Exhibit 10.4
MASTER LEASE AGREEMENT, dated as of March 30, 1999 (this "Lease"),
between ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ASSOCIATES, L.P., a New York limited partnership,
having an office c/o Wexford Management LLC, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Lessee"), and STEINWAY, INC., a Delaware corporation, having
an address at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ("Lessor").
65535RT65535CLE I
DEMISE; TERM
I.1 LEASE OF PREMISES; TITLE AND CONDITION.
(a) In consideration of the rents and covenants herein stipulated to
be paid and performed by Lessee and upon the terms and conditions herein
specified, Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor,
the premises (the "Premises") consisting of (i) the parcel of land described in
SCHEDULE A annexed hereto and made a part hereof (such parcel hereinafter
referred to the "Land"), (ii) the easements, rights and appurtenances relating
to the Land, including, without limitation, the agreements, if any, set forth in
SCHEDULE B, annexed hereto and made a part hereof, and (iii) all buildings and
other improvements (including, without limitation, the attachments and other
affixed property) now or hereafter located on the Land, including, without
limitation, any additions, alterations, restorations and repairs to and
replacements of any of the foregoing (collectively referred to as the
"Improvements"). The Premises are leased to Lessee in their present condition
without representation or warranty by Lessor of any kind and subject to all
applicable Legal Requirements (as hereinafter defined) now or hereafter in
effect and to the existing state of title, including, without limitation, the
title matters listed in SCHEDULE C attached hereto and made a part hereof (the
"Permitted Exceptions"). Lessee has examined the Premises and title to the
Premises and has found all of the same to be satisfactory for all purposes.
(b) Lessee acknowledges and agrees that, except as otherwise
expressly set forth in this Lease, no representations, statements, or
warranties, express or implied, have been made by or on behalf of Lessor in
respect of the Premises, the status of title to the Premises, the zoning or
other laws, regulations, rules and orders applicable thereto, the nature and
extent of any Impositions (as hereinafter defined), or the use that may be made
of the Premises.
(c) Lessee agrees that, except as otherwise expressly set forth in
this Lease, no representations, statements or warranties, express or implied,
have been made by or on behalf of Lessor that would entitle or permit Lessee to
have any abatement, reduction, set-off, counterclaim, defense or deduction with
respect to any Rental (as hereinafter defined) or other sum payable hereunder,
that Lessee has relied on no such representations, statements or warranties and
that Lessor shall
not in any event whatsoever be liable by reason of any claim
of representation or misrepresentation or breach of warranty with respect
thereto.
I.2 USE; COVENANT OF QUIET ENJOYMENT; RIGHT OF INSPECTION.
(a) Lessee may use the Premises for the maintenance and operation of
an office building, and for any lawful purpose appurtenant thereto. Lessor
covenants that, if and as long as Lessee shall faithfully perform the
agreements, terms, covenants and conditions hereof, Lessee and any person
claiming through or under Lessee shall and may (subject, however, to the
provisions, reservations, terms and conditions of this Lease) peaceably and
quietly have, hold and enjoy the Premises for the term hereby granted without
molestation or disturbance by or from Lessor or any person claiming through or
under Lessor. The foregoing does not, and shall not be deemed to, create or give
to any person claiming through or under Lessee or to any other person except
Lessee any claim or right of action against Lessor.
(b) Lessor and its agents and designees may, upon reasonable notice
and at reasonable times, and subject to the rights of any subtenants, licensees,
and guests, enter upon and examine the Premises and show the Premises to
prospective purchasers, mortgagees or lessees of the Premises or the interest of
Lessor therein, as long as such examination or showing shall not unreasonably
interfere with the business operations of Lessee at the Premises.
I.3 TERM. The Premises are leased for a term (the "Term") commencing on
March __, 1999 (the "Commencement Date") and ending on December 31, 2008 (the
"Expiration Date").
I.4 GROUND LEASE. Lessor and Lessee have simultaneously entered into a
certain Ground Lease, of even date herewith, pursuant to which Lessee, as
lessor, has leased to Lessor, as lessee, the Land and certain rights appurtenant
thereto (the "Ground Lease"). The parties acknowledge and agree that during the
Term hereof, Lessee's right, as lessor under the Ground Lease, to receive a
portion of the annual basic rent payable under the Ground Lease (the "Ground
Lease Basic Rent") in the amount of $270,000 per annum (the "Annual Subordinate
Rent Amount") shall be subordinate to Lessor's right to receive the Basic Rent
payable by Lessee to Lessor hereunder, such that to the extent that, and for so
long as, any portion of the Basic Rent is not paid by Lessee when due, Lessor
shall be permitted to deduct from the next payment(s) of Ground Lease Basic Rent
payable thereunder the amount of such Basic Rent, but in no event shall Lessor
be permitted to deduct in excess of $22,500 per month or the Annual Subordinate
Rent Amount from the Ground Lease Basic Rent payable in any given calendar year
during the term hereof, it being understood and agreed, however, that (x) upon
the earlier to occur of (i) the payment to Lessor of any such unpaid Basic Rent
(whether by application of the offset of Ground Lease Basic Rent as provided
above or otherwise), and (ii) the
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deduction by Lessor of the Annual Subordinate Rent Amount from the Ground
Lease Basic Rent, Lessor shall have no further right to any offset against
the rental provided in the Ground Lease with respect to any such unpaid Basic
Rent, (y) Lessee shall receive a credit against the Basic Rent payable
hereunder in the amount of any offset against the Ground Lease Basic Rent
taken by Lessor in accordance with the applicable provisions of the Ground
Lease, and (z) to the extent that Lessee shall pay any Basic Rent after
Lessor shall have taken an offset against Ground Lease Basic Rent with
respect thereto, Lessor shall make a corresponding payment of Ground Lease
Basic Rent under the Ground Lease.
I.5 LEASEHOLD MORTGAGES.
(a) The parties agree that Lessor shall be permitted to mortgage its
fee interest in the Improvements, its interest as lessee under the Ground Lease
and its interest as lessor under this Lease(each, a "Leasehold Mortgage"),
provided that (i) any such Leasehold Mortgage shall encumber all such interests
of Lessor in the Premises, and (ii) to the extent required by the holder of any
Fee Mortgage (each, a "Fee Mortgagee"), the holder of any such Leasehold
Mortgage (each, a "Leasehold Mortgagee"), shall consent and enter into an
agreement with such Fee Mortgagee pursuant to which a lockbox or other similar
arrangement is established for the collection of all rents due from any
Subtenant (a "Lockbox"), which agreement shall contain provisions consistent
with the terms described on SCHEDULE E annexed hereto and made a part hereof,
and which shall in all other respects be reasonably acceptable to the Fee
Mortgagee and the Leasehold Mortgagee. This Lease shall be subject and
subordinate to the terms and provisions of, and the lien of, any such Leasehold
Mortgage, provided that (i) such Leasehold Mortgage contains an express
provision to the effect that, if there shall be a foreclosure of the Leasehold
Mortgage, the holder of such Leasehold Mortgage will not evict Lessee, disturb
Lessee's possession under this Lease, or terminate or disturb Lessee's leasehold
estate or rights hereunder, and will recognize Lessee as the direct tenant of
such holder on the same terms and conditions as are contained in this Lease,
subject to the provisions hereinafter set forth, provided no Event of Default
shall have occurred and be continuing hereunder, or (ii) Lessee shall obtain a
separate subordination, non-disturbance and attornment agreement from the holder
of such Leasehold Mortgage, which agreement may be conditioned upon conditions
then ordinary and customary in subordination, non-disturbance and attornment
agreements entered into by lenders at that time. If, in connection with the
financing of the Premises by Lessor, any lending institution shall request
reasonable modifications of this Lease that do not increase Lessee's monetary
obligations under this Lease, or materially adversely affect or diminish the
rights, or materially increase the other obligations of Lessee under this Lease,
Lessee shall make such modifications.
(b) Unless expressly waived or modified therein, any nondisturbance
provision contained in a Leasehold Mortgage or any
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separate subordination, nondisturbance and attornment agreement delivered to
Lessee by the holder of any Leasehold Mortgage shall be deemed to have been
made on the condition that neither the holder of such Leasehold Mortgage nor
anyone claiming by, through or under such holder, including a purchaser at a
foreclosure sale, shall be:
(i) liable for any act or omission of any prior lessor
(including, without limitation, the then defaulting Lessor), except to the
extent arising or continuing after the Leasehold Mortgagee or such purchaser
shall have succeeded to the right and title of the defaulting lessor in the
Premises, or
(ii) subject to any defense or offsets which Lessee may have
against any prior lessor (including, without limitation, the then defaulting
Lessor), except to the extent arising or continuing after the Leasehold
Mortgagee or such purchaser shall have succeeded to the right and title of the
defaulting lessor in the Premises, or
(iii) bound by any payment of Rental which Lessee may have made
to any prior landlord (including, without limitation, the then defaulting
Lessor) more than thirty (30) days in advance of the date upon which such
payment was due, or
(iv) bound by any obligation to make any payment to or on
behalf of Lessee, except to the extent arising or continuing after the Leasehold
Mortgagee or such purchaser shall have succeeded to the right and title of the
defaulting lessor in the Premises, or
(v) bound by any obligation to perform any work or to make
improvements to the Premises, or
(vi) bound by any amendment or modification of this Lease made
after the date of its mortgage without its consent (other than any amendment
which confirms the amount of any CPI Escalation as provided in Section 11.2), or
(vii) bound to return any collateral delivered by Lessee to
Lessor in connection with Lessee's obligations under this Lease until such
collateral has come into its actual possession and Lessee would be entitled to
such collateral pursuant to the terms of this Lease.
(c) Within fifteen (15) days after request of Lessor, Lessee shall
execute and deliver such documents, agreements, instruments, assignments, forms
and affidavits which may be required in connection with any such superior
Leasehold Mortgage, and to confirm the subordination of this Lease to such
superior Leasehold Mortgage, including, without limitation, any subordination,
nondisturbance and attornment agreement contemplated by subparagraph (a) above.
I.6 FEE MORTGAGE; TRANSFER OF FEE INTEREST OR INTEREST IN LESSEE.
Notwithstanding anything in this Lease to the contrary, the parties acknowledge
and agree that (i) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("▇▇▇▇▇▇") is currently the sole shareholder
of the sole general partner of Lessee, (ii) Lessee is the current owner of the
fee title interest in the Land, and (iii) Lessee is permitted under the Ground
Lease to encumber Lessee's fee title interest in the Land with a Fee Mortgage
(as such term is defined in the
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Ground Lease). If (I) title to the Land and/or Lessee's interest as lessor
under the Ground Lease is assigned or otherwise conveyed to (a) the holder of
any Fee Mortgage pursuant to a foreclosure or deed-in-lieu thereof, or (b) to
an independent person or other entity (other than to an affiliate, subsidiary
or parent of Lessee or to a partnership, limited liability company or other
entity which has the same beneficial owners as Lessee and is controlled by or
under common control with Lessee or the partners or principals of Lessee), or
(II) any interest in Lessee is transferred (other than by reason of death)
such that ▇▇▇▇▇▇ shall cease to control, directly or indirectly, the day to
day management of Lessee (each of the events described in clauses (I) and
(II) above being referred to as a "Change in Control"), this Lease and the
Term and all rights of Lessee under this Lease shall expire and terminate on
the effective date of such Change in Control, as if such date were the date
herein definitely fixed for the expiration of the Term. Lessee or ▇▇▇▇▇▇, as
the case may be, shall provide Lessor with written notice of such Change in
Control, in the manner and at the address provided below, (x) no less than
thirty (30) days prior to the proposed effective date of any such Change in
Control (or such shorter period as shall be reasonable, given the
circumstances surrounding such Change in Control), and (y) within ten (10)
days after the effective date of such Change in Control, confirming the
actual occurrence of same.
65535RT65535CLE II
RENT
II.1 BASIC RENT. Lessee shall pay to Lessor as basic rent ("Basic Rent")
an amount equal to $4,653,346 per annum ($387,778.83 per month) during the Term
hereof.
II.2 MONTHLY INSTALLMENTS. The Basic Rent shall be due and payable in
equal monthly installments in advance, on the Commencement Date and on the first
day of each month thereafter during the Term. If the Commencement Date occurs
on a day other than the first day of a calendar month or the Expiration Date
occurs on a day other than the last day of a calendar month, the monthly
installment of Basic Rent for such partial calendar month shall be prorated on
the basis of a thirty (30) day month.
II.3 OFFSET FOR GROUND LEASE BASIC RENT. Notwithstanding anything in this
Lease to the contrary, Lessee shall not be responsible for the payment of any
Ground Lease Basic Rent payable by Lessor as lessee under the Ground Lease, it
being expressly understood and agreed, however, that Lessee shall (a) deduct
from any monthly installment of Basic Rent hereunder the amount of the Ground
Lease Basic Rent payable by Lessor under the Ground Lease for such period, (b)
pay the amount of such Ground Lease Basic Rent directly to the party entitled to
receive such amount pursuant to the Ground Lease and (c) pay the remaining
portion of such installment of Basic Rent (after the deduction of
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the Ground Lease Basic Rent payment) to Lessor.
II.4 NET LEASE; NON-TERMINABILITY.
(a) This Lease is a net, net, net lease and Lessee's obligations
hereunder shall be absolute and unconditional. Except to the extent expressly
provided in Section 2.3 above, the Basic Rent, Impositions (as hereinafter
defined) and all other amounts payable by Lessee hereunder shall be absolutely
net to Lessor and shall be payable by Lessee without any notice, demand,
counterclaim or defense, and without any abatement, suspension, deferment,
diminution, setoff, deduction or reduction whatsoever, free from any charges,
assessments, impositions, expenses or deductions of any and every kind or nature
whatsoever, so that this Lease shall yield net to Lessor under all circumstances
and conditions (whether now or hereafter existing and whether or not within the
contemplation of the parties), the Basic Rent, Impositions and all other amounts
payable by Lessee hereunder. Lessee shall pay all costs, expenses and charges of
every kind and nature relating to the Premises and the operation, use,
occupancy, management, condition, maintenance and repair thereof, which arise or
become due or payable prior to, during or after (but, if payable after,
attributable to a period falling within) the Term (other than Ground Lease Basic
Rent and any payments of principal or interest, prepayment premiums, loan fees,
exit fees or any other amounts which may become due and payable by Lessor to any
Leasehold Mortgagee in connection with such Leasehold Mortgage or other
financing obtained by Lessor and which are not otherwise provided to be the
responsibility of Lessee pursuant to the terms of this Lease), and Lessee shall
indemnify Lessor against, and hold Lessor harmless from, such costs, expenses
and charges, and Lessee's liability for the payment of any of such costs,
expenses and charges which shall become payable after the Term as aforesaid is
hereby expressly provided to survive the Term.
