TEN HANOVER LLC,
Landlord,
TO
THE GOLDMAN SACHS GROUP, L.P.,
Tenant
Lease
Dated as of August 22, 1997
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TABLE OF CONTENTS
1. LEASED PREMISES; TERM OF LEASE ............................................1
1.1 LEASED PREMISES .......................................................1
1.2 TERM ..................................................................2
1.3 STEPHANEZE PREMISES ...................................................2
1.4 TENANT'S TERMINATION OPTIONS ..........................................8
1.5 LANDLORD'S FINANCING ..................................................9
1.6 CERTAIN DEFINITIONS ..................................................11
2. BASIC RENT, ETC ..........................................................14
2.1 BASIC RENT ...........................................................14
2.2 DETERMINATION OF FAIR MARKET RENT ....................................15
2.3 SUPPLEMENTAL RENT ....................................................17
3. MANNER OF PAYMENT ........................................................17
4. NET LEASE; NO ABATEMENT ..................................................18
5. CONDITION AND USE OF LEASED PREMISES .....................................18
6. MAINTENANCE; ALTERATIONS; CERTAIN REIMBURSEMENTS; ETC. ...................19
6.1 GENERALLY ............................................................19
6.2 CERTAIN DEFINITIONS ..................................................20
6.3 SUBMISSION AND APPROVAL OF PLANS AND SPECIFICATIONS IN
CERTAIN INSTANCES ....................................................23
6.4 REIMBURSABLE ALTERATIONS .............................................26
6.5 GENERAL PROVISIONS ...................................................36
6.6 CONSIDERATION BY TENANT ..............................................36
6.7 ENGINEER; APPROPRIATE ENGINEER .......................................37
7. HAZARDOUS SUBSTANCES .....................................................38
8. UTILITY SERVICES .........................................................39
9. INDEMNIFICATION BY TENANT ................................................40
10. ENTRY BY LANDLORD .......................................................41
11. PAYMENT OF TAXES ........................................................42
11.1 DEFINITIONS .........................................................42
11.2 PAYMENT OF TAXES ....................................................43
11.3 INITIAL TAX PAYMENTS ................................................43
11.4 EXTENDED TAX PAYMENTS ...............................................43
11.5 GENERAL PROVISIONS APPLICABLE TO TAXES ..............................45
11.6 INDUSTRIAL AND COMMERCIAL INCENTIVE PROGRAM .........................45
12. COMPLIANCE WITH LEGAL AND INSURANCE REQUIREMENTS AND
PERMITTED ENCUMBRANCES ..................................................46
12.1 GENERALLY ...........................................................46
12.2 PERMITTED CONTESTS ..................................................47
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13. LIENS ...................................................................48
14. INSURANCE ...............................................................48
14.1 RISKS TO BE INSURED .................................................49
14.2 POLICY PROVISIONS ...................................................50
14.3 DELIVERY OF INSURANCE CERTIFICATES; PAYMENT OF PREMIUM ..............51
14.4 NO LIMITATION OF DAMAGES ............................................51
15. DAMAGE TO OR DESTRUCTION OF PROPERTY ....................................51
15.1 WAIVER OF SS. 227; TENANT TO GIVE NOTICE ............................51
15.2 RESTORATION .........................................................51
15.3 APPLICATION OF INSURANCE PROCEEDS ...................................52
15.4 TERMINATION IN LIEU OF RESTORATION ..................................52
16. TAKING OF PROPERTY ......................................................59
16.1 NOTICE ..............................................................59
16.2 TOTAL TAKING ........................................................59
16.3 PARTIAL TAKING ......................................................60
16.4 APPLICATION OF AWARD ................................................61
16.5 TEMPORARY TAKING ....................................................62
17. DISBURSEMENT OF DEPOSITED SUMS ..........................................63
18. CERTIFICATE AS TO NO DEFAULT, ETC. ......................................65
19. RIGHT OF LANDLORD TO PERFORM TENANT'S COVENANTS, ETC. ...................66
20. ASSIGNMENT; SUBLEASES ...................................................67
21. VAULTS ..................................................................68
22. EVENTS OF DEFAULT; TERMINATION ..........................................68
23. REPOSSESSION ............................................................70
24. RELETTING ...............................................................70
25. SURVIVAL OF TENANT'S OBLIGATIONS; DAMAGES ...............................70
25.1 TERMINATION OF LEASE NOT TO RELIEVE TENANT OF OBLIGATIONS ...........70
25.2 CURRENT DAMAGES AND DAMAGES IN RESPECT OF SUPPLEMENTAL RENT .........71
25.3 FINAL DAMAGES .......................................................72
26. NO WAIVER ...............................................................73
27. REMEDIES CUMULATIVE .....................................................73
28. ACCEPTANCE OF EARLY TERMINATION OR SURRENDER ............................73
29. NO MERGER OF TITLE ......................................................74
30. EXCULPATION .............................................................74
31. DEFINITIONS. ............................................................75
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32. END OF LEASE TERM .......................................................77
33. NOTICES .................................................................78
34. ANNUAL REPORTS ..........................................................78
35. MISCELLANEOUS ...........................................................79
36. EXPEDITED ARBITRATION ...................................................81
37. SUBORDINATION ...........................................................82
38. LANDLORD'S FAILURE TO PAY TAXES .........................................83
39. LANDLORD'S FAILURE TO PAY COSTS OF BASE BUILDING UPGRADE WORK OR FIT-OUT
WORK ..................................................................84
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EXHIBITS
Exhibit A The Land
Exhibit B Initial Tax Payments
Exhibit C Permitted Encumbrances
Exhibit D Non-Disturbance Agreement
Exhibit E Major Building Equipment
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Index of Definitions
--------------------
Defined Term Section Where Defined
------------ ---------------------
50% Untenantability .............................................15.4
Accountant .......................................................6.7
Additional Bidders ...............................................6.4
Alterations ......................................................6.1
Appropriate Engineer .............................................6.7
Appropriate Engineer .............................................6.7
Article 38 Advance ................................................38
Article 38 Demand Amount ..........................................38
Article 38 Demand Notice ..........................................38
Article 38 Dispute Notice .........................................38
Article 39 Advance ................................................39
Article 39 Demand Amount ..........................................39
Article 39 Demand Notice ..........................................39
Article 39 Dispute Notice .........................................39
Associated Reimbursables .........................................6.4
balance to be apportioned .......................................16.4
Base Amount ......................................................6.2
Base Building Savings Constant Payment ...........................1.6
Base Building Savings Credit .....................................2.1
Base Building Savings ............................................1.6
