision of electricity in such manner.
Section 13.4. If Landlord shall be required by Requirements of the public
utility or alternative electricity provider serving the Premises to discontinue
furnishing electricity to Tenant this Lease shall continue in full force and
effect and shall be unaffected thereby, except only that from and after the
effective date of such discontinuance, Landlord shall not be obligated to
furnish electricity to Tenant and Tenant shall not be obligated to pay the
Electricity Additional Rent or the Electricity Inclusion Charge, as the case may
be. If Landlord so discontinues
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furnishing electricity to Tenant, Tenant shall use diligent efforts to obtain
electric energy directly from the public utility or alternative electricity
provider furnishing electric service to the Building. The costs of such service
shall be paid by Tenant directly to such public utility or alternative
electricity provider. Such electricity may be furnished to Tenant by means of
the existing electrical facilities serving the Premises, at no charge, to the
extent the same are available, suitable and safe for such purposes as determined
by Landlord. All meters and all additional panel boards, feeders, risers, wiring
and other conductors and equipment which may be required to obtain electricity
shall be installed by Landlord at Tenant's expense. Provided Tenant shall use
and continue to use diligent efforts to obtain electric energy directly from the
public utility, Landlord, to the extent permitted by applicable Requirements,
shall not discontinue furnishing electricity to the Premises until such
installations have been made and Tenant shall be able to obtain electricity
directly from the public utility or alternative electricity provider.
ARTICLE 14
ACCESS TO PREMISES
Section 14.1. (A) Tenant shall permit Landlord, Landlord's agents,
representatives, contractors and employees and public utilities servicing the
Building to erect, use and maintain, concealed ducts, pipes and conduits in and
through the Premises. Landlord, Landlord's agents, representatives, contractors,
and employees and the agents, representatives, contractors, and employees of
public utilities servicing the Building shall have the right to enter the
Premises at all reasonable times upon reasonable prior notice (except in the
case of an emergency in which event Landlord and Landlord's agents,
representatives, contractors, and employees may enter without prior notice to
Tenant), which notice may be oral, to examine the same, to show them to
prospective purchasers, or prospective or existing Mortgagees or Lessors, and to
make such repairs, alterations, improvements, additions or restorations (i) as
Landlord may deem necessary to the Premises or necessary or desirable to any
other portion of the Building, or (ii) which Landlord may elect to perform
following ten (10) days after notice, except in the case of an emergency (in
which event Landlord and Landlord's agents, representatives, contractors, and
employees may enter without prior notice to Tenant), following Tenant's failure
to make repairs or perform any work which Tenant is obligated to make or perform
under this Lease (provided that (except in the case of emergency) so long as
Tenant has commenced such repairs or work within such ten (10) day period and
diligently prosecutes same to completion, Landlord shall have no right to
perform same), or (iii) for the purpose of complying with any Requirements, a
Superior Lease or a Mortgage, and Landlord shall be allowed to take all material
into and upon the Premises that may be required therefor without the same
constituting an eviction or constructive eviction of Tenant in whole or in part
and the Fixed Rent (and any other item of Rental) shall in no wise abate (except
to the extent expressly set forth in Section 14.2 hereof) while said repairs,
alterations, improvements, additions or restorations are being made, by reason
of loss or interruption of business of Tenant, or otherwise. All materials which
Landlord shall take into and upon the Premises pursuant to the provisions of
this Article 14 may be stored
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within the Premises provided the same is located so as to minimize interference
with or disruption of Tenant's normal business operation. Tenant shall have the
right (except in the case of emergency) to have a representative of Tenant
accompany Landlord in the Premises when access is permitted hereunder.
(B) Any work performed or installations made pursuant to this
Article 14 shall be made with reasonable diligence and otherwise pursuant to the
provisions of Section 4.3 hereof. Landlord shall cause any debris or refuse to
be removed from the work area in the Premises at the end of each day and, upon
completion of any such work, Landlord shall repair any damage to the Premises
caused by or resulting from such work or activity and restore such portion of
the Premises to its previously existing condition. Landlord shall also clean all
areas of the Premises affected by Landlord's activities and, upon completion of
such work, subject to the provisions of Section 14.1(A) hereof, shall remove
from the Premises all tools, equipment and materials relating to such work.
(C) Except as hereinafter provided, any pipes, ducts, or conduits
installed in or through the Premises pursuant to this Article 14 shall be
concealed behind, beneath or within partitioning, columns, ceilings or floors
located or to be located in the Premises. Notwithstanding the foregoing, any
such pipes, ducts, or conduits may be furred at points immediately adjacent to
partitioning columns or ceilings located or to be located in the Premises,
provided that the same are completely furred and that the installation of such
pipes, ducts, or conduits, when completed, shall not reduce the usable area of
the Premises beyond a de minimis amount.
Section 14.2. If due to any work or installation performed by Landlord
hereunder or failure by Landlord to perform its obligations hereunder (other
than by reason of Unavoidable Delays) or the failure of any Building System, (i)
Tenant shall be unable for at least ten (10) consecutive Business Days to
operate its business in the Premises in substantially the same manner as such
business was operated prior to the performance of such work or installation or
such failure, and (ii) such interruption shall occur during business hours, the
Fixed Rent and the Escalation Rent shall be reduced on a per diem basis in the
proportion in which the area of the portion of the Premises which is unusable
bears to the total area of the Premises for each day subsequent to the aforesaid
ten (10) Business Day period that such portion of the Premises remains unusable.
Section 14.3. During the nine (9) month period prior to the Expiration
Date, Landlord may exhibit the Premises to prospective tenants thereof upon
reasonable prior notice (which may be oral) and at reasonable times. Tenant
shall have the right to have a representative of Tenant accompanying Landlord in
the Premises when access is permitted under this Section 14.3.
Section 14.4. If Tenant shall not be present when for any reason entry
into the Premises shall be necessary or permissible, Landlord or Landlord's
agents, representatives, contractors or employees may enter the same without
rendering Landlord or such agents liable therefor if
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during such entry Landlord or Landlord's agents shall accord reasonable care
under the circumstances to Tenant's Property, and without in any manner
affecting this Lease. Nothing herein contained, however, shall be deemed or
construed to impose upon Landlord any obligation, responsibility or liability
whatsoever, for the care, supervision or repair of the Building or any part
thereof, other than as herein provided.
Section 14.5. Landlord also shall have the right at any time, without the
same constituting an actual or constructive eviction and without incurring any
liability to Tenant therefor, to change the arrangement or location of entrances
or passageways, doors and doorways, and corridors, elevators, stairs, toilets,
or other public parts of the Building and to change the name, number or
designation by which the Building is commonly known, provided any such change
does not (a) unreasonably reduce, interfere with or deprive Tenant of access to
the Building or the Premises or services or service facilities available to
Tenant or (b) reduce the rentable area (except by a de minimis amount) of the
Premises. All parts (except surfaces facing the interior of the Premises) of all
walls, windows and doors bounding the Premises (including exterior Building
walls, exterior core corridor walls, exterior doors and entrances), all
balconies, terraces and roofs adjacent to the Premises, all space in or adjacent
to the Premises used for shafts, stacks, stairways, chutes, pipes, conduits,
ducts, fan rooms, heating, air cooling, plumbing and other mechanical
facilities, service closets and other Building facilities are not part of the
Premises, and Landlord shall have the use thereof, as well as access thereto
through the Premises for the purposes of operation, maintenance, alteration and
repair.
ARTICLE 15
CERTIFICATE OF OCCUPANCY
Tenant shall not at any time use or occupy the Premises in violation of
the certificate of occupancy at such time issued for the Premises or for the
Building and in the event that any department of the City or State of New York
shall hereafter contend or declare by notice, violation, order or in any other
manner whatsoever that the Premises are used for a purpose which is a violation
of such certificate of occupancy, Tenant, upon written notice from Landlord or
any Governmental Authority, shall immediately discontinue such use of the
Premises. On the Commencement Date a temporary or permanent certificate of
occupancy covering the Premises will be in force permitting the Premises to be
used as offices, provided, however, neither such certificate, nor any provision
of this Lease, nor any act or omission of Landlord, shall be deemed to
constitute a representation or warranty that the Premises, or any part thereof,
lawfully may be used or occupied for any particular purpose or in any particular
manner, in contradistinction to mere "office" use or that the Accessory Premises
or any part thereof, lawfully may be used or occupied for any particular purpose
or in any particular manner in contradistinction to mere "storage" use.
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ARTICLE 16
DEFAULT
Section 16.1. Each of the following events shall be an "Event of Default"
hereunder:
(A) If Tenant shall default in the payment when due of any
installment of Fixed Rent and such default shall continue for five (5) Business
Days after notice of such default is given to Tenant, or in the payment when due
of any other item of Rental and such default shall continue for five (5)
Business Days after notice of such default is given to Tenant, except that if
Landlord shall have given two (2) such notices in any twelve (12) month period,
Tenant shall not be entitled to any further notice of its delinquency in the
payment of Rental until such time as twelve (12) consecutive months shall have
elapsed without Tenant having defaulted in any such payment; or
(B) Intentionally Omitted Prior To Execution.
(C) if the Premises shall become abandoned (for the purpose of this
Section 16.1(C), the term "abandoned" shall mean that Tenant shall (i) have
vacated the Premises with no intention to return, and (ii) not be maintaining
the Premises in accordance with good business practice); or
(D) if Tenant's interest or any portion thereof in this Lease shall
devolve upon or pass to any person, whether by operation of law or otherwise,
except as expressly permitted under Article 12 hereof; or
(E) (1) if Tenant shall generally not, or shall be unable to, or
shall admit in writing its inability to, pay its debts as they become due; or
(2) if Tenant 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; or
(3) if Tenant shall make a general assignment for the benefit
of creditors; or
(4) if any case, proceeding or other action shall be commenced
or instituted against Tenant (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
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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 (i) results in any such entry of an order for relief, adjudication of
bankruptcy or insolvency or such an appointment or the issuance or entry of any
other order having a similar effect or (ii) remains undismissed for a period of
ninety (90) days; or
(5) if any case, proceeding or other action shall be commenced
or instituted against Tenant seeking issuance of a warrant of attachment,
execution, distraint or similar process against all or any substantial part of
its property which results in the entry of an order for any such relief which
shall not have been vacated, discharged, or stayed or bonded pending appeal
within ninety (90) days from the entry thereof; or
(6) if Tenant shall take any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in, any of the acts set
forth in clauses (2), (3), (4) or (5) above; or
(7) if a trustee, receiver or other custodian is appointed for
any substantial part of the assets of Tenant which appointment is not vacated or
stayed within seven (7) Business Days; or
(F) if Tenant shall fail more than five (5) times during any twelve
(12) month period to pay any installment of Fixed Rent or any item of Rental
when due, after receipt of the notice and the expiration of the applicable grace
period pursuant to the provisions of paragraph (A) above, if such notice and
grace period are then required; or
(G) if Tenant shall fail to pay any installments of Fixed Rent or
items of Rental when due as required by this Lease, and Landlord shall bring
more than one (1) summary dispossess proceeding during any twelve (12) month
period; or
(H) if this Lease is assigned (or all or a portion of the Premises
are subleased) to a Related Entity and such Related Entity shall no longer (i)
Control, (ii) be under common Control with, or (iii) be under the Control of
Tenant (or any permitted successor by merger, consolidation or purchase as
provided herein); or
(I) if Landlord shall present the Letter of Credit to the bank which
issued the same in accordance with the provisions of Article 31 hereof, and the
bank shall fail to honor the Letter of Credit and pay the proceeds thereof to
Landlord for any reason whatsoever; or
(J) if Tenant shall default in the observance or performance of any
other term, covenant or condition of this Lease on Tenant's part to be observed
or performed and Tenant shall fail to remedy such default within thirty (30)
days after notice by Landlord to Tenant of such default, or if such default is
of such a nature that it cannot with due diligence be completely
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remedied within said period of thirty (30) days and Tenant shall not commence
within said period of thirty (30) days, or shall not thereafter diligently
prosecute to completion, all steps necessary to remedy such default.
Section 16.2. (A) If an Event of Default (i) described in Section 16.1(E)
hereof shall occur, or (ii) described in Sections 16.1(A), (B), (C), (D), (F),
(G), (H), (I) or (J) shall occur and Landlord, at any time thereafter, at its
option gives written notice to Tenant stating that this Lease and the Term shall
expire and terminate three (3) days after the date Landlord shall give Tenant
such notice, then this Lease and the Term and all rights of Tenant under this
Lease shall expire and terminate as if the date on which the Event of Default
described in clause (i) above occurred or three (3) days after the date of such
notice, pursuant to clause (ii) above, as the case may be, were the Fixed
Expiration Date and Tenant immediately shall quit and surrender the Premises,
but Tenant shall nonetheless be liable for all of its obligations hereunder, as
provided for in Articles 17 and 18 hereof. 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 16.1(E)
hereof; or by federal or state statute, then, following the expiration of any
such stay, or if the trustee appointed in any such proceeding, Tenant or Tenant
as debtor-in-possession shall fail to assume Tenant's obligations under this
Lease within the period prescribed therefor by law or within one hundred twenty
(120) days after entry of the order for relief or as may be allowed by the
court, or if said trustee, Tenant or Tenant as debtor-in-possession shall fail
to provide adequate protection of Landlord's right, title and interest in and to
the Premises or adequate assurance of the complete and continuous future
performance of Tenant's obligations under this Lease as provided in Section
12.3(B), Landlord, 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 Tenant, Tenant 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 Tenant, Tenant as
debtor-in-possession or said trustee shall immediately quit and surrender the
Premises as aforesaid.
(B) If this Lease shall be terminated as provided in Section 16.2(A)
hereof, Landlord, without notice, may reenter and repossess the Premises in
accordance with applicable law without being liable to indictment, prosecution
or damages therefor and may dispossess Tenant by summary proceedings or
otherwise.
Section 16.3. If at any time, (i) Tenant shall be comprised of two (2) or
more persons, or (ii) Tenant's obligations under this Lease shall have been
guaranteed by any person other than Tenant, or (iii) Tenant's interest in this
Lease shall have been assigned, the word "Tenant", as used in Section 16.1(E),
shall be deemed to mean any one or more of the persons primarily or secondarily
liable for Tenant's obligations under this Lease. Any monies received by
Landlord from or on behalf of Tenant during the pendency of any proceeding of
the types referred to in Section 16.1(E) shall be deemed paid as compensation
for the use and occupation of the Premises and the acceptance of any such
compensation by Landlord shall not be deemed an acceptance of Rental or a waiver
on the part of Landlord of any rights under Section 16.2.