(b) Except as expressly provided in Section 5.1(b), any present or
future law to the contrary notwithstanding, this Lease shall not terminate, nor
shall Lessee have any right to terminate, rescind or void this Lease or to be
released or discharged from any obligations or liability hereunder, nor shall
Lessee be entitled to any abatement or reduction, set-off, counterclaim, defense
or deduction with respect to any Rental or other sum payable hereunder, except
as expressly provided in Section 2.3, nor shall the obligations of Lessee
hereunder be affected under any circumstances for any reason, including, without
limitation: (i) any damage to or destruction of the Premises, (ii) any taking of
the Premises or any part thereof by condemnation or otherwise, (iii) any
prohibition, limitation, restriction or prevention of Lessee's use, occupancy or
enjoyment of the Premises, or any interference with such use, occupancy or
enjoyment by any Person (whether due to any defect in or failure of Lessor's
title to the Premises or otherwise), (iv) any action of any court,
administrative agency or other governmental authority, (v) any action, omission
or breach on the part of Lessor under this Lease or under any other agreement to
which Lessee and Lessor are parties, (vi) the impossibility of
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performance by Lessor or Lessee or both, or (vii) any other cause whatsoever,
whether similar or dissimilar to the foregoing. The obligations of Lessee
hereunder are and shall in all events be construed as separate and
independent covenants and agreements and shall continue unaffected unless
such obligations shall have been modified in writing (which writing shall be
executed by Lessor and Lessee) or terminated pursuant to an express provision
of this Lease. Lessee waives all rights to terminate or surrender this Lease,
or to ▇▇▇▇▇ or defer any Rental or other sums payable hereunder, except as
set forth in Section 2.3 hereof, or to claim that a constructive eviction has
occurred with respect to the Premises or any part thereof.
(c) Lessee shall remain obligated under this Lease in accordance with
its terms, and shall not take any action to terminate, rescind or void this
Lease as a result of any bankruptcy, insolvency, reorganization, liquidation,
dissolution or other proceeding affecting Lessor or any assignee of Lessor, or
any action with respect to this Lease which may be taken by any receiver,
trustee or liquidator or by any court. Except as otherwise expressly provided
herein, Lessee waives all rights at any time conferred by statute or otherwise
to quit, terminate or surrender this Lease or the Premises, or to any abatement
or deferment of any amount payable by Lessee hereunder.
(d) All amounts payable by Lessee pursuant to this Lease, including,
without limitation, the Basic Rent, Impositions, and all other amounts payable
by Lessee under this Lease (collectively, "Rental"), shall constitute rent under
this Lease, and all of the Rental to be paid to Lessor pursuant to the
provisions of this Lease shall be paid as provided in this Article II.
(e) Each item of Rental hereunder shall be obligations within the
meaning of Section 365(d)(3) of the Bankruptcy Code, including without
limitation, all amounts which are due and payable after the occurrence of any
bankruptcy or insolvency proceeding of Lessee.
(f) All Rental under this Lease shall be payable when due and, except
as otherwise expressly provided herein, without notice or demand and without any
abatement, deduction, counterclaim or offset whatsoever, by wire transfer of
immediately available funds, and shall be payable to a bank account or bank
accounts designated by Lessor in accordance with wire transfer instructions
provided by Lessor, from time to time, in a notice to Lessee, which designation
shall remain in effect until Lessee's receipt of any subsequent or modified
written instructions. All Rental paid under this Lease to Persons other than
Lessor shall be, and be construed as, payments made by Lessee for the benefit of
Lessor. Lessor shall have the right to direct Lessee to pay all or any part of
the Rental directly to the holder of a Leasehold Mortgage or any other third
party (other than the Ground Lease Basic Rent being paid directly to the lessor
under the Ground Lease pursuant to Section 2.3 above), and Lessee shall be
obligated to comply with such request.
(g) No payment by Lessee or receipt or acceptance by Lessor of a
lesser amount than the correct amount of any Rental
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shall be deemed to be other than a payment on account, nor shall any
endorsement or statement on any check or any letter accompanying any check or
payment be deemed an accord and satisfaction, and Lessor may accept such
check or payment without prejudice to Lessor's right to recover the balance
or pursue any other remedy in this Lease or at law provided.
(h) If any of the Basic Rent, Impositions or any other Rental payable
under the terms and provisions of this Lease shall be or become uncollectible,
reduced or required to be refunded because of any rent control or similar act or
law enacted by a governmental authority, Lessee shall enter into such
agreement(s) and take such other steps as Lessor may reasonably request and as
may be legally permissible to permit Lessor to collect the maximum rents or
other amounts which from time to time during the continuance of such legal rent
restriction may be legally permissible (and not in excess of the amounts
reserved therefor under this Lease). Upon the termination of such legal rent
restriction, (a) the Rental in question shall become and thereafter be payable
in accordance with the amounts reserved herein for the periods following such
termination, and (b) Lessee shall pay to Lessor, to the maximum extent legally
permissible, an amount equal to (i) the amount of the Rental in question which
would have been paid pursuant to this Lease but for such legal rent restriction
less (ii) the amounts with respect to such Rental paid by Lessee during the
period such legal rent restriction was in effect.
II.5 LATE PAYMENT OF RENTAL. Lessee shall pay to Lessor interest at a rate
(the "Rate") equal to (i) two (2%) percent in excess of the default rate of
interest per annum on any Fee Mortgage encumbering Lessee's interest in the
Land, or (ii) if no such Fee Mortgage is outstanding, the rate per annum equal
to eight (8%) percent above the "prime rate" (the "Prime Rate") announced from
time to time by The Chase Manhattan Bank, or, if such bank ceases to exist, a
bank of comparable stature (but in no event shall the Rate exceed the maximum
amount permitted by law), on all overdue Basic Rent and other Rental from the
due date thereof until paid and on all other overdue sums due hereunder from the
date of payment by Lessor until repaid by Lessee. In addition, if Lessee fails
to make any payment of Basic Rent to Lessor on the due date thereof, Lessee
shall pay a late charge equal to five percent (5%) of the amount past due.
65535RT65535CLE III
IMPOSITIONS; LIENS; PERMITTED CONTESTS
III.1 IMPOSITIONS.
(a) Lessee covenants and agrees to pay or cause to be paid, prior to
delinquency, to the governmental authority imposing the same, all of the
following items (collectively, the "Impositions"): (1) taxes, payments in lieu
of taxes, real property assessments and special assessments, and business
improvement district taxes and assessments, (2) personal property
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taxes, (3) occupancy and rent taxes, (4) water, water meter and sewer rents,
rates and charges, (5) excises, (6) levies, (7) license and permit fees, (8)
charges for fire alarm service, sprinkler supervisory service, gas,
electricity, steam, and other public utility or similar services, (9) fines,
penalties and other similar or like governmental charges applicable to the
foregoing and any interest or costs with respect thereto, and (10) all other
governmental charges, general and special, ordinary and extraordinary,
foreseen and unforeseen, which are at any time during the Term hereof, are
assessed, levied, confirmed, imposed upon, or would grow or become due and
payable out of or in respect of, or would be charged with respect to, (t) the
Premises, (u) the use and occupancy of the Premises by Lessee, (v)
encumbrances or liens on the Premises, (w) any vault, passageway or space in
or under the sidewalks or streets in front of or adjoining the Premises, (x)
any other appurtenances of the Premises, (y) the Improvements, or any
equipment, personal property or other facility used by Lessee or its manager
in the operation thereof, or (z) the Rental (or any portion thereof) payable
by Lessee hereunder. Lessee shall not be required to pay any franchise,
estate, inheritance, transfer, income or similar tax of Lessor unless such
tax is imposed, levied or assessed in substitution for any other tax,
assessment, charge or levy which Lessee is required to pay pursuant to this
Paragraph 3.1; provided, however, that if at any time during the Term of this
Lease, the method of taxation shall be such that there shall be assessed,
levied, charged or imposed on Lessor a capital levy or other tax directly on
the rents received therefrom, or upon the value of the Premises or any
present or any future improvement or improvements on the Premises, then all
such levies and taxes or the part thereof so measured or based shall be
payable by Lessee, but only to the extent that such levies or taxes would be
payable if the Premises were the only property of Lessor, and Lessee shall
pay and discharge the same as herein provided. Lessee will furnish to
Lessor, promptly after demand therefor, proof of payment of all items
referred to above which are payable by Lessee. If any such assessment may
legally be paid in installments, Lessee may pay such assessment in
installments; in such event, Lessee shall be liable only for installments
which become due and payable during the Term hereof.
(b) If required by the holder of any Fee Mortgage, Lessee shall
deposit with the holder of such Fee Mortgage, or, if not so required by the
terms of a Fee Mortgage but required by the terms of a Leasehold Mortgage, with
the Leasehold Mortgagee (any such mortgagee being referred to below as the
"Mortgagee"): (x) on the first day of each calendar month, one-twelfth of an
amount which would be sufficient to pay any Impositions payable, or estimated by
the Mortgagee to be payable, during the next ensuing 12 months, plus one-twelfth
of an amount which would be sufficient to pay the insurance premiums due for the
renewal of the coverage afforded by the policies required to be obtained by
Lessee hereunder upon the expiration thereof, and (y) to the extent deemed
necessary by the Mortgagee, an initial deposit in
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an amount necessary so that, when combined with the monthly payments
described in clause (x) above, sufficient funds exist to pay the next ensuing
payments of Impositions and insurance premiums thirty (30) days prior to the
due date thereof while still leaving an amount equal to one (1) full month's
payment (the amounts described in clauses (x) and (y) above, collectively,
the "Tax and Insurance Escrow Fund"). The Tax and Insurance Escrow Fund shall
be payable at the same time, and in the same manner, as the monthly
installments of Basic Rent hereunder. At the election of the Mortgagee, the
Tax and Insurance Escrow Fund may be divided into separate escrows for
Impositions and insurance premiums. The Mortgagee will make the payments of
Impositions and insurance premiums required to be made by Lessee pursuant to
this Lease, provided that (x) not later than 30 days (or such shorter period
as may be reasonable under the circumstances) prior to the due date therefor
Lessee shall have notified the holder of such Fee Mortgage of the scheduled
amount of Impositions or insurance premiums and the payee, payee's address
and due date therefor, and (y) if the amounts deposited in the Tax and
Insurance Escrow Fund are not sufficient to pay the items set forth in
clauses (x) and (y) above, Lessee shall promptly pay to the Mortgagee, upon
demand, an amount which is sufficient to make up the deficiency. Any Fee
Mortgage or Leasehold Mortgage will provide that the Mortgagee may not, under
any circumstances, use any amount in the Tax and Insurance Escrow Fund for
purposes other than the payment of Impositions and insurance premiums, as
described in this Section 3.1(b). If the amount of the Tax and Insurance
Escrow Fund shall exceed the amounts due for such Impositions and insurance
premiums, the Mortgagee shall, in its discretion, either return any excess to
Lessee or credit such excess against future payments to be made to the Tax
and Insurance Escrow Fund. To the extent permitted by applicable law, the
Tax and Insurance Escrow Fund shall not constitute a trust fund and may be
commingled with other monies held by the Mortgagee. No earnings or interest
on the Tax and Insurance Escrow Fund shall be payable to Lessee.
Notwithstanding anything in this Section 3.1(b) to the contrary, the
Mortgagee shall be permitted to adjust the monthly payments required hereunder
from time to time on notice to Lessor and Lessee as reasonably necessary to
ensure that there shall always be sufficient funds in the Tax and Insurance
Escrow Fund to pay the next ensuing payments of Impositions and insurance
premiums thirty (30) days prior to the due date thereof while still leaving
one (1) full month's payment in the Tax and Insurance Escrow Fund.
(c) Any Imposition, relating to a fiscal period of the imposing
governmental authority, a part of which period is included within the Term and a
part of which is included in a period of time after the Expiration Date (whether
or not such Imposition shall be assessed, levied, confirmed, imposed upon or in
respect of or become a lien upon the Premises, or shall become payable, during
the Term) shall be apportioned between Lessor and Lessee as of the Expiration
Date, so that Lessee shall pay that portion of such Imposition relating to that
part of such fiscal
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period included in the period of time before the Expiration
Date.
III.2 LIENS. Subject to the provisions of Paragraph 3.3, Lessee will
promptly remove and discharge any charge, lien, security interest or encumbrance
upon the Premises which arises for any reason, including all liens which arise
out of the possession, use, occupancy, construction, repair or rebuilding of the
Premises or by reason of labor or materials furnished or claimed to have been
furnished to Lessee or for the Premises, but not including (i) the Permitted
Exceptions, (ii) any sublease permitted by the terms of this Lease, and (iii)
any charge, lien, security interest or encumbrance affirmatively created by
Lessor in its capacity as fee owner of the Improvements or lessee under the
Ground Lease after the date hereof; provided that Lessee shall have no
obligation to discharge any mechanic's, laborer's, materialman's, supplier's or
vendor's lien if payment is being contested pursuant to Paragraph 3.3 hereof.
Nothing contained in this Lease shall be construed as constituting the consent
or request of Lessor, express or implied, to or for the performance by any
contractor, laborer, materialman, supplier or vendor of any labor or services or
for the furnishing of any materials for any construction, alteration, addition,
repair or demolition of or to the Premises or any part thereof. Notice is
hereby given that Lessor will not be liable for any labor, services or materials
furnished or to be furnished to Lessee, or to anyone (other than Lessor) holding
an interest in the Premises or any part thereof through or under Lessee, and
that no mechanic's or other liens for any such labor, services or materials
shall attach to or affect the interest of Lessor in and to the Premises.