Base Rate ........................................................1.6
Base Tax Amount .................................................11.1
Basic Rent .......................................................2.1
Benchmark Amount .................................................6.4
Business Day ......................................................31
Cancellation Payment Payment Date ................................1.4
Cancellation Payment .............................................1.4
Comparable Treasury Rate .........................................1.6
Completed Percentage .............................................6.4
Condemnation Proceeds ...........................................16.4
ConEd ..............................................................8
Contractors ......................................................6.4
Cost Division Date ...............................................6.2
Cost Participation Limitation Notice .............................6.4
Costs .............................................................31
Credit Amount .....................................................35
Damage Cancellation Payment .....................................15.4
Damage Date .....................................................15.4
Damage Payment ..................................................15.4
Damage Termination Notice .......................................15.4
Deductible Amount .................................................31
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Depositary ......................................................15.3
Deposited Sums ....................................................17
Determinated Amount ..............................................6.2
Determination Date ................................................19
Different Scope of Work Statement ................................6.4
Dispute Notice ...................................................6.4
Disputed Article 38 Amount ........................................38
Disputed Article 39 Amount ........................................39
Election Period .................................................15.4
Emergency Reimbursement Amount ...................................6.4
Engineer Designation Notice ......................................6.7
Engineer .........................................................6.7
Estimated Cost ...................................................6.4
Estimated Substantial Completion Date ............................6.4
Expedited Arbitration .............................................36
Expiration Date ..................................................1.2
Extended Completion Notice .......................................6.4
Extended Tax Payment ............................................11.4
Fair Market Rent .................................................2.2
Financing Closing Date ...........................................1.5
Financing Termination Notice .....................................1.5
First Rent Period ................................................2.1
First-Class Standard .............................................6.1
Fit-Out Work Constant Payment ....................................1.6
Fit-Out Work Interest Rate .......................................1.6
Fit-Out Work Investment ..........................................1.6
Fourth Rent Period ...............................................2.1
full placement cost .............................................14.1
Full Proceeds Amount ............................................15.4
GAAP..............................................................6.2
Gross Amount .....................................................6.4
Ground Lease ....................................................12.1
GS ................................................................30
Hazardous Substances ..............................................31
ICIP ............................................................11.6
Improvements .....................................................1.1
Index .............................................................31
Initial Improvements Agreement ...................................1.1
Initial Tax Payment .............................................11.3
Insurance Requirements ............................................31
Interest Rate ......................................................3
Land .............................................................1.1
Landlord ..........................................................31
Landlord ................................................Introduction
Landlord's Alternate Bidders .....................................6.4
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Landlord's Preferred Bidder ......................................6.4
Landlord's Revised Plans .........................................6.4
Lease Termination Notice ..........................................22
Leased Premises ..................................................1.1
Legal Requirement Alteration .....................................6.2
Legal Requirements ................................................31
Liability Insurance ..............................................1.3
Limited Reimbursement Amount .....................................6.4
LMEP ...............................................................8
Main Interest Rate ...............................................1.6
Major Building Equipment .........................................6.2
Measuring Fraction ...............................................6.2
net annual rental .................................................31
Next Available Termination Date .................................16.5
Non-Disturbance Agreement .........................................37
Notice ............................................................33
Notional Expiration Date ........................................25.1
Notional Fit-Out Work Loan Amount ................................1.6
Notional Main Loan Debt Service ..................................1.6
Notional Main Loan Original Balance ..............................1.6
Notional Main Loan Outstanding Balance ...........................1.6
Notional Make-Whole Amount .......................................1.6
Notional Termination Date ........................................6.4
Officer's Certificate .............................................31
OLS .............................................................11.6
Original Bidders .................................................6.4
Overrun Notice ...................................................6.4
Overrun ..........................................................6.4
Partial Taking ..................................................16.2
Permitted Encumbrances ...........................................1.1
Permitted Investment ..............................................31
Permitted Investments .............................................31
Plan Submission Date .............................................6.4
Plans and Specifications Notice ..................................6.3
Plans and Specifications ..........................................31
Plans Submission Notice ..........................................6.3
Post-Termination Insurance ......................................15.4
Pre-Existing Mortgages ..........................................12.1
Prime Rate ........................................................31
Project ..........................................................1.1
Property Insurance ..............................................14.1
Qualified Alteration .............................................6.2
Qualified Hazardous Substance .....................................31
Qualified Overrun ................................................6.4
Qualified Prefinancing Costs .....................................1.5
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Qualified Restoration Costs .....................................15.4
Reduced Proceeds Amount .........................................15.4
Reimbursable Alterations .........................................6.2
Reimbursable Legal Requirement Alteration ........................6.2
Reimbursable Removal of Hazardous Substances .....................6.2
Reimbursable Replacement .........................................6.2
Reimbursable Structural Work .....................................6.2