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ARTICLE 17
REMEDIES AND DAMAGES
Section 17.1. (A) If there shall occur any Event of Default, and this
Lease and the Term shall expire and come to an end as provided in Article 16
hereof:
(1) Tenant shall quit and peacefully surrender the Premises to
Landlord, and Landlord and its agents may immediately, or at any time after such
default or after the date upon which this Lease and the Term shall expire and
come to an end, re-enter the Premises or any part thereof, without notice,
either by summary proceedings, or by any other applicable action or proceeding
in accordance with applicable law (without being liable to indictment,
prosecution or damages therefor), and may repossess the Premises and dispossess
Tenant and any other persons from the Premises and remove any and all of their
property and effects from the Premises; and
(2) Landlord, at Landlord's option, may relet the whole or any
portion or portions of the Premises from time to time, either in the name of
Landlord or otherwise, to such tenant or tenants, for such term or terms ending
before, on or after the Expiration Date, at such rental or rentals and upon such
other conditions, which may include concessions and free rent periods, as
Landlord, in its sole discretion, may determine; provided, however, that
Landlord shall have no obligation to relet the Premises or any part thereof and
shall in no event be liable for refusal or failure to relet the Premises or any
part thereof, or, in the event of any such reletting, for refusal or failure to
collect any rent due upon any such reletting, and no such refusal or failure
shall operate to relieve Tenant of any liability under this Lease or otherwise
affect any such liability, and Landlord, at Landlord's option, may make such
repairs, replacements, alterations, additions, improvements, decorations and
other physical changes in and to the Premises as Landlord, in its sole
discretion, considers advisable or necessary in connection with any such
reletting or proposed reletting, without relieving Tenant of any liability under
this Lease or otherwise affecting any such liability.
(B) Tenant hereby waives the service of any notice of intention to
re-enter or to institute legal proceedings to that end which may otherwise be
required to be given under any present or future law. Tenant, on its own behalf
and on behalf of all persons claiming through or under Tenant, including all
creditors, does further hereby waive any and all rights which Tenant and all
such persons might otherwise have under any present or future law to redeem the
Premises, or to re-enter or repossess the Premises, or to restore the operation
of this Lease, after (a) Tenant shall have been dispossessed by a judgment or by
warrant of any court or judge, or (b) any re-entry by Landlord, or (c) any
expiration or termination of this Lease and the Term, whether such dispossess,
re-entry, expiration or termination shall be by operation of law or pursuant to
the provisions of this Lease. The words "re-enter," "re-entry" and "re-entered"
as used in this Lease shall not be deemed to be restricted to their technical
legal meanings. In the event of a breach or threatened breach by Tenant, or any
persons claiming through or under
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Tenant, of any term, covenant or condition of this Lease, Landlord shall have
the right to enjoin such breach and the right to invoke any other remedy allowed
by law or in equity as if re-entry, summary proceedings and other special
remedies were not provided in this Lease for such breach. The right to invoke
the remedies hereinbefore set forth are cumulative and shall not preclude
Landlord from invoking any other remedy allowed at law or in equity.
Section 17.2. (A) If this Lease and the Term shall expire and come to an
end as provided in Article 16 hereof, or by or under any summary proceeding or
any other action or proceeding, or if Landlord shall re-enter the Premises as
provided in Section 17.1, or by or under any summary proceeding or any other
action or proceeding, then, in any of said events:
(1) Tenant shall pay to Landlord all Fixed Rent, Escalation
Rent and other items of Rental payable under this Lease by Tenant to Landlord 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 Landlord, as the case may
be;
(2) Tenant also shall be liable for and shall pay to Landlord,
as damages, any deficiency (referred to as "Deficiency") between the Rental 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 clause (2) of Section 17.1(A) for any part of such
period (first deducting from the rents collected under any such reletting all of
Landlord's expenses in connection with the termination of this Lease, Landlord's
re-entry upon the Premises and with such reletting, including, but not limited
to, all repossession costs, brokerage commissions, legal expenses, attorneys'
fees and disbursements, alteration costs, contribution to work and other
expenses of preparing the Premises for such reletting); any such Deficiency
shall be paid in monthly installments by Tenant on the days specified in this
Lease for payment of installments of Fixed Rent; Landlord shall be entitled to
recover from Tenant each monthly Deficiency as the same shall arise, and no suit
to collect the amount of the Deficiency for any month shall prejudice Landlord's
right to collect the Deficiency for any subsequent month by a similar
proceeding; and
(3) whether or not Landlord shall have collected any monthly
Deficiency as aforesaid, Landlord shall be entitled to recover from Tenant, and
Tenant shall pay to Landlord, on demand, in lieu of any further Deficiency as
and for liquidated and agreed final damages, a sum equal to the amount by which
the Rental for the period which otherwise would have constituted the unexpired
portion of the Term (commencing on the date immediately succeeding the last date
with respect to which a Deficiency, if any, was collected) exceeds the then fair
and reasonable rental value of the Premises for the same period, both discounted
to present worth at the Base Rate; if, before presentation of proof of such
liquidated damages to any court, commission or tribunal, the Premises, or any
part thereof, shall have been relet by Landlord 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
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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.
(B) If the Premises, or any part thereof, shall be relet together
with other space in the Building, the rents collected or reserved under any such
reletting and the expenses of any such reletting shall be equitably apportioned
for the purposes of this Section 17.2. Tenant shall in no event be entitled to
any rents collected or payable under any reletting, whether or not such rents
shall exceed the Fixed Rent reserved in this Lease. Solely for the purposes of
this Article 17, the term "Escalation Rent" as used in Section 17.2(A) shall
mean the Escalation Rent in effect immediately prior to the Expiration Date, or
the date of re-entry upon the Premises by Landlord, as the case may be, adjusted
to reflect any increase pursuant to the provisions of Article 27 hereof for the
Operating Year immediately preceding such event. Nothing contained in Article 16
hereof or this Article 17 shall be deemed to limit or preclude the recovery by
Landlord from Tenant of the maximum amount allowed to be obtained as damages by
any statute or rule of law, or of any sums or damages to which Landlord may be
entitled in addition to the damages set forth in this Section 17.2.
ARTICLE 18
LANDLORD FEES AND EXPENSES
Section 18.1. If an Event of Default shall have occurred and be
continuing, Landlord may (1) as provided in Section 14.1 hereof, perform the
same for the account of Tenant, or (2) make any expenditure or incur any
obligation for the payment of money, including, without limitation, reasonable
attorneys' fees and disbursements in instituting, prosecuting or defending any
action or proceeding, and the cost thereof, with interest thereon at the
Applicable Rate, shall be deemed to be additional rent hereunder and shall be
paid by Tenant to Landlord within twenty (20) days of rendition of any bill or
statement to Tenant therefor and if the term of this Lease shall have expired at
the time of making of such expenditures or incurring of such obligations, such
sums shall be recoverable by Landlord as damages.
Section 18.2. If Tenant shall fail to pay any installment of Fixed Rent,
Escalation Rent or any other item of Rental when due, Tenant shall pay to
Landlord, in addition to such installment of Fixed Rent, Escalation Rent or
other item of Rental, as the case may be, as a late charge and as additional
rent, a sum equal to interest at the Applicable Rate on the amount unpaid,
computed from the date such payment was due to and including the date of
payment.
ARTICLE 19
NO REPRESENTATIONS BY LANDLORD
Section 19.1. Landlord and Landlord's agents and representatives have made
no representations or promises with respect to the Building, the Real Property
or the Premises
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except as herein expressly set forth, and no rights, easements or licenses are
acquired by Tenant by implication or otherwise except as expressly set forth
herein. Tenant shall accept possession of the Premises in the condition which
shall exist on the Commencement Date "as is" (subject to the provisions of
Section 4.1 hereof), and Landlord shall have no obligation to perform any work
or make any installations in order to prepare the Premises for Tenant's
occupancy except that Landlord shall perform at Landlord's cost and expense, the
items set forth on Exhibit "B" attached hereto and made a part hereof
("Landlord's Work").
Section 19.2. (A) Landlord has made and makes no representation as to the
date on which it will complete and Landlord's Work. No delay in completing
Landlord's Work shall in any way affect the validity of this Lease or the
obligations of Tenant hereunder or give rise to a claim for damages by Tenant or
a claim for rescission of this Lease, nor shall the same be construed in any
wise to extend the Term hereof. Landlord agrees that, subject to Unavoidable
Delay, each item of Landlord's Work shall be prosecuted with due diligence, in a
good and workerlike manner and in compliance with Requirements; provided,
however, that nothing contained in this Article 19 shall be deemed to impose
upon Landlord any obligations to employ contractors or labor at so-called
overtime or other premium pay rates or to incur any other overtime costs or
expenses whatsoever. Landlord and Tenant agree to cooperate with each other in
accordance with good construction practice and scheduling to permit the Initial
Alterations to be performed simultaneously with Landlord's Work. Landlord shall
have the right to enter the Premises, subject to the provisions of Article 14
hereof, subsequent to the Commencement Date to complete Landlord's Work and the
payment of Fixed Rent and Escalation Rent shall not be affected thereby.
(B) Notwithstanding anything to the contrary contained herein
(including, without limitation, Section 19.2(A) hereof), if (i) Landlord shall
fail to Substantially Complete item (1) of Landlord's Work on or before the date
that shall be thirty (30) days after the Commencement Date (subject to extension
by reason of Unavoidable Delays), or (ii) Landlord shall fail to Substantially
Complete item (2) of Landlord's Work on or before the date that shall be thirty
(30) days after the date on which Tenant takes occupancy of the Premises for the
conduct of its business (subject to extension by reason of Unavoidable Delays),
then provided Landlord's failure to Substantially Complete such work did not
result from any delays caused by Tenant, Tenant's agents, employees, invitees,
contractors or licensees, the Rent Commencement Date shall be delayed (without
duplication) beyond the date referred to in the definition of "Rent Commencement
Date" one (1) day for each day, if any, that such item(s) of Landlord's Work are
not Substantially Completed.
Section 19.3. (A) If Tenant during the performance of the Initial
Alterations shall uncover or discover any asbestos or asbestos-containing
materials (collectively, "ACM") in the Premises which are required by
Requirements to be abated by removal, enclosure or encapsulation then Landlord,
at its cost and expense, shall promptly commence and diligently proceed to abate
the same in accordance with all applicable Requirements, except that in no event
shall Landlord be required to remove, encapsulate or otherwise abate any ACM
which is
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contained in column enclosures. Upon the uncovering or discovery of any such
ACM, Tenant shall immediately vacate the Premises (or the affected portion, if
in the judgment of Landlord and Landlord's certified asbestos removal
contractor, it is possible for persons to safely remain in any other portion of
the Premises) and shall cause all of its contractors, subcontractors, mechanics,
materialmen, laborers and all other parties to do the same. Tenant shall have no
right to re-enter the Premises (or such affected portion) until all of such ACM
shall have been abated as aforesaid by Landlord in accordance with all
applicable Requirements.
(B) If Tenant shall discover ACM in the performance of its Initial
Alterations and Tenant shall actually be delayed in the performance and
completion of the Initial Alterations in the entire Premises by reason of its
discovery of ACM in the Premises, Tenant's vacating the entire Premises, and
Landlord's removing of such ACM as aforesaid, then the Rent Commencement Date
shall be postponed one day for each day Tenant is so delayed in the completion
of the Initial Alterations. If Tenant shall not be required to vacate the entire
Premises, but only a portion of the Premises and Tenant shall actually be
delayed in the performance and completion of the Initial Alterations with
respect to such portion of the Premises which Tenant is required to vacate, then
the Rent Commencement Date shall not be postponed, but rather, the Fixed Rent
and Escalation Rent appropriately prorated for such portion of the Premises
which Tenant is required to vacate shall be abated for a period equal to the
number of days for which Tenant is delayed in the performance and completion of
the Initial Alterations in such portion of the Premises.
ARTICLE 20
END OF TERM
Upon the expiration or other termination of this Lease, Tenant shall quit
and surrender to Landlord the Premises, vacant, broom clean, in good order and
condition, ordinary wear and tear and damage for which Tenant is not responsible
under the terms of this Lease excepted, and otherwise in compliance with the
provisions of Article 3 hereof. If the last day of the Term or any renewal
thereof falls on Saturday or Sunday, this Lease shall expire on the Business Day
immediately preceding. Tenant expressly waives, for itself and for any person
claiming through or under Tenant, any rights which Tenant or any such person may
have under the provisions of Section 2201 of the New York Civil Practice Law and
Rules and of any successor law of like import then in force in connection with
any holdover summary proceedings which Landlord may institute to enforce the
foregoing provisions of this Article 20. Tenant acknowledges that possession of
the Premises must be surrendered to Landlord on the Expiration Date. Tenant
agrees to indemnify and save Landlord harmless from and against all claims,
losses, damages, liabilities, costs and expenses (including, without limitation,
attorneys' fees and disbursements) resulting from delay by Tenant in so
surrendering the Premises, including, without limitation, any claims made by any
succeeding tenant founded on such delay. The parties recognize and agree that
the damage to Landlord resulting from any failure by Tenant to timely surrender
possession of the Premises as aforesaid will be extremely substantial, will
exceed the amount of
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the monthly installments of the Fixed Rent and Rental theretofore payable
hereunder, and will be impossible to accurately measure. Tenant therefore agrees
that if possession of the Premises is not surrendered to Landlord within
twenty-four (24) hours after the Expiration Date, in addition to any other
rights or remedies Landlord may have hereunder or at law, and without in any
manner limiting Landlord's right to demonstrate and collect any damages suffered
by Landlord and arising from Tenant's failure to surrender the Premises as
provided herein, Tenant shall pay to Landlord on account of use and occupancy of
the Premises for each month and for each portion of any month during which
Tenant holds over in the Premises after the Expiration Date, a sum equal to the
greater of (i) one hundred seventy-five percent (175%) of the aggregate of that
portion of the Fixed Rent, Escalation Rent and Rental which was payable under
this Lease during the last month of the Term, and (ii) the then fair market
rental value for the Premises. Nothing herein contained shall be deemed to
permit Tenant to retain possession of the Premises after the Expiration Date or
to limit in any manner Landlord's right to regain possession of the Premises
through summary proceedings, or otherwise, and no acceptance by Landlord of
payments from Tenant after the Expiration Date shall be deemed to be other than
on account of the amount to be paid by Tenant in accordance with the provisions
of this Article 20. The provisions of this Article 20 shall survive the
Expiration Date.
ARTICLE 21
QUIET ENJOYMENT
As long as this Lease shall remain in full force and effect, Tenant may
peaceably and quietly enjoy the Premises subject, nevertheless, to the terms and
conditions of this Lease.
ARTICLE 22
FAILURE TO GIVE POSSESSION
Landlord shall deliver possession of the Premises on the Commencement
Date.
ARTICLE 23
NO WAIVER
Section 23.1. No act or thing done by Landlord or Landlord's agents during
the Term shall be deemed an acceptance of a surrender of the Premises, and no
agreement to accept such surrender shall be valid unless in writing signed by
Landlord. No employee of Landlord or of Landlord's agents shall have any power
to accept the keys of the Premises prior to the termination of this Lease. The
delivery of keys to any employee of Landlord or of Landlord's agents shall not
operate as a termination of this Lease or a surrender of the Premises. In the
event Tenant at any time desires to have Landlord sublet the Premises for
Tenant's account, Landlord or Landlord's agents are authorized to receive said
keys for such purpose without
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releasing Tenant from any of the obligations under this Lease, and Tenant hereby
relieves Landlord of any liability for loss of or damage to any of Tenant's
effects in connection with such subletting.