III.3 PERMITTED CONTESTS. Notwithstanding any provision hereof to the
contrary, Lessee shall not be required, nor shall Lessor have the right to
require Lessee, to pay, discharge or remove any tax, assessment, levy, fee,
rent, charge, lien or encumbrance, or to comply with any Legal Requirements
applicable to the Premises or the use thereof, as long as Lessee shall contest,
diligently and in good faith, the existence, amount or validity thereof by
appropriate proceedings which shall prevent the collection of or other
realization upon the tax, assessment, levy, fee, rent, charge, lien or
encumbrance so contested, and which also shall prevent the sale, forfeiture or
loss of the Premises, or any part thereof, or any part of the rents, issues and
profits thereof, to satisfy the same or Legal Requirements, and which shall not
affect the payment of any sums required to be paid by Lessee hereunder, provided
that (i) Lessee provides Lessor with prior written notice of such contest, and
(ii) such contest shall not subject Lessor to the risk of any criminal liability
or civil liability. Lessee shall give such security as may be reasonably
requested by Lessor to insure ultimate payment of such tax, assessment, levy,
fee, rent, charge, lien or encumbrance and compliance with Legal Requirements
and to prevent any sale or forfeiture of the Premises or any portion thereof or
any part of the rents, issues and profits thereof and to
11
otherwise protect the interests of Lessor in the Premises. In the event that
Lessor, in Lessor's good faith judgment, determines at any time that the
Premises or any portion thereof or any part of the rents, issues and profits
thereof are in danger of sale or forfeiture or that action is necessary to
otherwise protect the interests of Lessor in the Premises, Lessor may pay the
amount of such contested tax, assessment, levy, fee, rent, charge, lien or
encumbrance, or comply with any Legal Requirements applicable to the Premises
or the use thereof, and in such event, the amount expended by Lessor in
connection therewith shall be deemed to be additional Rental hereunder and
shall be payable by Lessee to Lessor within ten (10) days after demand
therefor by Lessor.
65535RT65535CLE IV
MAINTENANCE AND REPAIR; SERVICES; ALTERATION
IV.1 MAINTENANCE AND REPAIR; COMPLIANCE WITH LEGAL REQUIREMENTS.
(a) Lessee, at its own cost and expense, will maintain all parts of
the Premises in good repair and condition, will maintain and operate the
Premises in a manner customary for a first-class office property such as the
Premises, and will take all action and will make all foreseen and unforeseen and
ordinary and extraordinary changes and repairs which may be required to keep all
parts of the Premises in such condition, ordinary wear and tear excepted.
During the term of this Lease, Lessee shall obtain and maintain service and
maintenance contracts with respect to the HVAC systems and the elevators
servicing the Premises (other than any HVAC system or subsystem and/or elevator
servicing a Subtenant space which is the responsibility of such Subtenant to
maintain and repair). Lessor shall not be required to maintain or repair the
Premises, or to make any alteration, addition, change, improvement or
replacement with respect to the Premises. Lessee waives the right (x) to
require Lessor to maintain or repair the Premises, or to make any alteration,
addition, change, improvement or replacement with respect to the Premises, or
(y) to make repairs at the expense of Lessor pursuant to any applicable present
and future laws, rules, orders, ordinances, regulations, statutes, requirements,
codes, resolutions and executive orders (including, without limitation,
environmental laws ("Environmental Laws") of all governmental authorities now
existing or hereafter created, and of any and all of their departments and
bureaus, including, without limitation, any Board of Fire Underwriters or
similar body exercising similar functions, affecting the Premises or the use or
occupancy of the Premises (collectively, "Legal Requirements") or any contract,
agreement, covenant, condition or restriction at any time in effect.
(b) Throughout the Term, Lessee, at its sole cost and expense, shall
(i) timely obtain and thereafter keep in full force and effect all permits,
authorizations and approvals of governmental authorities required for the use,
occupancy,
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operation, maintenance, repair and insurability of the Premises, (ii)
promptly comply with, and discharge of record any violations of, any and all
applicable Legal Requirements affecting the Premises or the use or occupancy
of the Premises, whether or not such Legal Requirements shall necessitate
structural changes, improvements, interference with use and enjoyment of the
Premises, replacements or repairs, extraordinary as well as ordinary, and
Lessee shall so perform and comply, whether or not such Legal Requirements or
conditions shall now exist or shall hereafter be enacted or promulgated or
come to occur, and whether or not such Legal Requirements can be said to be
within the present contemplation of the parties hereto, and (iii) promptly
comply with the requirements of any Permitted Exception which encumbers the
Property (excluding the Ground Lease, any Leasehold Mortgage and the
Subleases).
(c) Lessee covenants and agrees that: (i) all use and operation of
the Property by Lessee shall be in compliance with all Environmental Laws and
required permits; (ii) there shall be no releases of hazardous materials
affecting the Property by Lessee, and Lessee shall use commercially reasonable
efforts to prevent any such releases by any Subtenant or other user of the
Property; (iii) Lessee shall not use or store, and shall use commercially
reasonable efforts to prevent any Subtenant or other user of the Property from
using or storing, hazardous materials at the Property except (A) routine office,
cleaning and janitorial supplies, (B) in compliance with all Environmental Laws,
and (C) with all required permits; (iv) Lessee shall keep the Property free and
clear of all liens and encumbrances imposed by any Environmental Laws due to any
act or omission by Lessee or any person within Lessee's control (the
"ENVIRONMENTAL LIENS"); (v) Lessee shall, at its sole expense, fully and
expeditiously cooperate in all activities described in Section 4.1(d) below,
including providing all relevant information and making knowledgeable persons
within Lessee's control available for interviews; (vi) Lessee shall, at its sole
expense, (A) perform any environmental site assessment or other investigation of
environmental conditions at the Property upon Lessor's request based on Lessor's
reasonable belief that the Property is not in compliance with all Environmental
Laws, (B) share with Lessor the results and reports and Lessor and the Lessor
Indemnified Parties (defined below) shall be entitled to rely on such results
and reports, and (C) complete any remediation of hazardous materials affecting
the Property or other actions required by any Environmental Laws; (vii) Lessee
shall not allow any Tenant or other user of the Property to violate any
Environmental Law; and (viii) Lessee shall promptly notify Lessor in writing
after it becomes aware of (A) the presence, release, or threatened release of
hazardous materials affecting the Property, (B) any non-compliance of the
Property with any Environmental Laws, (C) any actual or potential Environmental
Lien, (D) any required or proposed remediation of
13
environmental conditions relating to the Property, or (E) any written
communication or notice from any person relating to hazardous materials which
comes into Lessee's possession.
(d) Subject to the rights of Subtenants, Lessor and any person
designated by Lessor may enter the Property to assess the environmental
condition of the Property and its use including (i) conducting any environmental
assessment or audit (the scope of which shall be determined by Lessor) and (ii)
taking samples of soil, groundwater or other water, air, or building materials,
and conducting other invasive testing at all reasonable times when (A) Lessor
reasonably believes that a release has occurred or the Property is not in
compliance with all Environmental Laws, or (B) such action is required by any
Leasehold Mortgage. Subject to the rights of Subtenants, Lessee shall cooperate
with and provide access to Lessor and such person.
IV.2 SERVICES. Lessor shall not be required to furnish any services,
utilities or facilities to the Premises. Lessee assumes sole responsibility for
obtaining all services, utilities and facilities required at the Premises, and
for the operation, repair, alteration, improvement, replacement, maintenance and
management of the Premises during the Term, and shall pay all costs relating to
any of the foregoing.
IV.3 ALTERATIONS.
(a) Lessee may, at its expense, make additions to and alterations
of the Improvements, and construct additional Improvements on the Premises
(collectively, "Alterations"), provided that (i) the fair market value,
utility and useful life of the Premises shall not be reduced or lessened
thereby, and the character and use of the Property as a first-class office
building shall not be altered or impaired,(ii) such Alterations shall be
expeditiously completed in a good and workmanlike first-class manner, free
and clear of liens and encumbrances, and in compliance with all applicable
Legal Requirements, the requirements of all insurance policies required to be
maintained by Lessee hereunder and the terms and provisions of this Lease,
(iii) Lessee shall not make any Alterations in violation of the terms of any
Fee Mortgage, restriction, easement, condition, covenant or other matter
affecting title to or use of the Premises (other than any Leasehold
Mortgage), and (iv) no Material Alterations, as hereafter defined, shall be
made unless Lessor's prior written consent shall have been obtained, which
consent shall not be unreasonably withheld, delayed or conditioned, unless an
Event of Default shall have occurred and be continuing in which case such
consent may be withheld by Lessor in its sole discretion. "Material
Alteration" is defined as an Alteration which exceeds a total Estimated Cost
of $1,000,000. "Estimated Cost" is defined as the estimated cost of
materials, construction and labor (not including architects, engineers or
other professionals), as estimated
14
by a licensed architect (or if not required by the terms hereof to be
estimated by an architect, as reasonably estimated by Lessor), which estimate
together with a complete description of the Work (as hereinafter defined) and
all related work shall in any case be delivered to, and such estimate and
description reasonably approved by, Lessor, and to the extent required by any
Leasehold Mortgage, by the holder thereof, before the commencement of any
Work hereunder, whether or not such Work shall constitute a Material
Alteration. In addition to the limitations set forth in (i) through (iv)
above, Lessee agrees that all Alterations, restoration, repair and any other
work which Lessee shall be required or permitted to do under the provisions
of this Lease (hereinafter collectively called the "Work") shall be performed
in each case subject to the following:
(i) Lessee shall not perform any Work which shall have an adverse
effect on the structural portions of the Premises or on the building systems,
as operated by Lessee as of the date hereof. Any Work when completed shall
be of such a character as not to reduce the value of the Premises below its
value immediately prior to the commencement of such Work or damage to the
Premises necessitating such Work or change.
(ii) No Work shall be performed by Lessee if the same would
materially reduce the usable square footage of the Improvements, or reduce
the permitted uses thereof under applicable zoning laws or impair other
amenities of the Premises.
(iii) No Material Alterations shall be commenced until detailed
plans and specifications (including layout, architectural, mechanical and
structural drawings), prepared by a licensed architect shall have been
submitted to and approved by Lessor, and no such Work pursuant to a Material
Alteration shall be undertaken except under the supervision of the architect.
(iv) If the Work shall constitute a Material Alteration, the
reasonable out-of-pocket cost and expense of Lessor's, and to the extent
required by any Leasehold Mortgage, the holder thereof's respective (A)
review of any plans and specifications required to be furnished pursuant to
this Lease or (B) review/supervision of any such Work, shall be paid by
Lessee to Lessor, within ten (10) days after demand. Such review and/or
supervision by Lessor and/or the holder of any Leasehold Mortgage may be
conducted by an engineer, architect or similar professional retained by
Lessor and/or such holder, it being understood and agreed, however, that if
Lessor and the holder of any Leasehold Mortgage shall obtain separate
consultants to perform the same function, Lessor may only seek reimbursement
from Lessee for the cost of one (1) such consultant.
(v) All Work shall be commenced only after all required municipal
and other governmental permits, authorizations and approvals for Work
permitted under this Lease shall have been obtained by Lessee, at its own
cost and expense, and copies thereof delivered to Lessor. Lessor will, on
Lessee's written request, promptly execute any documents necessary to be
signed by Lessor to obtain any such permits, authorizations and approvals,
provided that Lessee shall bear any out-of-pocket expense or liability of
Lessor in connection therewith; provided that none
15
of the foregoing shall, in any manner, result in a change in zoning or
otherwise have an adverse affect on the ability to use the Premises as
currently operated by Lessee.
(vi) All Work shall be commenced only after Lessee shall have
delivered to Lessor insurance policies or certificates therefor issued by
responsible insurers, bearing notations evidencing the payment of premiums or
accompanied by other evidence satisfactory to Lessor of such payment, for
"Builders All Risk" course of construction insurance, worker's compensation
insurance covering all persons employed in connection with the Work and with
respect to whom death or bodily injury claims could be asserted against
Lessor, Lessee or the Premises, and owner's protective liability insurance
expressly covering the additional hazards resulting from the Work with limits
not less than those, and otherwise subject to the same conditions and
requirements, set forth in Article V of this Lease with respect to the
liability insurance required thereunder. If under the provisions of any
fire, liability or other insurance policy or policies then covering the
Premises or any part thereof any consent to such Alteration by said insurance
company or companies issuing such policy or policies shall be required to
continue and keep such policy or policies in full force and effect, Lessee
shall obtain such consents and pay any additional premiums or charges
therefor that may be imposed by said insurance company or companies.
(vii) If the Work shall constitute a Material Alteration, it shall
not be commenced until Lessee shall have obtained and delivered to Lessor
such security for the performance of Lessee's obligations hereunder as shall
be reasonably satisfactory to Lessor.
(viii) All Work shall be performed in accordance with any plans and
specifications therefor which shall have been approved by Lessor. All Work
shall be commenced and completed in a commercially reasonable manner.
(ix) Upon completion of any Work, Lessee, at Lessee's expense,
shall obtain certificates of final approval of such Work and certificates of
occupancy required by any governmental or quasi-governmental authority and
shall furnish Lessor with copies thereof, and, if the Work constituted
Material Alterations, together with "as-built" plans and specifications for
such Work.
(x) Upon two (2) business days' advance notice (except in the
event of an emergency, for which no notice shall be required), any Work shall
be subject to inspection at any time and from time to time by any of Lessor
or the holder of any Fee Mortgage or Leasehold Mortgage, their respective
architect(s), or their duly authorized representatives. If the Work is not
being performed in accordance with the provisions of this Section 4.3 or the
plans and specifications (if plans and specifications are required as a
result of a Material Alteration), or if any of the materials or workmanship
are not first-class or are unsound or improper, Lessee shall correct any such
failure and shall replace any unsound or improper materials or workmanship.
(xi) All agreements with any contractor performing work or
supplying labor or materials in connection with any
16
Material Alteration shall provide that such agreements shall be conditionally
assigned to the following parties, in the following order of priority: (1)
the holder of any Fee Mortgage, (2) the Leasehold Mortgagee, and (3) Lessor,
and that upon written notice to the contractor by any such party that a
default hereunder has occurred, such contractor shall attorn to such
requesting party and perform the remaining obligations of contractor pursuant
to such agreement for such party's benefit on the same terms and conditions
provided therein. Lessee shall execute and deliver to any such party such
collateral assignments of such agreements as such party shall reasonably
request.
(xii) All Alterations installed in or upon the Premises at
any time during the Term shall become part of the Improvements and shall be
the property of Lessor, subject to the terms of this Lease.
(b) Lessee may, at its cost and expense, install, or place
upon or reinstall, or replace and remove from the Premises any personal
property of Lessee, provided that Lessee repairs any damage to the
Improvements caused thereby.
65535RT65535CLE V
CASUALTY AND CONDEMNATION; INSURANCE; INDEMNIFICATION
V.1 CONDEMNATION; LEASE TERMINATION.
(a) If at any time during the Term, all or any part of the Premises
shall be taken for any public or quasi-public purpose by any lawful power or
authority by the exercise of the right of condemnation or eminent domain or by
agreement among Lessor, Lessee and those authorized to exercise such right, the
entire award for the Premises shall be allocable to Lessor and Lessee in
proportion to the fair market value of their respective interests in the
Premises (including, without limitation, Lessee's interest as the owner of the
Land and the lessor under the Ground Lease), provided, however, that if the
parties cannot agree on such fair market values, the fair market value of each
party's respective interest in the Premises shall be determined by arbitration,
as provided in Article XI of the Ground Lease, it being understood and agreed,
however, that in no event shall the portion of such award allocable to Lessee's
interest in the Premises be less than $25,000,000 for such purposes.