Reimbursement Advances ...........................................6.4
Reimbursement Amount .............................................6.4
removal ............................................................7
remove .............................................................7
Rent Based Cancellation Payment ..................................1.4
Rent Commencement Date ...........................................2.1
Required Replacements ............................................6.1
Restoration Advances ..............................................17
Retained Bidder ..................................................6.4
Rules ............................................................2.2
Second Rent Period ...............................................2.1
Significant Proceeds Amount .......................................31
Specified Damage Termination Date ...............................15.4
Stephaneze Possession Date .......................................1.3
Stephaneze Premises ..............................................1.3
Stephaneze Restriction Date ......................................1.3
Stephaneze .......................................................1.3
Structural Work ..................................................6.2
Successor Landlord ................................................37
successor-assignee ................................................30
Superior Mortgage .................................................37
Superior Mortgagee ................................................37
Supplemental Rent ................................................2.3
Taking Fraction .................................................16.2
Taking ............................................................31
Tax Payments ....................................................11.4
Tax Year ........................................................11.1
Taxes ...........................................................11.1
Tenant Impositions ..............................................11.5
Tenant ............................................................31
Tenant ..................................................Introduction
Tenant's Counsel ...................................................9
Tenant's Designation Notice ......................................2.2
Tenant's Selected Bidder .........................................6.4
Tenant's Total Taking Amount ....................................16.4
Term .............................................................1.2
Termination Date .................................................1.4
Termination Notice ...............................................1.4
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Termination Option ...............................................1.4
Third Rent Period ................................................2.1
Total Taking ....................................................16.2
Unamortized Fit-Out Work Investment ..............................1.6
Voluntary Alterations ............................................6.1
Witkoff Management Agreement ......................................31
work ..............................................................31
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LEASE, dated as of August 22, 1997, between TEN HANOVER LLC ("Landlord"),
a New York limited liability company having its principal office c/o The Witkoff
Group LLC, 156 William Street, New York, New York 10038, and THE GOLDMAN SACHS
GROUP, L.P. ("Tenant"), a Delaware limited partnership having its principal
office at 85 Broad Street, New York, New York 10004, Attention: General Services
Department.
WITNESSETH:
That in consideration of the mutual agreements herein contained, Landlord
and Tenant hereby agree and covenant to and with each other as follows:
1. Leased Premises; Term of Lease
1.1 Leased Premises
Landlord leases to Tenant, and Tenant rents from Landlord, subject
to the Permitted Encumbrances, the land located in the City, County and State of
New York more particularly described on Exhibit A hereto (the "Land"),
TOGETHER WITH (i) all Improvements (excluding any thereof which
pursuant to the final paragraph of this Section 1.1 are not Landlord's
property), and (ii) all personal property owned by Landlord now or
hereafter attached to or used in connection with the Improvements,
TOGETHER WITH all right, title and interest, if any, of Landlord in
and to:
(a) any strips and gores of land adjoining the Land on
any side thereof;
(b) any land lying in the bed of any street or avenue
abutting the Land, to the center line thereof; and
(c) any easements or other rights in adjoining property
enuring to Landlord by reason of ownership of the Land;
all of the foregoing (together with any Improvements excluded from clause (i)
above) are collectively called the "Leased Premises".
The Land and the Improvements are collectively called the "Project".
The term "Permitted Encumbrances" shall refer to the matters listed on Exhibit C
hereto. Simultaneously with the execution of this Lease, Landlord and Tenant are
executing an Initial Improvements Agreement of even date herewith (the "Initial
Improvements Agreement") relating to certain work to be done to prepare the
Leased Premises for occupancy by Tenant.
The term "Improvements" shall mean all buildings, structures,
fixtures, equipment and improvements now or hereafter located on, or attached to
or appurtenant to, the Land or to other Improvements, including any thereof
installed (i) as Base Building Upgrade Work (as such
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term is defined in the Initial Improvements Agreement) or Fit-Out Work (as such
term is defined in the Initial Improvements Agreement) pursuant to the Initial
Improvements Agreement, or (ii) by Tenant pursuant to Article 6; provided, that
the term "Improvements" shall not include any furniture, furnishings, trade
fixtures or business equipment furnished, installed or placed in the
Improvements by Tenant at Tenant's sole cost and expense.
Except as otherwise provided in the next paragraph, all Improvements
shall be (or if hereafter installed shall upon installation become) the property
of Landlord, a part of the Leased Premises and subject to this Lease.
Notwithstanding the provisions of Article 6, Tenant shall not remove from the
Leased Premises
(i) any Improvements constituting Base Building Upgrade Work, or
(ii) any Improvements constituting Fit-Out Work paid for by Landlord
unless (x) such removal is required by Legal Requirements, or (y) Tenant
replaces the Improvements so removed with other Improvements of substantially
equal value.
All Improvements constituting Fit-Out Work paid for by Tenant shall
remain the property of Tenant, subject to removal by Tenant subject to the
provisions of Article 6; provided, that unless and until so removed, the same
shall nonetheless constitute Improvements for all purposes under this Lease. Any
such Improvements that shall not have been so removed shall, upon the expiration
or sooner termination of this Lease, become the property of Landlord.
1.2 Term.
Except as otherwise provided in Section 1.3, the term of this Lease
shall commence on the Possession Date (as such term is defined in the Initial
Improvements Agreement) and, unless sooner terminated pursuant to law or
pursuant to any of the terms of this Lease, shall expire at 11:59 p.m. on June
30, 2018 (the "Expiration Date"). The term of this Lease is referred to herein
as the "Term".
1.3 Stephaneze Premises.
(a) Landlord represents and warrants to Tenant that, as of the date
of this Lease, the Leased Premises are vacant and free of any occupancy or
tenancy or right thereto, other than the occupancy or tenancy by Stephaneze
("Stephaneze") of a portion of the Leased Premises (the "Stephaneze Premises"),
and that Landlord has commenced a summary proceeding against Stephaneze seeking
to recover possession of the Stephaneze Premises, and has furnished Tenant with
copies of all material pleading and material motion papers filed or served by
any party thereto. Landlord shall diligently prosecute such summary proceeding
and if such summary proceeding is dismissed or terminated without Landlord
having recovered possession of the Stephaneze Premises, then Landlord shall take
such further action as may be available to Landlord to recover possession of the
Stephaneze Premises.
