LEASE
between
THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION)
"Landlord"
and
THE GOLDMAN SACHS GROUP, L.P.
"Tenant"
April 5, 1994
<PAGE> 2
Lease
TABLE OF CONTENTS
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ARTICLE 1 Premises, Term and Fixed Rent ..................................................................1
ARTICLE 2 Use of Premises ................................................................................3
ARTICLE 3 Escalations ....................................................................................6
ARTICLE 4 Delivery of Premises; Landlord's Work .........................................................31
ARTICLE 5 Subordination, Non-Disturbance and
Attornment ..................................................................................33
ARTICLE 6 Quiet Enjoyment ...............................................................................37
ARTICLE 7 Assignment, Subletting and Mortgaging .........................................................37
ARTICLE 8 Compliance with Laws ..........................................................................61
ARTICLE 9 Insurance .....................................................................................66
ARTICLE 10 Rules and Regulations..........................................................................69
ARTICLE 11 Alterations....................................................................................70
ARTICLE 12 Tenant's Improvements and Tenant's Property....................................................78
ARTICLE 13 Repairs and Maintenance........................................................................80
ARTICLE 14 Electric Energy................................................................................83
ARTICLE 15 Landlord's Services............................................................................92
ARTICLE 16 Access and Name of Building...................................................................103
ARTICLE 17 Partnership Tenant............................................................................114
ARTICLE 18 Indemnification and Non-Liability.............................................................115
ARTICLE 19 Damage or Destruction.........................................................................117
ARTICLE 20 Eminent Domain................................................................................122
ARTICLE 21 Surrender.....................................................................................124
ARTICLE 22 Conditions of Limitation......................................................................124
ARTICLE 23 Reentry by Landlord...........................................................................127
ARTICLE 24 Damages.......................................................................................128
ARTICLE 25 Affirmative Waivers...........................................................................130
ARTICLE 26 No Waivers....................................................................................131
ARTICLE 27 Curing Tenant's Defaults......................................................................131
ARTICLE 28 Broker........................................................................................132
ARTICLE 29 Notices.......................................................................................132
ARTICLE 30 Estoppel Certificates.........................................................................133
ARTICLE 31 Definitions...................................................................................133
ARTICLE 32 No Representations by Landlord................................................................138
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ARTICLE 33 Untenantability...............................................................................138
ARTICLE 34 Holdover......................................................................................138
ARTICLE 35 Miscellaneous Provisions and Definitions......................................................139
ARTICLE 36 Parking.......................................................................................145
ARTICLE 37 Tenant's Termination Right....................................................................147
ARTICLE 38 Renewal Terms.................................................................................154
ARTICLE 39 Definition of Landlord; Condominium
Provisions.........................................................................162
ARTICLE 40 Arbitration...................................................................................164
ARTICLE 41 Structural Work and Exterior Improvements.....................................................165
ARTICLE 42 47th Floor Space..............................................................................185
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SCHEDULES AND EXHIBITS
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Schedule A Fixed Rent
Exhibit A Land
Exhibit B List of Units of Condominium
Exhibit C-1 Floor Plan of 41st Floor
Exhibit C-2 Floor Plan of 42nd Floor
Exhibit C-3 Floor Plan of 43rd Floor
Exhibit C-4 Floor Plan of 44th Floor
Exhibit C-5 Floor Plan of 45th Floor
Exhibit C-6 Floor Plan of 46th Floor
Exhibit C-7 Floor Plan of 48th Floor
Exhibit C-8 Floor Plan of 49th Floor
Exhibit C-9 Floor Plan of 50th Floor
Exhibit D Rentable Area of Building and Each Floor
Exhibit E Landlord's Work
Exhibit F-1 Form of Non-Disturbance Agreement for
Underlying Leases
Exhibit F-2 Form of Non-Disturbance Agreement for
Mortgages
Exhibit G Form of Assumption Agreement
Exhibit H Rules and Regulations
Exhibit I List of Contractors Approved for Initial
Alterations
Exhibit J Alteration Rules and Regulations
Exhibit K HVAC Specifications
Exhibit L Cleaning Specifications
Exhibit M-1 PSI Dedicated Lobby
Exhibit M-2 Bank X Elevator Lobby and Bank X Concourse
Elevator
Exhibit M-3 Location of Lobby Partitions, Security Desk
and Podium
Exhibit N Building's Certificate of Occupancy
Exhibit O-1 Form of Landlord's Consent to Assignments
Exhibit O-2 Form of Landlord's Consent to Subleases
Exhibit P Permitted Location of Unisex Lavatories (Each
Floor)
Exhibit Q Acknowledged ACM Areas
Exhibit R Switchgear Room (Containing Designated 20th
Floor Electrical Panels)
Exhibit S Primary Landlord Conduit Areas
Exhibit T-1 Stairwell B Enclosure Location
Exhibit T-2 Stairwell E Enclosure Location
Exhibit T-3 Designated Fire Stairwells
Exhibit U Map of Possible Area of Qualified Relocation
Premises
Exhibit V-1 Specifications for Chilled Water Meter
Exhibit V-2 Specifications for Steam Meter
Exhibit W Lease Amendments and Modifications; Re: GSAM
Exhibit X-1 Tenant's Penthouse Roof Area
Exhibit X-2 Building Penthouse
Exhibit X-3 Ancillary Telecommunications Roof Area
Exhibit X-4 Tenant's Fuel Tank Area
Exhibit X-5 Tenant's 20th Floor Electrical Power Areas
Exhibit X-6 Structural Work Preliminary Plans
Exhibit X-7 Penthouse Work Preliminary Plans
Exhibit X-8 Noise and Vibration Specification
Exhibit X-9 Description of Tenant's UPS Units
Exhibit X-10 Fire Tower
Exhibit X-11 Designated Hot Decks
Exhibit X-12 Building's Freight Elevator Lobby
Exhibit X-13 Specifications for 50th Floor Pipe Relocation
Work
Exhibit Y Floor Plan of 47th Floor (47th Floor Space)
Exhibit Z Disabled Person Access Procedures
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<PAGE> 5
LEASE, dated April 5, 1994, between THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION), incorporated under the laws of the United States of
America, having an office at 4 Chase MetroTech Center, 17th Floor, Brooklyn, New
York 11245, Attention: Vice President (herein called "LANDLORD") and THE GOLDMAN
SACHS GROUP, L.P., a Delaware limited partnership, having its principal business
address at 85 Broad Street, New York, New York 10004, Attention: General
Services Department (herein called "TENANT").
W I T N E S S E T H:
ARTICLE 1
Premises, Term and Fixed Rent
1.01. Landlord hereby leases to Tenant, and Tenant hereby
hires from Landlord, upon and subject to the terms, covenants, provisions and
conditions of this lease, the premises described in Section 1.03, which premises
are located in the building known as One New York Plaza in the City, County and
State of New York (herein called the "BUILDING"), which Building is located on
the land described in Exhibit A attached hereto and made a part hereof (herein
called the "LAND").
1.02. As of March 4, 1993, Landlord, as the then sole fee
simple owner of the Building and the Land, submitted the Building and the Land
to condominium ownership in accordance with the Condominium Act (as defined in
Article 31 hereof) by recording the Condominium Declaration (as defined in
Article 31 hereof), and thereby created the condominium known as The One New
York Plaza Condominium (the "CONDOMINIUM"), which Condominium consists of the
units described on Exhibit B annexed hereto and made a part hereof (each, a
"UNIT", and collectively, the "UNITS"), and which Condominium is governed by the
Common Owner and/or the Board, as such terms are defined in and as more
particularly set forth in the Condominium Declaration; such Board and Common
Owner being herein referred to collectively as the "CONDOMINIUM BOARD").
1.03. The premises leased to Tenant hereunder (herein called
the "PREMISES") consist of those portions of the forty-first (41st),
forty-second (42nd), forty-third (43rd), forty-fourth (44th), forty-fifth
(45th), forty-sixth (46th), forty-eighth (48th), forty-ninth (49th) and
fiftieth (50th) floors of the Building that are shown hatched on the floor plans
attached hereto as Exhibit C-1 through Exhibit C-9, respectively.
1.04. The term of this lease (a) shall commence on the date
hereof (the "COMMENCEMENT DATE"), and (b) shall end at 11:59 p.m. on last day of
the month in which occurs the tenth (10th) anniversary of the day preceding the
Fixed Rent Commencement Date (as hereinafter defined) (such day being herein
called the "INITIAL EXPIRATION DATE", and such day, as the same may be extended
pursuant to Article 38 hereof, being herein called the "EXPIRATION DATE"), or on
such earlier date upon which the term of this lease shall expire or be canceled
or terminated pursuant to any of the conditions or covenants of this lease or
pursuant to law. As used in this lease, the term "THEN CURRENT EXPIRATION DATE"
shall mean, as of any date, the last day of the last Renewal Term the Renewal
Option with respect to which has, as of such date, been finally exercised or if,
as of such date, no Renewal Option has been finally exercised, the Initial
Expiration Date. As used above, the phrase "finally exercised" shall mean, with
respect to any Renewal Option, that the same has been duly exercised by Tenant,
that any right of Landlord to render such exercise void, and any right of Tenant
to rescind such exercise, shall have lapsed or been waived in writing.
<PAGE> 6
1.05. The rents shall be and consist of (1) fixed rent (herein
called "FIXED RENT"), which shall be payable for the Premises at the per annum
rates therefor set forth on Schedule A annexed hereto, and which, subject to the
provisions of Section 1.06 below, shall be payable commencing on the
Commencement Date and thereafter in equal monthly installments in advance on the
first day of each and every calendar month during the term of this lease, and
(2) additional rent (herein called "ADDITIONAL CHARGES") consisting of Tax
Payments (as hereinafter defined), Operating Payments (as hereinafter defined)
and all other sums of money as shall become due from and payable by Tenant to
Landlord hereunder; all to be paid in lawful money of the United States to
Landlord at its office, or such other place, or to Landlord's agent and at such
other place, as Landlord shall designate by written notice to Tenant.
1.06. The "FIXED RENT COMMENCEMENT DATE" shall be September
21, 1994. Notwithstanding anything to the contrary contained in Section 1.05
above, (i) there shall be a complete abatement of the Fixed Rent set forth on
Schedule A attached hereto for the period commencing on the Commencement Date
and ending on the day preceding the Fixed Rent Commencement Date, both days
inclusive, and (ii) such Fixed Rent for the month in which the Fixed Rent
Commencement Date occurs shall be a prorated amount, determined on a per diem
basis, and shall be payable on the Fixed Rent Commencement Date. Furthermore,
there shall be an additional abatement of the Fixed Rent payable with respect to
the Premises located on the forty-third (43rd) floor of the Building only
(determined on a pro-rata rentable square foot basis between the Premises
located on such forty-third (43rd) floor of the Building and the entirety of the
Initially Demised Premises (as defined in Article 31 hereof) based solely upon
the Fixed Rent as set forth on Schedule A attached hereto, i.e., without regard
to any increase in such Fixed Rent pursuant to the provisions of Article 42
hereof and the operation of Section 1.11 hereof)) for the period commencing on
the Fixed Rent Commencement Date and ending on the day preceding the first (1st)
anniversary of the Fixed Rent Commencement Date, both days inclusive.
1.07. Tenant covenants and agrees to pay Fixed Rent and
Additional Charges as follows: Tenant shall pay Fixed Rent and Recurring
Additional Charges (as hereinafter defined) without notice or demand therefor.
Tenant shall pay all other Additional Charges at such time or times as may be
provided for herein, or, if no due date is specified, within thirty (30) days of
notice or demand therefor. Tenant shall pay Fixed Rent and all Additional
Charges without any abatement, deduction or setoff for any reason whatsoever,
except as may be expressly provided in this lease. Unless otherwise instructed
by Landlord, Fixed Rent and Recurring Additional Charges shall be paid by wire
transfer of immediately available federal funds to Landlord or its designee, to
such account(s) as may be designated in written directions delivered by Landlord
to Tenant from time to time, and in the absence of any such instructions, in the
same manner as hereinafter provided for other Additional Charges. All other
Additional Charges shall be paid by good and sufficient check (subject to
collection) drawn on a bank which is a member of the Federal Reserve system or a
successor thereto. As used herein, the term "RECURRING ADDITIONAL CHARGES" shall
mean (i) those Additional Charges payable periodically by Tenant in accordance
with the provisions of Section 3.02(b) hereof, (ii) those Additional Charges
payable monthly by Tenant in accordance with the provisions of Section 3.03(b)
hereof, and (iii) those Additional Charges payable monthly by Tenant in
accordance with the provisions of Section 41.07 hereof.