Notwithstanding anything in this Section 5.1 to the contrary, neither Lessor nor
Lessee shall be permitted to settle any condemnation award or other similar
payment relating to the Premises with the applicable condemning authority
without the prior written consent of the other party, which consent shall not be
unreasonably withheld. To the extent that the applicable condemning authority
makes any separate award or other compensation to Lessor or Lessee which is
inconsistent with the provisions of this Section 5.1, Lessor and Lessee each
hereby irrevocably assigns to the other the portion of any such award or other
compensation which is in excess of the amount which such party shall be entitled
to hereunder in connection with any such taking. Each of the parties agrees to
execute and deliver any
17
and all documents that may be reasonably required in order to facilitate the
settlement and collection of such awards in accordance with the provisions of
this Section 5.1.
(b) If all or substantially all of the Premises shall be taken as
provided in this Section 5.1, this Lease and the Term shall terminate and expire
on the date of such taking and the Rental payable by Lessee hereunder shall be
paid to and apportioned as of the date of such taking. For purposes of this
Section 5.1, (x) "substantially all of the Premises" shall be deemed to mean
such portion of the Premises as, when so taken, would render the untaken portion
of the Premises unusable for the purpose for which the same were being used
immediately prior to the taking, and (y) the "date of taking" shall be deemed to
be the earlier of (i) the date on which actual possession of the whole or
substantially all of the Premises, or a part thereof, as the case may be, is
acquired by any lawful power or authority pursuant to the provisions of the
applicable federal or New York State law, or (ii) the date on which title to the
Premises or the aforesaid portion thereof shall have vested in any lawful power
or authority pursuant to the provisions of the applicable federal or New York
State law.
(c) If less than substantially all of the Premises shall be taken as
provided in this Section 5.1, then this Lease and the Term shall continue
without abatement of the Rental or diminution of any of Lessee's obligations
hereunder, and Lessee shall promptly restore, to the extent practicable, any
damage to the remaining portion of the Premises caused by such taking. The
portion of any award with respect to such taking allocable to Lessee's interest
under this Lease (but not any portion of such award allocable to Lessee's
interest as the owner of the Land and the lessor under the Ground Lease) (the
"Lessee's Master Lease Award") shall be paid to and held by the Depository (as
hereinafter defined) and shall be disbursed by the Depository to Lessee in the
manner set forth in Section 5.3 below for the disbursement of insurance proceeds
for Restoration Costs. If Lessee's Master Lease Award shall be insufficient to
complete any restoration of the Premises which Lessee is required to perform
hereunder, after Lessee has expended the entire amount of Lessee's Master Lease
Award, there shall be paid to the Depository for disbursement as described above
(a) such portion of the award otherwise payable to Lessor hereunder in an amount
reasonably necessary to pay the excess cost of restoration of any remaining part
of the Premises not so taken (the "Excess Restoration Cost"), and (b) if such
portion of the award otherwise payable to Lessor is not sufficient to pay the
entire Excess Restoration Cost, after completely disbursing same, such portion
of the award otherwise payable to Lessee pursuant to the Ground Lease for
Lessee's interest as the owner of the Land and the lessor under the Ground
Lease, in an amount reasonably necessary to pay any remaining Excess Restoration
Cost.
(d) If the temporary use of the whole or any part of the Premises
shall be taken at any time during the Term for any public or quasi-public
purpose by any lawful power or authority by the exercise of the right of
condemnation or eminent domain or
18
by agreement between Lessee and those authorized to exercise such right, the
Term shall not be reduced or affected in any way and Lessee shall continue to
pay in full the Rental payable by Lessee hereunder without reduction or
abatement, and Lessee shall be entitled to receive for itself any award or
payments for such use, provided, however, that if the taking is for a period
extending beyond the Term such award or payment shall be apportioned between
Lessor and Lessee as of the last day of the Term.
(e) In case of any governmental action not resulting in the taking or
condemnation of any portion of the Premises but creating a right to compensation
therefor, such as the changing of the grade of any street upon which the
Premises abut, then this Lease shall continue in full force and effect without
reduction or abatement of Rental. In such event, the entire award applicable to
the Premises shall be allocable to Lessor and Lessee in proportion to the fair
market value of their respective interests in the Premises (including, without
limitation, Lessee's interest as the owner of the Land and the lessor under the
Ground Lease), provided, however, that if the parties cannot agree on such fair
market values, the fair market value of each party's respective interest in the
Premises shall be determined by arbitration, as provided in Article XI of the
Ground Lease.
(f) Notwithstanding anything which may be to the contrary in this
Section 5.1, in connection with any taking, to the extent that Lessee is
actually occupying the Premises, Lessee shall be entitled to make a separate
claim, and to prove and receive an award for moving allowance and other expenses
permitted by law, provided that such award shall not diminish the amount of the
award to which Lessor would otherwise be entitled.
V.2 INSURANCE.
(a) The Lessee, at its own cost and expense, shall at all times carry
and maintain, or cause to be carried and maintained, the following insurance:
(i) Insurance with respect to the Improvements against all
perils included within the classification "All Risk of Physical Loss", covering
such risks as shall be customarily insured against with respect to improvements
similar in construction, location and use including by way of example,
earthquake, flood, sprinkler leakage, debris removal, cost of demolition,
malicious mischief, water damage, boiler and machinery explosion or damage and
the like, with extended coverage, a deductible of $25,000 or less, and in
amounts not less than the greater of (x) 100% of the actual replacement cost of
the Improvements (exclusive of foundations and excavations), without regard to
depreciation, and (y) such other amount as is necessary to prevent any reduction
in such policy by reason of and to prevent Lessor, the holder(s) of any
Leasehold Mortgage and/or Fee Mortgage or any other insured thereunder from
being deemed to be a co-insurer.
(ii) Comprehensive, commercial general liability insurance,
including bodily injury, death and property damage liability, and umbrella
liability insurance against any and all
19
claims arising out of or connected with the possession, maintenance, use,
occupancy, operation, leasing or condition of the Premises in an amount not
less than $3,000,000 for a combined single limit and $10,000,000 for an
aggregate limit; such insurance shall include the Premises and all sidewalks
adjoining or appurtenant to the Premises, shall contain blanket contractual
coverage and shall also provide the following protection:
(1) completed operations;
(2) personal injury protection;
(3) sprinkler leakage-water damage legal liability;
(4) fire legal liability, if not otherwise covered
under the comprehensive form of public liability
insurance; and
(5) employees as additional insured coverage.
(iii) Statutory worker's compensation insurance with respect to
the operation of the Premises and any work performed on or about the Premises.
(iv) Insurance against loss or damage from (A) leakage of
sprinkler systems and (B) explosion of steam boilers, air conditioning
equipment, pressure vessels or similar apparatus now or hereafter installed at
the Premises, in an amount not less than $1,000,000 or such greater amount as
Lessor may from time to time reasonably require and which are customarily
required with respect to similar properties similarly situated.
(v) Flood insurance in an amount equal to the full
Replacement Cost of the Improvements or the maximum amount available, whichever
is less, if all or any portion of the Improvements are located in an area which
has been designated by the Secretary of Housing and Urban Development as having
special flood hazards, and if flood insurance is available under the National
Flood Insurance Act.
(vi) Rent loss, business interruption or use and occupancy
insurance, in an amount not less than twelve (12) months' gross income from the
Premises.
(vii) Such other insurance in such amounts as may from time to
time be reasonably required by Lessor or the holder of any Leasehold Mortgage
against such other insurable hazards as at the time are commonly insured against
in the case of prudent owners of like premises.
(b) The Lessee will cause the Lessor and the holder(s) of any
Leasehold Mortgage and/or Fee Mortgage to be named as additional insureds as
their respective interests may appear on all policies covering the insurance
referred to above (other than (x) the insurance referred to in Paragraph
5.2(a)(i), where the holder of any Fee Mortgage and any Leasehold Mortgagee
shall be named as mortgagees only, and (y) the insurance referred to in
Paragraph 5.2(a)(iii)), without the Lessor or the holder(s) of any Leasehold
Mortgage and/or Fee Mortgage thereby having any obligation, including,
without limitation, the obligation to pay premiums. All insurance required
by any provision of this Lease shall be in such form as is reasonably
acceptable to Lessor and shall be issued by any insurance company licensed
and authorized
20
to do business in the State of New York and having a Bests
Insurance Reports (or any successor publication of comparable standing)
rating of A VII (or the then equivalent of such rating) or better or by any
other insurance company consented to by Lessor. All policies referred to in
this Lease shall be for periods of not less than one (1) year. A duplicate
original or certificate of each such policy shall be delivered to Lessor and
the holder of any Leasehold Mortgage and/or Fee Mortgage within a reasonable
period of time prior to the commencement of the term of each such policy,
except that if any insurance carried by Lessee is effected by one or more
blanket policies, then with respect to such insurance, certified abstracted
policies relating to the Premises shall be so delivered to Lessor and the
holder of any Leasehold Mortgage and/or Fee Mortgage. A certificate or other
evidence reasonably satisfactory to Lessor of the existence of any new or
renewal policy that replaces any policy expiring during the Term shall be
delivered as aforesaid at least thirty (30) days prior to the date of
expiration, together with proof reasonably satisfactory to Lessor that all
premiums due have been paid for at least the first year of the term of such
policies.
(c) Every policy referred to in Paragraph 5.2(a) shall provide that
(i) it will not be canceled or amended except after 30 days' written notice to
Lessor and the holder of any Leasehold Mortgage and/or Fee Mortgage, and that it
shall not be invalidated by any act or negligence of Lessor or Lessee, nor by
occupancy or use of the Premises for purposes more hazardous than permitted by
such policy, nor by any foreclosure or other proceedings relating to the
Premises, nor by change in title to or ownership of the Land or the Improvements
and (ii) the insurer thereunder waives all rights of subrogation against the
Lessor and waives any right of setoff and counterclaim and any other right of
deduction, whether by attachment or otherwise.
(d) The requirements of this Paragraph 5.2 shall not be construed to
negate or modify Lessee's obligations under Paragraph 5.4.
V.3 CASUALTY.
(a) If the Premises shall be damaged or destroyed by any casualty
during the Term hereof, this Lease shall continue in full effect without any
reduction in the Rental payable by Lessee hereunder and Lessee shall, at its
expense, promptly rebuild, replace or repair the Premises in conformity with the
requirements of Section 4.3 so as to restore the Premises to the condition and
fair market value thereof immediately prior to such occurrence, subject to the
following:
(i) Lessee shall settle any claim relating to such casualty
with the applicable insurance carrier, provided, however, that with respect to
any casualty involving a Restoration Cost (as hereinafter defined) in excess of
$500,000, such settlement shall be subject to the consent of Lessor, which
consent shall not be unreasonably withheld.
(ii) Prior to any such rebuilding, replacement or repair,
Lessee shall deliver its reasonable estimate of the cost thereof, which shall be
subject to the approval of Lessor, which
21
approval shall not be unreasonably withheld (the cost approved by Lessor, as
updated from time to time as provided below, is referred to as the
"Restoration Cost"). If the repair constitutes a Material Alteration, the
Restoration Cost must be confirmed and periodically updated by an architect
reasonably acceptable to Lessor who is registered or licensed as such in the
state in which the Premises is located, and if the Restoration Cost is, or is
reasonably anticipated to be, more than the amount of net insurance proceeds
available to Lessee for such restoration (less any cost to the Depository (as
hereinafter defined) of recovering and paying out such proceeds, including,
without limitation, reasonable attorneys', trustees' or escrow fees relating
thereto and out-of-pocket costs allocable to inspecting the work and the
plans and specifications therefor) (the "Net Proceeds"), Lessee shall deliver
or cause to be delivered to the Depository such security for the payment by
Lessee of such excess costs as shall be reasonably acceptable to the
Depository and Lessor. The Net Proceeds and any additional security posted
by Lessee hereunder shall be held and disbursed in accordance with the
provisions of this Lease by (i) the holder of any Fee Mortgage, to the extent
required by the terms thereof, or (ii) to the extent not required to be held
by the holder of a Fee Mortgage as provided above, a bank or other financial
institution selected by Lessor and reasonably acceptable to Lessee (the
holder of such Fee Mortgage or such bank or financial institution being
hereinafter referred to as the "Depository").
(iii) The Restoration Cost shall be paid first out of Lessee's
own funds to the extent that the Restoration Cost exceeds the Net Proceeds
payable in connection with such occurrence, after which expenditure Lessee shall
be entitled to receive the Net Proceeds, but only against certificates of Lessee
(and lien releases and other items generally and reasonably required in
connection with disbursement of construction loan or insurance proceeds)
delivered to Depository and Lessor from time to time as such work or rebuilding,
replacement and repair progresses, each such certificate describing the work for
which Lessee is requesting payment and the cost incurred by Lessee in connection
therewith and stating that Lessee has not theretofore received payment for such
work, and stating that the amount of the Net Proceeds remaining after such
requested disbursement shall be sufficient to satisfy the cost of completing
such restoration. Any Net Proceeds remaining after final payment has been made
for such work shall be returned to Lessee. If the cost of any rebuilding,
replacement or repair required to be made by Lessee pursuant to this Section 5.3
shall exceed the amount of such Net Proceeds, the deficiency shall be paid by
Lessee. Lessee shall not be entitled to disbursements of the Net Proceeds if an
Event of Default has occurred and is continuing.
(b) The Rental payable under the provisions of this Lease shall not
be affected, altered or reduced by any casualty, and Lessee shall continue to
pay the full amount of the Rental provided in this Lease notwithstanding any
such casualty.