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Promptly after recovering possession of the Stephaneze Premises,
Owner shall (i) perform and complete any Asbestos Removal Work, Refireproofing
Work, and/or Demolition Work (as such terms are defined in the Initial
Improvement Agreement), that may be required under the provisions of the Initial
Improvement Agreement with respect to the Stephaneze Premises, and (ii) notify
Tenant that the foregoing has been performed and completed and, prior to or
together with such notice, furnish Tenant with one or more Forms ACP-5
evidencing the removal from the Stephaneze Premises of all asbestos and
asbestos-containing material.
The term of the Lease with respect to the Stephaneze Premises shall
commence on (and the term "Leased Premises" shall not include the Stephaneze
Premises until) the Stephaneze Possession Date. The term "Stephaneze Possession
Date" shall mean the last of
(x) the Possession Date,
(y) the date on which Landlord recovers possession
of the Stephaneze Premises,
(z) the date on which (i) all Asbestos Removal
Work, Refireproofing Work and Demolition Work throughout the
Stephaneze Premises shall have been completed, (ii) Tenant
shall have been furnished with or obtained one or more Forms
ACP-5 evidencing the removal from the Stephaneze Premises of
all asbestos and asbestos-containing material, and (iii)
Tenant shall have received the Stephaneze Completion Notice,
or, if Tenant shall so elect, such earlier date (not earlier than the later of
the Possession Date or the date 30 days after the date on which Landlord
recovers possession of the Stephaneze Premises) as Tenant shall elect by notice
to Landlord.
If the Stephaneze Possession Date does not occur by the later of the
Possession Date or October 15, 1997, then Tenant shall be entitled to a credit
against the Basic Rent during the 12 month period beginning on the Rent
Commencement Date equal to $347,000; one-twelfth of such credit shall be applied
against each of the 12 monthly installments of Basic Rent during such 12 month
period. If the Stephaneze Possession Date does not occur by the first or any
later anniversary of October 15, 1997, then Tenant shall be entitled to a credit
against the Basic Rent during the 12 month period beginning with the first or
such later anniversary of the Rent Commencement Date equal to $347,000; one
twelfth of such credit shall be applied against each of the 12 monthly
installments of Basic Rent during such 12 month period. The preceding sentence
may be applied repeatedly, so long as Landlord's inability to deliver vacant
possession of the Stephaneze Premises by an anniversary of October 15, 1997
continues.
This Section 1.3(a) shall be an express provision to the contrary
for purposes of Section 223-a of the New York Real Property Law and any other
law of like import now or hereafter in effect.
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(b) The following provisions of this Section 1.3(b) shall be
applicable until the Stephaneze Possession Date:
(i) There shall be no direct access between the Stephaneze
Premises and the Building (i.e., all access to or from the
Stephaneze Premises shall be from the street only).
(ii) Tenant shall not be required to furnish any services or
utilities to the Stephaneze Premises. If and to the extent
that the electricity, water, sewer, gas and telephone lines
currently serving the Stephaneze Premises run through the
Leased Premises, Tenant shall permit the same to remain;
provided, that Tenant shall have the right
(A) to relocate such lines at Tenant's expense;
provided, that (i) any such relocation shall be
performed only at times other than during the
regular business hours of Stephaneze, and (ii) no
such relocation shall be performed prior to the
earlier of (1) October 15, 1997, or (2) the date
on which Landlord recovers possession of the
Stephaneze Premises (such earlier date being
herein called the "Stephaneze Restriction Date"),
and
(B) to shut down such lines or otherwise to interrupt,
stop, suspend or curtail the delivery of services
through such lines whenever and for so long as may
be reasonably necessary by reason of damage to
such lines, accidents, or any testing,
maintenance, repairs, replacements, alterations,
additions or other work being undertaken by
Tenant, or by reason of any other cause beyond
Tenant's reasonable control; provided, that,
except in case of emergency, or reasonably
foreseeable or actual criminal liability of
Tenant, damage to such lines, accident or any
other cause beyond Tenant's reasonable control,
Tenant (i) shall not shut down such lines or
otherwise interrupt stop, suspend or curtail the
delivery of services through such lines prior to
the Stephaneze Restriction Date, and (ii) shall
use reasonable efforts to minimize interference
with the ordinary conduct of the business of
Stephaneze.
Provided that Tenant complies with the provisions of this
Section 1.3(b), Tenant shall have no liability to Landlord or
any Occupant of the Stephaneze Premises for or on account of
any shutdown of such lines or any interruption, stoppage,
suspension or curtailment of service through such lines for
any reason. In case of any damage to such lines, Tenant shall,
with reasonable promptness and diligence, immediately after
Tenant becomes aware of such damage, repair such damage (at
Landlord's
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expense, unless such damage shall have arisen from any act,
omission, negligence or intentional misconduct of Tenant). All
electricity, gas and water and sewer service to the Stephaneze
Premises shall be separately metered, and the charges therefor
shall be paid by Landlord directly to the public or municipal
utility supplier.
(iii) If the term of this Lease shall not have commenced with
respect to the Stephaneze Premises on or before March 1, 1998
then thereafter until the Stephaneze Possession Date: (A)
Landlord shall keep (or cause to be kept) all portions of the
Stephaneze Premises visible from without the Stephaneze
Premises in a well-maintained, clean and attractive condition;
(B) Landlord shall exterminate (or cause to be exterminated)
the Stephaneze Premises as necessary to keep the Stephaneze
Premises free of vermin; and (C) Landlord shall clean and
maintain (or cause to be cleaned and maintained) the exterior
surface of the exterior walls of the Stephaneze Premises,
including any and all glass located thereon.