1.08. No payment by Tenant or receipt or acceptance by
Landlord of a lesser amount than the correct Fixed Rent or Additional Charges
shall be deemed to be other than a payment on
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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
Landlord may accept such check or payment without prejudice to Landlord's right
to recover the balance or pursue any other remedy in this lease or at law
provided.
1.09. If any of the Fixed Rent or Additional Charges payable
under the terms and provisions of this lease shall be or become uncollectible,
reduced or required to be refunded because of any legal rent restrictions
enacted by a governmental authority, Tenant (without any additional expense to
Tenant, other than expense which is de minimis or which Landlord has agreed to
pay) shall enter into such agreement(s) and take such other steps as Landlord
may request and as may be legally permissible to permit Landlord to collect the
maximum rents which from time to time during the continuance of such legal rent
restriction may be legally permissible (but not in excess of the amounts nor
earlier than the due dates reserved therefor under this lease). Upon the
termination of such legal rent restriction, (a) the Fixed Rent and/or Additional
Charges shall become and thereafter be payable in accordance with the amounts
reserved herein for the periods following such termination, and (b) Tenant shall
pay to Landlord within thirty (30) days after being billed, to the maximum
extent legally permissible, an amount equal to (i) the Fixed Rent and/or
Additional Charges which would have been paid pursuant to this lease but for
such legal rent restriction less (ii) the rents paid by Tenant during the period
such legal rent restriction was in effect. The rights and obligations set forth
in this Section 1.09 shall survive the expiration or termination of this lease
for a period of three (3) years following such expiration or termination.
1.10. Additional Charges shall be deemed to be rent and
Tenant's failure to pay Additional Charges shall be considered a failure to pay
rent hereunder and Landlord shall be entitled to all rights and remedies
provided herein or by law in connection therewith.
1.11. For all purposes of this lease, the Fixed Rent payable
with respect to any particular portion of the Premises shall, absent any express
provisions to the contrary (such as the last sentence of Section 1.06 hereof),
be determined on a pro-rata rentable square foot basis between such portion of
the Premises and the entirety of the Premises.
ARTICLE 2
Use of Premises
2.01. Tenant shall have the right to use and occupy the
Premises only as follows: (i) primarily, for general and executive office use,
and, to the extent incidental to such general and executive office use, for
computer and data processing, photocopying, kitchenette (including microwave and
dishwasher), pantry and vending machine areas (the uses described in this clause
(i) being herein called the "PRIMARY USE"); and (ii) secondarily, for (x)
printing, (y) cooking, cafeteria and dining facilities (whether food and
beverages be provided with or without charge), and health and exercise
facilities (whether the same be available with or without charge), all for use
solely by Tenant's employees and business invitees, and (z) other uses
incidental to the Primary Use which are consistent with a first-class office
building (the uses described in this clause (ii) being herein called the
"SECONDARY USES").
2.02. (a) Landlord, throughout the term of this lease, shall
maintain in effect a Certificate of Occupancy for the Building (either temporary
or permanent) which, subject to the completion by Tenant of its Initial
Alterations (as such term
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<PAGE> 8
is defined in Article 11 hereof) in accordance with this lease, will (I) permit
the use of the Premises by Tenant for the Primary Use at occupancy levels, for
each portion thereof, which are not less than the occupancy levels therefor set
forth in the existing Certificate of Occupancy for the Building, a copy of which
is attached hereto as Exhibit N (herein called the "EXISTING CERTIFICATE OF
OCCUPANCY"), and (II) permit the floors of the Premises to be loaded with a load
at least equal to the permitted floor load set forth on the Existing Certificate
of Occupancy; provided, however that Landlord shall have no liability for a
breach of the foregoing if such breach results from any act or omission of
Tenant or any Tenant Party (as hereinafter defined), which act or omission
violates any provision of this lease.
(b) If any governmental license or permit (other
than a Certificate of Occupancy for the Building permitting the Premises to be
used for the Primary Use at the occupancy levels and with the floor loads
referred to in Section 2.02(a) above) shall be required for the proper and
lawful conduct of business in the Premises or any part thereof and if the
failure to have such license or permit would affect the Real Property, Landlord
or any occupant of the Building, then Tenant, at its expense, shall duly procure
and thereafter maintain such license or permit and, upon request, deliver a copy
thereof to Landlord. Additionally, if Tenant shall desire to use the Premises,
or any portion thereof, for a use other than the Primary Use at the occupancy
levels and with the floor loads referred to in Section 2.02(a) above, and such
use shall require a modification or amendment of the then existing Certificate
of Occupancy for the Building, then, prior to so using the Premises or such
portion thereof, Tenant, at its expense, shall procure any such required
modification or amendment. The foregoing provisions are not intended to be
deemed Landlord's consent to any Alterations or to a use of the Premises not
otherwise permitted hereunder. Landlord shall execute (and provide any readily
accessible information known by Landlord for) any applications and similar
documents reasonably required in connection with obtaining any licenses or
permits or any amendments or modifications of any Certificate of Occupancy for
the Building required by the foregoing provisions of this Section 2.02(b),
provided that such documents are in proper form. Tenant hereby agrees that it
shall (i) reimburse Landlord all Landlord's out-of-pocket expenses incurred in
connection with Tenant's obtaining of any such license, permit, amendment or
modification (including without limitation those incurred in connection with
Landlord's execution of any applications or similar documents, or its provision
of information, as provided in the preceding sentence), and (ii) indemnify and
hold harmless Landlord against any and all liabilities which Landlord may incur
by reason of its execution of any applications or similar documents, or its
provision of information, as provided in the preceding sentence; provided,
however, that neither such reimbursement nor such indemnity shall include any
such expenses or liabilities to the extent that (A) Landlord is responsible
therefor under any other provision of this lease, (B) the same would be, or
would have been, discharged, satisfied or avoided by Landlord's performance of
its obligations under this lease, or (C) the same arise out of any inaccuracy in
any information provided by Landlord.
(c) In connection with the Initial
Alterations, Landlord has heretofore delivered to Tenant a Form ACP-5 executed
by Landlord's hygienist with respect to the portion of the Premises located on
each Premises Floor (as hereinafter defined). In connection with any Alterations
made subsequent to the Initial Alterations, Landlord, reasonably promptly after
a request therefor, shall deliver to Tenant, with respect to each portion of the
Premises in respect of which such Alterations shall be performed, a Form ACP-5
executed by Landlord's hygienist and/or any other form or documentation which
evidences or confirms the absence of asbestos from such
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<PAGE> 9
portion(s) of the Premises, provided that (i) such other form or documentation
is then required by any governmental agency as a condition to the performance of
such Alterations, and (ii) the matters evidenced or confirmed by such other form
or documentation are not greater in scope then the matters evidenced or
confirmed by the initial Form ACP-5 delivered by Landlord with respect to such
portion(s) of the Premises. In no event shall the provisions of this Section
2.02(c) require Landlord to perform any work in the Premises or otherwise.
2.03. Tenant shall not use or occupy the Premises or the
Building, or suffer or permit anyone to use or occupy the Premises, in any
manner which would violate the Certificate of Occupancy for the Building (except
to the extent that such violation is attributable to Landlord's failure to
comply with its obligations under Section 2.02(a) above). Tenant shall not at
any time use or occupy the Premises or the Building, or suffer or permit anyone
to use or occupy the Premises, in any manner, or do anything in the Premises or
the Building, or suffer or permit anything to be done in, brought into or kept
on the Premises, which (a) impairs the proper and economic maintenance,
operation and repair of the Building and/or its equipment, facilities or systems
(except to the extent that such impairment arises out of the use of the Premises
for the Primary Use in accordance with the provisions of this lease), (b)
constitutes a nuisance, public or private, (c) makes unobtainable from reputable
insurance companies authorized to do business in New York State all risk
property insurance, or liability, elevator, boiler or other insurance at
standard rates, or (d) discharges objectionable fumes, vapors or odors into the
Building's flues or vents or otherwise, except to the extent such fumes, vapors
or odors are discharged into flues or vents designed for such purposes and which
Tenant, pursuant to the terms of this lease, is permitted to use.
2.04. Tenant shall not use, or suffer or permit anyone to use,
the Premises or any part thereof, by or for (i) an agency, department or bureau
of the United States Government, (ii) any state or municipality within the
United States or any foreign government, or any political subdivision of any of
them, (iii) an employment or travel agency (other than an executive search firm
and other than an employment or travel agency primarily serving Tenant's
employees), (iv) any charitable or religious organization or union (except that,
so long as Original Tenant is in occupancy of more than one-half (1/2) of the
rentable area of the Premises, Original Tenant may sublease portions of the
Premises to one or more Qualified Charities (as hereinafter defined), provided,
that each such sublease shall be permitted under Article 7, no such sublease
shall provide for any sublease rent or other consideration to be paid to Tenant,
and that all such subleases, in the aggregate, do not demise an area greater
than 21,500 rentable square feet), (v) a school or classroom (it being agreed
that this clause shall not prohibit Tenant from using discrete portions of the
Premises for training, lectures or other classroom purposes for Tenant's
employees and/or customers in connection with Tenant's business, it being
understood that all such uses shall be considered Secondary Uses), (vi) medical
or psychiatric offices (it being agreed that this clause shall not prohibit
Tenant from employing doctors and/or nurses at the Premises for Tenant's
employees), (vii) conduct of an auction (other than in the ordinary course of
Tenant's business), (viii) gambling activities, (ix) the conduct of obscene,
pornographic or similarly disreputable activities, (x) an automated teller
machine or similar facility (except that Tenant, during any period that there is
no Qualified ATM (as hereinafter defined) located on the Real Property, shall
have the right to allow an automated teller machine or similar facility to be
located in the Premises for use solely by Tenant's employees, provided that the
same is removed promptly after the end of any such period), (xi) a restaurant
and/or bar and/or the sale of
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confectionery and/or soda and/or beverages and/or sandwiches and/or ice cream
and/or baked goods (the foregoing shall not prohibit the use of portions of the
Premises as kitchenette, pantry or vending machine areas pursuant to Section
2.01(i) or for the Secondary Uses described in Section 2.01(ii)(y) hereof),
(xii) the business of photographic reproductions and/or offset printing (except
that Tenant may use portions of the Premises for photographic reproductions
and/or offset printing in connection with, either directly or indirectly, its
own business and/or activities), (xiii) the retail offices or the retail
activities of a bank, trust company, safe deposit business, savings and loan
association, or loan company, (xiv) the retail sale of traveler's checks or
foreign exchange, or (xv) a retail stock brokerage office or for retail stock
brokerage purposes (except that Original Tenant and its Affiliates may use
portions of the Premises as a retail stock brokerage office or for retail stock
brokerage purposes, provided, that at no time shall the portions of the Premises
so used exceed, in the aggregate, 43,000 rentable square feet). For purposes of
this Section 2.04, (I) the term "QUALIFIED CHARITY" shall mean any charitable
organization (x) which has no political, religious or union affiliation (or
which has a religious affiliation, but no religious purpose), and (y) with which
either Original Tenant or one or more of the partners or principals of Original
Tenant are actively involved, (II) the term "QUALIFIED ATM" shall mean any
automated teller machine or similar facility operated and maintained on the Real
Property by Landlord or by any person authorized by Landlord, and which is
available for use by Tenant's employees, and (III) the term "RETAIL" shall refer
to a business whose primary patronage are customers visiting its offices in
person.
ARTICLE 3
Escalations
3.01. The terms defined below shall for the purposes of this
lease have the meanings herein specified:
(a) "OPERATING STATEMENT" shall mean, with
respect to any Operating Year, a document containing (i) a reasonably itemized
statement of Operating Expenses for such Operating Year prepared by an
independent certified public accountant, and (ii) with respect to any Operating
Year after the Base Operating Year, a statement, in reasonable detail, of the
Operating Payment payable by Tenant for such Operating Year.