Section 23.2. The failure of Landlord to seek redress for violation of, or
to insist upon the strict performance of, any covenant or condition of this
Lease, or any of the Rules and Regulations set forth or hereafter adopted by
Landlord, shall not prevent a subsequent act, which would have originally
constituted a violation of the provisions of this Lease, from having all of the
force and effect of an original violation of the provisions of this Lease. The
receipt by Landlord of Fixed Rent, Escalation Rent or any other item of Rental
with knowledge of the breach of any covenant of this Lease shall not be deemed a
waiver of such breach. The failure of Landlord to enforce any of the Rules and
Regulations set forth, or hereafter adopted, against Tenant or any other tenant
in the Building shall not be deemed a waiver of any such Rules and Regulations.
No provision of this Lease shall be deemed to have been waived by Landlord,
unless such waiver be in writing signed by Landlord. No payment by Tenant or
receipt by Landlord of a lesser amount than the monthly Fixed Rent or other item
of Rental herein stipulated shall be deemed to be other than on account of the
earliest stipulated Fixed Rent or other item of Rental, or as Landlord may elect
to apply same, nor shall any endorsement or statement on any check or any letter
accompanying any check or payment as Fixed Rent or other item of Rental be
deemed an accord and satisfaction, and Landlord may accept such check or payment
without prejudice to Landlord's right to recover the balance of such Fixed Rent
or other item of Rental or to pursue any other remedy provided in this Lease.
This Lease contains the entire agreement between the parties and all prior
negotiations and agreements are merged herein. Any executory agreement hereafter
made shall be ineffective to change, modify, discharge or effect an abandonment
of this Lease in whole or in part unless such executory agreement is in writing
and signed by the party against whom enforcement of the change, modification,
discharge or abandonment is sought.
Section 23.3. The failure of Tenant to seek redress for violation of, or
to insist upon the strict performance of, any covenant or condition of this
Lease on Landlord's part to be performed, shall not be deemed a waiver of such
breach or prevent a subsequent act which would have originally constituted a
violation of the provisions of this Lease from having all of the force and
effect of an original violation of the provisions of this Lease. The payment by
Tenant of Fixed Rent, Escalation Rent or any other item of Rental or performance
of any obligation of Tenant hereunder with knowledge of any breach of any
covenant of this Lease shall not be deemed a waiver of such breach, and payment
of the same by Tenant shall be without prejudice to Tenant's right to pursue any
remedy against Landlord in this Lease provided.
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ARTICLE 24
WAIVER OF TRIAL BY JURY
The respective parties hereto shall and they hereby do waive trial by jury
in any action, proceeding or counterclaim brought by either of the parties
hereto against the other (except for personal injury or property damage) on any
matters whatsoever arising out of or in any way connected with this Lease, the
relationship of Landlord and Tenant, Tenant's use or occupancy of the Premises,
or for the enforcement of any remedy under any statute, emergency or otherwise.
If Landlord commences any summary proceeding against Tenant, Tenant will not
interpose any counterclaim of whatever nature or description in any such
proceeding (unless failure to impose such counterclaim would preclude Tenant
from asserting in a separate action the claim which is the subject of such
counterclaim), and will not seek to consolidate such proceeding with any other
action which may have been or will be brought in any other court by Tenant.
ARTICLE 25
INABILITY TO PERFORM
Except as otherwise expressly provided in this Lease, this Lease and the
obligation of Tenant to pay Rental hereunder and perform all of the other
covenants and agreements hereunder on the part of Tenant to be performed shall
in no wise be affected, impaired or excused because Landlord is unable to
fulfill any of its obligations under this Lease expressly or impliedly to be
performed by Landlord or because Landlord is unable to make, or is delayed in
making any repairs, additions, alterations, improvements or decorations or is
unable to supply or is delayed in supplying any equipment or fixtures, if
Landlord is prevented or delayed from so doing by reason of strikes or labor
troubles or by accident, or by any cause whatsoever beyond Landlord's control,
including, but not limited to, laws, governmental preemption in connection with
a national emergency or by reason of any Requirements of any Governmental
Authority or by reason of failure of the HVAC, electrical, plumbing, or other
Building Systems in the Building, or by reason of the conditions of supply and
demand which have been or are affected by war or other emergency ("Unavoidable
Delays").
ARTICLE 26
BILLS AND NOTICES
Except as otherwise expressly provided in this Lease, any bills,
statements, consents, notices, demands, requests or other communications given
or required to be given under this Lease shall be in writing and shall be deemed
sufficiently given or rendered if delivered by hand (against a signed receipt)
or if sent by registered or certified mail (return receipt requested) addressed
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if to Tenant (a) at Tenant's address set forth in this Lease, Attn.:
Mr. Lawrence Sutter, if mailed prior to Tenant's taking possession
of the Premises, or (b) at the Building, Attn.: Mr. Lawrence Sutter,
if mailed subsequent to Tenant's taking possession of the Premises,
or (c) at any place where Tenant or any agent or employee of Tenant
may be found if mailed subsequent to Tenant's vacating, deserting,
abandoning or surrendering the Premises, in each case with a copy to
Fried, Frank, Harris, Shriver & Jacobson, One New York Plaza, New
York, New York 10004, Attn.: Jonathan L. Mechanic, Esq., or
if to Landlord at Landlord's address set forth in this Lease, Attn.:
Mr. Kevin R. Wang, and with copies to (y) Proskauer Rose LLP, 1585
Broadway, New York, New York 10036, Attn.: Lawrence J. Lipson, Esq.,
and (z) each Mortgagee and Lessor which shall have requested same,
by notice given in accordance with the provisions of this Article 26
at the address designated by such Mortgagee or Lessor, or
to such other address(es) as Landlord, Tenant or any Mortgagee or Lessor may
designate as its new address(es) for such purpose by notice given to the other
in accordance with the provisions of this Article 26. Any such bill, statement,
consent, notice, demand, request or other communication shall be deemed to have
been rendered or given on the date when it shall have been hand delivered or
three (3) Business Days from when it shall have been mailed as provided in this
Article 26. Anything contained herein to the contrary notwithstanding, any
Operating Statement, Tax Statement or any other bill, statement, consent,
notice, demand, request or other communication from Landlord to Tenant with
respect to any item of Rental (other than any "default notice" if required
hereunder) may be sent to Tenant by regular United States mail.
ARTICLE 27
ESCALATION
Section 27.1. For the purposes of this Article 27, the following terms
shall have the meanings set forth below.
(A) "Assessed Valuation" shall mean the amount for which the Real
Property is assessed pursuant to applicable provisions of the New York City
Charter and of the Administrative Code of the City of New York for the purpose
of calculating all or any portion of the Taxes payable with respect to the Real
Property.
(B) "Base Operating Expenses" shall mean the Operating Expenses for
the Base Operating Year. Accordingly, Base Operating Expenses shall mean fifty
percent (50%) of
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the sum of (x) the Operating Expenses for the twelve (12) month period
commencing on January 1, 1998 and ending on December 31, 1998, and (y) the
Operating Expenses for the twelve (12) month period commencing on January 1,
1999 and ending on December 31, 1999.
(C) "Base Operating Year" shall mean the twelve (12) month fiscal
period commencing July 1, 1998 and ending June 30, 1999.
(D) "Base Taxes" shall mean the Taxes payable for the Tax Year
commencing July 1, 1998 and ending June 30, 1999.
(E) (1) "Operating Expenses" shall mean the aggregate of those costs
and expenses (and taxes, if any, thereon, including without limitation, sales
and value added taxes) paid or incurred by or on behalf of Landlord (whether
directly or through independent contractors) in respect of the Operation of the
Property which, are properly chargeable to the Operation of the Property
together with and including (without limitation) the costs of gas, oil, steam,
water, sewer rental, electricity (for the portions of the Real Property not
leased to and occupied by tenants or available for occupancy), HVAC and other
utilities furnished to the Building and utility taxes, and the expenses incurred
in connection with the Operation of the Property such as insurance premiums,
attorneys' fees and disbursements, auditing and other professional fees and
expenses, and all expenses (including attorneys' fees and disbursements,
experts' and other witnesses' fees) incurred in contesting the validity or
amount of any Taxes or in obtaining a refund of any Taxes, but specifically
excluding:
(i) Taxes,
(ii) franchise or income taxes imposed upon Landlord,
(iii) debt service on Mortgages,
(iv) leasing commissions,
(v) capital improvements (except as otherwise provided
herein),
(vi) the cost of electrical energy furnished directly to
Tenant and other tenants of the Building,
(vii) the cost of tenant installations incurred in
connection with preparing space for a new tenant,
(viii) salaries of personnel above the grade of building
manager and such building manager's supervisor,
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(ix) rent paid under Superior Leases (other than in the
nature of Rent consisting of Taxes or Operating Expenses),
(x) any expense for which Landlord is otherwise
compensated through the proceeds of insurance or is otherwise compensated by any
tenant (including Tenant) of the Building for services in excess of the services
Landlord is obligated to furnish to Tenant hereunder,
(xi) legal fees incurred in connection with any
negotiation of, or disputes arising out of, any space lease in the Building,
(xii) depreciation, except as provided herein,
(xiii) Landlord's advertising and promotional costs for
the Building,
(xiv) any fee or expenditure paid (a) to any Person
which shall Control, be under the Control of, or be under common Control with
Landlord, or in which Landlord directly or indirectly owns not less than a fifty
(50%) percent interest or (b) to any shareholder owning at least fifty (50%)
percent of the common stock, any general partner, any officer above the rank of
vice president, or member of any Board of Directors of Landlord or of any Person
described in this clause (xiv) or (c) to any person who is a relative by blood
(to the first degree of consanguinity, lineal or lateral) or marriage of any
such persons, in each case in excess of the amount which would be paid in the
absence of such relationship.
(xv) costs incurred with respect to a sale of all or any
portion of the Building or any interest therein (including, without limitation,
transfer, sales, and/or gains taxes),
(xvi) the cost of maintaining, organizing or
reorganizing the entity that is Landlord,
(xvii) interest, fines, penalties and late charges
incurred by Landlord for late payment except to the extent the same shall be due
to the act or omission of Tenant,
(xviii) the cost of removing or encapsulating asbestos
or asbestos containing materials, except to the extent the same shall be brought
to the Real Property by Tenant, Tenant's agents, employees, contractors,
invitees or licensees,
(xix) costs of providing services or performing work for
tenants to the extent in excess of services or work for which Landlord is
required to provide to Tenant at no additional cost hereunder;
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(xx) amounts otherwise includable in Operating Expenses
but reimbursed to Landlord directly (i.e. not through this Article 27 or
provisions in such other tenants' leases similar to this Article 27) by Tenant,
other tenants or any other party; and
(xxi) any bad debt loss, rent loss or reserves for bad
debts or rent loss.
except, however, that if Landlord is not furnishing any particular work or
service (the cost of which if performed by Landlord would constitute an
Operating Expense) to a tenant who has undertaken to perform such work or
service in lieu of the performance thereof by Landlord, Operating Expenses shall
be deemed to be increased by an amount equal to the additional Operating
Expenses which reasonably would have been incurred during such period by
Landlord if it had at its own expense furnished such work or services to such
tenant. Any insurance proceeds received with respect to any item previously
included as an Operating Expense shall be deducted from Operating Expenses for
the Operating Year in which such proceeds are received; provided, however, to
the extent any insurance proceeds are received by Landlord in any Operating Year
with respect to any item which was included in Operating Expenses during the
Base Operating Year, the amount of insurance proceeds so received shall be
deducted from Base Operating Expenses and (x) the Base Operating Expenses shall
be retroactively adjusted to reflect such deduction and (y) all retroactive
Operating Payments resulting from such retroactive adjustment shall be due and
payable within twenty (20) days after rendition of a bill therefor by Landlord.
Until such time as the electricity supplied to each floor of the Building and
the common and public areas of the Building (including, without limitation, the
Building Systems) shall be separately metered or submetered, Operating Expenses
shall include an amount equal to (x) (i) Landlord's cost (utilizing the
electrical rates applicable to the Building including energy charges, demand
charges, time-of-day charges, fuel adjustment charges, rate adjustment charges,
sales tax and any other factors used by the public utility in computing its
charges to Landlord) of furnishing electric current to the entire Building,
multiplied by (ii) the number of kilowatt hours of electric current furnished to
the public and common areas of the Building (including, without limitation, the
Building Systems) and other areas not available for occupancy as determined by a
survey prepared by an independent, reputable electrical engineer selected by
Landlord, plus (y) Landlord's out-of-pocket costs in connection with the same.
(2) In determining the amount of Operating Expenses for any
Operating Year (including the Base Operating Year), if less than all of the
Building rentable area shall have been occupied by tenant(s) at any time during
any such Operating Year, Operating Expenses shall be determined for such
Operating Year to be an amount equal to the like expenses which would normally
be expected to be incurred had all such areas been occupied throughout such
Operating Year.
(3) (a) If any capital improvement is made during any
Operating Year in compliance with (i) a Requirement enacted or becoming
effective after the date hereof,
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whether or not such Requirement is valid or mandatory (ii) any modifications or
amendments of presently existing Requirements, whether or not such Requirement
is valid or mandatory or (iii) costs incurred in connection with the making of
capital improvements required in order to cause the Building to remain in
compliance with presently existing Requirements, whether or not such
Requirements are valid or mandatory (but in no event including costs incurred in
connection with the making of capital improvements in order to comply with
existing Requirements to the extent that the Building is not as of the date
hereof in compliance with such existing Requirements), or in lieu of a repair,
then the cost of such improvement shall be included in Operating Expenses for
the Operating Year in which such improvement was made; provided, however, to the
extent the cost of such improvement is required to be capitalized in accordance
with GAAP, such cost shall be amortized over the useful economic life of such
improvement determined in accordance with GAAP, and the annual amortization,
together with interest thereon at the then Base Rate, of such improvement shall
be deemed an Operating Expense in each of the Operating Years during which such
cost of the improvement is amortized. For the purposes of determining whether
capital improvements are incurred in order to cause the Building to comply with
existing Requirements with respect to which the Building is not in compliance on
the date hereof, pursuant to the exclusions set forth in subsection (iii) of
this Section 27.1(E)(3)(a), the Building shall be deemed to have not been in
compliance with presently existing Requirements only to the extent that an
inspection of the Building by the applicable Governmental Authorities would
result in the issuance as of the date hereof of a notice of violation or similar
notice by reason of the condition of the Building as of the date hereof.
(b) If any capital improvement is made during any
Operating Year either for the purpose of saving or reducing Operating Expenses
(as, for example, a labor-saving improvement), then the cost of such improvement
shall be included in Operating Expenses for the Operating Year in which such
improvement was made; provided, however, such cost shall be amortized over the
useful economic life of such improvement determined in accordance with GAAP, and
the annual amortization, together with interest thereon at the then Base Rate,
of such improvement shall be deemed an Operating Expense in each of the
Operating Years during which such cost of the improvement is amortized;
provided, further, however, the amortized cost of such improvement included in
any Operating Year shall not exceed the amount which Tenant would have paid had
such improvement not been made. Any portion of the amortized cost of any such
capital improvement which may not be included in Operating Expenses in an
Operating Year by reason of the foregoing limitation may be included in
Operating Expenses in subsequent Operating Years (subject to such limitation).