(c) The Net Proceeds shall be held by the Depository, to be paid out
from time to time to Lessee as the work
22
progresses, subject to each of the following conditions:
(i) Each request for payment shall be made on not less than
ten (10) business days' prior notice to the Depository and to Lessor and shall
be accompanied by an officer's certificate (or if such work is being performed
under the supervision of an architect, by a certificate of such architect),
stating (A) in the case of an officer's certificate only, that no Event of
Default exists hereunder, (B) that, based upon an inspection of the Premises,
all of the work completed has been done in substantial compliance with the
approved plans and specifications, if required, (C) that the sum requested is
validly required to reimburse Lessee for payments by Lessee, or is validly due
to the contractor, subcontractors, materialmen, laborers, engineers, architects
or other persons rendering services or materials for the work (giving a brief
description of such services and materials), and that when added to all sums
previously paid out by the Depository does not exceed the value of the work done
to the date of such certificate, (D) if the sum requested is to cover payment
relating to repair and restoration of personal property required or relating to
the Premises, that title to the personal property items covered by the request
for payment is vested in Lessor or Lessee, as applicable, and (E) the remaining
cost to complete such work and that the remaining amount held by the Depository
(together with any amounts contemporaneously deposited by Lessee with the
Depository) shall be sufficient to cover such cost of completion; PROVIDED,
HOWEVER, that if such certificate is given by an architect, such architect shall
certify as to clause (B) above, and Lessee shall certify as to the remaining
clauses above, and provided, further, that the Depository shall not be obligated
to disburse such funds if the Depository determines, in its reasonable
discretion, that Lessee shall not be in compliance with this Section 5.3.
Additionally, each request for payment shall contain a statement signed by
Lessee approving both the work done to date and the work covered by the request
for payment in question.
(ii) Each request for payment shall be accompanied by waivers
of lien satisfactory to Lessor and the Depository covering that part of the work
for which payment or reimbursement has been made as of the date of the current
request and, if required by the Depository, a search prepared by a title company
or licensed abstractor, or by other evidence satisfactory to the Depository that
there has not been filed with respect to the Premises any mechanics or other
lien or instrument for the retention of title relating to any part of the work
not discharged of record. Additionally, as to any personal property covered by
the request for payment, Lessor and the Depository shall be furnished with
evidence of payment therefor and such further evidence satisfactory to assure
the Leasehold Mortgagee of its valid first lien on and security interest in the
personal property.
(iii) Lessor and the Depository shall have the right to inspect
the work at all reasonable times upon reasonable prior notice and may condition
any disbursement of Net Proceeds upon the satisfactory completion of any portion
of the work for
23
which payment or reimbursement is being requested. Neither the approval by
the Depository or Lessor of any required plans and specifications for the
work nor the inspection by the Depository or Lessor of the work shall make
the Depository or Lessor responsible for the preparation of such plans and
specifications or the compliance of such plans and specifications, or of the
work, with any applicable Legal Requirement, covenant or agreement.
(iv) Net Proceeds shall not be disbursed more frequently than
once every thirty (30) days.
(d) If an Event of Default shall have occurred and be continuing
or if Lessee (i) shall fail to submit to Lessor for approval plans and
specifications (if required pursuant to Section 4.3 hereof) for the Work
(approved by the architect and by all governmental authorities whose approval
is required), (ii) after any such plans and specifications are approved by
all such governmental authorities, the architect, Lessor and the Depository,
shall fail to commence promptly such Work, (iii) after the Depository or
Lessor has released the Net Proceeds to the extent provided for hereunder,
shall fail to diligently prosecute such Work to completion, or (iv) fail in
any other respect to comply with the Work obligations under this Section 5.3,
then in addition to all other rights available hereunder, at law or in
equity, Lessor, the Depository, any Leasehold Mortgagee or any receiver of
the Premises or any portion thereof, upon five (5) days prior notice to
Lessee (except in the event of emergency in which case no notice shall be
required), may (but shall have no obligation to) perform or cause to be
performed such Work, and may take such other steps as such party deems
advisable (but such performance shall not cure the default of Lessee),
including the restoration and repair of the Premises, and the Net Proceeds
shall be released to reimburse such party for the cost thereof. In addition,
Lessee acknowledges that if an Event of Default shall have occurred and be
continuing, the Depository may apply any Net Proceeds towards payment of the
Fee Mortgage, to the extent permitted by Section 5.3 of the Ground Lease,
which payment shall not relieve Lessee of any of its obligations hereunder.
Lessee hereby waives, for Lessee and all others holding under or through
Lessee, any claim, other than for gross negligence or willful misconduct,
against Lessor and the Depository and any receiver arising out of any act or
omission of such party pursuant hereto, and Lessor or the Depository may
apply all or any portion of the Net Proceeds (without the need to fulfill any
other requirements set forth in this Section 5.3) to reimburse itself for all
amounts incurred in connection with the Work.
V.4 INDEMNIFICATION.
(a) Lessee shall not do or permit any act or thing to be done upon
the Premises which may subject Lessor to any liability or responsibility for
injury, damages to persons or property or to any liability by reason of any
violation of any Legal Requirement, and shall exercise such control over the
Premises as to fully protect Lessor against any such liability.
24
Lessee hereby assumes liability for and shall pay, and shall protect, defend,
save, indemnify and hold the Lessor and the holder of any Leasehold Mortgage
and/or Fee Mortgage and their respective affiliates, partners, directors,
shareholders, members, officers, employees, agents, successors and assigns
(the "Lessor Indemnified Parties") harmless from and against all liabilities,
suits, obligations, fines, damages, penalties, claims, costs, charges and
expenses, including, without limitation, reasonable engineers', architects',
experts', consultants, and attorneys' fees and disbursements (collectively,
the "Claims") arising from or in connection with any of the following: (i)
the performance or non-performance of any of the terms hereof by the Lessee,
(ii) the lease, sublease, possession, use, operation, maintenance, condition
or repair of the Premises, (iii) any accident, injury to or death of persons
or loss of property occurring on or about the Premises or any part thereof,
or the adjoining sidewalks, curbs, vaults and vault space, if any, streets or
ways, (iv) performance of any labor or services or the furnishing of any
materials or other property in respect of the Premises or any part thereof,
(v) any negligence or wrongful act or omission of Lessee or any of its
subtenants, servants, agents, contractors, employees, licensees or invitees,
(vi) any contest conducted by the Lessee pursuant to Section 3.3 or (vii) any
violation of any Legal Requirement, including, without limitation, any
violation of environmental laws, regardless of whether such violation arises
before or during the Term.
(b) The obligations of Lessee under this Section 5.4 shall not be
affected in any way by the absence in any case of covering insurance or by the
failure or refusal of any insurance carrier to perform any obligation on its
part under insurance policies affecting the Premises.
(c) The indemnified parties shall give notice to the indemnifying
party of any demand or claim that may result in an indemnified claim under this
Lease promptly after the indemnified parties have knowledge of same. Notice
shall be deemed to have been promptly given pursuant to this Section 5.4 if it
is given within such time as is required to avoid prejudicing the indemnifying
party's defense to the claim or demand. Failure to give prompt notice pursuant
to the terms of this Section 5.4 shall not relieve the indemnifying party of any
liability or obligation under this Lease, but such failure shall entitle the
indemnifying party to compensation from the indemnified parties for any cost,
expense or liability it incurs as a direct consequence of such late notice.
(d) The indemnifying party shall either (i) pay such claim within
thirty (30) days after such notice is given or (ii) subject to the provisions of
Subsection (e) of this Section 5.4, commence to compromise or defend such claim
within thirty (30) days after such notice is given, at its own expense and by
counsel of its own choosing (reasonably acceptable to the indemnified parties),
and shall notify the indemnified parties of such payment, compromise or defense,
subject to the terms and conditions hereof. The indemnified parties shall
cooperate, at
25
the expense of the indemnifying party, in the compromise or defense of such
claim; provided that the indemnifying party shall control such compromise or
defense. The indemnified parties shall have the right to be kept fully
informed of the status of any claim and to participate in the defense of a
claim or demand at their sole expense. If the indemnifying party does not
pay or promptly commence to compromise or defend against such claim as herein
provided, or fails diligently to pursue the compromise or defense of such
claim, then the indemnified parties may thereafter pay, compromise or defend
against such claim with counsel of their choosing, and all expenses incurred
by the indemnified parties in so doing shall be paid by the indemnifying
party on demand.
(e) If the indemnifying party wishes to enter into a settlement or
compromise with respect to a claim, it shall give notice to the indemnified
parties of the terms of the proposed settlement or compromise and any such
settlement or compromise shall be subject to the prior written consent of the
indemnified parties, which consent shall not be unreasonably withheld. Without
limiting the generality of the foregoing, it shall be reasonable to refuse
consent to a settlement or compromise which would impose upon the indemnified
parties (or any of them) either (x) a financial obligation which would not be
satisfied by the indemnifying party at the time of such settlement or
compromise, or (y) any other material obligation (including, without limitation,
such obligation as may be imposed by injunctive or other equitable relief) that
would not be discharged by the performance of the indemnifying party or such
performance by the indemnifying party is not assured by virtue of the financial
condition of the indemnifying party, the lack of security therefor or otherwise.
(f) The provisions of this Section 5.4 shall survive the Expiration
Date.
65535RT65535CLE VI
ASSIGNMENT, SUBLETTING AND LEASEHOLD MORTGAGES
VI.1 ASSIGNMENT AND SUBLETTING.
(a) During the term of this Lease, Lessee shall endeavor to keep the
rentable space at the Premises leased at reasonable occupancy levels in light of
the then current market conditions, and, with respect to any space at the
Premises not occupied by Lessor, Lessee or any affiliate of the foregoing
parties, at then current market rents and on then current market terms. In
furtherance of the foregoing, Lessee may, without Lessor's consent, but subject
to compliance with the terms and conditions of this Lease, enter into subleases
in the ordinary course of business for occupancy of the Premises, provided that
any such sublease shall comply with the requirements of Section 6.1(h) below.
(b) Except as provided in Section 6.1(a) above, Lessee shall not (i)
assign or otherwise transfer this Lease or the term and estate hereby granted,
(ii) sublet the Premises or any part
26
thereof, or (iii) mortgage, pledge, encumber or otherwise hypothecate this
Lease or the Premises or any part thereof (other than an encumbrance on
Lessee's fee title to the Land in connection with a Fee Mortgage permitted by
the Ground Lease), without in each instance obtaining the prior written
consent of Lessor, which may be given or withheld in Lessor's sole
discretion, and any attempted assignment, transfer, sublease, mortgage,
pledge, encumbrance or hypothecation which is not in compliance with the
terms and conditions hereof shall be void and of no force or effect.
(c) Any assignment or transfer consented to in writing by Lessor
hereunder shall be made only if, and shall not be effective until, the assignee
shall execute, acknowledge and deliver to Lessor an agreement in form and
substance reasonably satisfactory to Lessor whereby the assignee shall assume
the obligations of this Lease on the part of Lessee to be performed or observed
and whereby the assignee shall agree that the provisions in this Article VI
shall, notwithstanding such assignment or transfer, continue to be binding upon
it in respect of all future assignments and transfers.
(d) If this Lease is assigned, whether or not in violation of the
provisions of this Lease, Lessor may collect rent from the assignee, subject to
the rights of the holder of any Fee Mortgage with respect to any Lockbox. If the
Premises or any part thereof is sublet or used or occupied by anybody other than
Lessee, whether or not in violation of this Lease, Lessor may, if an Event of
Default has occurred and is continuing, collect rent from the subtenant or
occupant, subject to the rights of the holder of any Fee Mortgage with respect
to any Lockbox. In either event, Lessor shall apply the net amount collected to
the Rental herein reserved, but no such assignment, subletting, occupancy or
collection shall be deemed a waiver of any of the provisions of this Article VI,
or the acceptance of the assignee, subtenant or occupant as tenant, or a release
of Lessee from the performance by Lessee of Lessee's obligations under this
Lease. The consent by Lessor to an assignment or subletting or the use or
occupancy by others shall not in any way be considered to relieve Lessee from
obtaining the express written consent of Lessor to any other or further
assignment, or subletting or use or occupancy by others not expressly permitted
by this Article VI. Reference in this Lease to use or occupancy by others (that
is, anyone other than Lessee) shall not be construed as limited to subtenants
and those claiming under or through subtenants but as including also licensees,
concessionaires, operators and others claiming under or through Lessee,
immediately or remotely, a legal right of possession or occupancy of the
Premises or any portion thereof (all such persons being referred to individually
in this Lease as a "Subtenant" and collectively as "Subtenants", and the
agreements pursuant to which such Subtenants occupy a portion of the Premises
being referred to individually as a "Sublease" and collectively as "Subleases").
(e) The joint and several liability of Lessee and any immediate or
remote successor in interest of Lessee and the due
27
performance of the obligations of this Lease on Lessee's part to be performed
or observed shall not be discharged, released or impaired in any respect by
any agreement or stipulation made by Lessor extending the time of, or
modifying any of the obligations of, this Lease, or by any waiver or failure
of Lessor to enforce any of the obligations of this Lease, except to the
extent specifically set forth in such agreement, stipulation or waiver.
(f) If Lessee shall at any time or times during the Term of this
Lease desire to sublet all or part of the Premises (other than as provided in
Section 6.1(a)), Lessee shall give prior notice thereof to Lessor, which
notice shall be accompanied by (i) a conformed or photostatic copy of the
proposed sublease, the effective or commencement date of which shall be at
least fifteen (15) days after the giving of such notice and (ii) a statement
setting forth in reasonable detail the identity of the proposed Subtenant,
the nature of its business and its proposed use of the Premises.
(g) Each sublease permitted (or, to the extent required, consented to
in writing by Lessor) pursuant to this Article VI shall expressly be subject to
all of the covenants, agreements, terms, provisions and conditions contained in
this Lease, except such as are inapplicable. Notwithstanding any such subletting
and/or acceptance of rent or additional rent by Lessor from any Subtenant,
Lessee shall and will remain fully liable for the payment of all Rental due and
to become due hereunder and for the performance of all the covenants,
agreements, terms, provisions and conditions contained in this Lease on the part
of Lessee to be performed and all acts and omissions of any Subtenant or anyone
claiming under or through any Subtenant which shall be in violation of any of
the obligations of this Lease, and any such violation shall be deemed to be a
violation by Lessee. Lessee further agrees that notwithstanding any such
subletting, no other or further subletting of the Premises or any part thereof
by Lessee or any person claiming through or under Lessee shall or will be made
except upon compliance with and subject to the provisions of this Article.
(h) With respect to each and every sublease permitted (or, to the
extent required, consented to in writing by Lessor) under the provisions of this
Lease, it is further agreed:
(i) No subletting shall be for a term (including renewal or
extension options) ending later than one day prior to the expiration of the Term
of this Lease without the prior written consent of Lessor, it being understood
and agreed that if Lessee desires to enter into a sublease which would extend
beyond the Term, Lessor and Lessee shall negotiate in good faith with respect to
the allocation of the cost of any tenant improvements, free rent or other tenant
inducements.
(ii) No Subtenant shall take possession of the Premises or any
part thereof until an executed counterpart of such sublease has been delivered
to Lessor.