(b) "TAX STATEMENT" shall mean a document
setting forth, in reasonable detail, the Tax Payment payable by Tenant for a
specified Tax Year pursuant to this Article 3.
(c) "OPERATING EXPENSES" shall mean, without
duplication, all expenses paid or incurred by, or on behalf of, Landlord or any
other Condominium Party (whether directly or indirectly by way of reimbursement
through common charges or otherwise) in respect of the repair, replacement,
maintenance, operation and/or security of the Real Property (as hereinafter
defined), determined on an accrual basis and otherwise in accordance with
generally accepted accounting principles (except to the extent that any of the
following provisions of this Section 3.01(c) are inconsistent with generally
accepted accounting principles), including, without limitation, the following:
(A) salaries, wages, medical, surgical, insurance
(including, without limitation, group life and disability insurance), union and
general welfare benefits, pension payments, severance payments, sick day
payments and other fringe benefits of, and payroll taxes, worker's compensation,
uniforms and similar related expenses (whether direct or
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indirect) for, employees engaged in such repair, replacement, maintenance,
operation and/or security (all of the foregoing being herein called "LABOR
COSTS"); provided, however, that if any such employees are not engaged
exclusively in such repair, replacement, maintenance, operation and/or security,
then the Labor Costs of or for such employees shall be included in Operating
Expenses on a pro-rated basis, based upon the proportion of such employees'
total work time that is spent engaged in such repair, replacement, maintenance,
operation and/or security;
(B) the cost of fuel, gas, steam,
electricity, heat, ventilation, air-conditioning and chilled or condenser water,
water, sewer and other utilities, together with any taxes and surcharges on, and
fees paid to third parties in connection with the calculation and billing of,
such utilities;
(C) the cost of painting and/or decorating
all areas of the Real Property, excluding, however, any leasable areas of the
Building (the phrase "LEASABLE AREAS" of the Building shall, at any time, mean
all areas of the Building that are then leased or available for lease to
tenants, whether or not the same are then being marketed, and shall include any
space occupied or held for occupancy by Landlord or any Affiliate of Landlord,
other than as Building Offices (as hereinafter defined));
(D) the cost of casualty, liability,
fidelity, rent and all other insurance regarding the Real Property and the
repair, replacement, maintenance, operation and/or security thereof, to the
extent the such types of insurance are customarily carried in respect of Similar
Buildings (as defined in Article 31 hereof);
(E) the cost of all supplies, tools,
materials and equipment, whether by purchase or rental, used in the repair,
replacement, maintenance, operation and/or security of the Real Property, and
any sales and other taxes thereon;
(F) all office expenses, such as telephone,
utility, stationery and similar expenses incurred in connection with any
Building office or other premises in the Real Property utilized by employees
and/or contractors engaged in the repair, replacement, maintenance, operation
and/or security of the Real Property (collectively, "BUILDING OFFICES") (it
being agreed that Operating Expenses shall not include the rental value of any
Building Offices);
(G) the cost of cleaning, janitorial and
security services, including, without limitation, glass cleaning, snow and ice
removal and garbage and waste collection and/or disposal;
(H) the cost of maintaining all existing
interior and exterior landscaping, but excluding the initial cost of any
additional landscaping;
(I) the cost of alterations, additions,
improvements, replacements and repairs made with respect to the Real Property
and of tools and equipment acquired for use in the operation, maintenance or
repair of the Real Property; provided, however, that (i) no Capital Costs (as
hereinafter defined) incurred in or prior to the Base Operating Year shall be
included in Operating Expenses for the year of incurrence or any subsequent
year, and (ii) Capital Costs incurred subsequent to the Base Operating Year
shall be included in Operating Expenses only:
(1) if, and to the extent that, the
alteration, addition, improvement, replacement, repair,
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equipment or tool in question (a) is required to be made by a
Subsequent Legal Requirement (as hereinafter defined) (it being agreed
that an alteration, addition, improvement, replacement, repair,
equipment or tool shall not be deemed required to be made by a
Subsequent Legal Requirement to the extent that such alteration,
addition, improvement, replacement, repair, equipment or tool is also
required to be made by an Existing Legal Requirement (as hereinafter
defined)), and (b) if made to any leasable area of the Building (or to
the passenger elevator lobby or any common corridors on any
multi-tenant floor of the Building), would not, if such leasable area
(or such lobby or corridors on a multi-tenant floor, as the case may
be), were demised by this lease, be the responsibility of Tenant under
Article 8 hereof; and, in such event, for each month during the useful
life of the alteration, addition, improvement, replacement, repair,
equipment or tool in question there shall be included in Operating
Expenses an amount equal to the combined constant monthly principal and
interest payment which would be payable on a loan (i) having an
original principal amount equal to the Capital Costs of such
alteration, addition, improvement, replacement, repair, equipment or
tool, (ii) bearing interest at the Capital Cost Rate (as hereinafter
defined) applicable to such Capital Costs, and (iii) providing for a
combined constant monthly payment of principal and interest sufficient
to fully-liquidate such loan over a period of time equal in length to
the length of such useful life (except, that (x) if such useful life
shall not commence on the first day of a month, then the amount so
included in the month in which such useful life shall commence shall be
computed on a prorata basis, and (y) if such useful life shall not end
on the last day of a month, then the amount so included in the month in
which such useful life shall end shall be computed on a prorata basis);
or
(2) if the alteration, addition,
improvement, replacement, repair, equipment or tool in question is such
that, at the time made, Landlord reasonably estimates that the same
will result in an avoidance of or a savings in Operating Expenses over
the useful life of such alteration, addition, improvement, replacement,
repair, equipment or tool, then (a) Landlord shall prepare a written
schedule setting forth Landlord's reasonable estimate of the Operating
Expenses avoided or saved for each Operating Year during the Cost
Savings Period for such alteration, addition, improvement, replacement,
repair, equipment or tool as a result of the same, and shall make the
same a part of the Operating Expense Records (or otherwise made
available to Tenant) on or prior to the date that Landlord delivers the
first Operating Statement reflecting Operating Expenses pursuant to
this Section 3.01(c)(I)(2) resulting from such alteration, addition,
improvement, replacement, repair, equipment or tool (which written
schedule, in respect of any alteration, addition, improvement,
replacement, repair, equipment or tool, is herein called the "ESTIMATED
COST SAVINGS SCHEDULE" and Landlord's estimate of the Operating
Expenses so avoided or saved for each Operating Year as set forth on
any such schedule is herein called an "ESTIMATED ANNUAL SAVINGS
AMOUNT"), and (b) there shall be included in Operating Expenses for
each month during the useful life of such alteration, addition,
improvement, replacement, repair, equipment or tool an amount equal to
the combined constant monthly principal and interest payment which
would be payable on a loan (i) having an original principal amount
equal to the Capital Costs of such alteration, addition, improvement,
replacement, repair, equipment or tool, (ii) bearing interest at the
Capital Cost Rate (as hereinafter defined) applicable to such Capital
Costs, and (iii) providing for a combined constant monthly
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payment of principal and interest sufficient to fully-liquidate such
loan over a period of time equal in length to the length of such useful
life (except, that (x) if such useful life shall not commence on the
first day of a month, then the amount so included in the month in which
such useful life shall commence shall be computed on a prorata basis,
and (y) if such useful life shall not end on the last day of a month,
then the amount so included in the month in which such useful life
shall end shall be computed on a prorata basis); provided, however,
that if, with respect to any alteration, addition, improvement,
replacement, repair, equipment or tool, (X) the present value of all
the monthly amounts which, absent this proviso, would be included in
Operating Expenses during the Cost Savings Period for such alteration,
addition, improvement, replacement, repair, equipment or tool pursuant
to the foregoing provisions of this Section 3.01(c)(I)(2) (which
present value shall be determined as of the first day of the such Cost
Savings Period, using a discount rate of 10%), exceeds (Y) the present
value of all the Estimated Annual Savings Amounts on the Estimated Cost
Savings Schedule in respect of such alteration, addition, improvement,
replacement, repair, equipment or tool (which present value shall be
determined as of the first day of such Cost Savings Period, using a
discount rate of 10%, and assuming that the Estimated Annual Savings
Amount for any Operating Year shall be payable in equal monthly
installments during such Operating Year, or during the portion thereof
within the Cost Savings Period) (such excess, in respect of any
alteration, addition, improvement, replacement, repair, equipment or
tool, being herein called the "SECTION 3.01(c)(I)(2) EXCESS"), then (i)
such monthly amounts referred to in subclause (X) above shall not be
included in Operating Expenses as hereinabove provided pursuant to this
Section 3.01(c)(I)(2), and (ii) in lieu thereof, the following
provisions shall apply:
(A) for each Operating Year
during the Cost Savings Period for the alteration, addition,
improvement, replacement, repair, equipment or tool in
question, there shall be included in Operating Expenses an
amount equal to the Estimated Annual Savings Amount for such
Operating Year as set forth on the Estimated Cost Savings
Schedule in respect of such alteration, addition, improvement,
replacement, repair, equipment or tool; and
(B) if the Cost Savings
Period shall end prior to the Expiration Date, then, for each
Operating Year after the Cost Savings Period for the
alteration, addition, improvement, replacement, repair,
equipment or tool in question, there shall be included in
Operating Expenses an amount, if any, equal to the lesser of
(i) the excess, if any, of (x) the Section 3.01(c)(I)(2)
Excess in respect of such alteration, addition, improvement,
replacement, repair, equipment or tool, over (y) all amounts
included in Operating Expenses for prior Operating Years
pursuant to this subclause (B) in respect of such alteration,
addition, improvement, replacement, repair, equipment or tool,
and (ii) Landlord's reasonable estimate of the Operating
Expenses avoided or saved for such Operating Year as a result
of such alteration, addition, improvement, replacement,
repair, equipment or tool;
it being agreed that, as used herein, (A) the term "CAPITAL COSTS" shall mean
the costs of any alteration, addition, improvement, replacement, repair,
equipment or tool the costs of which, under generally accepted accounting
principles consistently applied, are required to be capitalized (it being
understood that if, under generally accepted accounting
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principles, the issue of whether, or the extent to which, any such costs are
required to be capitalized shall depend upon whether such costs are deemed
"material", then the issue of whether such costs are deemed "material" shall be
determined assuming the Real Property were the sole asset of Landlord), (B) the
term "SUBSEQUENT LEGAL REQUIREMENT" shall mean (i) any statute or governmental
rule or regulation in implementation thereof which is adopted after the date
hereof or (ii) any amendment to or modification of a statute or governmental
rule or regulation in implementation thereof, which amendment or modification is
adopted after the date hereof (and, without limiting the generality of the
foregoing, such term shall exclude any Existing Legal Requirement taking effect
after the date hereof), (C) the term "EXISTING LEGAL REQUIREMENT" shall mean any
statute or governmental rule or regulation in implementation thereof which is
adopted on or prior to the date hereof or (ii) any amendment to or modification
of a statute or governmental rule or regulation in implementation thereof, which
amendment or modification is adopted prior to the date hereof, (D) the term
"USEFUL LIFE", of any alteration, addition, improvement, replacement, repair,
equipment or tool, shall mean the useful life thereof determined in accordance
with generally accepted accounting principles, and (E) the term "COST SAVINGS
PERIOD", for any alteration, addition, improvement, replacement, repair,
equipment or tool, shall mean the period of the useful life thereof, provided,
however, that such period, in all events, shall end on the Then Current
Expiration Date (as of the date that Landlord shall have made the Estimated Cost
Savings Schedule, in respect of such alteration, addition, improvement,
replacement, repair, equipment or tool, a part of the Operating Expense
Records);
(J) management fees; it being agreed that
(i) for the Base Operating Year, the amount included in Operating Expenses
pursuant to this Section 3.01(c)(J) shall be conclusively deemed to be $480,000
(and there shall not be included in Operating Expenses for the Base Operating
Year any actual management fees or any cost in respect of services customarily
provided by a managing agent as part of its standard and customary management
fee, i.e., without separate or additional charge, such as, by way of example,
bookkeeping), and (ii) for any subsequent Operating Year, or portion thereof,
during which no managing agent is employed in respect of the Real Property, the
amount included in Operating Expenses pursuant to this Section 3.01(c)(J) shall
be an amount equal to the then standard and customary management fee for a
Similar Building (and there shall not be included in Operating Expenses for such
Operating Year, or, as the case may be, the applicable portion thereof, any cost
in respect of services customarily provided by a managing agent as part of its
standard and customary management fee, i.e., without separate or additional
charge, such as, by way of example, bookkeeping);
(K) all reasonable costs and expenses of
legal, accounting and other professional services incurred with respect to the
repair, replacement, maintenance, operation and/or security of the Real
Property;
(L) vault taxes, sewer rents, water frontage
charges; and
(M) assessments, common charges or the like
imposed by the Condominium Board to the extent that the same are imposed to pay
for (or as reimbursement for) costs which constitute Operating Expenses.