(iv) Landlord shall make (or cause to be made) all repairs and
replacements in and to the Stephaneze Premises if the failure
to make such repair or replacement would result in an adverse
effect on the use, occupancy or appearance of the Leased
Premises and the need for such repair or replacement is not
the result of any act, omission, negligence or intentional
misconduct of Tenant (in which latter event such repair or
replacement shall be performed by Tenant). Landlord, at
Landlord's expense (unless the need for such compliance arises
out of any act, omission, negligence or intentional misconduct
of Tenant, in which event Tenant shall reimburse Landlord for
the cost of such compliance within 30 days after submission by
Landlord to Tenant of invoices evidencing the cost of such
compliance), shall promptly comply with all Legal
Requirements, Insurance Requirements and Permitted
Encumbrances relative to the Stephaneze Premises, whether or
not compliance therewith shall require Alterations or
interfere with the use or enjoyment of the Stephaneze
Premises. Landlord may contest any such Legal Requirement,
Insurance Requirement or Permitted Encumbrance (and not comply
therewith pending the resolution of such contest); provided,
that such contest has no adverse affect on Tenant's use or
occupancy of the Leased Premises. Tenant shall not at any time
use or occupy the Stephaneze Premises, or suffer or permit
anyone to use or occupy the Stephaneze Premises, in any
manner, or do anything in the Stephaneze Premises, or suffer
or permit anything to be done, brought into or kept on the
Stephaneze Premises which (A) constitutes a nuisance, public
or private, (B) 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 (C) discharges objectionable
fumes, vapors or odors.
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(v) Landlord shall keep in effect commercial general liability
insurance, including broad form bodily injury, personal
injury, property damage and blanket contractual insurance,
against claims arising out of or connected with the
possession, use, operation or condition of the Stephaneze
Premises ("Liability Insurance") with a combined single limit
of not less than $10,000,000 for all claims with respect to
bodily injury, property damage and personal injury with
respect to any one occurrence. All such Liability Insurance
shall name Tenant as an additional insured and provide that no
cancellation, reduction in amount or material change in
coverage thereof shall be effective until at least 30 days
after receipt by Tenant of written notice thereof. Landlord
may obtain the aforesaid insurance under blanket or umbrella
policies. On the date hereof (with respect to Liability
Insurance required to be carried by Landlord), and at least 7
days prior to each policy expiration, Landlord shall deliver
(or cause to be delivered) to Tenant certificates of all such
Liability Insurance.
(vi) Subject to the next sentence, Tenant shall have (A) the
exclusive right to use, disconnect or close (x) any pipe,
duct, conduit, utility line or similar installation running in
or through but not serving the Stephaneze Premises, or (y) any
exhaust duct running in or through or serving the Stephaneze
Premises, (B) the right to install in and through the
Stephaneze Premises new or additional pipes, ducts, conduits,
utility lines or similar installations, in locations adjacent
to ceiling slabs, demising walls or structural columns, in
each case in a manner so as not to unreasonably interfere with
the use or occupancy of the Stephaneze Premises as retail
space, (C) the right to maintain, repair and replace any of
the foregoing and (D) the right to enter the Stephaneze
Premises for (1) all or any of the foregoing purposes, (2) to
inspect the Stephaneze Premises or (3) to maintain or make
repairs, replacements, alterations, additions or improvements
in or to the Leased Premises; provided, that, except in case
of emergency or reasonably foreseeable or actual criminal
liability of Tenant, Tenant shall give Landlord reasonable
prior notice of any such entry and shall use reasonable
efforts to minimize interference with the use and occupancy of
the Stephaneze Premises arising by reason of such entry.
Notwithstanding the foregoing, except in case of emergency or
reasonably foreseeable or actual criminal liability of Tenant,
Tenant shall take no action pursuant to this Section
1.3(b)(vi) prior to the Stephaneze Restriction Date. The
Stephaneze Premises shall consist only of the space within the
inside surface of the structural (or centerline of any
non-structural) walls, windows, doors, columns, and floor
slabs bounding the Stephaneze Premises (exclusive of any such
space used for pipes, ducts, conduits, utility lines or
similar installations). If at any time any windows of the
Stephaneze Premises are either temporarily darkened or
obstructed by reason of maintenance, cleaning, repairs,
replacements, alterations, additions or improvements in or
about the Leased Premises or the
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Stephaneze Premises, including by way of a sidewalk bridge (or
permanently darkened or obstructed if required by law), Tenant
shall have no liability to Landlord or any Occupant of the
Stephaneze Premises on account thereof; provided, that Tenant
shall use reasonable efforts not to darken or obstruct any
windows of the Stephaneze Premises and to minimize any such
darkening or obstruction when the same cannot reasonably be
avoided.
(c) Subject to the last sentence of this Section 1.3(c), if
Landlord shall fail to make any payment or perform any act required to be made
or performed by Landlord hereunder with respect or relating to the Stephaneze
Premises Tenant may (but shall be under no obligation to) without waiving or
releasing any obligation or default:
(i) in case of emergency, or reasonably foreseeable or actual
criminal liability of Tenant or interference with the use or
occupancy of, or the performance of the Base Building Upgrade
Work or the Fit-Out Work in, the Leased Premises, or
(ii) if Tenant shall give notice to Landlord referring to Tenant's
intent to exercise its self-help right under this Section
1.3(c), which notice shall specify Landlord's failure with
respect to the Stephaneze Premises and require such failure to
be remedied, and Landlord shall not remedy such failure within
30 days after the giving of such notice; provided, that in
case such failure cannot with due diligence be remedied by
Landlord within a period of 30 days, if Landlord proceeds as
promptly as may be reasonably possible after the giving of
such notice and with all due diligence to remedy such failure
and thereafter to prosecute the remedying of such failure with
all due diligence, the period of time after the receipt of
such notice by Landlord within which to remedy such failure
shall be extended for such period as may be necessary to
remedy the same with all due diligence,
make such payment or perform such act for the account and at the expense of
Landlord, and may enter upon the Stephaneze Premises or any part thereof for
such purpose and take all such action therein as, in the opinion of Tenant, may
be necessary or appropriate therefor. All payments so made by Tenant and all
costs and expenses (including without limitation attorneys fees and expenses)
incurred in connection with Tenant's exercise of its self-help right under this
Section 1.3(c), together with interest thereon at the Interest Rate, shall be
paid by Landlord to Tenant within 30 days after Landlord's receipt of Tenant's
demand therefor, accompanied by invoices evidencing the costs incurred by
Tenant. If Landlord objects to Tenant's exercise of its right of self-help under
this Section 1.3(c), then Tenant shall not be entitled to any reimbursement
under this Section 1.3(c) unless and until the matter is resolved in favor of
Tenant by Expedited Arbitration. Except in case of emergency or reasonably
foreseeable or actual criminal liability of Tenant, Tenant shall take no action
under this Section 1.3(c) prior to the Stephaneze Restriction Date.