(iii) Each sublease shall provide that it is subject and
subordinate to this Lease and to the matters to which this Lease is or shall be
subordinate, and that in the event of
28
termination, re-entry or dispossession by Lessor under this Lease Lessor may,
at its option, take over all of the right, title and interest of Lessee, as
sublessor, under such sublease, and such Subtenant shall, at Lessor's option,
attorn to Lessor pursuant to the then executory provisions of such sublease,
or enter into a direct lease on identical terms with Lessor for the balance
of the unexpired term of the sublease.
(i) At Lessee's request, Lessor shall enter into a non-disturbance
and attornment agreement, in the form annexed hereto as Schedule D (or on
such other form as shall be reasonably acceptable to Lessor), with respect to
any subtenant occupying 1 or more full floors at the Premises (each, a "Major
Subtenant") under a sublease (a "Major Sublease"), provided that (x) Lessee
shall obtain Lessor's prior written approval of such Major Subtenant and such
Major Sublease, such approval not to be unreasonably withheld or delayed (it
being understood and agreed that such approval shall only be required if
Lessor is entering into a non-disturbance and attornment agreement with such
Major Subtenant as provided hereunder), and (y) Lessee shall reimburse
Lessor, prior to the issuance of any such non-disturbance and attornment
agreement, or, if such non-disturbance and attornment agreement is not
granted, within ten (10) days after demand therefor, for the reasonable
out-of-pocket costs incurred by Lessor and the holder of any Leasehold
Mortgage, including, without limitation, reasonable attorneys fees, in
reviewing any such Major Sublease and non-disturbance and attornment
agreement.
(j) At Lessee's request, Lessor shall request that holder of any
Leasehold Mortgage enter into a subordination, non-disturbance and attornment
agreement, in such form as shall be reasonably acceptable to such holder,
with respect to any Major Subtenant under a Major Sublease, provided that (x)
the holder of such Leasehold Mortgage may grant or deny such request in such
holder's sole and absolute discretion, (y) Lessee shall reimburse the holder
of such Leasehold Mortgage, prior to the issuance of any such subordination,
non-disturbance and attornment agreement, or, if such subordination,
non-disturbance and attornment agreement is not granted, within ten (10) days
after demand therefor, for the reasonable out-of-pocket costs incurred by
such holder of any Leasehold Mortgage, including, without limitation,
reasonable attorneys fees, in reviewing any such Major Sublease and
subordination, non-disturbance and attornment agreement, and (z) Lessor's
sole obligation hereunder shall be to submit such request to the holder of
such Leasehold Mortgage, it being understood and agreed that Lessee's
obligations under this Lease shall not be affected in any manner whatsoever
by the refusal of any such holder of a Leasehold Mortgage to enter into any
such subordination, non-disturbance and attornment agreement.
65535RT65535CLE VII
LESSEE'S DEFAULT; CONDITION OF LIMITATION
29
VII.1 LESSEE'S DEFAULT. The occurrence of each of the following events
shall be an "Event of Default" hereunder:
(a) if Lessee shall fail to pay any installment of any Basic Rent, or
Impositions, or any part thereof, when the same shall become due and payable;
(b) if Lessee shall fail to make any payment of any Rental (other
than the categories of Rental listed in Section 7.1(a)) required to be paid by
Lessee hereunder when the same shall become due and payable, and such failure
shall continue for a period of fifteen (15) days after notice from Lessor to
Lessee to cure such Default;
(c) if Lessee shall fail to deliver to Lessor a certificate or other
evidence reasonably satisfactory to Lessor of the existence of any new or
renewal insurance policy required under this Lease on or prior to the date the
same is required to be delivered to Lessor hereunder;
(d) if Lessee shall be unable to, or shall admit in writing its
inability to, pay its debts as such debts become due, or if Lessee shall make an
assignment for the benefit of creditors;
(e) if Lessee shall commence or institute any case, proceeding or
other action (A) seeking relief on its behalf as debtor, or to adjudicate it a
bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
winding-up, liquidation, dissolution, composition or other relief with respect
to it or its debts under any existing or future law of any jurisdiction,
domestic or foreign, relating to bankruptcy, insolvency, reorganization or
relief of debtors, or (B) seeking appointment of a receiver, trustee, custodian
or other similar official for it or for all or any substantial part of its
property;
(f) if any case, proceeding or other action shall be commenced or
instituted against Lessee (A) seeking to have an order for relief entered
against it as debtor or to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation, dissolution,
composition or other relief with respect to it or its debts under any existing
or future law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors, or (B) seeking appointment of a
receiver, trustee, custodian or other similar official for it or for all or any
substantial part of its property, which in either of such cases is not dismissed
or denied within sixty (60) days after such commencement or institution;
(g) if any case, proceeding or other action shall be commenced or
instituted against Lessee seeking issuance of a warrant of attachment,
execution, distraint or similar process against all or any substantial part of
its property which shall not have been dismissed within sixty (60) days from the
commencement thereof;
(h) if a trustee, receiver or other custodian is appointed for any
substantial part of the assets of Lessee which appointment is not vacated or
stayed within sixty (60) days;
(i) if Lessee shall take any action in furtherance of any action
described in Section 7.1(e) or 7.1(f) hereof, or
30
indicating its consent to, approval of, or acquiescence in, any of the acts
set forth in such Sections;
(j) if this Lease or the estate of Lessee hereunder shall be
assigned, subleased or transferred, without compliance with the provisions of
this Lease applicable thereto;
(k) if this Lease or the estate of Lessee hereunder shall be
mortgaged or encumbered in violation of this Lease;
(l) if Lessee shall fail to observe or perform one or more of the
other terms, conditions, covenants or agreements of this Lease and such failure
shall continue for a period of thirty (30) days after written notice thereof by
Lessor to Lessee specifying such failure (unless such failure requires work to
be performed, acts to be done, or conditions to be removed which cannot by their
nature reasonably be performed, done or removed, as the case may be, within such
thirty (30) day period, in which case no Event of Default shall be deemed to
exist as long as Lessee shall have commenced curing the same within such thirty
(30) day period and shall prosecute the same to completion with reasonable
diligence within ninety (90) days after Lessor's written notice of such
failure).
VII.2 [INTENTIONALLY OMITTED]
VII.3 JUDICIAL PROCEEDINGS. If any Event of Default shall occur,
Lessor may elect to proceed by appropriate judicial proceedings, either at law
or in equity, to enforce the performance or observance by Lessee of the
applicable provisions of this Lease and/or to recover damages for breach
thereof.
VII.4 TERMINATION. If any Event of Default described in Section 7.1
(d), (e), (f), (g), (h) or (i) hereof shall occur, then to the extent permitted
by law this Lease and the Term and all rights of Lessee under this Lease shall
expire and terminate on the date on which such Event of Default occurs, as if
such date were the date herein definitely fixed for the expiration of the Term.
If any other Event of Default shall occur and Lessor, at any time thereafter
during the continuance of such Event of Default, at its option, gives written
notice to Lessee stating that this Lease and the Term shall expire and terminate
on the date specified in such notice, which date shall be not less than ten (10)
days after the giving of such notice, then this Lease and the Term and all
rights of Lessee under this Lease shall expire and terminate on the date
specified in such notice as if such date were the date herein definitely fixed
for the expiration of the Term. Upon such termination, Lessee immediately shall
quit and surrender the Premises and Lessee's interest in the Improvements, but
Lessee shall remain liable for damages as hereinafter provided. Anything
contained herein to the contrary notwithstanding, if such termination shall be
stayed by order of any court having jurisdiction over any proceeding described
in Section 7.1(g) hereof, or by federal or state statute, then, following the
expiration of any such stay, or if the trustee appointed in any such proceeding,
Lessee or Lessee as debtor-in-possession shall fail to assume Lessee's
obligations
31
under this Lease within the period prescribed therefor by law or within sixty
(60) days after entry of the order for relief or as may be allowed by the
court, or if said trustee, Lessee or Lessee as debtor-in-possession shall
fail to provide adequate protection of Lessor's right, title and interest in
and to the Premises or adequate assurance of the complete and continuous
future performance of Lessee's obligations under this Lease as provided
below, Lessor, to the extent permitted by law or by leave of the court having
jurisdiction over such proceeding, shall have the right, at its election, to
terminate this Lease on five (5) days' notice to Lessee, Lessee as
debtor-in-possession or said trustee and upon the expiration of said five (5)
day period this Lease shall cease and expire as aforesaid and Lessee, Lessee
as debtor-in-possession and/or said trustee shall immediately quit and
surrender the Premises as aforesaid.
VII.5 RIGHT TO DISPOSSESS. If an Event of Default described in Section
7.1(a) or (b) shall occur, or if this Lease shall be terminated as provided in
Section 7.4, Lessor, without notice, may dispossess Lessee by summary
proceedings or by any suitable action or proceeding at law or by force or
otherwise.
VII.6 REJECTION IN BANKRUPTCY. If, at any time, Lessee rejects this
Lease under Section 365 of the Bankruptcy Code, or any corresponding provision
under applicable state law, then this Lease shall immediately terminate,
Lessee's entire right, title and interest in and to the Premises and this Lease
shall automatically and without further action on the part of any person vest in
Lessor and Lessee shall immediately surrender and deliver possession of the
Premises to Lessor.
VII.7 RIGHTS UPON TERMINATION. If this Lease shall be terminated as
provided in Section 7.4 and/or Lessee shall be dispossessed as provided in
Section 7.5:
(a) Lessor or Lessor's agents or servants, may immediately or at any
time thereafter re-enter the Premises and remove therefrom Lessee, its agents,
employees, servants, licensees, and any subtenants and other persons holding or
claiming by, through or under Lessee, and all or any of its or their property,
without being liable to indictment, prosecution or damages therefor, and
repossess and enjoy the Premises, together with the Improvements;
(b) All of the right, title, estate and interest of Lessee in and to
(i) the Premises, (ii) all rents, issues and profits of the Premises, or any
part thereof, whether then accrued or to accrue and (iii) all insurance policies
and all insurance monies paid or payable thereunder, shall automatically pass
to, vest in and belong to Lessor, without further action on the part of either
party, free of any claim thereto by Lessee, and Lessor may instruct any
Subtenants at the Premises to pay rent directly to Lessor or its designee,
rather than to Lessee or any Lockbox;
(c) Lessee shall pay to Lessor all Rental payable by Lessee under
this Lease to the date upon which this Lease and the
32
Term shall have expired and come to an end or to the date of re-entry upon
the Premises by Lessor, as the case may be;
(d) Lessor may repair and alter the Premises in such manner as Lessor
may deem necessary or advisable without relieving Lessee of any liability under
this Lease or otherwise affecting any such liability, and/or let or relet the
Premises or any parts thereof for the whole or any part of the remainder of the
Term or for a longer period, in Lessor's name or as agent of Lessee, and out of
any rent and other sums collected or received as a result of such reletting
Lessor shall: (i) first, pay to itself the reasonable cost and expense of
terminating this Lease, re-entering, retaking, repossessing, completing
construction of and repairing and/or altering the Premises, or any part thereof,
and the reasonable cost and expense of removing all persons and property
therefrom, including in such costs reasonable brokerage commissions, legal
expenses and attorneys' fees and disbursements, (ii) second, pay to itself the
reasonable cost and expense sustained in securing any new tenants and other
occupants, including in such costs reasonable brokerage commissions, legal
expenses and attorneys' fees and disbursements and other expenses of preparing
the Premises for reletting, and, if Lessor shall maintain and operate the
Premises, the cost and expense of operating and maintaining the Premises, and
(iii) third, pay to itself any balance remaining on account of the liability of
Lessee to Lessor. Lessor in no way shall be responsible or liable for any
failure to relet the Premises or any part thereof, or for any failure to collect
any rent due on any such reletting, and no such failure to relet or to collect
rent shall operate to relieve Lessee of any liability under this Lease or to
otherwise affect any such liability; and in no event shall Lessee be entitled to
receive any excess of such annual rents over the sums payable by Lessee to
Lessor hereunder;
(e) Lessee shall be liable for and shall pay to Lessor, as damages,
any deficiency ("Deficiency") between the Rental reserved in this Lease for the
period which otherwise would have constituted the unexpired portion of the Term
and the net amount, if any, of rents collected under any reletting effected
pursuant to the provisions of Section 7.7(d) for any part of such period (which
net amount shall be determined after deducting from the rents collected under
any such reletting all of the payments to Lessor described in Section 7.7(d)
hereof); any such Deficiency shall be paid in installments by Lessee on the days
specified in this Lease for payment of installments of Rental, and Lessor shall
be entitled to recover from Lessee each Deficiency installment as the same shall
arise, and no suit to collect the amount of the Deficiency for any installment
period shall prejudice Lessor's right to collect the Deficiency for any
subsequent installment period by a similar proceeding; and
(f) Whether or not Lessor shall have collected any Deficiency
installments as aforesaid, Lessor shall be entitled to recover from Lessee, and
Lessee shall pay to Lessor, on demand, in lieu of any further Deficiencies, as
and for liquidated and agreed final damages (it being agreed that it would be
impracticable or extremely difficult to fix the actual damage), a
33
sum equal to the amount by which the Rental reserved in this Lease for the
period which otherwise would have constituted the unexpired portion of the
Term exceeds the then fair and reasonable rental value of the Premises for
the same period, both discounted to present worth at the rate of seven (7%)
percent per annum, less the aggregate amount of Deficiencies theretofore
collected by Lessor pursuant to the provisions of Section 7.7(e) for the same
period; it being agreed that before presentation of proof of such liquidated
damages to any court, commission or tribunal, if the Premises, or any
substantial part thereof, shall have been relet by Lessor for the period
which otherwise would have constituted the unexpired portion of the Term, or
any part thereof, the amount of rent reserved upon such reletting shall be
deemed, prima facie, to be the fair and reasonable rental value for the part
or the whole of the Premises so relet during the term of the reletting.
VII.8 NO RELIEF FROM LIABILITIES. No termination of this Lease
pursuant to this Article VII, and no taking possession of and/or reletting the
Premises, or any part thereof, pursuant to this Article VII, shall relieve
Lessee of its liabilities and obligations hereunder, all of which shall survive
such expiration, termination, repossession or reletting except as otherwise
specifically provided.
VII.9 WAIVER. To the extent not prohibited by law, Lessee hereby
waives and releases all rights now or hereafter conferred by statute or
otherwise which would have the effect of limiting or modifying any of the
provisions of this Article VII. Lessee shall execute, acknowledge and deliver
any instruments which Lessor may reasonably request, whether before or after the
occurrence of an Event of Default, evidencing such waiver or release.