Notwithstanding anything to the contrary
contained in the foregoing provisions of this subsection (c), the term
"OPERATING EXPENSES", as used and defined under this subsection (c), shall not
include the following items:
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<PAGE> 15
(1) depreciation and amortization (except as provided above in
this subsection (c));
(2) interest on and amortization of debts (except as provided
above in this subsection (c));
(3) the cost of tenant improvements, installations and
decorations made in connection with preparing space for tenant(s) or renovating
space for an existing tenant, including any permit, license and inspection fees
and any contribution by Landlord to the cost of tenant improvements,
installations and decorations;
(4) leasing and brokerage commissions and similar fees;
(5) financing or refinancing costs;
(6) the cost of any work or service (or level or amount
thereof) provided to any tenant(s) of the Building (including Tenant) which is
in excess of the work or service (or level or amount thereof) which Landlord is
required by this lease to furnish to Tenant without separate or additional
charge (including without limitation the costs of all overtime HVAC,
supplemental HVAC, supplemental chilled water, supplemental condenser water,
special or supplemental cleaning, and overtime freight elevator service); it
being agreed, however, that, without limitation, none of the following costs
shall be excluded from Operating Expenses by reason of this clause (6): (i) the
costs of operating, maintaining, repairing and replacing any freight elevator
dedicated to one or more other tenants of the Building (other than the costs of
operating such freight elevator during overtime hours); and (ii) the costs of
operating, maintaining, repairing and replacing any passenger elevators in the
Building (except to the extent such costs are attributable to providing one or
more other tenants of the Building with a greater level of passenger elevator
service (as to number of elevators, determined on a proportional rentable square
foot basis, or hours of operation) than that provided to Tenant under this lease
without a separate or additional charge);
(7) the cost of any electricity consumed in the Premises or
any other leasable areas of the Building (together with any taxes and surcharges
on, and fees paid to third parties in connection with the calculation and
billing of such electricity);
(8) Taxes, as well as franchise, gains, transfer, inheritance,
estate and income taxes, excess profit taxes and capital stock taxes;
(9) interest, fines or penalties resulting from the violation
by Landlord or any tenant of the Building of any laws or requirements of public
authorities;
(10) costs and expenses incurred in connection with procuring
tenants, including lease concessions, landlord contributions and allowances,
lease takeover or rental assumption obligations;
(11) costs resulting from any judgment, settlement or
arbitration award against Landlord and attorneys' fees and disbursements and
other costs incurred in connection with the defense of any claim or action
against Landlord; provided, however, that any portion of such costs, fees and
disbursements (other than any thereof which were awarded as compensation for
bodily or personal injury) which would otherwise be included in and not excluded
from Operating Expenses pursuant to this Section 3.01(c), irrespective of such
liability, shall, notwithstanding the foregoing, constitute an Operating
Expense;
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<PAGE> 16
(12) Labor Costs for personnel above the grade of building
manager;
(13) rent and all other amounts payable under any ground,
overriding or underlying lease of all or any portion of the Real Property;
provided, however, that any sums paid under any such lease in respect of
expenses which would otherwise be included in and not excluded from Operating
Expenses pursuant to this Section 3.01(c) shall not be excluded from Operating
Expenses even though denominated as "rent" under any such lease;
(14) costs incurred for the repair and restoration of the
Building the need for which results from a casualty; provided, however, that
Operating Expenses shall include such costs to the extent of any commercially
reasonable deductible under the applicable insurance policy(ies), it being
agreed that (i) the costs so included in Operating Expenses shall be attributed
to the item(s) of the Landlord Restoration Work (as hereinafter defined) which
have the longest useful life(s) (such useful life(s) being determined in
accordance with generally accepted accounting principles), and (ii) in respect
of each such item, for each month of the useful life of such item (as so
determined) there shall be included in Operating Expenses an amount equal to the
combined constant monthly principal and interest payment which would be payable
on a loan (i) having an original principal amount equal to the cost of such
item, (ii) bearing interest at the Capital Cost Rate (as hereinafter defined)
applicable to such cost, and (iii) providing for a combined constant monthly
payment of principal and interest sufficient to fully-liquidate such loan over a
period of time equal in length to the length of such useful life (except, that
(x) if such useful life shall not commence on the first day of a month, the
amount so included in the month in which such useful life shall commence shall
be computed on a prorata basis, and (y) if such useful life shall not end on the
last day of a month, the amount so included in the month in which such useful
life shall end shall be computed on a prorata basis);
(15) the excess, if any, of (i) any sums paid or incurred
between affiliated parties for goods, services or other items the costs of which
are includable in Operating Expenses over (ii) the sums which would have been
paid or incurred therefor if the same had been furnished by unaffiliated third
parties on a competitive basis;
(16) any compensation paid to clerks, attendants or other
persons in commercial concessions;
(17) advertising and promotional expenditures;
(18) all costs which under generally accepted accounting
principles consistently applied are required to be capitalized (it being
understood that if, under generally accepted accounting principles, the issue of
whether, or the extent to which, any such costs are required to be capitalized
shall depend upon whether such costs are deemed "material", then the issue of
whether such costs are deemed "material" shall be determined assuming the Real
Property were the sole asset of Landlord), except for (i) Capital Costs
includable in Operating Expenses pursuant to Section 3.01(c)(I) above, (ii)
costs includable in Operating Expenses pursuant to Section 3.01(c)(14) above,
and (iii) costs which under generally accepted accounting principles
consistently applied would qualify as deferred expenses (e.g., prepaid charges)
(which deferred expenses shall be includable as and when chargeable in
accordance with generally accepted accounting principles consistently applied);
except, in any case pursuant to this clause (18), if and to the extent
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<PAGE> 17
otherwise excluded from Operating Expenses by any other provision of this
Section 3.01(c);
(19) any charges or penalties resulting from a late payment of
any item of Operating Expenses;
(20) costs incurred in the removal, encapsulation, handling or
other treatment of asbestos;
(21) the costs of purchasing sculptures, paintings and other
works of fine art located within or outside the Building;
(22) any costs related to the Retail Part (as hereinafter
defined) of the Building (provided, however, that Operating Expenses shall
include costs incurred in connection with the portions of the Real Property
(other than leasable areas of the Building) that serve both the Retail Part and
other parts of the Building to the extent the same are otherwise includable in
Operating Expenses);
(23) costs incurred for the repair and restoration of the
Building the need for which results from a condemnation;
(24) costs incurred with respect to a sale of all or any
portion of the Real Property;
(25) legal fees, expenses and disbursements relating (A) to
the enforcement of leases, recovery of possession, collection of rent, (B) to
disputes with tenants or prospective tenants of the Building or real estate
brokers, or (C) to disputes with purchasers or mortgagees or underlying lessors
of the Real Property, (C) to negotiations of leases, contracts of sale or
mortgages or sale or finance documents, or (D) to the defense of any claims for
bodily or personal injury or for any other damages the payment of which would
not constitute Operating Expenses;
(26) costs incurred in the operation and maintenance of the
Building's Parking Garage (as hereinafter defined);
(27) costs relating to withdrawal liability or unfunded
pension liability under the Multi-Employer Pension Plan Act or similar law;
(28) the cost of installing, operating and maintaining any
specialty facility, such as an observatory, broadcasting facilities, luncheon
club, athletic or recreational club, cafeteria or dining facility; provided,
however, that Operating Expenses shall include costs incurred in connection with
the portions of the Real Property (other than the leasable areas of the
Building) that serve both any such specialty facility and other parts of the
Building to the extent the same are otherwise includable in Operating Expenses;
(29) Landlord's general overhead not related to the Building;
and
(30) assessments, common charges or the like imposed by the
Condominium Board to the extent that the same are imposed to pay for (or as
reimbursement for) costs which do not constitute Operating Expenses (it being
agreed that any such assessments, common charges or the like which are paid to
the Condominium Board or otherwise to establish "reserves" for future
expenditures shall not be included in Operating Expenses at the time so paid,
but cost paid from any such reserves shall be Operating Expenses, when incurred,
to the extent such costs constitute Operating Expenses).
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<PAGE> 18
As used in this Section 3.01(c) the term
"tenant" shall include Landlord, and any Affiliate of Landlord, as occupant of
any leasable space in the Building.
If during any relevant period (i) any leasable
area of the Building shall be vacant or unoccupied, and/or (ii) the tenant or
occupant of any space in the Building shall undertake to perform work or
services therein, the cost of which, if the same had been performed by or on
behalf of Landlord, would have been included in Operating Expenses, then, in any
such event(s), the Operating Expenses for such period shall be adjusted to
reflect the Operating Expenses that would have been paid or incurred if
one-hundred (100%) percent of the leasable areas of the Building had been
occupied or if the costs of all such work or services were paid or incurred as
Operating Expenses, as the case may be.
(d) "OPERATING YEAR" shall mean each calendar
year in which occurs any part of the term of this lease.
(e) "BASE OPERATING YEAR" shall mean the
calendar year commencing on January 1, 1994.
(f) "BASE OPERATING AMOUNT" shall mean the
Operating Expenses for the Base Operating Year.
(g) "CAPITAL COST RATE", in respect of any
costs, shall mean a per annum rate equal to the Base Rate (as defined in Article
31 hereof) in effect as of December 31st of the Operating Year in which such
costs are incurred.
(h) "REAL PROPERTY" shall mean, collectively,
the Building and all fixtures, machinery and equipment installed therein or used
in the operation thereof (including, without limitation, the entire Base
Building (as hereinafter defined) and all improvements and betterments of the
Building's tenants (whether or not owned by Landlord)), including, but not
limited to, all cables, fans, pumps, boilers, generators, heating and cooling
equipment, wiring and electrical fixtures and metering, control and distribution
equipment, component parts of the HVAC, electrical, plumbing, elevator and any
life or property protection systems (including, without limitation, sprinkler
systems), window washing equipment and snow removal equipment, the Land, the
curbs, sidewalks and plazas on the Land, and all easements and other
appurtenances to the Building and/or the Land. For any Tax Year that the Real
Property shall include more than a single tax lot, the "Real Property", for
purposes of this Article 3, shall be deemed to include, and be comprised of, all
of such tax lots, and, without limiting the generality thereof, for so long as
the Condominium shall be in effect, the "Real Property", for purposes of this
Article 3, shall be deemed to include, and be comprised of, all of the Units and
the common interests appurtenant thereto (including without limitation the IDA
Units) and all common interests appurtenant thereto.
(i) "IDA UNITS" shall mean, at any time, the
Units in which title is then held by the IDA; the term "IDA" shall mean the New
York City Industrial Development Agency, its successors and assigns.
(j) "TAXES", with respect to the Real Property
(or any Unit(s) or other tax lot(s) comprising the same), shall mean all (A) the
real estate taxes and assessments (special or otherwise), rates, charges and any
other levies, impositions or charges of a similar or dissimilar nature, whether
general, special, ordinary or extraordinary, foreseen or unforeseen, which may
be levied, assessed or imposed upon or with respect to the Real Property (or any
Unit(s) or other tax lot(s) comprising the same) at any time by any federal,
state, municipal or other governments or governmental bodies or authorities, and
(B)
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<PAGE> 19
expenses incurred in contesting taxes or assessments and/or the assessed value
of the Real Property (or any Unit(s) or other tax lot(s) comprising the same)
which expenses shall be allocated to the Tax Year to which such expenses relate.