(F) "Operating Statement" shall mean a statement in reasonable
detail setting forth a comparison of the Operating Expenses for an Operating
Year with the Base Operating Expenses and the Escalation Rent for the preceding
Operating Year pursuant to the provisions of this Article 27.
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(G) "Operating Year" shall mean the calendar year within which the
Commencement Date occurs and each subsequent calendar year for any part or all
of which Escalation Rent shall be payable pursuant to this Article 27.
(H) "Taxes" shall mean the aggregate amount of real estate taxes and
any general or special assessments (exclusive of penalties and interest thereon)
imposed upon the Real Property (including, without limitation, (i) assessments
made upon or with respect to any "air" and "development" rights now or hereafter
appurtenant to or affecting the Real Property, (ii) any fee, tax or charge
imposed by any Governmental Authority for any vaults, vault space or other space
within or outside the boundaries of the Real Property, and (iii) any taxes or
assessments levied after the date of this Lease in whole or in part for public
benefits to the Real Property or the Building, including, without limitation,
any Business Improvement District taxes and assessments) without taking into
account any discount that Landlord may receive by virtue of any early payment of
Taxes; provided, that if because of any change in the taxation of real estate,
any other tax or assessment, however denominated (including, without limitation,
any franchise, income, profit, sales, use, occupancy, gross receipts or rental
tax) is imposed upon Landlord or the owner of the Real Property or the Building,
or the occupancy, rents or income therefrom, in substitution for any of the
foregoing Taxes, such other tax or assessment shall be deemed part of Taxes
computed as if Landlord's sole asset were the Real Property. Anything contained
herein to the contrary notwithstanding, Taxes shall not be deemed to include (w)
any taxes on Landlord's income, (x) franchise taxes, (y) estate or inheritance
taxes or (z) any similar taxes imposed on Landlord, unless such taxes are
levied, assessed or imposed in lieu of or as a substitute for the whole or any
part of the taxes, assessments, levies, impositions which now constitute Taxes.
(I) "Tax Statement" shall mean a statement in reasonable detail
setting forth a comparison of the Taxes for a Tax Year with the Base Taxes.
(J) "Tax Year" shall mean the period July 1 through June 30 (or such
other period as hereinafter may be duly adopted by the Governmental Authority
then imposing taxes as its fiscal year for real estate tax purposes), any
portion of which occurs during the Term.
Section 27.2. (A) If the Taxes payable for any Tax Year (any part or all
of which falls within the Term from and after July 1, 1999) shall represent an
increase above the Base Taxes, then Tenant shall pay as additional rent for such
Tax Year and continuing thereafter until a new Tax Statement is rendered to
Tenant, Tenant's Share of such increase (the "Tax Payment") as shown on the Tax
Statement with respect to such Tax Year. Tenant shall be obliged to pay the Tax
Payment regardless of whether Tenant is exempt in whole or part, from the
payment of any Taxes by reason of Tenant's diplomatic status or for any other
reason whatsoever. The Taxes shall be computed initially on the basis of the
Assessed Valuation in effect at the time the Tax Statement is rendered (as the
Taxes may have been settled or finally adjudicated prior to such time)
regardless of any then pending application, proceeding or appeal respecting the
reduction
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of any such Assessed Valuation, but shall be subject to subsequent adjustment as
provided in Section 27.3 hereof.
(B) At any time during or after the Term, Landlord may render to
Tenant a Tax Statement or Statements showing (i) a comparison of the Taxes for
the Tax Year with the Base Taxes and (ii) the amount of the Tax Payment
resulting from such comparison. On the first day of the month following the
furnishing to Tenant of a Tax Statement (so long as Landlord shall have
delivered such Tax Statement not less than (20) days prior to the first (1st)
day of such month), Tenant shall pay to Landlord a sum equal to 1/12th of the
Tax Payment shown thereon to be due for such Tax Year multiplied by the number
of months of the Term then elapsed since the commencement of such Tax Year (it
being expressly agreed that if Landlord shall not have delivered such Tax
Statement at least twenty (20) days prior to the first (1st) day of such month,
then Tenant shall pay such amount on the first (1st) day of the next following
month). Tenant shall continue to pay to Landlord a sum equal to one-twelfth
(1/12th) of the Tax Payment shown on such Tax Statement on the first day of each
succeeding month until the first day of the month following the month in which
Landlord shall deliver to Tenant a new Tax Statement. If Landlord furnishes a
Tax Statement for a new Tax Year subsequent to the commencement thereof,
promptly after the new Tax Statement is furnished to Tenant, Landlord shall give
notice to Tenant stating whether the amount previously paid by Tenant to
Landlord for the current Tax Year was greater or less than the installments of
the Tax Payment for the current tax year in accordance with the Tax Statement,
and (a) if there shall be a deficiency, Tenant shall pay the amount thereof
within twenty (20) days after demand therefor, or (b) if there shall have been
an overpayment, Landlord shall credit the amount thereof against the next
monthly installments of the Fixed Rent payable under this Lease. Tax Payments
shall be collectible by Landlord in the same manner as Fixed Rent. Landlord's
failure to render a Tax Statement shall not prejudice Landlord's right to render
a Tax Statement during or with respect to any subsequent Tax Year, and shall not
eliminate or reduce Tenant's obligation to make Tax Payments for such Tax Year.
Section 27.3. (A) Only Landlord shall be eligible to institute tax
reduction or other proceedings to reduce the Assessed Valuation. In the event
that, after a Tax Statement has been sent to Tenant, an Assessed Valuation which
had been utilized in computing the Taxes for a Tax Year is reduced (as a result
of settlement, final determination of legal proceedings or otherwise), and as a
result thereof a refund of Taxes is actually received by or on behalf of
Landlord, then, promptly after receipt of such refund, Landlord shall send
Tenant a Tax Statement adjusting the Taxes for such Tax Year and setting forth
Tenant's Share of such refund and Tenant shall be entitled to receive such
Share, at Landlord's option, either by way of a credit against the Fixed Rent
next becoming due after the sending of such Tax Statement or by a refund to the
extent no further Fixed Rent is due; provided, however, that Tenant's Share of
such refund shall be limited to the portion of the Tax Payment, if any, which
Tenant had theretofore paid to Landlord attributable to increases in Taxes for
the Tax Year to which the refund is applicable on the basis of the Assessed
Valuation before it had been reduced.
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(B) In the event that, after a Tax Statement has been sent to
Tenant, the Assessed Valuation which had been utilized in computing the Base
Taxes is reduced (as a result of settlement, final determination of legal
proceedings or otherwise) then, and in such event: (i) the Base Taxes shall be
retroactively adjusted to reflect such reduction, and (ii) all retroactive Tax
Payments resulting from such retroactive adjustment shall be due and payable
within twenty (20) days after rendering of a bill therefor by Landlord. Landlord
promptly shall send to Tenant a statement setting forth the basis for such
retroactive adjustment and Tax Payments.
Section 27.4. (A) If the Operating Expenses for any Operating Year (any
part or all of which falls within the Term from and after July 1, 1999) shall be
greater than the Base Operating Expenses, then Tenant shall pay as additional
rent for such Operating Year and continuing thereafter until a new Operating
Statement is rendered to Tenant, Tenant's Share of such increase (the "Operating
Payment") as hereinafter provided.
(B) At any time during or after the Term Landlord may render to
Tenant an Operating Statement or Statements showing (i) a comparison of the
Operating Expenses for the Operating Year in question with the Base Operating
Expenses, and (ii) the amount of the Operating Payment resulting from such
comparison. Landlord's failure to render an Operating Statement during or with
respect to any Operating Year in question shall not prejudice Landlord's right
to render an Operating Statement during or with respect to any subsequent
Operating Year, and shall not eliminate or reduce Tenant's obligation to make
payments of the Operating Payment pursuant to this Article 27 for such Operating
Year.
(C) On the first day of the month following the furnishing to Tenant
of an Operating Statement (so long as Landlord shall have delivered such
Operating Statement not less than twenty (20) days prior to the first (1st) day
of such month), Tenant shall pay to Landlord a sum equal to 1/12th of the
Operating Payment shown thereon to be due for the preceding Operating Year
multiplied by the number of months (and any fraction thereof) of the Term then
elapsed since the commencement of such Operating Year in which such Operating
Statement is delivered, less Operating Payments theretofore made by Tenant for
such Operating Year (it being expressly agreed that if Landlord shall not have
delivered such Operating Statement at least twenty (20) days prior to the first
(1st) day of such month, then Tenant shall pay such amount on the first (1st)
day of the next following month) and thereafter, commencing with the then
current monthly installment of Fixed Rent and continuing monthly thereafter
until rendition of the next succeeding Operating Statement, Tenant shall pay on
account of the Operating Payment for such Year an amount equal to 1/12th of the
Operating Payment shown thereon to be due for the preceding Operating Year. Any
Operating Payment shall be collectible by Landlord in the same manner as Fixed
Rent.
(D) (1) As used in this Section 27.4, (i) "Tentative Monthly
Escalation Charge" shall mean a sum equal to 1/12th of the product of (a)
Tenant's Share, and (b) the difference between (x) the Base Operating Expenses
and (y) Landlord's good faith estimate of Operating Expenses for the Current
Year (based upon information available to Landlord at such
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time), and (ii) "Current Year" shall mean the Operating Year in which a demand
is made upon Tenant for payment of a Tentative Monthly Escalation Charge.
(2) At any time in any Operating Year, Landlord, at its
option, in lieu of the payments required under Section 27.4(C) hereof, may
demand and collect from Tenant, as additional rent, a sum equal to the Tentative
Monthly Escalation Charge multiplied by the number of months in said Operating
Year preceding the demand and reduced by the sum of all payments theretofore
made under Section 27.4(C) with respect to said Operating Year, and thereafter,
commencing with the month in which the demand is made and continuing thereafter
for each month remaining in said Operating Year, the monthly installments of
Fixed Rent shall be deemed increased by the Tentative Monthly Escalation Charge.
Any amount due to Landlord under this Section 27.4(D) may be included by
Landlord in any Operating Statement rendered to Tenant as provided in Section
27.4(B) hereof.
(E) (1) After the end of the Current Year and at any time that
Landlord renders an Operating Statement or Statements to Tenant as provided in
Section 27.4(B) hereof with respect to the comparison of the Operating Expenses
for said Operating Year or Current Year, with the Base Operating Expenses, as
the case may be, the amounts, if any, collected by Landlord from Tenant under
Section 27.4(C) or (D) on account of the Operating Payment or the Tentative
Monthly Escalation Charge, as the case may be, shall be adjusted, and, if the
amount so collected is less than or exceeds the amount actually due under said
Operating Statement for the Operating Year, a reconciliation shall be made as
follows: Tenant shall be debited with any Operating Payment shown on such
Operating Statement and credited with the amounts, if any, paid by Tenant on
account in accordance with the provisions of subsection (C) and subsection
(D)(2) of this Section 27.4 for the Operating Year in question. Tenant shall pay
any net debit balance to Landlord within twenty (20) days next following
rendition by Landlord of an invoice for such net debit balance; any net credit
balance shall be applied against the next accruing monthly installments of Fixed
Rent.
(2) If the sum of the Tentative Monthly Escalation Charges and
payments made by Tenant in accordance with subsection (C) of this Section 27.4
for any Operating Year shall have exceeded the Operating Payment for such
Operating Year by more than seven percent (7%), interest at the Applicable Rate
on the portion of the overpayment that exceeds the applicable Operating Payment
by more than seven percent (7%) determined as of the respective dates of such
payments by Tenant and calculated from such respective dates to the dates on
which such amounts are credited against the monthly installments of Fixed Rent,
shall be so credited. Any amount owing to Tenant subsequent to the Term shall be
paid to Tenant within ten (10) Business Days after a final determination has
been made of the amount due to Tenant.
Section 27.5. Any Operating Statement sent to Tenant shall be conclusively
binding upon Tenant unless, within one hundred eighty (180) days after such
Statement is sent, Tenant shall send a written notice to Landlord objecting to
such Statement and specifying the respects in which such Statement is disputed.
If such notice is sent, Tenant (together with its independent
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certified public accountants, provided they are one of the so-called "big-six"
accounting firms or if at such time there is no group of accounting firms
commonly referred to as "big-six", then a nationally recognized firm of at least
one hundred fifty (150) partners or principals who are certified public
accountants) may examine Landlord's books and records relating to the Operation
of the Property to determine the accuracy of the Operating Statement. Tenant
recognizes the confidential nature of such books and records and agrees to
maintain the information obtained from such examination in strict confidence. If
after such examination, Tenant still disputes such Operating Statement, either
party may refer the decision of the issues raised to a reputable independent
firm of certified public accountants, selected by Landlord and approved by
Tenant, which approval shall not be unreasonably withheld or delayed as long as
such firm of certified public accountants is one of the so-called "big-six"
public accounting firms or if at such time there is no group of accounting firms
commonly referred to as "big-six", then a nationally recognized firm of at least
one hundred fifty (150) partners or principals who are certified public
accountants, and the decision of such accountants shall be conclusively binding
upon the parties. The fees and expenses involved in such decision shall be borne
by the unsuccessful party (and if both parties are partially successful, such
fees and expenses shall be apportioned between Landlord and Tenant in inverse
proportion to the amount by which such decision is favorable to each party).
Notwithstanding the giving of such notice by Tenant, and pending the resolution
of any such dispute, Tenant shall pay to Landlord when due the amount shown on
any such Operating Statement, as provided in Section 27.4 hereof.
Section 27.6. The expiration or termination of this Lease during any
Operating Year or Tax Year shall not affect the rights or obligations of the
parties hereto respecting any payments of Operating Payments for such Operating
Year and any payments of Tax Payments for such Tax Year, and any Operating
Statement relating to such Operating Payment and any Tax Statement relating to
such Tax Payment, may be sent to Tenant subsequent to, and all such rights and
obligations shall survive, any such expiration or termination. In determining
the amount of the Operating Payment for the Operating Year or the Tax Payment
for the Tax Year in which the Term shall expire, the payment of the Operating
Payment for such Operating Year or the Tax Payment for the Tax Year shall be
prorated based on the number of days of the Term which fall within such
Operating Year or Tax Year, as the case may be. Any payments due under such
Operating Statement or Tax Statement shall be payable within twenty (20) days
after such Statement is sent to Tenant.
ARTICLE 28
SERVICES
Section 28.1. (A) Landlord shall provide passenger elevator service to the
Premises on Business Days from 8:00 A.M. to 6:00 P.M. and have an elevator
subject to call at all other times subject to Landlord's reasonable security
procedures and rules, Landlord shall provide access to the Building and the
Premises 24 hours per day, 365 days per year.