VII.10 LIEN. The Rental payable by Lessee hereunder and each and every
installment thereof, and all reasonable costs (including, without limitation,
reasonable attorneys' fees and disbursements) and other expenses which may be
incurred by Lessor in enforcing the provisions of this Lease or on account of
any delinquency of Lessee in carrying out the provisions of this Lease shall be
and they hereby are declared to constitute a valid lien upon the interest of
Lessee in this Lease, in the Premises and in the Improvements.
VII.11 SUITS. Suit or suits for the recovery of damages, or for a sum
equal to any installment or installments of Rental payable hereunder or any
Deficiencies or other sums payable by Lessee to Lessor pursuant to this Article
VII, or for conveyance of the Improvements, may be brought by Lessor from time
to time at Lessor's election, and nothing herein contained shall be deemed to
require Lessor to await the date whereon this Lease or the Term would have
expired had there been no Event of Default by Lessee and termination.
34
VII.12 NO PREJUDICE. Nothing contained in this Article VII shall limit
or prejudice the right of Lessor to prove and obtain as liquidated damages in
any bankruptcy, insolvency, receivership, reorganization or dissolution
proceeding an amount equal to the maximum allowed by a statute or rule of law
governing such proceeding and in effect at the time when such damages are to be
proved, whether or not such amount shall be greater than, equal to or less than
the amount of the damages referred to in any of the preceding Sections of this
Article VII.
VII.13 NO REINSTATEMENT. No receipt of moneys by Lessor from Lessee
after the termination of this Lease, or after the giving of any notice of the
termination of this Lease shall reinstate, continue or extend the Term or affect
any notice theretofore given to Lessee, or operate as a waiver of the right of
Lessor to enforce the payment of Rental payable by Lessee hereunder or
thereafter falling due, or operate as a waiver of the right of Lessor to recover
possession of the Premises by proper remedy, except as herein otherwise
expressly provided, it being agreed that after the service of notice to
terminate this Lease or the commencement of any suit or summary proceedings, or
after a final order or judgment for the possession of the Premises, Lessor may
demand, receive and collect any moneys due or thereafter falling due without in
any manner affecting such notice, proceeding, order, suit or judgment, all such
moneys collected being deemed payments on account of the use and occupation of
the Premises or, at the election of Lessor, on account of Lessee's liability
hereunder.
VII.14 WAIVER OF NOTICE. Except as otherwise expressly provided herein
or as prohibited by applicable law, Lessee hereby expressly waives the service
of any notice of intention to re-enter provided for in any statute, or of the
institution of legal proceedings to that end, and Lessee, for and on behalf of
itself and all persons claiming through or under Lessee, also waives any and all
right of redemption provided by any law or statute now in force or hereafter
enacted or otherwise, or re-entry or repossession or to restore the operation of
this Lease in case Lessee shall be dispossessed by a judgment or by warrant of
any court or judge or in case of re-entry or repossession by Lessor or in case
of any expiration or termination of this Lease, and Lessor and Lessee waive and
shall waive trial by jury in any action, proceeding or counterclaim brought by
either of the parties hereto against the other on any matter whatsoever arising
out of or in any way connected with this Lease, the relationship of Lessor and
Lessee, Lessee's use or occupancy of the Premises, or any claim of injury or
damage. The terms "enter", "re-enter", "entry" or "re-entry", as used in this
Lease are not restricted to their technical legal meaning.
VII.15 STRICT PERFORMANCE. No failure by Lessor to insist upon the
strict performance by Lessee of any covenant, agreement, term or condition of
this Lease or to exercise any right or remedy consequent upon a breach thereof,
and no payment
35
or acceptance of full or partial Rental during the continuance of any such
breach, shall constitute a waiver of any such breach or of such covenant,
agreement, term or condition or of any such right or remedy. No covenant,
agreement, term or condition of this Lease to be performed or complied with
by Lessee, and no breach thereof, shall be waived, altered or modified except
by a written instrument executed by Lessor. No waiver by Lessor of any breach
shall affect or alter this Lease, but each and every covenant, agreement,
term and condition of this Lease shall continue in full force and effect with
respect to any other then existing or subsequent breach thereof.
VII.16 RIGHT TO ENJOIN. Except as expressly provided herein to the
contrary, in the event of any breach, or attempted or threatened breach, by
Lessee of any of the covenants, agreements, terms or conditions contained in
this Lease, Lessor shall be entitled to enjoin such breach or such attempted or
threatened breach, and shall have the right to a decree compelling specific
performance of any of the provisions hereof and to invoke any rights and
remedies allowed at law or in equity or by statute or otherwise as though
reentry, summary proceedings, and other remedies were not provided for in this
Lease.
VII.17 REMEDIES CUMULATIVE. Each right and remedy of Lessor provided
for in this Lease shall be cumulative and shall be in addition to every other
right or remedy provided for in this Lease or now or hereafter existing at law
or in equity or by statute or otherwise, and the exercise or beginning of the
exercise by Lessor of any one or more of the rights or remedies provided for in
this Lease or now or hereafter existing at law or in equity or by statute or
otherwise shall not preclude the simultaneous or later exercise by Lessor of any
or all other rights or remedies provided for in this Lease or now or hereafter
existing at law or in equity or by statute or otherwise.
VII.18 ADEQUATE PROTECTION AND ADEQUATE ASSURANCE. Lessee hereby
acknowledges that Lessor has an interest in the Premises within the meaning of
Section 363(e) of the Bankruptcy Code. Accordingly, if an order for relief is
entered or if a stay of proceeding or other acts becomes effective in favor of
Lessee or Lessee's interest in this Lease, in any proceeding which is commenced
by or against Lessee, under the Bankruptcy Code or any future federal bankruptcy
code or any other present or future applicable federal, state or other statute
or law, Lessor shall be entitled to invoke any and all rights and remedies
available to it under such bankruptcy code, statute, law or this Lease,
including, without limitation, such rights and remedies as may be necessary to
adequately protect Lessor's right, title and interest in and to the Premises or
any part thereof and/or adequately assure the complete and continuous future
36
performance of Lessee's obligations under this Lease. Adequate protection of
Lessor's right, title and interest in and to the Premises and adequate assurance
of the complete and continuous future performance of Lessee's obligations under
this Lease, shall include, without limitation, the following requirements:
(a) that Lessee shall comply with all of its obligations under this
Lease;
(b) that Lessee shall pay to Lessor, on the first day of each month
occurring subsequent to the entry of such order or the effective date of such
stay, a sum equal to the amount by which the Premises diminished in value during
the immediately preceding monthly period, but, in no event, an amount which is
less than the aggregate Rental payable for such monthly period;
(c) that Lessee shall continue to use the Premises in the manner
required by this Lease;
(d) that Lessor shall be permitted to supervise the performance of
Lessee's obligations under this Lease;
(e) that Lessee shall hire, at its sole cost and expense, such
security personnel as may be necessary to insure the adequate protection and
security of the Premises;
(f) that Lessee pay to Lessor within thirty (30) days after entry of
such order or the effective date of such stay, as partial adequate protection
against future diminution in value of the Premises and adequate assurance of the
complete and continuous future performance of Lessee's obligations under this
Lease, a security deposit in an amount acceptable to Lessor, but in no event
less than the Rental payable hereunder for the then current lease year;
(g) that Lessee has and will continue to have unencumbered assets
after the payment of all secured obligations and administrative expenses to
assure Lessor that sufficient funds will be available to fulfill the obligations
of Lessee under this Lease;
(h) that Lessor be granted a security interest acceptable to Lessor
in property of Lessee to secure the performance of Lessee's obligations under
this Lease; and
(i) that if Lessee's trustee, Lessee or Lessee as
debtor-in-possession assumes this Lease and proposes to assign the same
(pursuant to Section 365 of the Bankruptcy Code) to any person who shall have
made a bona fide offer to accept an assignment of this Lease on terms acceptable
to the trustee, Lessee or Lessee as debtor-in-possession, then notice of such
proposed assignment, setting forth (x) the name and address of such person, (y)
all of the terms and conditions of such offer, and (z) the adequate assurance to
be provided Lessor to assure such person's future performance under the Lease,
including, without limitation, the assurances referred to in Section 365 of the
Bankruptcy Code, shall be given to Lessor by the trustee, Lessee or Lessee as
debtor-in-possession no later than twenty (20) days after receipt by the
trustee, Lessee or Lessee as debtor-in-possession of such offer, but in any
event no later than ten (10) days prior to the date that the trustee, Lessee or
Lessee as debtor-in-possession shall make application to a court of competent
jurisdiction for authority and approval to enter into such assignment and
assumption, and Lessor shall thereupon have the prior right and option, to be
exercised by notice to the trustee, Lessee or Lessee as debtor-in-possession,
given at any time prior to the
37
effective date of such proposed assignment, to accept an assignment of this
Lease upon the same terms and conditions and for the same consideration, if
any, as the bona fide offer made by such person, less any brokerage
commissions which may be payable out of the consideration to be paid by such
person for the assignment of this Lease.
VII.19 ADDITIONAL RIGHTS OF LESSOR.
(a) If Lessee shall be in default in the performance of any of its
obligations hereunder, Lessee shall pay to Lessor, on demand, all expenses
incurred by Lessor as a result thereof, including reasonable attorneys' fees and
expenses (including those incurred in connection with any appellate
proceedings). If Lessor shall be made a party to any litigation commenced
against Lessee and Lessee shall fail to provide Lessor with counsel approved by
Lessor and pay the expenses thereof, Lessee shall pay all costs and reasonable
attorneys' fees and expenses incurred by Lessor in connection with such
litigation (including such fees and expenses incurred in connection with any
appellate proceedings).
(b) If there shall be an Event of Default under this Lease, then
Lessor, without waiving or releasing Lessee from any obligation of Lessee
contained in this Lease, may (but shall be under no obligation to) perform such
obligations on Lessee's behalf.
(c) All reasonable sums paid by Lessor and all costs and expenses
(including, without limitation, reasonable attorneys' fees and disbursements)
incurred by Lessor in connection with its performance under Section 7.19(b) of
any of Lessee's obligations, shall be paid by Lessee to Lessor on demand as
additional Rental. Any payment or performance by Lessor pursuant to the
foregoing provisions of Section 7.19(b) shall not be or be deemed to be a waiver
or release of breach or default of Lessee with respect thereto or of the right
of Lessor to terminate this Lease, institute summary proceedings and/or take
such other action as may be permissible hereunder if an Event of Default by
Lessee shall have occurred.
65535RT65535CLE VIII
NOTICES; ESTOPPEL CERTIFICATES; REPORTING REQUIREMENTS
VIII.1 NOTICES. All notices, demands, requests, consents, approvals,
reports or other communications required or permitted to be given pursuant to
this Lease shall be in writing and shall be deemed given: (i) when delivered
by hand (including, without limitation, delivery by any private or public
courier service); (ii) when delivered by first class, certified mail, return
receipt requested, postage prepaid (or when delivery is attempted if such
delivery is refused by recipient); or (iii) when sent by tested telex,
telecopier or other facsimile reproduction equipment, or e-mail to the
following addresses (or such other address as the recipient party may
hereafter specify
38
in the same manner):
If to Lessor, to it at:
c/o Steinway Musical Instruments, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
E-Mail: ▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
with a copy to:
Milbank, Tweed, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
E-Mail: ▇▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇
If to Lessee, to it at:
c/o Wexford Management LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
E-Mail: ▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇
with a copy to:
Proskauer Rose LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
E-Mail: ▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇.▇▇▇
However, Lessor and Lessee shall have the right from time to time to change
their respective addresses and persons to whom copies of notices shall be sent
by not less than five (5) days written notice to the other party.
VIII.2 CERTIFICATES OF LESSOR AND LESSEE. Either party shall, within
twenty (20) days after each and every request by the other party, execute,
acknowledge and deliver to such requesting party a statement in writing:
(a) certifying that this Lease is unmodified and in full force and
effect (or if there have been modifications, that the same, as modified, is in
full force and effect and stating the modifications);
(b) stating whether or not to the best knowledge of the certifying
party (without independent investigation) (i)
39
there is a continuing default by the other party in the performance or
observance of any covenant, agreement or condition contained in this Lease to
be performed or observed by such other party, or (ii) there shall have
occurred any event which, with the giving of notice or passage of time or
both, would become such a default, and, if so, specifying each such default
or occurrence of which such certifying party shall have knowledge;
(c) stating whether or not such certifying party has received from
the other party a notice of default by such certifying party in the performance
or observance of any covenant, agreement or condition contained in this Lease to
be performed or observed by such certifying party;
(d) stating whether this Lease commenced and the Term;
(e) certifying that Rental obligations have commenced, and specifying
the dates through which the Basic Rent and all other Rentals have been paid;
(f) stating whether or not there is pending any action, arbitration
or proceeding between Lessor and Lessee arising under this Lease, and, if so,
the nature thereof;
(g) if the certifying party is Lessee, certifying that Lessee has no
counterclaims, defenses or right to offset against any amounts due to Lessor
under this Lease, and that Lessee is not entitled to any concessions, rebates or
any reductions in Basic Rent or other Rental under this Lease for whatever
reason as of the date the statement is given;
(h) stating that the addresses for Notices are as set out in this
Lease or as stated in the statement; and
(i) certifying that the statement shall be binding upon such
certifying party and may be relied upon by (x) the holder of any Fee or
Leasehold Mortgage, (y) any assignee or purchaser of all or a portion of the
requesting party's interest in the Premises or this Lease, and/or (z) any
purchaser of any partnership interest, stock or membership interest in the
requesting party.
VIII.3 REPORTING REQUIREMENTS; BOOKS AND RECORDS.
(a) During the Term of this Lease, within ninety (90) days after the
close of its fiscal year, Lessee will deliver to Lessor annual financial
statements for the Premises for such fiscal year, which financial statements
shall be prepared using generally accepted accounting principals, and shall
include (i) a balance sheet, (ii) a statement of profit and loss, (iii) a
statement of sources and uses of funds, (iv) a rent roll indicating the identity
of the tenant, the square footage and location of the space leased, the rent and
escalations payable (with relevant formulas and base years included), any
special rights or obligations of landlord and/or tenant under such leases,
including, without limitation, any free rent, landlord's work, tenant
improvement allowances or other tenant inducements, options to renew, expand,
surrender or terminate and such other information as Lessor shall reasonably
request, and (v) such other financial statements as Lessor shall reasonably
request, setting forth, in each case, in comparative form, figures for the
preceding year. All such annual financial statements shall be
40
audited by an independent certified public accountant reasonably satisfactory
to Lessor, and shall be accompanied by the certificate of a principal
financial or accounting officer of Lessee (or if Lessee is a limited
liability company, of its managing member, or if Lessee is a partnership, of
its general partner) (each, an "Officer's Certificate"), dated within five
(5) days of the delivery of such statements to Lessor, stating that such
financial statements are true and correct in all material respects and
stating that Lessee knows of no Event of Default which has occurred and is
continuing, or, if any such Event of Default has occurred and is continuing,
specifying the nature and period of existence thereof and what action Lessee
has taken or proposes to take with respect thereto, and, except as otherwise
specified, stating that to Lessee's knowledge Lessee has fulfilled all its
material obligations under this Lease which are required to be fulfilled on
or prior to the date of such certificate. During the Term of this Lease,
Lessee will deliver to Lessor, from time to time, within fifteen (15) days of
Lessee's receipt thereof, copies of any such monthly, quarterly or other
interim financial statements and other financial information with respect to
the Premises as shall be prepared by, or for the benefit of, Lessee by
Lessee, Lessee's property manager and/or Lessee's financial advisors.