If at any time during the term of this lease the methods of taxation prevailing
on the date hereof shall be altered so that in lieu of, or as an addition to or
as a substitute for, the whole or any part of such real estate taxes or
assessments (special or otherwise) now imposed on real estate, there shall be
levied, assessed or imposed (x) a tax, assessment, levy, imposition, license fee
or charge wholly or partially as a capital levy or otherwise on the rents
received therefrom, or (y) a tax, charge or assessment, special or otherwise,
intended to serve as a real estate tax or to fulfill substantially the same
function as existing real estate taxes, then the same shall be deemed to be
included within the term "Taxes" for the purposes hereof; provided, however,
that, for purposes of such inclusion, the amounts described in clause (x) above
shall be computed as if Landlord owned the entire Real Property (or the
applicable Unit(s) or other tax lot(s)) and the same was the only real estate
owned by Landlord. For the purposes hereof, assessments included within Taxes
shall, regardless of how actually paid, be deemed to be paid in the maximum
number of installments permitted by the taxing authority imposing any such
assessment, together with interest calculated at a rate equal to the rate then
being charged by the taxing authority imposing such assessment. If Landlord
shall receive any refund of Taxes, then Taxes shall be computed net of (i.e. by
deducting) such refund; for purposes of this lease, a "refund" of Taxes shall
include the interest, if any, which is paid by the taxing authority to Landlord
in respect of such refund.
(k) "REAL PROPERTY TAXES", for any Tax Year,
shall mean the sum of (A) all Taxes payable with respect to the Real Property
for such Tax Year, plus (B) all Taxes that would have been payable with respect
to the IDA Units for such Tax Year, but for any exemption then in effect
therefor (but which, in fact, are not payable as a result of such exemption).
(l) (1) "PSI'S GENERATOR TAXES" shall mean
either (i) for any Tax Year that PSI's Generator constitutes a separate tax lot
for purposes of Taxes, Taxes payable with respect to such separate tax lot for
such Tax Year, and (ii) for any Tax Year that PSI's Generator does not
constitute a separate tax lot for purposes of Taxes, the portion of Taxes
payable with respect to the Real Property which is attributable to PSI's
Generator; the term "PSI'S GENERATOR" shall mean those certain generators
heretofore installed and currently maintained in the Building by Prudential
Securities Incorporated (herein, together with its successors and assigns,
called "PSI"), inclusive of all fuel tanks, fuel pumps, fuel pipes and
electrical conduits ancillary thereto, and together with (x) any successor
generator(s) and/or ancillary equipment thereto, and (y) any of PSI's
supplements or additions to such generator and/or such ancillary equipment (by
way of additional generator units and/or ancillary equipment or otherwise).
(2) "TENANT'S GENERATOR TAXES" shall
mean either (i) for any Tax Year that Tenant's Generator constitutes a separate
tax lot for purposes of Taxes, Taxes payable with respect to such separate tax
lot for such Tax Year, and (ii) for any Tax Year that Tenant's Generator does
not constitute a separate tax lot for purposes of Taxes, the portion of Taxes
payable with respect to the Real Property which is attributable to Tenant's
Generator; the term "Tenant's Generator" being defined in Article 41 hereof.
(3) "GENERATOR TAXES" shall mean
Tenant's Generator Taxes and/or PSI's Generator Taxes; the term "GENERATOR"
shall mean Tenant's Generator and/or PSI's Generator.
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<PAGE> 20
(m) "ADJUSTED REAL PROPERTY TAXES", for any Tax
Year, shall mean the excess of (i) Real Property Taxes for such Tax Year
(inclusive of PSI's Generator Taxes and Tenant's Generator Taxes for such Tax
Year), over (ii) the sum of (x) PSI's Generator Taxes for such Tax Year, plus
(y) Tenant's Generator Taxes for such Tax Year.
(n) "TAX YEAR" shall mean each period of twelve
(12) months, commencing on the first day of July of each such period, in which
occurs any part of the term of this lease (or the Applicable Period (as
hereinafter defined)), or such other period of twelve (12) months occurring
during the term of this lease (or the Applicable Period) as hereafter may be
duly adopted as the fiscal year for real estate tax purposes of the City of New
York.
(o) "BASE TAX AMOUNT" shall mean the sum of (i)
one-half (1/2) of Adjusted Real Property Taxes for the Tax Year commencing on
July 1, 1994 and ending on June 30, 1995, plus (ii) one-half (1/2) of Adjusted
Real Property Taxes for the Tax Year commencing on July 1, 1995 and ending on
June 30, 1996.
(p) "TENANT'S OPERATING SHARE", during any
period, shall mean a fraction (expressed as a percentage rounded to four decimal
places), (i) the numerator of which is the then aggregate rentable area of the
Premises, and (ii) the denominator of which is equal to Tenant's Operating Share
Denominator (as defined in Section 3.06 below). As of the date hereof, Tenant's
Operating Share is 16.3523%. If, for any Operating Year, Tenant's Operating
Share shall not remain a constant percentage throughout the entirety of such
Operating Year, then Tenant's Operating Share for such Operating Year shall be
that percentage which represents the weighted average (computed on a per diem
basis) of all the percentages constituting Tenant's Operating Share during such
Operating Year.
(q) "TENANT'S TAX SHARE", during any period,
shall mean a fraction (expressed as a percentage rounded to four decimal
places), (i) the numerator of which is the then aggregate rentable area of the
Premises, and (ii) the denominator of which is equal to Tenant's Tax Share
Denominator (as defined in Section 3.06 below). As of the date hereof, Tenant's
Tax Share is 15.9961%. If, for any Tax Year, Tenant's Tax Share shall not remain
a constant percentage throughout the entirety of such Tax Year, then Tenant's
Tax Share for such Tax Year shall be that percentage which represents the
weighted average (computed on a per diem basis) of all the percentages
constituting Tenant's Tax Share during such Tax Year.
(r) "TAX CLOSURE DATE", for any Tax Year, shall
mean the date upon which all tax reduction proceedings in respect of Taxes for
such Tax Year (exclusive of any such proceedings regarding Taxes with respect to
a Generator which, for such Tax Year, constitutes a separate tax lot) shall have
been finally resolved (or, if no such proceedings shall have been timely
instituted for such Tax Year, then the date upon which the right to bring such
proceedings shall have lapsed).
3.02. (a) Tenant, for each Tax Year (subject to the provisions
of Section 3.02(h) below), shall pay to Landlord as Additional Charges an amount
(herein called the "TAX PAYMENT") equal to the sum of (i) Tenant's Tax Share of
the excess of (x) the Adjusted Real Property Taxes for such Tax Year, over (y)
the Base Tax Amount (the portion of any Tax Payment described in this clause (i)
being herein called the "BASE COMPONENT" of such Tax Payment), plus (ii)
Tenant's Generator Taxes for such Tax Year (the portion of any Tax Payment
described in this clause (ii) being herein called the "GENERATOR COMPONENT" of
such Tax Payment).
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(b) Landlord, at anytime prior to, during, or
after the end of, any Tax Year, may deliver to Tenant a Tax Statement(s) for
such Tax Year. Tenant, for each Tax Year, shall pay to Landlord the Tax Payment
set forth on the Tax Statement(s) for such Tax Year in the same number of
installments as Taxes are required to be paid to the City of New York for such
Tax Year, with each such installment being due on the later to occur of (x) the
date that is thirty (30) days prior to the due date of the corresponding
installment of Taxes and (y) the date that is ten (10) Business Days after the
date that Tenant receives the initial Tax Statement for such Tax Year.
(c) If, at any time after the delivery of the
initial Tax Statement for any Tax Year, it is determined that, the Tax Payment
for such Tax Year is greater or less than the amount set forth on the then most
recent Tax Statement(s) (for any reason including without limitation (i) any
increase in Taxes for such Tax Year, whether before, during or after such Tax
Year, (ii) any decrease in the Taxes for any Tax Year, whether or before, during
or after such Tax Year, including without limitation any such decrease resulting
from any refund of Taxes for such Tax Year, or (iii) any decrease in Taxes
comprising the whole or any part of the Base Tax Amount, including without
limitation any such decrease resulting from any refund of Taxes for either or
both of the 1994/95 Tax Year or the 1995/96 Tax Year), then, in any case that
the Tax Payment is greater, Landlord may, or, in any case that the Tax Payment
is less, Landlord shall, furnish to Tenant a revised Tax Statement(s) for such
Tax Year. If any revised Tax Statement shall set forth a Tax Payment that is
greater than that set forth on the previous Tax Statement, then Tenant shall pay
to Landlord such additional amount within thirty (30) days after Tenant's
receipt of such revised Tax Statement. If any revised Tax Statement shall set
forth a Tax Payment that is less than that set forth on the previous Tax
Statement, then Landlord, within thirty (30) days after Tenant's receipt of such
revised Tax Statement, shall pay to Tenant the difference between the Tax
Payment, as set forth on the revised Tax Statement, and the Tax Payment set
forth on the previous Tax Statement.
(d) (1) Nothing contained in this lease shall
require the filing of any application, or the institution of any proceeding,
seeking a reduction in Taxes or assessed valuation. Tenant, for itself and its
immediate and remote subtenants and successors in interest hereunder, hereby
waives, to the extent permitted by law, any right Tenant may now or in the
future have to protest or contest any Taxes. As used herein, the phrase "PROTEST
OR CONTEST" of Taxes shall include the filing of any application, and the
institution, prosecution and/or settlement of any proceeding, seeking a
reduction in Taxes or the assessed valuation of the Real Property or any part
thereof, and any other challenge of the determination of Taxes or such assessed
valuation.
(2) Notwithstanding the provisions of
Section 3.02(d)(1) above, Landlord, upon Tenant's request received between
January 2 and February 10 of each calendar year during the term of this lease,
shall, on or before February 24 of such calendar year, advise Tenant whether or
not Landlord intends to file a Protest with respect to the next succeeding Tax
Year. A "PROTEST" shall mean such necessary administrative action(s) under
applicable law as shall be necessary to protest the tentative assessed valuation
of the Real Property. If Landlord advises Tenant that Landlord does not intend
to file a Protest with respect to such Tax Year, Tenant shall have the right,
upon notice given to Landlord on or before February 25 of such calendar year
(or, if February 25 is not a Business Day, then the next succeeding Business
Day), to require Landlord, at Tenant's expense, to file a Protest in accordance
with this Section 3.02(d)(2). If Tenant shall give such notice to Landlord,
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Landlord, at Tenant's expense, shall commence a Protest. Failure of Tenant to so
notify Landlord as aforesaid shall be deemed a waiver of Tenant's right to cause
Landlord to commence a Protest. Tenant, within thirty (30) days after demand by
Landlord, shall reimburse Landlord as Additional Charges for any costs and
expenses incurred by Landlord in connection with any Protest filed by reason of
Tenant's direction. If such Protest shall result in a refund of the Taxes paid
for such Tax Year, then, provided Tenant shall have paid all costs and expenses
required to be paid by Tenant in accordance with the preceding sentence and
Tenant shall not otherwise be in monetary default under this lease beyond the
expiration of any applicable notice and/or cure period, the amount of such
refund shall be paid to Tenant up to the amount of costs and expenses paid by
Tenant in connection with the prosecution of such Protest before application
thereof toward a refund of the tax payments for such Tax Year to tenants in the
Building (including without limitation Tenant) as may be required pursuant to
their respective leases.