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(B) There shall be one (1) freight elevator serving the Premises and
the entire Building on call on a "first come, first served" basis on Business
Days from 8:00 A.M. to 5:00 P.M., and on a reservation, "first come, first
served" basis from 5:00 P.M. to 8:00 A.M. on Business Days and at any time on
days other than Business Days. If Tenant shall use the freight elevators serving
the Premises between 5:00 P.M. and 8:00 A.M. on Business Days or at any time on
any other days, Tenant shall pay Landlord, as additional rent for such use, the
standard rates then fixed by Landlord for the Building, or if no such rates are
then fixed, at reasonable rates. Notwithstanding the foregoing, Landlord shall
provide Tenant, at no cost to Tenant, with free freight elevator service and
free non-exclusive access to the loading dock of the Building during the weekend
of Tenant's initial move into the Premises.
(C) Landlord shall not be required to furnish any freight elevator
services during the hours from 5:00 P.M. to 8:00 A.M. on Business Days and at
any time on days other than Business Days unless Landlord has received advance
notice from Tenant requesting such services prior to 2:00 P.M. of the day upon
which such service is requested or by 2:00 P.M. of the last preceding Business
Day if such periods are to occur on a day other than a Business Day.
Section 28.2. Landlord, at Landlord's expense (but subject to recoupment
pursuant to Article 27 hereof), shall furnish to the perimeter of the Office
Premises (for distribution by Tenant within the Premises) through the HVAC
System, when required for the comfortable occupancy of the Office Premises,
HVAC, in accordance with the specifications set forth in Schedule C annexed
hereto and made a part hereof, on a year round basis from 8:00 A.M. to 6:00 P.M.
on Business Days and from 8:30 A.M. to 1:00 P.M. on Saturdays. Landlord,
throughout the Term, shall have free access to any and all mechanical
installations of Landlord, including, but not limited to, air-cooling, fan,
ventilating and machine rooms and electrical closets; Tenant shall not construct
partitions or other obstructions which may interfere with Landlord's free access
thereto, or interfere with the moving of Landlord's equipment to and from the
enclosures containing said installations. Neither Tenant, nor its agents,
employees or contractors shall at any time enter the said enclosures or tamper
with, adjust or touch or otherwise in any manner affect said mechanical
installations. Tenant shall draw and close the draperies or blinds for the
windows of the Office Premises whenever the HVAC System is in operation and the
position of the sun so requires and shall at all times cooperate fully with
Landlord and abide by all of the regulations and requirements which Landlord may
prescribe for the proper functioning and protection of the HVAC System.
Section 28.3. The Fixed Rent does not reflect or include any charge to
Tenant for the furnishing of any necessary HVAC to the Office Premises during
periods other than the hours and days set forth above ("Overtime Periods").
Accordingly, if Landlord shall furnish such HVAC to the Office Premises at the
request of Tenant during Overtime Periods, Tenant shall pay Landlord additional
rent for such services at the standard rates then fixed by Landlord for the
Building, or if no such rates are then fixed, at reasonable rates. Landlord
shall not be required to furnish any such services during any Overtime Periods
unless Landlord has received advance notice from Tenant requesting such services
prior to 2:00 P.M. of the day upon which such
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services are requested or by 2:00 P.M. of the last preceding Business Day if
such Overtime Periods are to occur on a day other than a Business Day. If Tenant
fails to give Landlord such advance notice, then, failure by Landlord to furnish
or distribute any such services during such Overtime Periods shall not
constitute an actual or constructive eviction, in whole or in part, or entitle
Tenant to any abatement or diminution of Rental, or relieve Tenant from any of
its obligations under this Lease, or impose any liability upon Landlord or its
agents by reason of inconvenience or annoyance to Tenant, or injury to or
interruption of Tenant's business or otherwise. If more than one tenant
utilizing the same system as Tenant requests the same Overtime Periods for the
same services as Tenant, the charge to Tenant shall be adjusted pro rata.
Section 28.4. Provided Tenant shall keep the Office Premises in reasonable
order, Landlord, at Landlord's expense, subject to recoupment pursuant to
Article 27 hereof, shall cause the Office Premises, excluding any portions
thereof used for the storage, preparation, service or consumption of food or
beverages, to be cleaned, substantially in accordance with the standards set
forth in Schedule B annexed hereto and made a part hereof. Tenant shall pay to
Landlord the cost of removal of any of Tenant's refuse and rubbish from the
Office Premises and the Building to the extent that the same exceeds the refuse
and rubbish usually attendant upon the use of such Premises as offices. Bills
for the same shall be rendered by Landlord to Tenant at such time as Landlord
may elect and shall be due and payable when rendered as additional rent. Tenant,
at Tenant's sole cost and expense, shall cause all portions of the Premises used
for the storage, preparation, service or consumption of food or beverages to be
cleaned daily in a manner satisfactory to Landlord, and to be exterminated
against infestation by vermin, rodents or roaches regularly and, in addition,
whenever there shall be evidence of any infestation. Any such exterminating
shall be done at Tenant's sole cost and expense, in a manner satisfactory to
Landlord, and by Persons approved by Landlord. If Tenant shall perform any
cleaning services in addition to the services provided by Landlord as aforesaid,
Tenant shall employ the cleaning contractor providing cleaning services to the
Building on behalf of Landlord or such other cleaning contractor as shall be
approved by Landlord. Tenant shall comply with any recycling program and/or
refuse disposal program (including, without limitation, any program related to
the recycling, separation or other disposal of paper, glass or metals) which
Landlord shall impose or which shall be required pursuant to any Requirements.
Section 28.5. If the New York Board of Fire Underwriters or the Insurance
Services Office or any Governmental Authority, department or official of the
state or city government shall require or recommend that any changes,
modifications, alterations or additional sprinkler heads or other equipment be
made or supplied by reason of Tenant's particular manner of business as opposed
to mere "office" use (with respect to the Office Premises) or mere "storage" use
(with respect to the Accessory Premises), or the location of the partitions,
trade fixtures, or other contents of the Premises (other than those partitions,
trade fixtures or other contents of the Premises installed by or on behalf of
Landlord in the event of a recapture of all or a portion of the Premises
pursuant to Section 12.6(B) or Section 12.8(B) hereof), Landlord, at Tenant's
cost and expense, shall promptly make and supply such changes, modifications,
alterations, additional sprinkler heads or other equipment.
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Section 28.6. Landlord shall provide to the Office Premises hot and cold
water for ordinary drinking, cleaning and lavatory purposes. If Tenant requires,
uses or consumes water for any purpose in addition to ordinary drinking,
cleaning or lavatory purposes, Landlord may install a water meter and thereby
measure Tenant's water consumption. In such event (1) Tenant shall pay Landlord
for the cost of the meter and the cost of the installation thereof and through
the duration of Tenant's occupancy Tenant shall keep said meter and equipment in
good working order and repair at Tenant's own cost and expense; (2) Tenant shall
pay for water consumed as shown on said meter, as additional rent, and on
default in making such payment Landlord may pay such charges and collect the
same from Tenant; and (3) Tenant shall pay the sewer rent, charge or any other
tax, rent, levy or charge which now or hereafter is assessed, imposed or shall
become a lien upon the Premises or the Real Property of which they are a part
pursuant to any Requirement made or issued in connection with any such metered
use, consumption, maintenance or supply of water, water system, or sewage or
sewage connection or system. The bill rendered by Landlord for the above shall
be based upon Tenant's consumption and shall be payable by Tenant as additional
rent within twenty (20) days after rendition.
Section 28.7. Landlord reserves the right to stop service of the HVAC
System or the elevator, electrical, plumbing or other Building Systems when
necessary, by reason of accident or emergency, or for repairs, additions,
alterations, replacements or improvements in the judgment of Landlord desirable
or necessary to be made, until said repairs, alterations, replacements or
improvements shall have been completed (which repairs, additions, alterations,
replacements and improvements shall be performed in accordance with Section 4.3
hereof). Landlord shall have no responsibility or liability for interruption,
curtailment or failure to supply HVAC, elevator, electrical, plumbing or other
Building Systems when prevented by Unavoidable Delays or by any Requirement of
any Governmental Authority or due to the exercise of its right to stop service
as provided in this Article 28 and the exercise of such right or such failure by
Landlord shall not constitute an actual or constructive eviction, in whole or in
part, or entitle Tenant to any compensation or to any abatement or diminution of
Rental (except to the extent expressly set forth in Section 14.2 hereof), or
relieve Tenant from any of its obligations under this Lease, or impose any
liability upon Landlord or its agents by reason of inconvenience or annoyance to
Tenant, or injury to or interruption of Tenant's business, or otherwise.
Section 28.8. Landlord shall make available to Tenant the computerized
directory in the lobby of the Building for up to one hundred (100) listings. The
initial programming shall be without charge to Tenant. From time to time, but
not more frequently than once every three (3) months, Landlord shall reprogram
the computerized directory to reflect such changes in the listings therein as
Tenant shall request without charge to Tenant. If Landlord replaces the
computerized directory with a standard directory in the lobby of the Building,
Tenant shall be entitled to Tenant's Share of such listings on such directory.
Section 28.9. As part of the Initial Alterations, Landlord shall not
unreasonably withhold its consent to an Alteration consisting of the
installation of a supplementary air conditioning system of up to twenty-five
(25) tons capacity to service the Office Premises. In connection
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therewith, Tenant, at Tenant's sole cost and expense, may tap into the existing
condenser water pipes of the Building to obtain condenser water for the system.
Landlord shall furnish to the floor(s) of the Office Premises serviced by such
system condenser water to service such system at such times as Tenant shall
request. Any installations required to connect Tenant's supplementary air
conditioning system to the condenser water pipes shall be made by Landlord and
Tenant shall pay to Landlord as additional rent a one time "tap-in" fee of Two
Thousand Five Hundred Dollars ($2,500) within twenty (20) days of rendition of a
bill therefor. Tenant shall also pay Landlord for the supply of condenser water,
within twenty (20) days after rendition of a bill therefor, an annual charge of
Two Hundred Fifty Dollars ($250.00) per ton of cooling capacity of the system so
connected. Such amount shall be increased on each anniversary of the
Commencement Date so that it equals (i) Two Hundred Fifty Dollars ($250.00) plus
(ii) Two Hundred Fifty Dollars ($250.00) multiplied by the percentage increase,
if any, in the Consumer Price Index from that in effect on the Commencement
Date. Landlord shall not be liable to Tenant for any failure or defect in the
supply or character of condenser water supplied to Tenant by reason of any
Requirement, act or omission of the public service company serving the Building
or for any other reason not attributable to the gross negligence or willful
misconduct of Landlord, its agents, contractors and employees.
Section 28.10. Landlord shall provide to Tenant up to two hundred (200)
Building standard "access cards" (with respect to access to the Building through
the 32nd Street entrance to the Building from 7:30 A.M. to 5:30 P.M. on Business
Days and access to the Building between 7:00 P.M. and 7:00 A.M. on Business Days
and on Non-Business Days). The initial "access cards" delivered to Tenant shall
be without charge to Tenant. From time to time, but not more frequently than
once every month, Landlord shall provide Tenant with additional "access cards"
for Tenant's new employees or to replace lost "access cards" and Tenant, within
ten (10) Business Days after demand therefor, shall pay to Landlord, Landlord's
standard fee for each such additional "access card".
ARTICLE 29
PARTNERSHIP TENANT
If Tenant is a partnership (including, without limitation, a limited
liability partnership) or a limited liability company or a professional
corporation (or is comprised of two (2) or more Persons, individually or as
co-partners of a partnership (including, without limitation a limited liability
partnership), as members of a limited liability company or as shareholders of a
professional corporation) or if Tenant's interest in this Lease shall be
assigned to a partnership (including, without limitation, a limited liability
partnership) a limited liability company or a professional corporation (or to
two (2) or more Persons, individually or as co-partners of a partnership, as
members of a limited liability company or shareholders of a professional
corporation) pursuant to Article 12 hereof (any such partnership, professional
corporation and such Persons are referred to in this Article 29 as "Partnership
Tenant"), the following provisions shall apply to such Partnership Tenant: (a)
the liability of each of the parties comprising
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Partnership Tenant shall be joint and several; (b) each of the parties
comprising Partnership Tenant hereby consents in advance to, and agrees to be
bound by (x) any written instrument which may hereafter be executed by
Partnership Tenant or any successor entity, changing, modifying, extending or
discharging this Lease, in whole or in part, or surrendering all or any part of
the Premises to Landlord, and (y) any notices, demands, requests or other
communications which may hereafter be given by Partnership Tenant or by any of
the parties comprising Partnership Tenant; (c) any bills, statements, notices,
demands, requests or other communications given or rendered to Partnership
Tenant or to any of such parties shall be binding upon Partnership Tenant and
all such parties; (d) if Partnership Tenant shall admit new partners,
shareholders or members, as the case may be, Partnership Tenant shall give
Landlord notice of such event not later than ten (10) Business Days prior to the
admission of such partner(s), shareholder(s) or member(s) together with an
assumption agreement in form and substance satisfactory to Landlord pursuant to
which each of such new partners, shareholders or members, as the case may be,
shall, by their admission to Partnership Tenant, agree to assume joint and
several liability for the performance of all of the terms, covenants and
conditions of this Lease (as the same may have been or thereafter be amended) on
Tenant's part to be observed and performed; it being expressly understood and
agreed that each such new partner, shareholder or member (as the case may be)
shall be deemed to have assumed joint and several liability for the performance
of all of the terms, covenants and conditions of this Lease (as the same may
have been or thereafter be amended), whether or not such new partner,
shareholder or member shall have executed such assumption agreement, and that
neither Tenant's failure to deliver such assumption agreement nor the failure of
any such new partner or shareholder, as the case may be, to execute or deliver
any such agreement to Landlord shall vitiate the provisions of this clause (d)
of this Article 29.
ARTICLE 30
VAULT SPACE
Notwithstanding anything contained in this Lease or indicated on any
sketch, blueprint or plan, any vaults, vault space or other space outside the
boundaries of the Real Property are not included in the Premises. Landlord makes
no representation as to the location of the boundaries of the Real Property. All
vaults and vault space and all other space outside the boundaries of the Real
Property which Tenant may be permitted to use or occupy are to be used or
occupied under a revocable license, and if any such license shall be revoked, or
if the amount of such space shall be diminished or required by any Governmental
Authority or by any public utility company, such revocation, diminution or
requisition shall not constitute an actual or constructive eviction, in whole or
in part, or entitle Tenant to any abatement or diminution of Rental, or relieve
Tenant from any of its obligations under this Lease, or impose any liability
upon Landlord. Any fee, tax or charge imposed by any Governmental Authority for
any such vaults, vault space or other space occupied by Tenant shall be paid by
Tenant.