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(d) Landlord shall protect, indemnify and save harmless Tenant
from and against all liabilities, obligations, claims, damages, penalties,
causes of actions, costs and expenses (including, without limitation, attorneys'
fees and expenses) imposed upon or incurred by or asserted against Tenant by
reason of any action by Landlord to recover possession of the Stephaneze
Premises.
(e) Landlord shall reimburse Tenant for all incremental
out-of-pocket costs incurred by Tenant prior to the commencement of the Term
with respect to the Stephaneze Premises on account of the Stephaneze Premises,
or the use or occupancy thereof, including any such costs arising out of any
maintenance, repair or replacement of any utility lines serving the Stephaneze
Premises (unless the need therefor arises out of any act, omission, negligence
or intentional misconduct of Tenant). Such reimbursement shall be due from time
to time within 30 days after Tenant's presentation of an invoice detailing such
incremental out-of-pocket costs.
1.4 Tenant's Termination Options
(a) Subject to the further provisions of this Section 1.4,
Tenant shall have the option (each, a "Termination Option") to terminate this
Lease effective as of (i) September 30, 2004, (ii) September 30, 2006, (iii)
June 30, 2008 or (iv) June 30, 2013 (each of the dates set forth in the
preceding clauses (i) - (iv) is called a "Termination Date"), by giving an
exercise notice (the "Termination Notice") to Landlord on or before the date
that is (A) one year prior to the applicable Termination Date in the case of a
termination as of September 30, 2004 or September 30, 2006 or (B) 18 months
prior to the applicable Termination Date in the case of a termination as of June
30, 2008 or June 30, 2013. Time is of the essence with respect to the giving of
any Termination Notice. Tenant may, by notice to Landlord at any time, waive any
one or more of its Termination Options.
(b) If Tenant timely exercises a Termination Option providing
for the termination of this Lease as of September 30, 2004, September 30, 2006
or June 30, 2008, then Tenant shall pay to Landlord, on or before September 1,
2004, September 1, 2006 or June 1, 2008, as the case may be (the "Cancellation
Payment Payment Date"), in addition to the Basic Rent, Supplemental Rent and Tax
Payment due on the Cancellation Payment Payment Date, the applicable
Cancellation Payment. "Cancellation Payment" means
(i) the amount of the Unamortized Fit-Out Work Investment as
of the applicable Cancellation Payment Payment Date,
plus
(ii) in the case of a Termination Option providing for the
termination of this Lease as of September 30, 2004 or
September 30, 2006, the Basic Rent and the Tax Payments
that would be payable for the six month period
immediately following the applicable Termination Date if
Tenant had not exercised the Termination Option (the
portion of the Cancellation Payment referred to in this
clause (iii) is called the "Rent Based Cancellation
Payment").
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<PAGE> 19
(c) If Tenant timely exercises any Termination Option, then on
the applicable Termination Date (i) this Lease shall terminate, (ii) Tenant
shall deliver to Landlord vacant possession of the Leased Premises subject to
and in accordance with all applicable provisions of this Lease as if the
Termination Date were the Expiration Date, and (iii) Basic Rent, Supplemental
Rent and Tax Payments due hereunder shall be payable through and apportioned as
of the Termination Date, and (except as provided in Section 32(b) with respect
to any holdover) Tenant shall have no liability for Basic Rent, Supplemental
Rent or Tax Payments which would otherwise have been payable after the
Termination Date.
(d) If (i) Tenant timely exercises a Termination Option as of
September 30, 2004 or September 30, 2006 and (ii) any Reimbursable Alteration
(other than Reimbursable Removal of Hazardous Substances) was performed prior to
the applicable Termination Date, then on or before the applicable Termination
Date, Landlord shall pay to Tenant, in respect of each such Reimbursable
Alteration, an amount equal to the excess of (A) the Reimbursement Amount which
would have been payable by Landlord with respect thereto if the Cost Division
Date with respect to such Reimbursable Alterations had been the applicable
Termination Date rather than the last day of the Second Rent Period, over (B)
the Reimbursement Amount paid by Landlord with respect thereto; provided, that
if with respect to any such Reimbursable Alteration Landlord shall have been
required to pay the Limited Reimbursement Amount rather than the Reimbursement
Amount and shall not have subsequently been required to make the payment
described in Section 6.4(g)(vi), then rather than the excess of the amount
described in clause (A) above over the amount described in clause (B) above
Landlord shall pay to Tenant, in respect of such Reimbursable Alteration, an
amount equal to the excess of (C) the Limited Reimbursement Amount which would
have been payable by Landlord with respect thereto if the Cost Division Date
with respect to such Reimbursable Alteration had been the applicable Termination
Date rather than the last day of the Second Rent Period, over (D) the Limited
Reimbursement Amount paid by Landlord with respect thereto.