(e) For any Tax Year, Taxes "payable" with
respect to the Real Property (or any Unit(s) or other tax lot(s) comprising the
same) shall be computed by and after giving effect to (i) any deferral or
abatement of Taxes in effect for such Tax Year, and (ii) any repayment, with
interest if applicable, during such Tax Year of any Taxes deferred or abated in
any prior year. Without limiting the generality of the foregoing, it is
understood and agreed:
(1) that Landlord has obtained, or intends to obtain,
benefits under Title 11, Chapter 2, Part 4 of the Administrative Code
of the City of New York (the "ICIP");
(2) that Tenant shall report to Landlord upon request the
number of workers permanently engaged in employment in the Premises,
the nature of each worker's employment and the New York City residency
of each worker;
(3) that Tenant shall provide access to the Premises by
employees and agents of the Department (as such term is defined in the
ICIP Rules and Regulations) at all reasonable times at the request of
Landlord (which request may be verbal); and
(4) that Tenant shall not be required to pay taxes or
charges which become due because of the willful neglect or fraud by
Landlord in connection with ICIP, or otherwise relieve or indemnify
Landlord from any personal liability arising under the Administrative
Code of the City of New York, Section 11-265, except where imposition
of such taxes, charges or liability is occasioned by actions of Tenant
in violation of this lease.
Landlord represents that, other than (x) the ICIP tax deferral and abatement
program(s), and (y) tax deferral and abatement programs applicable to the IDA
Units resulting from, or incident to, the IDA's ownership thereof or other
benefit programs of the IDA, (I) the Real Property is not currently subject to
tax deferral or abatement program, and (II) no tax deferral or abatement program
to which the Real Property is currently subject or was previously subject (prior
to the date hereof) will hereafter require any repayment of any Taxes deferred
or abated in any prior year.
(f) If Tenant installs Tenant's Generator, then
the following provisions shall apply:
(1) Tenant, at Tenant's expense, shall cooperate with
Landlord in connection with Landlord's efforts to
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cause Tenant's Generator to be assigned a separate tax lot for purposes of
Taxes.
(2) For each Tax Year that Tenant's Generator does not
constitute a separate tax lot, the following provisions shall apply:
(A) Landlord, promptly after the occurrence of the Tax
Closure Date with respect to such Tax Year, shall furnish to Tenant a notice
that the same has occurred, it being understood and agreed that (i) such notice
may be given as part of a Tax Statement furnished after the Tax Closure Date,
and (ii) in any case where the initial Tax Statement for such Tax Year has not
theretofore been furnished, such notice shall be accompanied by such initial Tax
Statement (the date upon which such notice is furnished by Landlord being herein
called the "TAX CLOSURE NOTICE DATE"). The term "GENERATOR TAX DISPUTE PERIOD",
for any Tax Year, shall mean the period commencing on the Tax Closure Date for
such Tax Year and ending on the date one hundred twenty (120) days after the Tax
Closure Notice Date for such Tax Year; provided, however, that if, after the Tax
Closure Date for such Tax Year but prior to the expiration of such 120-day
period, Landlord shall issue a Tax Statement for such Tax Year, then the
Generator Tax Dispute Period shall be the period commencing on the Tax Closure
Date for such Tax Year and ending on the date one hundred twenty (120) days
after the later of (i) the Tax Closure Notice Date or (ii) the date on which
such Tax Statement is issued.
(B) (i) Tenant, unless and until there shall be a final
determination of Tenant's Generator Taxes for such Tax Year pursuant to the
provisions of this Section 3.02(f)(2) (by agreement, arbitration or otherwise),
shall make payments of the Tax Payment for such Tax Year based upon Landlord's
estimate of Tenant's Generator Taxes for such Tax Year, if any, as set forth
from time to time on the then most recent Tax Statement for such Tax Year.
Landlord's estimate of Tenant's Generator Taxes for any Tax Year, as set forth
on any Tax Statement, shall not be greater than Landlord's then good-faith
opinion of Tenant's Generator Taxes for such Tax Year.
(ii) If, at anytime during the Generator Tax Dispute
Period for such Tax Year, Tenant reasonably believes that the amount set forth
as Tenant's Generator Taxes on the then most recent Tax Statement for such Tax
Year is incorrect, then Tenant, by notice to Landlord given not later than end
of the Generator Tax Dispute Period for such Tax Year, shall so notify Landlord
of Tenant's belief, which notice shall refer to the Tax Year with respect to
which such notice is being served, and set forth Tenant's good-faith opinion of
the amount of Tenant's Generator Taxes for such Tax Year (each such notice being
herein called a "GENERATOR DISPUTE NOTICE"). If Tenant shall fail to serve a
Generator Dispute Notice prior to the end of the Generator Tax Dispute Period,
then, subject to the provisions of subsection (iii) below, the amount set forth
as Tenant's Generator Taxes on the most recent Tax Statement as of the end of
such period shall be binding and conclusive on Landlord and Tenant.
(iii) For purposes of this lease, Tenant's Generator
Taxes shall be deemed to have been finally determined for any Tax Year upon (x)
the expiration of the Generator Tax Dispute Period with respect to such Tax Year
(in the event that Tenant does not give a Generator Dispute Notice prior to the
end of such Generator Tax Dispute Period as provided in Section
3.02(f)(2)(B)(ii) above), (y) a determination in arbitration as to Tenant's
Generator Taxes (following Tenant's giving of a Generator Dispute Notice)
pursuant to Section 3.02(f)(2)(C) below, or (z) an agreement of Landlord and
Tenant as to Tenant's Generator Taxes (following Tenant's giving of a
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Generator Dispute Notice as contemplated by Section 3.02(f)(2)(C) below);
provided, however, that if Landlord, in accordance with the provisions of this
lease, shall issue a Tax Statement for such Tax Year after the lapse of the
Generator Tax Dispute Period, then, and in each such case, Tenant's Generator
Taxes for such Tax Year shall not be finally determined as aforesaid, but rather
the provisions of Sections 3.02(f)(2)(B)(ii) and 3.02(f)(2)(C), as well as this
Section 3.02(f)(2)(B)(iii), shall again apply, mutatis mutandis, except that the
Generator Tax Dispute Period shall be the period commencing on the date on which
Landlord issued such Tax Statement and ending on the date that is one hundred
twenty (120) days thereafter. Accordingly, pursuant to the operation of the
proviso to the preceding sentence there may be more than one final determination
of the Tenant's Generator Taxes.
(C) If Tenant shall timely serve a Generator Dispute Notice
for any Tax Year, then (I) Landlord and Tenant shall proceed in good-faith to
agree upon the amount of the Tenant's Generator Taxes for the Tax Year in
question, and (II) if Landlord and Tenant are unable to so agree on or prior to
the date that is sixty (60) days after the date that Landlord receives the
Generator Dispute Notice, then, at anytime thereafter, either of Landlord or
Tenant, by written notice to the other party (herein called a "GENERATOR
ARBITRATION NOTICE"), may submit the determination of Tenant's Generator Taxes
for such Tax Year to arbitration in accordance with the following provisions:
(w) Within thirty (30) days after either party's receipt
of a Generator Arbitration Notice, each of Landlord and Tenant, by
notice to the other party, shall appoint an arbitrator (the two
arbitrators so appointed being herein collectively called the "INITIAL
GENERATOR ARBITRATORS"). If either Landlord or Tenant shall fail to
timely appoint an Initial Generator Arbitrator within such 30-day
period, then the party which appointed an Initial Generator Arbitrator
may notify the other party of such failure (which notice shall refer
specifically to this Section 3.02(f)(2)(C)(w)), and if, in such event,
the other party does not, within a period of ten (10) days after its
receipt of such notice, appoint the second Initial Generator
Arbitrator, then the appointed Initial Generator Arbitrator shall
independently select and appoint the second Initial Generator
Arbitrator, within fifteen (15) days after the expiration of such
10-day period. Within twenty (20) days after the appointment of both
Initial Generator Arbitrators, the Initial Generator Arbitrators shall
jointly appoint a mutually agreeable third arbitrator who shall be
impartial (herein called the "THIRD GENERATOR ARBITRATOR"). If the
Initial Generator Arbitrators fail to agree upon and appoint the Third
Generator Arbitrator within such 10-day period, then either Landlord or
Tenant may request that the American Arbitration Association ("AAA")
appoint the Third Generator Arbitrator within twenty (20) days after
such request, and both parties shall be bound by any appointment so
made within such 20-day period. If the Third Generator Arbitrator shall
not have been appointed within such 20-day period, then either Landlord
or Tenant may apply to any court having jurisdiction to make such
appointment. The Third Generator Arbitrator shall subscribe and swear
to an oath to fairly and impartially perform the duties required of the
Third Generator Arbitrator pursuant to this Section 3.02(f)(2)(C).
(x) Within thirty (30) days after the appointment of the
Third Generator Arbitrator, Landlord and Tenant shall each submit to
the Third Arbitrator, in a sealed envelope, a written statement setting
forth such party's then good-faith determination of
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Tenant's Generator Taxes for such Tax Year (Landlord's determination is
herein called "LANDLORD'S GENERATOR DETERMINATION" and Tenant's
determination is herein called "TENANT'S GENERATOR DETERMINATION" and
Landlord's Generator Determination and Tenant's Generator Determination
are herein collectively called the "GENERATOR DETERMINATIONS"). Neither
of the Generator Determinations shall be opened except as and when
hereinafter expressly provided. If either Landlord or Tenant shall fail
to submit its Generator Determination in accordance with the provisions
of this Section 3.02(f)(2)(C)(x), then the party which made a Generator
Determination shall notify the other party of such failure (which
notice shall refer specifically to this Section 3.02(f)(2)(C)(x)), and
if, in such event, the other party does not, within a period of ten
(10) days after its receipt of such notice, submit its Generator
Determination, then the only Generator Determination which was made in
accordance with this Section 3.02(f)(2)(C)(x) shall promptly thereafter
be opened by the Third Generator Arbitrator, and Tenant's Generator
Taxes for such Tax Year shall be such Generator Determination, which
Generator Determination shall be conclusive and binding upon both
Landlord and Tenant.
(y) If both Landlord and Tenant submit their
respective Generator Determinations in accordance with the provisions
of Section 3.02(f)(2)(C)(x) above, then the Third Generator Arbitrator
shall arrange a meeting (herein called the "GENERATOR ARBITRATION
MEETING") to be held at the Building office (or at such other place as
is mutually agreeable to the Third Arbitrator and Landlord and Tenant
and located in the Borough of Manhattan), and which shall occur during
Business Hours on a day not later than twenty (20) days after the Third
Generator Arbitrator's receipt of both Generator Determinations.
Landlord and Tenant shall have not less than ten (10) days notice of
the date, time and location of the Generator Arbitration Meeting and
shall have the right to have its representatives present thereat. At
the Generator Arbitration Meeting, (i) the Generator Determinations
shall be opened by the Third Arbitrator and copies thereof shall be
distributed to Landlord and Tenant, and (ii) thereafter, each of
Landlord and Tenant may submit to the Third Generator Arbitrator such
written evidence in support of its Generator Determination as it deems
appropriate.
(z) Within twenty (20) days after the
Generator Arbitration Meeting, the Third Arbitrator shall independently
select the Generator Determination (as between Landlord's Generator
Determination and Tenant's Generator Determination) which, in his
opinion, more accurately reflects Tenant's Generator Taxes, and shall
notify Landlord and Tenant of such selection in writing.
(D) With respect to any arbitration
conducted pursuant to the provisions of Section 3.02(f)(2)(C) above, the
following provisions shall apply: (i) the fees and expenses of any such
arbitration shall be borne by the parties equally, but each party shall bear the
expense of the Initial Generator Arbitrator appointed by it and its attorneys
and experts as well as any expenses of presenting its own proof; (ii) Landlord
and Tenant shall each have the right to submit such data and memoranda to the
Third Arbitrator in support of their respective positions as they may deem
necessary or appropriate; (iii) each arbitrator shall be an attorney licensed to
practice law in the State of New York, who shall not be a sole practitioner, and
who shall have at least ten (10) years' experience in tax certiorari and real
estate tax litigation with respect to properties which are similar in character
to the Building; and (iv) no arbitrator shall have any power to add to, modify
or change any such definitions or any other provisions of
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this lease, and the jurisdiction of the arbitrators is accordingly limited.