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ARTICLE 31
SECURITY
Section 31.1. Tenant shall deposit with Landlord on the signing of this
Lease the sum of the Security Amount for the 1st Security Period, or at Tenant's
option, a "clean," unconditional, irrevocable and transferable letter of credit
(the "Letter of Credit") in the same amount, satisfactory to Landlord, issued by
and drawn on a bank satisfactory to Landlord and which is a member of the New
York Clearing House Association, for the account of Landlord, for a term of not
less than one (1) year, as security for the faithful performance and observance
by Tenant of the terms, covenants, conditions and provisions of this Lease,
including, without limitation, the surrender of possession of the Premises to
Landlord as herein provided. If an Event of Default shall occur and be
continuing, Landlord may apply the whole or any part of the security so
deposited, or present the Letter of Credit for payment and apply the whole or
any part of the proceeds thereof, as the case may be, (i) toward the payment of
any Fixed Rent, Escalation Rent or any other item of Rental as to which Tenant
is in default, (ii) toward any sum which Landlord may expend or be required to
expend by reason of Tenant's default in respect of any of the terms, covenants
and conditions of this Lease, including, without limitation, any damage,
liability or expense (including, without limitation, reasonable attorneys' fees
and disbursements) incurred or suffered by Landlord, and (iii) toward any damage
or deficiency incurred or suffered by Landlord in the reletting of the Premises,
whether such damages or deficiency accrue or accrues before or after summary
proceedings or other re-entry by Landlord. If Landlord applies or retains any
part of the proceeds of the Letter of Credit or the security so deposited, as
the case may be, Tenant, upon demand, shall deposit with Landlord the amount so
applied or retained so that Landlord shall have the full deposit on hand at all
times during the Term. If Tenant shall fully and faithfully comply with all of
the terms, provisions, covenants and conditions of this Lease, the Letter of
Credit or the security, as the case may be, shall be returned to Tenant after
the Expiration Date and after delivery of possession of the Premises to
Landlord. In the event of a sale or leasing of the Real Property or the
Building, Landlord shall have the right to transfer the Letter of Credit or
security, as the case may be, to the vendee or lessee and Landlord shall
thereupon be released by Tenant from all liability for the return of such
security or the Letter of Credit, as the case may be, and Tenant shall cause the
bank which issued the Letter of Credit to issue an amendment to the Letter of
Credit or issue a new Letter of Credit naming the vendee or lessee as the
beneficiary thereunder. Tenant shall look solely to the new landlord for the
return of the Letter of Credit or the security, as the case may be. The
provisions hereof shall apply to every transfer or assignment of the Letter of
Credit or security made to a new landlord. Tenant shall not assign or encumber
or attempt to assign or encumber the monies deposited herein as security and
neither Landlord nor its successors or assigns shall be bound by any such
assignment, encumbrance, attempted assignment or attempted encumbrance. Tenant
shall renew any Letter of Credit from time to time, at least thirty (30) days
prior to the expiration thereof, and deliver to Landlord a new Letter of Credit
or an endorsement to the Letter of Credit, and any other evidence required by
Landlord that the Letter of Credit has been renewed for a period of at least one
(1) year. If Tenant shall fail to renew the Letter of Credit as aforesaid,
Landlord may
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present the Letter of Credit for payment and retain the proceeds thereof as
security in lieu of the Letter of Credit.
Section 31.2. Provided no Event of Default shall have occurred and be
continuing, on the first day of the 2nd Security Period, 3rd Security Period,
4th Security Period, 5th Security Period, 6th Security Period, 7th Security
Period and 8th Security Period (a) if the Letter of Credit is on deposit, Tenant
shall be entitled to replace the Letter of Credit on deposit with Landlord with
a Letter of Credit in the Security Amount applicable to such Security Period, or
(b) if Tenant shall have deposited with Landlord cash security in lieu of a
Letter of Credit, if the Security Amount for such Security Period is less than
the security then on deposit for the immediately preceding Security Period, and
provided that Tenant shall have fully and faithfully complied with all of the
terms, provisions, covenants and conditions of this Lease, Landlord shall refund
to Tenant an amount equal to the amount by which the security then on deposit
for the immediately preceding Security Period exceeds the Security Amount for
such Security Period, or (c) if Tenant shall have deposited with Landlord cash
security in lieu of a Letter of Credit, if the Security Amount for such Security
Period is greater than the security then in deposit for the immediately
preceding Security Period, Tenant shall, on the first day of such Security
Period, deposit with Landlord an amount equal to the amount by which the
Security Amount for such Security Period exceeds the security then on deposit
for the immediately preceding Security Period.
ARTICLE 32
CAPTIONS
The captions are inserted only as a matter of convenience and for
reference and in no way define, limit or describe the scope of this Lease nor
the intent of any provision thereof.
ARTICLE 33
PARTIES BOUND
The covenants, conditions and agreements contained in this Lease shall
bind and inure to the benefit of Landlord and Tenant and their respective legal
representatives, successors, and, except as otherwise provided in this Lease,
their assigns.
ARTICLE 34
BROKER
Each party represents and warrants to the other that it has not dealt with
any broker or Person in connection with this Lease other than Newmark & Company
Real Estate, Inc. ("Broker"). The execution and delivery of this Lease by each
party shall be conclusive evidence that such party has relied upon the foregoing
representation and warranty. Landlord agrees to
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pay Broker pursuant to a separate agreement between Landlord and Broker. Tenant
shall indemnify and hold Landlord harmless from and against any and all claims
for commission, fee or other compensation by any Person (other than Broker) who
shall claim to have dealt with Tenant in connection with this Lease and for any
and all costs incurred by Landlord in connection with such claims, including,
without limitation, reasonable attorneys' fees and disbursements. Landlord shall
indemnify and hold Tenant harmless from and against any and all claims for
commission, fee or other compensation by the Broker and any Person who shall
claim to have dealt with Landlord in connection with this Lease and for any and
all costs incurred by Tenant in connection with such claims, including, without
limitation, reasonable attorneys' fees and disbursements. The provisions of this
Article 34 shall survive the Expiration Date.
ARTICLE 35
INDEMNITY
Section 35.1. (A) Tenant shall not do or permit any act or thing to be
done upon the Premises which may subject Landlord to any liability or
responsibility for injury, damages to persons or property or to any liability by
reason of any violation of any Requirement, and shall exercise such control over
the Premises as to fully protect Landlord against any such liability. Tenant
shall indemnify and save the Indemnitees harmless from and against (a) all
claims of whatever nature against the Indemnitees arising from any act, omission
(where this Lease or applicable law imposes a duty to act) or negligence of
Tenant, its contractors, licensees, agents, servants, employees, invitees or
visitors, (b) except to the extent the same are due to the negligence or willful
misconduct of Landlord, Landlord's employees, contractors, servants, agents or
licensees, all claims against the Indemnitees arising from any accident, injury
or damage whatsoever caused to any person or to the property of any person and
occurring during the Term in or about the Premises, and (c) all claims against
the Indemnitees arising from any accident, injury or damage occurring outside of
the Premises but anywhere within or about the Real Property, where such
accident, injury or damage results or is claimed to have resulted from an act,
omission or negligence of Tenant or Tenant's contractors, licensees, agents,
servants, employees, invitees or visitors. This indemnity and hold harmless
agreement shall include indemnity from and against any and all liability, fines,
suits, demands, costs and expenses of any kind or nature (including, without
limitation, reasonable attorneys' fees and disbursements) incurred in or in
connection with any such claim or proceeding brought thereon, and the defense
thereof but except with respect to claims with respect to bodily injury or
death, shall be limited to the extent any insurance proceeds collectible by
Landlord under policies owned by Landlord or such injured party with respect to
such damage or injury are insufficient to satisfy same. Tenant shall have no
liability for any consequential damages suffered either by Landlord or by any
party claiming through Landlord.
(B) Except as expressly provided in Articles 4, 9, 10, 13, 28, 36
and 37 hereof and otherwise as expressly provided herein and except to the
extent the same are due to the negligence or willful misconduct of Tenant,
Tenant's employees, agents or licenses, Landlord
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shall indemnify and save Tenant its shareholders, directors, officers, Partners,
employees and agents harmless from and against all claims against Tenant arising
from any damage to the Premises and any bodily injury to Tenant's employees,
contractors, servants, agents, licensees, servants, visitors or invitees
resulting from the acts, omissions or negligence of Landlord or its agents. This
indemnity and hold harmless agreement shall include indemnity from and against
any and all liability, fines, suits, demands, costs and expenses of any kind or
nature (including, without limitation, reasonable attorneys' fees and
disbursements) incurred in or in connection with any such claim or proceeding
brought thereon, but shall be limited to the extent any insurance proceeds
collectible by Tenant or such injured party with respect to such damage or
injury are insufficient to satisfy same. Landlord shall have no liability for
any consequential damages suffered either by Tenant or by any party claiming
through Tenant.
Section 35.2. If any claim, action or proceeding is made or brought
against either party, which claim, action or proceeding the other party shall be
obligated to indemnify such first party against pursuant to the terms of this
Lease, then, upon demand by the indemnified party, the indemnifying party, at
its sole cost and expense, shall resist or defend such claim, action or
proceeding in the indemnified party's name, if necessary, by such attorneys as
the indemnified party shall approve, which approval shall not be unreasonably
withheld. Attorneys for the indemnifying party's insurer are hereby deemed
approved for purposes of this Section 35.2. Notwithstanding the foregoing, an
indemnified party may retain its own attorneys to defend or assist in defending
any claim, action or proceeding involving potential liability of Three Million
Dollars ($3,000,000) or more, and the indemnifying party shall pay the
reasonable fees and disbursements of such attorneys. The provisions of this
Article 35 shall survive the expiration or earlier termination of this Lease.
ARTICLE 36
ADJACENT EXCAVATION-SHORING
If an excavation shall be made upon land adjacent to the Premises, or
shall be authorized to be made, Tenant, upon reasonable advance notice, shall
afford to the person causing or authorized to cause such excavation, a license
to enter upon the Premises for the purpose of doing such work as said person
shall deem necessary to preserve the wall or the Building from injury or damage
and to support the same by proper foundations, without any claim for damages or
indemnity against Landlord, or diminution or abatement of Rental, provided that
Tenant shall continue to have access to the Premises and the Building.
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ARTICLE 37
MISCELLANEOUS
Section 37.1. This Lease is offered for signature by Tenant and it is
understood that this Lease shall not be binding upon Landlord or Tenant unless
and until Landlord and Tenant shall have executed and unconditionally delivered
a fully executed copy of this Lease to each other.
Section 37.2. The obligations of Landlord under this Lease shall not be
binding upon Landlord named herein after the sale, conveyance, assignment or
transfer by such Landlord (or upon any subsequent landlord after the sale,
conveyance, assignment or transfer by such subsequent landlord) of its interest
in the Building or the Real Property, as the case may be, and in the event of
any such sale, conveyance, assignment or transfer, Landlord shall be and hereby
is entirely freed and relieved of (i) all covenants and obligations of Landlord
hereunder with respect to which performance of Landlord was due prior to the
date of such sale, conveyance, assignment or transfer, to the extent that such
transferee assumes such obligations of Landlord under this Lease, and (ii) all
covenants and obligations of Landlord hereunder with respect to which
performance of Landlord is due from and after the date of such sale, conveyance,
assignment or transfer. The members, partners, shareholders, directors, officers
and principals, direct and indirect, comprising Landlord (collectively, the
"Parties") shall not be liable for the performance of Landlord's obligations
under this Lease. Tenant shall look solely to Landlord to enforce Landlord's
obligations hereunder and shall not seek any damages against any of the Parties.
The liability of Landlord for Landlord's obligations under this Lease shall be
limited to Landlord's interest in the Real Property and Tenant shall not look to
any other property or assets of Landlord or the property or assets of any of the
Parties in seeking either to enforce Landlord's obligations under this Lease or
to satisfy a judgment for Landlord's failure to perform such obligations.
Section 37.3. Notwithstanding anything contained in this Lease to the
contrary, all amounts payable by Tenant to or on behalf of Landlord under this
Lease, whether or not expressly denominated Fixed Rent, Escalation Rent,
additional rent or Rental, shall constitute rent for the purposes of Section
502(b)(7) of the Bankruptcy Code.
Section 37.4. Tenant's liability for all items of Rental shall survive the
Expiration Date.
Section 37.5. Tenant shall reimburse Landlord as additional rent, within
twenty (20) days after rendition of a statement, for all expenditures made by,
or damages or fines sustained or incurred by, Landlord, due to any Event of
Default by Tenant under this Lease, with interest thereon at the Applicable
Rate.
Section 37.6. This Lease shall not be recorded.
Section 37.7. Tenant hereby waives any claim against Landlord which Tenant
may have based upon any assertion that Landlord has unreasonably withheld or
unreasonably delayed any consent or approval requested by Tenant, and Tenant
agrees that its sole remedy shall be an
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action or proceeding to enforce any related provision or for specific
performance, injunction or declaratory judgment. In the event of a determination
that such consent or approval has been unreasonably withheld or delayed, the
requested consent or approval shall be deemed to have been granted; however,
Landlord shall have no liability to Tenant for its refusal or failure to give
such consent or approval. Tenant's sole remedy for Landlord's unreasonably
withholding or delaying consent or approval shall be as provided in this Section
37.7.
Section 37.8. This Lease contains the entire agreement between the parties
and supersedes all prior understandings, if any, with respect thereto. This
Lease shall not be modified, changed, or supplemented, except by a written
instrument executed by both parties.
Section 37.9. Tenant hereby (a) irrevocably consents and submits to the
jurisdiction of any Federal, state, county or municipal court sitting in the
State of New York in respect to any action or proceeding brought therein by
Landlord against Tenant concerning any matters arising out of or in any way
relating to this Lease; (b) irrevocably waives personal service of any summons
and complaint and consents to the service upon it of process in any such action
or proceeding by mailing of such process to Tenant at the address set forth
herein and hereby irrevocably designates Fried, Frank, Harris, Shriver &
Jacobson or other law firm located in Manhattan if disclosed to Landlord in
writing (or if not so located, then upon any member of the law firm of Fried,
Frank, Harris, Shriver & Jacobson, or their successor, if so located in
Manhattan), to accept service of any process on Tenant's behalf and hereby
agrees that such service shall be deemed sufficient; (c) irrevocably waives all
objections as to venue and any and all rights it may have to seek a change of
venue with respect to any such action or proceedings; (d) agrees that the laws
of the State of New York shall govern in any such action or proceeding and
waives any defense to any action or proceeding granted by the laws of any other
country or jurisdiction unless such defense is also allowed by the laws of the
State of New York; and (e) agrees that any final judgment rendered against it in
any such action or proceeding shall be conclusive and may be enforced in any
other jurisdiction by suit on the judgment or in any other manner provided by
law. Tenant further agrees that any action or proceeding by Tenant against
Landlord in respect to any matters arising out of or in any way relating to this
Lease shall be brought only in the State of New York, county of New York. In
furtherance of the foregoing, Tenant hereby agrees that its address for notices
given by Landlord and service of process under this Lease shall be the Premises.
Notwithstanding the foregoing provisions of this Section 37.9, Tenant may, by
written notice to Landlord, change the designated agent for acceptance of
service of process to any other law firm located in the City, county and State
of New York.
Section 37.10. Unless Landlord shall render written notice to Tenant to
the contrary in accordance with the provisions of Article 26 hereof, MRC
Management LLC is authorized to act as Landlord's agent in connection with the
performance of this Lease, including, without limitation, the receipt and
delivery of any and all notices and consents in accordance with Article 26.