1.5 Landlord's Financing.
(a) Landlord shall make reasonable efforts, as promptly as
reasonably possible, to cause the Financing Closing Date to occur. The term
"Financing Closing Date" shall refer to the date on which
(i) Landlord has received full disbursement of one or more
new loans sufficient in amount to permit Landlord to
deposit, and Landlord has deposited (a) $17,350,000 into
the account described in Section 6 of the Initial
Improvements Agreement, and (b) $50,000,000 into the
account described in Section 7 of the Initial
Improvements Agreement,
(ii) Landlord has caused the holders of all mortgages or
other liens on the Project (including but not limited to
the lender or lenders who shall have disbursed the new
loan or
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<PAGE> 20
loans referred to above) to execute and deliver to
Tenant a Non-Disturbance Agreement, and
(iii) Tenant shall have received the certificate called for by
the last paragraph of Section 5 of the Option Agreement
of even date among Landlord, Tenant and certain others.
Landlord represents that it has furnished to Tenant a true and complete copy of
a commitment letter dated______ from Credit Suisse First Boston Mortgage
Capital. On the Financing Closing Date, Landlord shall furnish Tenant with
evidence that the deposits referred to in clause (i) above have been made.
(b) If the Financing Closing Date does not occur on or before
September 30, 1997, then either Landlord or Tenant may terminate this Lease by
notice (the "Financing Termination Notice") to the other given at any time prior
to the Financing Closing Date, in which event this Lease shall terminate as of
the date of the receipt of such Financing Termination Notice and neither party
shall have any further obligations or liabilities to the other, except that
Landlord shall reimburse Tenant in an amount not to exceed $6,700,000 for any
Qualified Prefinancing Costs incurred by Tenant. Tenant may make one or more
demands for reimbursement under this Section 1.5(b), each to be accompanied by
invoices paid or payable by Tenant, and each amount payable under this Section
1.5(b) shall be due within 30 days of such demand therefor. If any payment
required to be made pursuant to this Section 1.5(b) is not made when due, the
same shall bear interest in accordance with Section 3(c). Upon payment of any
amount pursuant to this Section 1.5(b), Tenant shall assign to Landlord all of
Tenant's right, title and interest in and to the plans and specifications, work,
equipment or other property to which such payment related (including the benefit
of any deposits or other payments made by Tenant and reimbursed by Landlord),
without recourse or representation.
"Qualified Prefinancing Costs" means any and all Costs paid or
incurred by Tenant for or in connection with the Base Building Work and/or the
Fit-Out Work on or prior to the date of termination of this Lease under this
Section 1.5(b), including any partial payments (e.g. deposits) with respect to
any systems or equipment to be installed as a part of the Base Building Work
and/or the Fit Out Work which were made by Tenant prior to the termination of
this Lease pursuant to this Section 1.5(b) or for which under commitments made
prior to the termination of this Lease pursuant to this Section 1.5(b) Tenant is
obligated, excluding in all cases any sums of which Tenant would be entitled to
a refund or which Tenant would be excused from paying if, promptly after
receiving notice of termination of this Lease under Section 1.5(b), Tenant gave
prompt notice of termination to Tenant's contractors, subcontractors or other
suppliers.
(c) If the Financing Closing Date shall not occur by September
30, 1997 Tenant shall have the right to arrange or provide on commercially
reasonable terms financing in the amount required
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(i) to make the deposits referred to in Section 1.5(a)
above,
(ii) to refinance the existing debt on the Property,
(iii) to pay all points, fees and other expenses, including,
without limitation, legal fees, title insurance premiums
and charges and mortgage recording taxes incurred by
Landlord in connection with all such financing being
provided under this Section 1(c),
(iv) to make all scheduled payments of principal and interest
through August 1, 1998 on the portion of the financing
being provided under this Section 1(c) applicable to the
deposits referred to in clause (i) above and to a
pro-rata share of the points, fees and other expenses
referred to in clause (iii) above, and
(v) to make all scheduled payments of principal and interest
through May 1, 1998 on the balance of the financing
being provided under this Section 1(c).
Notwithstanding the provisions of Section 1.5(b) above, Landlord shall not have
the right to terminate this Lease prior to October 15, 1997 and if prior to that
date Tenant shall arrange or provide a commercially reasonable commitment for
such financing, Landlord shall accept the same and close the financing to be
provided thereunder and shall not have the right to terminate this Lease
pursuant to Section 1.5(b).
1.6 Certain Definitions
The term "Notional Fit-Out Work Loan Amount" shall refer to the sum
of
(i) $50,000,000, plus
(ii) a pro rata portion of all points, fees and other
expenses, including, without limitation, legal
fees, title insurance premiums and charges and
mortgage recording taxes incurred by Landlord for
or in connection with the new loan or loans
referred to in clause (i) of Section 1.5(a), such
proration to be made according to the ratio which
the Notional Fit-Out Work Loan Amount bears to the
total amount of such new loan or loans, plus
(iii) the amount of all scheduled payments (including
principal and interest) which
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would be required to be paid on or before August
1, 1998 on a loan in the principal amount of the
Notional Fit-Out Work Loan Amount bearing
interest at the Fit-Out Work Interest Rate and
disbursed on the Financing Closing Date if such
loan had provided for constant monthly payments
on the first day of each month equal to the
constant monthly payment which would be required
to fully amortize such principal amount over such
constant monthly payments beginning on the first
day of the month after the month in which such
disbursement is made and ending December 1, 2009,
with each such payment being applied first to
accrued interest and then to a reduction in
principal (except that if the Financing Closing
Date is other than the first day of a month (x)
the first payment shall be deemed to consist of
interest only from the date of such disbursement
to the first day of the month after the month in
which such disbursement is made and to be due on
such first day of such month and (y) the
aforesaid constant monthly payments shall be
deemed to begin on the first day of the next
month).