(E) Within thirty (30) days after the final determination
of Tenant's Generator Taxes for any Tax Year as between Landlord and Tenant, the
Tax Payment for such Tax Year shall be re-computed and reconciled with payments
theretofore made on account of such Tax Payment, and (i) if the payments
theretofore made by Tenant on account of such Tax Payment were less than the Tax
Payment as re-computed, then Tenant shall pay to Landlord the amount of such
deficiency within twenty (20) days after demand therefor, or (ii) if the
payments theretofore made by Tenant on account of such Tax Payment were greater
than the Tax Payment as re-computed, then Landlord shall pay to Tenant the
amount of such overpayment within twenty (20) days after demand therefor.
(3) If, for any Tax Year that Tenant's Generator
constitutes a separate tax lot, Tenant shall have the obligation to pay to
Landlord, as the Generator Component of the Tax Payment, an amount equal to the
entire amount of Tenant's Generator Taxes, then, for each such Tax Year and
notwithstanding the provisions of Section 3.02(d) to the contrary, the following
provisions shall apply:
(A) Except as provided below, (i) Landlord shall not have
any right to protest or contest Tenant's Generator Taxes for such Tax Year or
any obligation to do so, and (ii) Tenant shall have the right to protest or
contest Tenant's Generator Taxes for such Tax Year.
(B) Landlord, in connection with any such protest or
contest of Tenant's Generator Taxes made or instituted by Tenant pursuant to
Section 3.02(f)(3)(A) above, shall, within fifteen (15) Business Days after
written request therefor, execute (and provide any readily accessible
information known by Landlord for) any documents reasonably required in
connection therewith, provided that such documents are in proper form. Tenant
hereby agrees that it shall (x) reimburse Landlord all Landlord's out-of-pocket
expenses incurred in connection with any protest or contest of Tenant's
Generator Taxes made or instituted by Tenant (including without limitation those
incurred in connection with Landlord's execution of any documents, or its
provision of information, as provided in the preceding sentence), and (y)
indemnify and hold harmless Landlord against any and all liabilities which
Landlord may incur by reason of its execution of any documents, or its provision
of information, as provided in the preceding sentence; provided, however, that
neither such reimbursement nor such indemnity shall include any such expenses or
liabilities to the extent that (i) Landlord is responsible therefor under any
other provision of this lease, (ii) the same would be, or would have been,
discharged, satisfied or avoided by Landlord's performance of its obligations
under this lease, or (iii) the same arise out of any inaccuracy in any
information provided by Landlord.
(C) Notwithstanding the foregoing provisions of this
Section 3.02(f)(3), Tenant's right to protest or contest Tenant's Generator
Taxes as set forth in Section 3.02(f)(3)(A) above for any Tax Year (as well as
Landlord's obligation to execute documents and provide information in connection
therewith as set forth in Section 3.02(f)(3)(B) above), shall be subject to such
protest or contest by Tenant not having, in Landlord's reasonable judgement, a
negative impact upon Landlord in any pending or prospective protest or contest
of any other Taxes for such Tax Year or any other Tax Year.
(g) In respect of PSI's Generator, the
following provisions shall apply:
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(1) Landlord shall make application to the applicable
taxing authority to have PSI's Generator assigned a separate tax lot for
purposes of Taxes.
(2) For each Tax Year that PSI's Generator does not
constitute a separate tax lot, the following provisions shall apply:
(A) Tenant, unless and until there shall be a final
determination of PSI's Generator Taxes as between Landlord and PSI (by agreement
or arbitration), shall make payments of the Tax Payment for such Tax Year based
upon Landlord's estimate of PSI's Generator Taxes for such Tax Year, if any, as
set forth from time to time on the then most recent Tax Statement for such Tax
Year. Landlord's estimate of PSI's Generator Taxes for any Tax Year, as set
forth on any Tax Statement, shall not be greater than Landlord's then good-faith
opinion of PSI's Generator Taxes for such Tax Year.
(B) Upon a final determination of PSI's Generator Taxes as
between Landlord and PSI for any Tax Year, PSI's Generator Taxes for purposes of
this lease for such Tax Year shall be deemed to be one of the following amounts
(which amount, in either case, shall be conclusive and binding upon Landlord and
Tenant): (i) if the final determination of PSI's Generator Taxes as between
Landlord and PSI for such Tax Year was the result of a binding arbitration
proceeding between Landlord and PSI, then PSI's Generator Taxes under this lease
for such Tax Year shall be deemed to be the amount of such final determination;
and (ii) in any other case, PSI's Generator Taxes under this lease for such Tax
Year shall be deemed to be an amount equal to (x) the Generator Differential
Factor (as hereinafter defined) for such Tax Year, multiplied by (y) Tenant's
Generator Taxes for such Tax Year (as finally determined under this lease). As
used herein, the "GENERATOR DIFFERENTIAL FACTOR", for any Tax Year, shall mean
the quotient obtained by dividing (I) the capacity of PSI's Generator (measured
in KVAs) for such Tax Year, by (II) the capacity of Tenant's Generator (measured
in KVAs) for such Tax Year (which quotient, if not a whole number, shall be
rounded to four decimal places).
(C) Within thirty (30) days after the final determination
of PSI's Generator Taxes under this lease for any Tax Year (it being understood
that if Section 3.02(g)(2)(B)(ii) is applicable, then such final determination
cannot be made until Tenant's Generator Taxes for such Tax Year have been
finally determined), the Tax Payment for such Tax Year shall be re-computed and
reconciled with payments theretofore made on account of such Tax Payment, and
(i) if the payments theretofore made by Tenant on account of such Tax Payment
were less than the Tax Payment as re-computed, then Tenant shall pay to Landlord
the amount of such deficiency within twenty (20) days after demand therefor, or
(ii) if the payments theretofore made by Tenant on account of such Tax Payment
were greater than the Tax Payment as re-computed, then Landlord shall pay to
Tenant the amount of such overpayment within twenty (20) days after demand
therefor.
(h) (1) Notwithstanding anything to the contrary
set forth above in this Section 3.02, there shall be an abatement of the Base
Component of the Tax Payment(s) which are payable in respect of all periods
prior to the Tax Payment Commencement Date (as hereinafter defined); there shall
be no such abatement of the Generator Component of such Tax Payment(s). The "TAX
PAYMENT COMMENCEMENT DATE" shall be July 1, 1995. If the Tax Payment
Commencement Date shall be a day other than the first day of a Tax Year, then
the Base Component of the Tax Payment for the Tax Year in which the Tax Payment
Commencement Date occurs shall be prorated (on a per diem basis) to correspond
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to that portion of the Tax Year occurring on or after the Tax Payment
Commencement Date.
(2) Notwithstanding anything to the contrary set forth
above in this Section 3.02, in respect of the Tax Year in which the Expiration
Date occurs, (i) the Base Component of the Tax Payment shall be prorated (on a
per diem basis) to correspond to that portion of such Tax Year occurring on or
prior to the Expiration Date, and (ii) except as provided in Section 3.02(h)(3)
below, the Generator Component of the Tax Payment shall also be prorated (on a
per diem basis) to correspond to that portion of such Tax Year occurring on or
prior to the Expiration Date.
(3) Unless (i) Landlord, pursuant to Section 12.02(c)
hereof, shall designate Tenant's Generator Unit as among Designated Exterior
Improvements (as hereinafter defined), or (ii) in any case that this lease shall
terminate pursuant to a Non-Scheduled Early Termination (as hereinafter
defined), the Section 12.02(c) Work shall include the removal of Tenant's
Generator Unit and Landlord shall not perform the same in accordance with the
provisions of Section 12.02(c), the following provisions shall apply
(notwithstanding the foregoing provisions of this Section 3.02): (A) in respect
of the Tax Year in which the Expiration Date occurs, the Generator Component of
the Tax Payment shall not be prorated (but rather Tenant shall pay, as the
Generator Component of the Tax Payment for such Tax Year, an amount equal to the
entirety of Tenant's Generator Taxes for such Tax Year, notwithstanding the fact
that this lease shall not be in effect for the entirety of such Tax Year), and
(B) in respect of each fiscal tax year or other period occurring after the Tax
Year in which the Expiration Date occurs, Tenant, notwithstanding that this
lease will not be in effect for any part of such fiscal tax year or other
period, shall continue to pay to Landlord an amount equal to either (i) for any
such fiscal tax year or other period for which a separate tax lot exists for
Tenant's Generator (whether or not Tenant's Generator is in existence during
such fiscal tax year or other period), Taxes payable with respect to such
separate tax lot, and (ii) for any other such fiscal tax year or other period,
the portion of Taxes payable with respect to the Real Property which is
attributable to the then current or past existence of Tenant's Generator. The
provisions of Sections 3.02(b), 3.02(c) and 3.02(f) above, as applicable to the
Generator Component of the Tax Payment for Tax Years, shall apply, mutatis
mutandis, to Tenant's payment obligations pursuant to clause (B) above for the
fiscal tax years and other periods described therein.
3.03. (a) Tenant, for each Operating Year occurring after the
Base Operating Year, shall pay to Landlord, as Additional Charges for such
Operating Year, an amount (herein called the "OPERATING PAYMENT") equal to
Tenant's Operating Share of the excess of (i) Operating Expenses for such
Operating Year, over (ii) the Base Operating Amount.
(b) Landlord may furnish to Tenant, prior to the
commencement of each Operating Year subsequent to the Base Operating Year, a
written statement setting forth Landlord's reasonable estimate of the Operating
Payment for such Operating Year (such estimate, as the same may be revised as
hereinafter provided, the "LANDLORD'S ESTIMATED OPERATING PAYMENT"). Tenant
shall pay to Landlord on the first day of each month during the Operating Year
for which the Operating Payment will be due, an amount equal to one-twelfth
(1/12th) of the Landlord's Estimated Operating Payment for such Operating Year.
If, however, Landlord shall not furnish any such estimate for an Operating Year
or if Landlord shall furnish any such estimate for an Operating Year subsequent
to the commencement thereof, then (i) until the first day of the month following
the month in which such estimate is furnished to Tenant, Tenant shall pay to
Landlord on the first
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day of each month an amount equal to the monthly sum payable by Tenant to
Landlord under this Section 3.03 for the last month of the preceding Operating
Year, (ii) after such estimate is furnished to Tenant, Landlord shall give
notice to Tenant stating whether the installments of the Operating Payment
previously made for such Operating Year were greater or less than the
installments of the Operating Payment which should have been previously made for
such Operating Year in accordance with such estimate, and (A) if there shall be
a deficiency, Tenant shall pay the amount thereof within thirty (30) days after
Tenant's receipt of such notice, or (B) if there shall have been an overpayment,
Landlord shall, within thirty (30) days from the giving of such notice, refund
to Tenant the amount thereof, together with interest on the amount thereof at
the Base Rate for the period from the date(s) of such overpayment to the date
such payment is made, and (iii) on the first day of the month following the
month in which such estimate is furnished to Tenant, and on the first day of
each month thereafter throughout the remainder of such Operating Year, Tenant
shall pay to Landlord an amount equal to one-twelfth (1/12th) of the Landlord's
Estimated Operating Payment set forth on such estimate. Landlord may, during
each Operating Year (but not more than twice during any Operating Year), furnish
to Tenant a revised statement of Landlord's Estimated Operating Payment for such
Operating Year, and in such case, the Landlord's Estimated Operating Payment for
such Operating Year shall be adjusted and paid or refunded or credited as the
case may be, substantially in the same manner as provided in the preceding
sentence.
(c) Landlord, after the end of each Operating Year
subsequent to the Base Operating Year, shall furnish to Tenant an Operating
Statement for such Operating Year. Landlord, prior to or together with the
delivery of the initial Operating Statement for the first Operating Year after
the Base Operating Year, shall furnish to Tenant an Operating Statement for the
Base Operating Year (the "BASE YEAR OPERATING STATEMENT"). If, for any Operating
Year after the Base Operating Year, the Operating Statement shall show that the
sums paid by Tenant, if any, under Section 3.03(b) exceeded the Operating
Payment to be paid by Tenant for such Operating Year (such excess for any
Operating Year being herein called the "OPERATING OVERPAYMENT"), then Landlord,
within thirty (30) days after delivery of such Operating Statement, shall refund
to Tenant the amount of such Operating Overpayment, together with interest on
the amount thereof at the Base Rate for the period commencing on the last day of
the Operating Year in question and ending on the date the appropriate refund is
made. If the Operating Statement for such Operating Year shall show that the
sums so paid by Tenant were less than the Operating Payment to be paid by Tenant
for such Operating Year (such deficiency for any Operating Year being herein
called the "OPERATING DEFICIENCY"), Tenant shall pay the amount of such
Operating Deficiency within thirty (30) days after Tenant's receipt of the
Operating Statement.