(b) From and after the expiration or earlier termination of the term
of this Master Lease, Lessor and its agents and designees may, upon reasonable
notice to Lessee and at reasonable times, examine Lessee's books and records
relating to the Premises, the Improvements and the operation, maintenance and
repair thereof.
65535RT65535CLE IX
SURRENDER AT THE END OF TERM
IX.1 CONDITION OF PREMISES. On the Expiration Date or earlier termination
of this Lease, Lessee shall at no cost or expense to Lessor, surrender and
deliver to Lessor or its designee the Premises (a) in such condition as the
Premises is required to be maintained pursuant to this Lease, except for damage
by fire or other casualty or condemnation or other taking that Lessee is
required under this Lease or in any other document, instrument or agreement to
repair or restore but, despite reasonable diligence, has been unable to repair
or restore (provided that all insurance and/or condemnation proceeds which have
not been applied to such restoration shall have been paid to Lessor, plus any
additional sums required to complete such restoration) and (b) free and clear of
all lettings, occupancies, liens and encumbrances other than those, if any,
existing at the date hereof, created by Lessor or which lettings and occupancies
by their express terms and conditions extend beyond the Expiration Date and
which Lessor shall have consented and agreed, in writing, may extend beyond the
end of the Term, without any payment or allowance whatever by Lessor. Lessee
hereby waives any notice now or hereafter required by law with
41
respect to vacating the Premises on any such termination date.
IX.2 OTHER REQUIREMENTS. If Lessee delivers the Premises to Lessor
pursuant to the provisions of Section 9.1, on the last day of the Term or upon
any earlier termination of this Lease, or upon re-entry by Lessor upon the
Premises pursuant to Article VII hereof, Lessee shall deliver to Lessor,
Lessee's executed counterparts of all Subleases and any service and maintenance
contracts then affecting the Premises, true and complete maintenance records for
the Premises, all original licenses and permits then pertaining to the Premises,
duly executed and acknowledged written instruments, documents, assignments,
forms and affidavits as Lessor shall reasonably request in form and substance
reasonably satisfactory to Lessor or its designee surrendering to Lessor or its
designee all of Lessee's right, title and interest in and to the Improvements
and any rights of Lessee with respect thereto, copies of Lessee's relevant books
and records relating to the Premises and the operation, maintenance and repair
thereof and, to the extent in Lessee's possession or control, permanent or
temporary Certificates of Occupancy then in effect for the Improvements and all
warranties and guarantees then in effect which Lessee has received in connection
with any work or services performed or equipment installed in the Improvements,
together with a duly executed assignment thereof to Lessor.
IX.3 APPORTIONMENTS. The following shall be apportioned between Lessee and
Lessor with respect to the Premises as of 11:59 P.M. on the day immediately
preceding the date of the expiration or earlier termination of this Lease (other
than termination for any default by Lessee) (the "Apportionment Date"), and the
net amount thereof shall be paid by Lessor to Lessee or by Lessee to Lessor, as
the case may be, within ten (10) days after the Apportionment Date, to the
extent practicable, subject to reapportionment from time to time within six (6)
months after the Apportionment Date to the extent that any amount to be
apportioned hereunder cannot reasonably be determined on the Apportionment Date:
(a) real property taxes and assessments (or installments thereof), on
the basis of the fiscal year for which payable;
(b) water rates and charges, except those required to be paid
directly by tenants in occupancy of portions of the Premises to the entity
imposing same;
(c) sewer taxes and rents, except those required to be paid directly
by tenants in occupancy of portions of the Premises to the entity imposing same;
(d) annual permit, license and inspection fees, if any, on the basis
of the fiscal year for which levied, if the rights with respect thereto are
transferable to Lessor;
42
(e) fuel, if any, at the cost per gallon or cubic foot most recently
charged to Lessee, based on the supplier's measurements thereof, plus sales
taxes thereon;
(f) deposits on account with any utility company servicing the
Premises, to the extent transferred to Lessor;
(g) fixed, escalation and other rent of tenants in occupancy of the
Premises, if, as, and when collected (the "Sublease Rents"
(h) amounts deposited with the holder of any Fee Mortgage or any
Leasehold Mortgagee for escrows of real estate taxes and insurance premiums; and
(i) all other items customarily apportioned in connection with
similar properties similarly located.
IX.4 FISCAL YEAR OF ASSESSMENT. Apportionment of real property taxes,
water rates and charges and sewer taxes and rents shall be made on the basis of
the fiscal year for which assessed. If the Apportionment Date shall occur
before the real property tax rate, water rates and charges and sewer taxes and
rents are fixed, the apportionment of taxes shall be made on the basis of the
real property tax rate, water rates and charges and sewer taxes and rents for
the preceding year applied to the latest assessed valuation. After the real
property taxes, water rates and charges and sewer taxes and rents are finally
fixed, Lessor and Lessee shall make a recalculation of the apportionment of
same, and Lessor or Lessee, as the case may be, shall make an appropriate
payment to the other based upon such recalculation.
IX.5 COLLECTION OF RENTS AFTER TERM. If Lessee is entitled, in accordance
with the provisions of this Lease, to all or any portion of any arrearages
regarding the Sublease Rents, Lessee shall have the right to commence any and
all appropriate legal proceedings (other than any proceeding to terminate the
applicable sublease or otherwise recover possession of the space demised
thereunder) to collect such arrearages after the Apportionment Date and Lessor
shall cooperate with Lessee in connection with such proceedings (at no cost to
Lessor).
IX.6 SURVIVAL. The provisions of this Article 9 shall survive the
expiration or termination of this Lease and, in the case of Lessee' obligations
hereunder, shall not be limited as provided in Section 10.4.
65535RT65535CLE X
MISCELLANEOUS
X.1 NO MERGER.
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(a) There shall be no merger of this Lease or of the leasehold estate
hereby created with the fee estate in the Land by reason of the fact that the
same person acquires or holds, directly or indirectly, this Lease or the
leasehold estate hereby created or any interest herein or in such leasehold
estate as well as the fee estate in the Land or any interest in such fee estate.
(b) There shall be no merger of this Lease or of the leasehold estate
hereby created with the leasehold estate created by any Sublease entered into
between Lessor and Lessee by reason of the fact that the same person acquires or
holds, directly or indirectly, this Lease or the leasehold estate hereby created
or any interest herein or in such leasehold estate as well as the interest of
the Subtenant under such Sublease, it being understood and agreed that the
provisions of this Agreement shall not diminish or otherwise effect the
responsibilities of Lessor, as lessee under any such Sublease.
X.2 SEPARABILITY; BINDING EFFECT. Each provision hereof shall be separate
and independent and the breach of any such provision by Lessor shall not
discharge or relieve Lessee from any of its obligations hereunder. Each
provision hereof shall be valid and shall be enforceable to the extent not
prohibited by law. If any provision hereof or the application thereof to any
person or circumstance shall to any extent be invalid or unenforceable, the
remaining provisions hereof, or the application of such provision to persons or
circumstances other than those as to which it is invalid or unenforceable, shall
not be affected thereby. All provisions contained in this Lease shall be
binding upon, inure to the benefit of, and be enforceable by, the respective
successors and assigns of Lessor and Lessee to the same extent as if each such
successor and assign were named as a party hereto. This Lease may not be
modified without the prior written consent of the holder of any Fee Mortgage and
any Leasehold Mortgage (other than any amendment which confirms the amount of
any CPI Escalation as provided in Section 11.2). This Lease shall be governed
by and interpreted in accordance with the laws of the State of New York.
X.3 HEADINGS. The headings to the various paragraphs and Schedules of
this Lease have been inserted for reference only and shall not to any extent
have the effect of modifying the express terms and provisions of this Lease.
X.4 IMMUNITY FROM LIABILITY.
(a) Notwithstanding anything to the contrary provided in this Lease,
each and every term, covenant, condition and provision of this Lease is hereby
made specifically subject to the provisions of this Paragraph 10.4, except as
expressly provided to the contrary in Section 9.6 and in Section 10.4(b) below.
It is specifically understood and agreed that (except to the extent of the
interest of Lessor or Lessee, as the case may be, in the Premises and any rents,
issues, profits, proceeds or awards thereof or relating thereto, other than, in
the case of
44
Lessee, any such interest of Lessee which arises solely by Lessee's
interest as fee owner of the Land and lessor under the Ground Lease) there shall
be no personal liability against Lessor (which shall for purposes of this
Paragraph 10.4 include the holder of any Leasehold Mortgage as mortgagee or
mortgagee in possession) or Lessee or any partner, member, shareholder, officer
or director of Lessor or Lessee or any partner, member, shareholder, officer or
director of any such partner, member, shareholder, officer or director or any
successor in interest of any of the foregoing, or any members or beneficial
owners of Lessor or Lessee whether the same be a corporation, individual, joint
venture, tenancy in common, partnership or otherwise, or against any officer,
director, or shareholder thereof, or any other person or entity for the
performance of any term, covenant, condition or provision of this Lease for any
claim based therein or otherwise in respect thereof. Lessor and Lessee shall
look solely to the interest of the other in the Premises for the satisfaction of
each and every remedy of such party in the event of any breach of any of the
terms, covenants and conditions of this Lease, such exculpation of personal
liability to be absolute and without any exception whatsoever.
(b) Notwithstanding anything in Section 10.4(a) above to the
contrary, in the event that Lessor or Lessee shall misapply, misappropriate or
otherwise fail to deliver to the party entitled to receive same under this
Lease, any insurance proceeds, condemnation awards or other similar funds, the
limitation on liability described in Section 10.4(a) shall not apply, and Lessor
or Lessee, as the case may be, shall be fully and personally liable to the other
party to the extent of any such funds so misapplied, misappropriated or
otherwise failed to be delivered to the party entitled thereto under this Lease.
X.5 COUNTERPARTS. This Lease may be executed in two or more counterparts
and shall be deemed effective when and only when one or more of such
counterparts shall have been signed by or on behalf of each of the parties
hereto (although it shall not be necessary that any single counterpart be signed
by or on behalf of each of the parties hereto, and all such counterparts shall
be deemed to constitute but one and the same instrument) and shall have been
delivered by each of the parties to the other.
X.6 RECORDATION. Lessor and Lessee, each upon the written request of the
other shall execute, acknowledge and deliver a memorandum of this Lease, and of
each modification of this Lease relating to a term set forth in any prior
memorandum, in proper form for recordation. Neither party shall record this
Lease without the prior consent of the other party.
X.7 TIME OF THE ESSENCE. Notwithstanding anything in this Lease to the
contrary, time shall be of the essence with respect to the performance by Lessor
and Lessee of all of the terms, conditions, covenants and obligations of Lessor
and Lessee hereunder.
45
X.8 DEEMED CONSENT OF GROUND LESSOR. Notwithstanding anything in this
Lease to the contrary, if Lessee requests the consent or approval of Lessor to
any matter pursuant to this Lease for which the consent of Lessee, as the lessor
under the Ground Lease, shall also be required, Lessee's submission of such
request for consent or approval to Lessor shall be deemed, for all purposes
hereunder, to constitute Lessee's consent or approval, as lessor under the
Ground Lease, to such matter.
65535RT65535CLE XI
CPI ESCALATION
XI.1 CALCULATION OF CPI ESCALATION. Notwithstanding anything in this Lease
to the contrary, any fixed dollar amount referred to in this Lease (including,
by way of example, any insurance requirement, threshold for Material
Alterations, minimum Fair Market Value for the Premises, etc., but specifically
excluding the amount of any fixed Basic Rent payment provided for herein) (each,
a "Fixed Amount") shall be increased on the fifth anniversary of the
Commencement Date (the "CPI Adjustment Date"), by multiplying such Fixed Amount
by the percentage increase, if any, in the Consumer Price Index from that in
effect on the Commencement Date to that in effect on the CPI Adjustment Date.
For purposes hereof, "Consumer Price Index" shall mean the Consumer Price Index
for All Urban Consumers published by the Bureau of Labor Statistics of the
United States Department of Labor, New York, N.Y. - Northeastern N.J. Area, All
Items (1982-84 = 100), or any successor index thereto, appropriately adjusted.
In the event that the Consumer Price Index is converted to a different standard
reference base or otherwise revised, the determination of adjustments provided
for herein shall be made with the use of such conversion factor, formula or
table for converting the Consumer Price Index as may be published by the Bureau
of Labor Statistics or, if said Bureau shall not publish the same, then with the
use of such conversion factor, formula or table as may be published by
▇▇▇▇▇▇▇▇-▇▇▇▇, Inc., or any other nationally recognized publisher of similar
statistical information. If the Consumer Price Index ceases to be published,
and there is no successor thereto, such other index as Lessor and Lessee shall
agree upon in writing shall be substituted for the Consumer Price Index. If
Lessor and Lessee are unable to agree as to such substituted index, such matter
shall be submitted to the American Arbitration Association or any successor
organization for determination in accordance with the regulations and procedures
thereof then obtaining for commercial arbitration.
XI.2 CONFIRMATION OF CPI ESCALATIONS. Within thirty (30) days after the
CPI Adjustment Date, Lessor shall prepare, and Lessor and Lessee shall each
execute, a written amendment to this Lease setting forth the escalated amount of
each Fixed Amount and
46
confirming the method of calculation thereof.
Notwithstanding the foregoing, the failure of either party to execute such
amendment shall not affect the increase in each Fixed Amount resulting from the
increase in the Consumer Price Index as provided in Section 11.1 above.
[END OF TEXT]
47
[EXECUTION PAGE]
IN WITNESS WHEREOF, the parties hereto have caused this Master Lease
to be executed as of the date first above written.
LESSEE:
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ASSOCIATES, L.P.
By: JASIE, INC., General Partner
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Vice President
LESSOR:
STEINWAY, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: V.P. and C.F.O.