Tenant shall direct all correspondence and requests to, and shall be entitled to
rely upon correspondence received from, MRC Management LLC, as agent for the
Landlord in accordance with Article 26. Tenant acknowledges that MRC Management
LLC is acting solely as agent for
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Landlord in connection with the foregoing, and neither MRC Management LLC nor
any of its direct or indirect partners, officers, shareholders, directors or
employees shall have any liability to Tenant in connection with the performance
of Landlord's obligations under this Lease and Tenant waives any and all claims
against any such party arising out of, or in any way connected with, this Lease
or the Real Property.
Section 37.11. (A) All of the Schedules and Exhibits attached hereto are
incorporated in and made a part of this Lease, but, in the event of any
inconsistency between the terms and provisions of this Lease and the terms and
provisions of the Schedules and Exhibits hereto, the terms and provisions of
this Lease shall control. Wherever appropriate in this Lease, personal pronouns
shall be deemed to include the other genders and the singular to include the
plural. All Article and Section references set forth herein shall, unless the
context otherwise specifically requires, be deemed references to the Articles
and Sections of this Lease.
(B) If any term, covenant, condition or provision of this Lease, or
the application thereof to any person or circumstance, shall ever be held to be
invalid or unenforceable, then in each such event the remainder of this Lease or
the application of such term, covenant, condition or provision to any other
Person or any other circumstance (other than those as to which it shall be
invalid or unenforceable) shall not be thereby affected, and each term,
covenant, condition and provision hereof shall remain valid and enforceable to
the fullest extent permitted by law.
(C) All references in this Lease to the consent or approval of
Landlord shall be deemed to mean the written consent or approval of Landlord and
no consent or approval of Landlord shall be effective for any purpose unless
such consent or approval is set forth in a written instrument executed by
Landlord.
Section 37.12. At any time and from time to time during the term of this
Lease, Landlord shall have the right to substitute for the Accessory Premises
(for the purposes of this Section 37.12 only, the Accessory Premises are
referred to as the "Replaced Accessory Premises") other space in the Building
(such other space being referred to as the "Substitute Accessory Premises") by
written notice given to Tenant not later than sixty (60) days prior to the date
set forth in said notice as the effective date (the "Substitution Date") for
such substitution. Landlord's notice shall include a floor plan identifying the
Substitute Premises, the Accessory Space Factor with respect to the Substitute
Accessory Premises, the Accessory Fixed Rent with respect to the Substitute
Accessory Premises and the Accessory Electricity Inclusion Factor with respect
to the Substitute Accessory Premises. Tenant shall vacate the Replaced Accessory
Premises and surrender the same to Landlord on or before the Substitution Date.
From and after the Substitution Date, the term "Accessory Premises" shall mean
the Substitute Accessory Premises for all purposes hereunder.
Section 37.13. This Agreement of Lease may be executed in several
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same agreement.
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ARTICLE 38
RENT CONTROL
If at the commencement of, or at any time or times during the Term of this
Lease, the Rental reserved in this Lease shall not be fully collectible by
reason of any Requirement, Tenant shall enter into such agreements and take such
other steps (without additional expense to Tenant) as Landlord may request and
as may be legally permissible to permit Landlord to collect the maximum rents
which may from time to time during the continuance of such legal rent
restriction be legally permissible (and not in excess of the amounts reserved
therefor under this Lease). Upon the termination of such legal rent restriction
prior to the expiration of the Term, (a) the Rental shall become and thereafter
be payable hereunder in accordance with the amounts reserved in this Lease for
the periods following such termination, and (b) Tenant shall pay to Landlord, if
legally permissible, an amount equal to (i) the items of Rental which would have
been paid pursuant to this Lease but for such legal rent restriction less (ii)
the rents paid by Tenant to Landlord during the period or periods such legal
rent restriction was in effect.
ARTICLE 39
LANDLORD'S ACCESSORY PREMISES CANCELLATION OPTION
Landlord and Tenant agree that Landlord shall have the option to terminate
this Lease with respect to the Accessory Premises only effective on the date
(the "Accessory Premises Cancellation Date") set forth in a written notice
thereof by Landlord to Tenant ("Landlord Accessory Premises Cancellation
Notice"), which Accessory Premises Cancellation Date shall not be earlier than
the date which is sixty (60) days after the date of Landlord's Accessory
Premises Cancellation Notice. If Landlord exercises the Accessory Premises
Cancellation Option, effective as of the Accessory Premises Cancellation Date,
this Lease with respect to the Accessory Premises only shall be deemed cancelled
and of no further force and effect and, except for those obligations which are
expressly stated to survive the expiration of this Lease, neither Landlord nor
Tenant shall have any liability of obligation to the other hereunder and Tenant
shall
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surrender the Accessory Premises on the Accessory Premises Cancellation Date and
deliver the Accessory Premises in accordance with and pursuant to the terms of
this Lease. The provisions of this Article 39 shall survive the Accessory
Premises Cancellation Date.
IN WITNESS WHEREOF, Landlord and Tenant have respectively executed this
Lease as of the day and year first above written.
ELEVEN PENN PLAZA LLC
By: Vornado M 393 L.L.C., member
By: Vornado Realty Trust, authorized signatory
By:
------------------------------------------
By: M 393 Associates LLC, member
By: Vornado M 393 L.L.C.
By: Vornado Realty Trust, authorized signatory
By:
-----------------------------------------
GENERAL MEDIA, INC.
By: /s/ Robert H. Altman
--------------------------------------------
Name:
Title:
Fed. Id. No. 13-3754988
-------------------------------
/s/ Patrick Gavin
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surrender the Accessory Premises on the Accessory Premises Cancellation Date and
deliver the Accessory Premises in accordance with and pursuant to the terms of
this Lease. The provisions of this Article 39 shall survive the Accessory
Premises Cancellation Date.
IN WITNESS WHEREOF, Landlord and Tenant have respectively executed this
Lease as of the day and year first above written.
M 393 Associates LLC
By: Vornado M 393 L.L.C.
By: Vornado Realty Trust, authorized signatory
By:
-----------------------------------------
GENERAL MEDIA, INC.
By:
--------------------------------------------
Name:
Title:
Fed. Id. No.
-------------------------------
ACCEPTED AND AGREED TO
this ____ day of _________, 1998
ELEVEN PENN PLAZA LLC
By: Vornado M 393 L.L.C.
By: Vornado Realty Trust, as authorized signatory
By:
-----------------------------------------
Name:
Title:
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surrender the Accessory Premises on the Accessory Premises Cancellation Date and
deliver the Accessory Premises in accordance with and pursuant to the terms of
this Lease. The provisions of this Article 39 shall survive the Accessory
Premises Cancellation Date.
IN WITNESS WHEREOF, Landlord and Tenant have respectively executed this
Lease as of the day and year first above written.
M 393 Associates LLC
By: Vornado M 393 L.L.C.
By: Vornado Realty Trust, authorized signatory
By: /s/ Joseph Macnow
-----------------------------------------
GENERAL MEDIA, INC.
By:
--------------------------------------------
Name:
Title:
Fed. Id. No.
-------------------------------
ACCEPTED AND AGREED TO
this ____ day of _________, 1998
ELEVEN PENN PLAZA LLC
By: Vornado M 393 L.L.C.
By: Vornado Realty Trust, as authorized signatory
By: /s/ Joseph Macnow
-----------------------------------------
Name: Joseph Macnow
Title: Executive Vice-President
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STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 29th day of July, 1998, before me personally came Patrick J. Gavin,
to me known, who, being by me duly sworn, did depose and say that he resides at
No. 3219 Faye La., Wantagh, NY 11793; that he is the Exec. VP/C.O.O. of GENERAL
MEDIA, INC., the corporation described and which executed the foregoing
instrument; that he signed his name thereto by order of the board of directors
of said corporation.
/s/ Laurence B. Sutter
----------------------------------------
Notary Public
LAURENCE B. SUTTER
Notary Public, State of New York
No. 31-4651683
Qualified in New York County
Commission Expires July 31, 1999
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<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 29th day of July, 1998, before me personally came Robert H. Altman,
to me known, who, being by me duly sworn, did depose and say that he resides at
No. 196 Riverview Rd., Irvington, NY 10533; that he is the President/C.E.O. of
GENERAL MEDIA, INC., the corporation described and which executed the foregoing
instrument; that he signed his name thereto by order of the board of directors
of said corporation.
/s/ Laurence B. Sutter
----------------------------------------
Notary Public
LAURENCE B. SUTTER
Notary Public, State of New York
No. 31-4651683
Qualified in New York County
Commission Expires July 31, 1999
96
EX.-10.3
Assignment of Lease and Agreement between General Media, Inc. And 277 Park
Ave, LLC dated August 1998
EXHIBIT 10.3 TO QUARTERLY REPORT ON FORM 10-Q OF GENERAL MEDIA, INC.
<PAGE>
ASSIGNMENT OF LEASE AND AGREEMENT
ASSIGNMENT OF LEASE AND AGREEMENT (this "Agreement"), dated as of
this __ day of August, 1998, by and between GENERAL MEDIA, INC., a Delaware
corporation, having an office at 277 Park Avenue, New York, New York ("Tenant")
and 277 PARK AVENUE, LLC, a Delaware limited liability company, having an office
at 277 Park Avenue, New York, New York ("Landlord").
WITNESSETH
WHEREAS, pursuant to a Lease, dated as of August 9, 1994, between
Tenant, as tenant, and Stanley Stahl d/b/a Stahl Park Avenue Co.,
predecessor-in-interest to Landlord, as landlord (the "Lease"), Tenant occupies
certain premises on the fourth floor (the "Premises") located in the building
known by the street address of 277 Park Avenue, New York, New York, which
Premises are more particularly described in the Lease; and
WHEREAS, there exist certain disputes between Landlord and Tenant;
and
WHEREAS, Tenant and Landlord desire to resolve their disputes and,
in connection therewith, (i) Landlord and Tenant have agreed to shorten the term
of the Lease and (ii) Landlord has agreed to take an assignment of Tenant's
interest in the Lease at anytime prior to the New Expiration Date (hereinafter
defined) and to release Tenant from any obligations under the Lease arising from
and after the effective date of such assignment.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the monetary consideration described below and other good and valuable
consideration, the mutual receipt and legal sufficiency of which are hereby
acknowledged, Landlord and Tenant hereby agree as follows:
1. All capitalized terms used herein and not otherwise defined
herein shall have the meanings ascribed to them in the Lease.
2. The Lease is hereby amended to change the term of the Lease so
that same shall expire by its terms (unless earlier terminated pursuant to the
terms of the Lease, as amended by this Agreement, or pursuant to law) on January
31, 1999 (the "New Expiration Date"). All references in the Lease to the
Expiration Date shall be deemed references to the New Expiration Date. Tenant
shall quit and surrender the Premises to Landlord on or prior to the New
Expiration Date in accordance with all of the applicable provisions of the Lease
including, without limitation, Articles 21 and 34C(9) thereof.
<PAGE>
3. Tenant may assign the Lease to Landlord and Landlord shall accept
an assignment of the Lease prior to the New Expiration Date at any time from and
after the date hereof by giving no less than ten (10) days' prior written notice
(an "Assignment Notice") to Landlord of its intention to do so (the date which
is ten (10) days following the giving of a Assignment Notice by Tenant and on
which Tenant actually assigns the Lease to Landlord is hereinafter referred to
as the "Effective Date"). Landlord and Tenant hereby acknowledge that two (2)
fully executed counterparts of an Assignment and Assumption of Lease, in the
form attached hereto as Exhibit A (the "Assignment Document") have been
delivered into escrow pursuant to the Escrow Agreement attached hereto as
Exhibit B (the "Escrow Agreement"). On or prior to the Effective Date, Tenant
shall vacate, quit and deliver to Landlord, as assignee, possession of the
Premises broom clean, free and clear of all tenants and occupants, with all of
Tenant's Property and any property of any subtenant or other occupant removed
therefrom and otherwise in the condition as would be required by the Lease at
the expiration of the term thereof. In the event the Lease is assigned as
aforesaid, and provided the Premises are delivered to Landlord on or prior to
the Effective Date, upon delivery of the Premises, Landlord shall sign and
deliver to Tenant, for Tenant's countersignature, a notice to the Escrow Agent
(as such term is defined in the Escrow Agreement) authorizing, inter alia, the
delivery of (i) a counterpart of the Assignment Document to each of Landlord and
Tenant which has been dated, as of the Effective Date, by the Escrow Agent and
(ii) the Assignment Payment to Tenant in accordance with Paragraph 4 below.
Provided the Premises is delivered to Landlord on or prior to the Effective Date
or, if the Lease is not so assigned, on or prior to the New Expiration Date, in
the condition required hereunder, upon the expiration of the Holding Period,
Landlord shall return to Tenant the security deposit being held by it pursuant
to Article 50 of the Lease.
4. As consideration for Tenant's agreement to resolve its disputes
with Landlord and to release any claims which it may have against Landlord in
respect thereof and Tenant shall not be in default of any of its monetary
obligations under the Lease as of the Effective Date, Landlord shall pay to
Tenant, on the Effective Date, the following (the "Assignment Payment"): (i) if
the Effective Date occurs on or prior to October 31, 1998, Landlord shall pay to
Tenant the sum of One Million Five Hundred Fifty Thousand Dollars ($1,550,000);
(ii) if the Effective Date occurs during the period commencing on November 1,
1998 and ending on November 30, 1998, both dates inclusive, Landlord shall pay
to Tenant the sum of One Million Four Hundred Fifty Thousand Dollars
($1,450,000); (iii) if the Effective Date occurs during the period commencing on
December 1, 1998 and ending on December 31, 1998, both dates inclusive, Landlord
shall pay to Tenant the sum of One Million Three Hundred Fifty Thousand Dollars
($1,350,000); and (iv) if the Effective Date occurs during the period commencing
on January 1, 1999 and ending on January 31, 1999, both dates inclusive,
Landlord shall pay to Tenant the sum of One Million Two Hundred Fifty Thousand
Dollars ($1,250,000). In the event the Effective Date does not occur prior to
the New Expiration Date, but Tenant delivers the Premises to Landlord, in the
condition required by the Lease, on or prior to January 31, 2001, Landlord
agrees to join with Tenant in delivering to Escrow Agent a joint notice, as
required pursuant to the terms of the Escrow Agreement, authorizing release of
the funds
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remaining in escrow pursuant to the Escrow Agreement ($750,000 plus interest) to
Tenant. In the event the Effective Date does not occur prior to the New
Expiration Date, and Tenant does not deliver the Premises to Landlord, in the
condition required by the Lease, on or prior to January 31, 2001, Tenant agrees
that it shall not object to the payment of such remaining funds to Landlord.