(d) (1) Tenant, upon notice given no later than the
applicable Audit Notice Deadline Date (as hereinafter defined) with respect to
any Operating Statement, may elect to have Tenant's employees, accountants or
other agents examine, at reasonable times and at such location(s) in the City of
New York as Landlord may reasonably designate, the Operating Expense Records (as
hereinafter defined) with respect to such Operating Statement; if Tenant shall
not timely give such notice, then the Operating Statement in question shall be
conclusive and binding upon Tenant (it being agreed that the foregoing shall not
be construed to prejudice Tenant's rights with respect to items constituting
revisions or corrections to such Operating Statement which are set forth in a
subsequently delivered revised or corrected Operating Statement for the same
Operating Year). As used herein, the "AUDIT NOTICE DEADLINE DATE", with respect
to any Operating Statement, shall refer to the date one hundred
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eighty (180) days after the date of Tenant's receipt thereof; provided, however,
that with respect to the initial Base Year Operating Statement, the initial
Operating Statement for the first Operating Year after the Base Operating Year
and the initial Operating Statement for the second Operating Year after the Base
Operating Year (such three Operating Statements being herein collectively called
the "THRESHOLD OPERATING STATEMENTS"), the term "Audit Notice Deadline Date"
shall refer to the date (herein called the "INITIAL AUDIT NOTICE DEADLINE DATE")
that is one hundred eighty (180) days after the first date after all of the
Threshold Operating Statements shall have been furnished to Tenant. As used
herein, "OPERATING EXPENSE RECORDS", with respect to any Operating Statement,
shall mean such books and records as are relevant to the Operating Expenses
incurred in the Operating Year for which such Operating Statement is furnished.
In connection with any examination by Tenant of the Operating Expense Records,
Tenant agrees to treat, and to instruct its employees, accountants, attorneys
and agents to treat, all information as confidential and not disclose it to any
other person except Tenant's accountants, employees, attorneys and agents,
except as may be required by law or may be necessary or appropriate in
connection with the prosecution of any claim by Tenant hereunder.
(2) If Tenant shall, in good-faith, dispute any Operating
Statement, then Tenant, no later than the Audit Notice Deadline Date with
respect to such Operating Statement, may send a written notice (each, a
"TENANT'S STATEMENT") to Landlord, setting forth such dispute(s) and specifying
in reasonable detail the basis therefor and Tenant's determination of the
Operating Expenses for such Operating Year. If Tenant shall not timely give such
Tenant's Statement, then the Operating Statement in question shall be conclusive
and binding upon Tenant. If Tenant shall timely give such Tenant's Statement,
then Landlord and Tenant shall attempt to resolve and adjust such dispute(s). If
they are unable to do so, Landlord and Tenant shall designate a certified public
accountant (the "ARBITER") whose determination made in accordance with this
Section 3.03(d)(2) shall be binding upon the parties. The Arbiter shall be a
member of an independent certified public accounting firm having at least twenty
(20) accounting professionals and shall have practiced as a certified public
accountant for at least ten (10) years. In the event that Landlord and Tenant
shall be unable to agree upon the designation of the Arbiter within thirty (30)
days after receipt of notice from the other party requesting agreement as to the
designation of the Arbiter, which notice shall contain the names and addresses
of two or more certified public accountants who are acceptable to the party
sending such notice (any one of whom, if acceptable to the party receiving such
notice as shall be evidenced by notice given by the receiving party to the other
party within such thirty (30) day period, shall be the agreed upon Arbiter),
then either party shall have the right to request the American Arbitration
Association (the "AAA") (or any organization which is the successor thereto) to
designate as the Arbiter a certified public accountant whose determination made
in accordance with this Section 3.03(d)(2) shall be conclusive and binding upon
the parties. Landlord and Tenant hereby agree that (A) except with respect to
the Base Operating Year, any determination of Operating Expenses made by an
Arbiter designated pursuant to this Section 3.03(d)(2) shall neither exceed the
determination of Landlord set forth in the Operating Statement nor be less the
determination of Tenant set forth in Tenant's Statement, (B) with respect to the
Base Operating Year, any determination of Operating Expenses made by an Arbiter
designated pursuant to this Section 3.03(d)(2) shall neither exceed the
determination of Tenant set forth in Tenant's Statement, nor be less than the
determination of Landlord set forth in the Operating Statement, and (C) that any
determination which does not comply with the foregoing shall be deemed increased
or
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decreased, as the case may be, to cure such noncompliance. In rendering such
determination the Arbiter shall not add to, subtract from or otherwise modify
the provisions of this lease, including the immediately preceding sentence.
Notwithstanding the foregoing provisions of this Section 3.03(d), Tenant,
pending the resolution of any contest pursuant to the terms hereof shall
continue to pay in the manner provided for in this Section 3.03 all sums as
determined to be due based upon the Operating Statement. If, and to the extent
that Tenant shall prevail, then within thirty (30) days after the resolution of
such contest (i.e., the Arbiter's determination), Landlord shall make an
appropriate refund to Tenant, together with interest on the amount thereof at
the Interest Rate (as defined in Article 31 hereof) for the period commencing on
the last day of the Operating Year to which such refund relates and ending on
the date such appropriate refund is made; if such determination shall relate to
the Base Operating Year, any applicable refund shall be made with respect to all
subsequent Operating Years with respect to which an initial Operating Statement
shall have been furnished to Tenant. With respect to any Operating Year other
than the Base Operating Year, (i) if the Operating Expenses set forth in the
Operating Statement shall, in the aggregate, exceed 105% of the Arbiter's
determination thereof, the costs of the Arbiter shall be borne by Landlord, (ii)
if the Operating Expenses set forth in Tenant's Statement shall, in the
aggregate, be less than 95% of the Arbiter's determination thereof, the costs of
the Arbiter shall be borne by Tenant, and (iii) otherwise, the costs of the
Arbiter shall be shared equally. With respect to the Base Operating Year, (x) if
the Operating Expenses set forth in Tenant's Statement shall, in the aggregate,
exceed 105% of the Arbiter's determination thereof, the costs of the Arbiter
shall be borne by Tenant, (y) if the Operating Expenses set forth in the
Operating Statement shall, in the aggregate be less than 95% of the Arbiter's
determination thereof, the costs of the Arbiter shall be borne by Landlord, and
(z) otherwise, the costs of the Arbiter shall be shared equally.
(3) Notwithstanding anything to the contrary contained in
Section 3.03(d)(2) above, the following provisions shall apply with respect to
Tenant's rights thereunder to dispute any amount included within Operating
Expenses on any Operating Statement pursuant to Section 3.01(c)(I)(2) hereof as
a result of any alteration, addition, improvement, replacement, repair,
equipment or tool (each such amount being herein called a "SECTION 3.01(C)(I)(2)
AMOUNT"):
(A) If Tenant shall not timely
give a Tenant's Statement with respect to any Operating Statement reflecting a
Section 3.01(c)(I)(2) Amount, or if Tenant's Statement with respect to such an
Operating Statement shall not set forth a dispute of any Section 3.01(c)(I)(2)
Amount reflected therein, then (i) any such Section 3.01(c)(I)(2) Amount, as
reflected in such Operating Statement, shall be conclusive and binding upon
Tenant, and (ii) in addition, the facts, figures and schedules used by Landlord
in determining such conclusive and binding Section 3.01(c)(I)(2) Amount (i.e.,
Landlord's determination of each of the useful life, the Cost Savings Period,
the Capital Costs and the Capital Cost Rate with respect to such alteration,
addition, improvement, replacement, repair, equipment or tool in question, as
well as the Estimated Cost Savings Schedule as prepared by Landlord with respect
thereto) shall all be conclusive and binding upon Tenant for purposes of all
Section 3.01(c)(I)(2) Amounts theretofore or thereafter based thereon (including
without limitation any such Section 3.01(c)(I)(2) Amounts may appear on any
subsequent Operating Statements), it being agreed that all further disputes by
Tenant of such facts, figures and schedules shall be foreclosed.
(B) If Tenant shall timely
give a Tenant's Statement with respect to any Operating Statement
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reflecting a Section 3.01(c)(I)(2) Amount and such Tenant's Statement shall set
forth a dispute of any such Section 3.01(c)(I)(2) Amount reflected therein
(other than a dispute which is foreclosed pursuant to Section 3.03(d)(3)(A)
above), then, to the extent any disputes as to such amounts shall be arbitrated
as provided in Section 3.03(d)(2) above, the following provisions shall apply
and bind the Arbiter:
(x) If any Estimated
Cost Savings Schedule shall be disputed, as to one or more Estimated Annual
Savings Amounts, then the issue which the Arbiter shall determine shall be
whether each such disputed Estimated Annual Savings Amount was or was not a
reasonable estimate, at the time that the Estimated Cost Savings Schedule was
made a part of the Operating Expense Records, of the Operating Expenses which
would be avoided or saved for the applicable Operating Year as a result of the
alteration, addition, improvement, replacement, repair, equipment or tool in
question; in rendering his determination as to each such disputed Estimated
Annual Savings Amount, the Arbiter shall be bound by the following: (I) if any
Estimated Annual Savings Amount is equal to or less than 115% of the Arbiter's
opinion of what was the best estimate, at the time that the Estimated Cost
Savings Schedule was made a part of the Operating Expense Records, of the
Operating Expenses which would be avoided or saved for the applicable Operating
Year as a result of the alteration, addition, improvement, replacement, repair,
equipment or tool in question, then such Estimated Annual Savings Amount shall
conclusively be deemed to have been reasonable at such time; and (II) if any
Estimated Annual Savings Amount is greater than 115% of the Arbiter's opinion of
what was the best estimate, at the time that the Estimated Cost Savings Schedule
was made a part of the Operating Expense Records, of the Operating Expenses
which would be avoided or saved for the applicable Operating Year as a result of
the alteration, addition, improvement, replacement, repair, equipment or tool in
question, then such Estimated Annual Savings Amount shall conclusively be deemed
to have been unreasonable at such time. Each disputed Estimated Annual Savings
Amount which the Arbiter determines to be an unreasonable in accordance with the
foregoing, shall be changed to the Arbiter's opinion of what was the best
estimate, at the time that the Estimated Cost Savings Schedule was made a part
of the Operating Expense Records, of the Operating Expenses which would be
avoided or saved for the applicable Operating Year as a result of the
alteration, addition, improvement, replacement, repair, equipment or tool in
question. The determination of the Arbiter, as to any disputed Estimated Annual
Savings Amount, shall, if made in accordance with this Section 3.03(d)(3)(x), be
conclusive and binding upon Landlord and Tenant as to all Section 3.01(c)(I)(2)
Amounts theretofore or thereafter based thereon.
(y) If Landlord's
determination of the useful life, Cost Savings Period, Capital Costs or Capital
Cost Rate with respect to any alteration, addition, improvement, replacement,
repair, equipment or tool shall be disputed, then any determination of the
Arbiter with respect thereto shall be conclusive and binding upon Landlord and
Tenant as to all Section 3.01(c)(I)(2) Amounts theretofore or thereafter based
thereon.
(e) (1) Notwithstanding anything to the contrary set
forth above in this Section 3.03, there shall be an abatement of the Operating
Payment(s), if any, which are payable in respect of all periods prior to the
Operating Payment Commencement Date (as hereinafter defined). The "OPERATING
PAYMENT COMMENCEMENT DATE" shall be January 1, 1995. If the Operating Payment
Commencement Date shall be a day other than the first day of a Operating Year,
then the Operating Payment for the Operating Year in which the Operating Payment
Commencement Date occurs shall be prorated (on a per diem basis) to correspond
to
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that portion of the Operating Year occurring on or after the Operating Payment
Commencement Date.
(2) Notwithstanding anything to the contrary set forth
above in this Section 3.03, the Operating Payment for any Operating Ye