5. Tenant covenants, represents and warrants to Landlord that (i)
Tenant is the present tenant under the Lease and Tenant has not assigned,
conveyed, encumbered, pledged, sublet or otherwise transferred, in whole or in
part, its interest in the Lease, and, anything to the contrary contained in the
Lease notwithstanding, Tenant shall not do any of the foregoing prior to the
Effective Date, (ii) there are no persons or entities claiming under Tenant, or
who or which may claim under Tenant, any rights of possession with respect to
the Premises, and, anything to the contrary contained in the Lease
notwithstanding, Tenant shall not permit any such claim to arise prior to the
Effective Date, and (iii) Tenant has the right, power and authority to execute
and deliver this Agreement and to perform Tenant's obligations hereunder and
this Agreement is a valid and binding obligation of Tenant enforceable against
Tenant in accordance with the terms hereof, subject only to bankruptcy,
reorganization and other similar laws effecting the enforcement of creditors'
rights generally. The foregoing representations and warranties shall survive the
assignment of the Lease.
6. Tenant shall pay to Landlord all fixed rent and additional rent
(as such terms are defined in the Lease) and other amounts and charges due or to
become due under the Lease through and including the Effective Date. If at any
time after the Effective Date, it shall be determined that any fixed rent,
additional rent or other sums and charges shall have been due and payable for
any period prior to the Effective Date, Tenant shall pay such amounts to
Landlord within ten (10) days after rendition of a bill therefor. If at any time
after the Effective Date, it shall be determined that Tenant has overpaid any
additional rent or other sums and charges under the Lease for any period prior
to the Effective Date, Landlord shall pay such amounts to Tenant promptly after
such determination is made. In addition, any and all escalations of any sort
required to be paid by Tenant under the Lease shall be apportioned as of the
Effective Date, and the obligation to pay any such escalations shall survive the
Effective Date. The terms and provisions of this Paragraph 5 shall survive the
Effective Date.
7. Effective as of the Effective Date, Tenant hereby releases
Landlord and its successors and assigns from all claims, obligations and
liabilities of every kind and nature whatsoever, arising out of, or in
connection with, the Premises or the Lease.
8. Provided Tenant shall have satisfied all of its obligations under
this Agreement (other than those obligations which by the terms of this
Agreement or the Lease are to be performed after the Effective Date), Landlord,
on the Effective Date, shall accept Tenant's assignment of the Lease and,
effective as of the Effective Date (but subject to the foregoing proviso),
hereby releases Tenant and its successors and assigns from all claims,
obligations and liabilities of every kind and nature whatsoever arising out of,
or in connection with, the Premises
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or the Lease. Notwithstanding the foregoing, Tenant shall not be released from
(i) any covenant, representation or warranty contained in this Agreement, which
by the terms of this Agreement is specifically stated to survive the assignment
of the Lease and the Effective Date and (ii) from any obligation or liability
arising out of or under the Lease prior to the Effective Date or arising in
connection with Tenant's delivery of the Premises to Landlord on or prior to the
Effective Date.
9. Landlord and Tenant each represents and warrants to the other
that it has not dealt with any broker in connection with this Agreement and the
transactions contemplated hereby other than Newmark & Company Real Estate, Inc.
(the "Broker"), the fees of which Broker shall be paid by Tenant pursuant to a
separate agreement. Tenant agrees to indemnify, defend and hold Landlord
harmless from and against any and all loss, costs, damage and expense,
including, without limitation, reasonable attorneys fees and disbursements,
incurred by Landlord by reason of any claims of, or liability to, any broker,
including the Broker, who shall claim to have dealt with Tenant in connection
with this agreement or the transactions contemplated hereby. Landlord agrees to
indemnify, defend and hold Tenant harmless from and against any and all loss,
costs, damage and expense, including, without limitation, reasonable attorneys
fees and disbursements, incurred by Tenant by reason of any claims of, or
liability to, any broker, other than the Broker, who shall claim to have dealt
with Landlord in connection with this agreement or the transactions contemplated
hereby. The provisions of this Paragraph 9 shall survive the assignment of the
Lease and the Effective Date.
10. Tenant (i) shall pay any and all taxes imposed by any
governmental authority in connection with this Agreement or the consummation of
the transactions contemplated hereby, if any, and (ii) does hereby agree to
indemnify and hold Landlord harmless of and from any taxes imposed by any
governmental authority by reason of the execution and delivery of this Agreement
and the consummation of the transaction contemplated hereby, if any, and all
expenses related thereto, including, without limitation, reasonable attorneys
fees and disbursements. The provisions of this Paragraph 10 shall survive the
Effective Date.
11. Neither the members comprising Landlord, nor the shareholders
(nor any of the partners comprising same), partners, directors or officers of
any of the foregoing (collectively, the "Parties") shall be liable for the
performance of Landlord's obligations under this Agreement. The liability of
Landlord for Landlord's obligations under this Agreement shall not exceed and
shall be limited to Landlord's interest in the Building and Tenant shall not
look to the property or assets of any of the Parties in seeking either to
enforce Landlord's obligations under this Agreement or to satisfy a judgment for
Landlord's failure to perform such obligations.
12. Landlord and Tenant, each upon request of the other, at any time
and from time to time hereafter and without further consideration, shall
execute, acknowledge and deliver to the other any instruments or documents, or
take such further action, as shall be reasonably requested or as may be
necessary more effectively to assure the assignment of the Lease and the full
benefits intended to be created by this Agreement.
4
<PAGE>
14. This Agreement shall not be binding upon or enforceable against
Landlord unless and until a fully executed counterpart of this Agreement shall
have been unconditionally delivered to Tenant.
15. As modified by this Agreement, the Lease and all covenants,
agreements, terms and conditions thereof shall remain in full force and effect
and are hereby in all respects ratified and confirmed.
5
<PAGE>
IN WITNESS WHEREOF, the parties to this Agreement have caused this
Agreement to be executed as of the day and year first above written.
277 PARK AVENUE, LLC, Landlord
By: PARK AVENUE MANAGEMENT
CORPORATION, a Delaware
corporation, its Co-Managing Member
By: /s/ Stanley Stahl
-----------------------------------
Name:
Title:
By: PAMC CO-MANAGER, INC.,
a Delaware corporation, its Co-
Managing Member
By: /s/ Stanley Stahl
-----------------------------------
Name:
Title:
GENERAL MEDIA, INC., Tenant
By: /s/ Robert H. Altman
-----------------------------------
Name:
Title:
By: /s/ Patrick J. Gavin
-----------------------------------
Name:
Title:
6
<PAGE>
Exhibit "A"
Assignment and Assumption of Lease
[see attached]
<PAGE>
ASSIGNMENT AND ASSUMPTION OF LEASE
The parties agree as follows:
Date: 199
Parties: Assignor: General Media, Inc., a Delaware corporation
Address: 277 Park Avenue, New York, New York
Assignee: 277 Park Avenue, LLC, a Delaware limited liability company
Address: 277 Park Avenue, New York, New York
If there are more than one Assignor or Assignee, the words "Assignor
and "Assignee" shall include them.
Lease
Assigned: The Lease which is assigned herein is identified as follows:
Landlord Stanley Stahl d/b/a/ Stahl Park Avenue Co.,
predecessor-in-interest to 277 Park Avenue, LLC
Tenant General Media, Inc., a Delaware corporation
Date August 9, 1994
Premises: Fourth Floor of the building known by the street address
of 277 Park Avenue, New York, New York
No Merger: Without the written consent of Landlord, Landlord's fee estate and
Assignee's leasehold estate shall remain distinct and separate
estates and shall not merge, notwithstanding the acquisition of both
such fee estate and such leasehold estate by Landlord, as Assignee.
Consider-
ation: Assignor has received Ten ($10.00) dollars and other good and
valuable consideration for this Assignment.
Comment: Assignor assigns to the Assignee all the Assignor's right, title and
interest in the Lease.
Assumption: Assignee agrees to pay the rent promptly and perform all of the
terms of the Lease as of the date of this Assignment. Assignee
assumes full responsibility for the Lease as if Assignee signed the
Lease originally as Tenant.
Indemnity: Assignee agrees to indemnify and hold Assignor harmless from any
legal actions, damages and expenses, including legal fees that the
Assignor may incur arising out of the Lease.
Benefit to
Landlord: Assignee agrees that the obligations assumed shall benefit the
landlord named in the Lease as well as the Assignor.
Assignor's
Statements: Assignor states that Assignor has the right to assign this Lease and
that the premises are free and clear of any judgments, executions,
liens, taxes and assessments.
Assignee's
Statement: Assignee states that Assignee has read the Lease and has received
the original or an exact copy of the Lease.
Successors: This assignment is binding on all parties who lawfully succeed to
the rights or take the place of the Assignor or Assignee.
Margin
Headings: The margin headings are for convenience only.
Signatures: Assignor and Assignee have signed this Assignment as of the date at
the top of the first page.
WITNESS
- --------------------------------
ASSIGNOR
[signature page attached hereto]
- --------------------------------
/s/ Patrick J. Gavin
- --------------------------------
ASSIGNEE
[signature page attached hereto]
- --------------------------------
- --------------------------------
<PAGE>
- --------------------------------------------------------------------------------
General Media, Inc.
Assignor
277 Park Avenue, LLC
Assignee
- --------------------------------------------------------------------------------
Assignment of Lease
with Assumption
- --------------------------------------------------------------------------------
Dated, ....................... July .................. 1998
- --------------------------------------------------------------------------------
STATE OF
COUNTY OF
On the day of 19 , before me personally came
to me known to be the individual described in and who executed the foregoing
instrument, and acknowledged that executed the same.
STATE OF
COUNTY OF
On the day of 19 , before me personally came
to me known, who, being by me duly sworn, did depose and say that he resides at
No. ; that he is the of , the corporation
described in and which executed the foregoing instrument; that he knows the seal
affixed to said instrument is such corporate seal; that it was so affixed by
order of the board of directors of said corporation, and that he signed his name
thereto by like order.
STATE OF
COUNTY OF
On the day of 19 , before me personally came
to me known to be the individual described in and who executed the foregoing
instrument, and acknowledged that executed the same.
STATE OF
COUNTY OF
On the day of 19 , before me personally came
the subscribing witness to the foregoing instrument, with whom I am personally
acquainted, who, being by me duly sworn, did depose and say that he resides at
No. ; that he knows to be the individual
described in and who executed the foregoing instrument; that he, said
subscribing witness, was present and saw execute the same; and
that he, said witness, at the same time subscribed his name as witness thereto.
[acknowledgements attached hereto]
<PAGE>
IN WITNESS WHEREOF, the parties to this Assignment and Assumption of
Lease have caused this Assignment and Assumption of Lease to be executed as of
the day and year first above written.
ASSIGNOR:
GENERAL MEDIA, INC.
By: /s/ Robert H. Altman
-----------------------------------
Name:
Title:
By: /s/ Patrick J. Gavin
-----------------------------------
Name:
Title:
ASSIGNEE:
277 PARK AVENUE, LLC
By: PARK AVENUE MANAGEMENT
CORPORATION, a Delaware
corporation, its Co-Managing Member
By: /s/ Stanley Stahl
-----------------------------------
Name:
Title:
By: PAMC CO-MANAGER, INC.,
a Delaware corporation, its Co-
Managing Member
By: /s/ Stanley Stahl
-----------------------------------
Name:
Title:
<PAGE>
STATE OF NEW YORK )
) ss
COUNTY OF NEW YORK )
On the 5th day of August, 1998 _______, before me personally came Robert
H. Altman, to me known, who, being by me duly sworn, did depose and say that he
resides in Irvington, N.Y.; that he is the President/CEO of General Media, Inc.,
the corporation described in and which executed the foregoing instrument; that
he signed his name thereto by authority of the board of directors of said
corporation; and that he executed such instrument as the act and deed of, and on
behalf of, said corporation.
/s/ Laurence B. Sutter
- -------------------------
Notary Public
LAURENCE B. SUTTER
Notary Public, State of New York
No. 31-4651683
Qualified in New York County
Commission Expires July 31, 1999
<PAGE>
STATE OF NEW YORK )
) ss
COUNTY OF NEW YORK )
On the 6th day of August, 1998 _______, before me personally came Patrick
T. Gavin, to me known, who, being by me duly sworn, did depose and say that he
resides in Wantagh, N.Y.; that he is the Executive Vice President/C.O.O. of
General Media, Inc., the corporation described in and which executed the
foregoing instrument; that he signed his name thereto by authority of the board
of directors of said corporation; and that he executed such instrument as the
act and deed of, and on behalf of, said corporation.
/s/ Laurence B. Sutter
- -------------------------
Notary Public
LAURENCE B. SUTTER
Notary Public, State of New York
No. 31-4651683
Qualified in New York County
Commission Expires July 31, 1999
<PAGE>
STATE OF NEW YORK )
) ss
COUNTY OF NEW YORK )
On the 10 day of August, 1998 _______, before me personally came Stanley
Stahl, to me known, who, being by me duly sworn, did depose and say that he
resides in New York, New York; that he is the ________________ of Park Avenue
Management Corporation, the corporation described in and which executed the
foregoing instrument as the Co-Managing Member of 277 Park Avenue, LLC, the
limited liability company described in the foregoing instrument; that he signed
his name thereto by authority of the board of directors of said corporation; and
that he executed such instrument as the act and deed of, and on behalf of, said
limited liability company acting through its corporate Co-Managing Member.
/s/ Martha Marie DeBello
- -------------------------
Notary Public
MARTHA MARIE DeBELLO
Notary Public, State of New York
No. 4303828
Qualified in New York County
Commission Expires Oct. 5, 1999
<PAGE>
STATE OF NEW YORK )
) ss
COUNTY OF NEW YORK )
On the 10 day of August, 1998 _______, before me personally came Stanley
Stahl, to me known, who, being by me duly sworn, did depose and say that he
resides in New York, New York; that he is the ________________ of PAMC
Co-Manager, Inc., the corporation described in and which executed the foregoing
instrument as the Co-Managing Member of 277 Park Avenue, LLC, the limited
liability company described in the foregoing instrument; that he signed his name
thereto by authority of the board of directors of said corporation; and that he
executed such instrument as the act and deed of, and on behalf of, said limited
liability company acting through its corporate Co-Managing Member.
/s/ Martha Marie DeBello
- -------------------------
Notary Public
MARTHA MARIE DeBELLO
Notary Public, State of New York
No. 4303828
Qualified in New York County
Commission Expires Oct. 5, 1999
<PAGE>
Exhibit "B"
Escrow Agreement
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from General
Media, Inc's September 30, 1998 Form 10Q and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 6,320
<SECURITIES> 0
<RECEIVABLES> 9,777
<ALLOWANCES> 0
<INVENTORY> 4,706
<CURRENT-ASSETS> 26,840
<PP&E> 3,592
<DEPRECIATION> 0
<TOTAL-ASSETS> 42,842
<CURRENT-LIABILITIES> 33,112
<BONDS> 79,601
0
0
<COMMON> 5
<OTHER-SE> (75,474)
<TOTAL-LIABILITY-AND-EQUITY> 42,842
<SALES> 81,663
<TOTAL-REVENUES> 81,663
<CGS> 35,817
<TOTAL-COSTS> 39,669
<OTHER-EXPENSES> 400
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (7,441)
<INCOME-PRETAX> (1,278)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,278)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,278)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