The term "Fit-Out Work Investment" shall mean the Notional Fit-Out
Work Loan Amount minus all amounts included therein in respect of principal
under clause (iii) of the definition thereof (it being understood that in
computing the Fit-Out Work Investment the amount of the interest under said
clause (iii) shall not be deducted).
The term "Base Building Savings" shall mean the excess, if any, on
the Base Building Savings Commencement Date of (i) $17,350,000 over (ii) all
amounts disbursed by Landlord pursuant to Section 6 of the Initial Improvements
Agreement.
The term "Fit-Out Work Constant Payment" shall mean the constant
monthly payment which would be required to fully amortize, with interest at the
Fit-Out Work Interest Rate, the Fit-Out Work Investment over such constant
monthly payments on the first day of each month beginning September 1, 1998 and
ending on December 1, 2009 with each such payment being applied first to
interest accrued at the Fit-Out Work Interest Rate and then to amortization (and
with interest commencing to accrue on the Fit Out Work Investment as of August
1, 1998).
The term "Base Building Savings Constant Payment" shall mean the
constant monthly payment which would be required to fully amortize, with
interest at the Main Interest Rate, the Base Building Savings over such constant
monthly payments on the first day of each month beginning on the Base Building
Savings Commencement Date (as such term is defined in the Initial Improvements
Agreement) and ending June 1, 2008 with each such payment being applied first to
interest accrued at the Main Interest Rate and then to amortization (and with
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interest commencing to accrue on the Base Building Savings as of one month
before the Base Building Savings Commencement Date).
The term "Main Interest Rate" shall mean the sum of the Base Rate
plus 140 basis points per annum.
The term "Fit-Out Work Interest Rate" shall mean the sum of the Base
Rate plus 90 basis points per annum.
The term "Base Rate" shall mean the straight line interpolation to
seven years between (i) the interest rate on the on-the-run five year U.S.
Treasury securities quoted by Credit Suisse First Boston to Landlord and Tenant
at the time during the business day prior to the Financing Closing Date at which
the rate being paid by Landlord on the corresponding new loan referred to in
clause (i) of Section 1.5(a) is determined, and (ii) the interest rate on the
on-the-run ten year U.S. Treasury securities quoted by Credit Suisse First
Boston to Landlord and Tenant at such time.
The term "Unamortized Fit-Out Work Investment" shall mean, as of any
date, that amount which would be unamortized on such date if the Fit-Out Work
Investment were amortized with interest at the Fit-Out Work Interest Rate over
constant monthly payments on the first of each month equal to the Fit-Out Work
Constant Payment beginning on September 1, 1998 and ending on December 1, 2009,
with each such payment being applied first to interest accrued at the Fit-Out
Work Interest Rate and then to amortization (with interest commencing to accrue
on the Fit-Out Work Investment as of August 1, 1998). The Unamortized Fit-Out
Work Investment as of the first day of any month shall be computed as of after
the application of such constant monthly payment due on such first day of such
month.
The term "Notional Main Loan Original Balance" shall equal the
excess of (i) the principal amount of all mortgage debt of Landlord outstanding
(other than to affiliates) as of immediately after the Financing Closing Date
over (ii) the sum of (a) the Notional Fit-Out Work Loan Amount, plus (b) the
Base Building Savings.
The term "Notional Main Loan Outstanding Balance" shall mean, as of
any date, the principal amount which would be outstanding on a loan having an
original principal amount equal to the Notional Main Loan Original Balance,
disbursed on the Financing Closing Date, providing for 216 constant monthly
payments on the first day of each month, beginning on the lst day of the month
after the month in which such disbursement is made, equal to the constant
monthly payment which would be required to fully amortize the Notional Main Loan
Original Balance over such 216 constant monthly payments, with each such payment
being applied first to accrued interest and then to a reduction in principal
(except that if the Financing Closing Date is other than the first day of a
month (x) the first payment shall be deemed to consist of interest only from the
date of such disbursement to the first day of the month after the month in which
such disbursement is made and to be due on such first day of such month and (y)
the aforesaid 216 constant monthly payments shall be deemed to begin on the
first day of the next month).
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The term "Notional Main Loan Debt Service" shall mean the amount of
the constant monthly payment referred to in the definition of Notional Main Loan
Outstanding Balance.
The term "Notional Make-Whole Amount" shall mean, as of any date,
the excess, if any, of (i) the present value as of such date (determined by
using a discount rate equal to Comparable Treasury Rate) of all Supplemental
Rent scheduled to be paid by Tenant under Section 2.3 of this Lease after such
date over (ii) the Unamortized Fit-Out Work Investment as of such date. In the
making the determination under clause (i) above, it shall be assumed that Tenant
has not exercised any of its Termination Options and any Termination Options
actually exercised by Tenant shall be disregarded. As used above, the term
"Comparable Treasury Rate" shall, as of any date, mean the yield to maturity of
U.S. Treasury securities maturing on or about June 1, 2008 as published by The
Wall Street Journal for the third business day prior to such date.
Promptly after the requisite facts are known, Landlord and Tenant
shall join in one or more instruments confirming (a) the Base Rate, the Fit-Out
Work Interest Rate, the Fit-Out Work Notional Loan Amount, the Fit-Out Work
Investment, the Fit-Out Work Constant Payment, the Unamortized Fit-Out Work
Investment as of September 1, 2004, the Unamortized Fit-Out Work Investment as
of September 1, 2006, and the Unamortized Fit-Out Work Investment as of June 1,
2008, and (b) the Main Interest Rate, the Base Building Savings, the Base
Building Savings Constant Payment and the Notional Main Loan Debt Service. The
failure of either party to execute such instrument referred to above shall not
constitute a default hereunder or otherwise affect this Lease.
Any dispute as to the computations and determination to be made
pursuant to this Section 1.6 shall be determined by Expedited Arbitration.
2. Basic Rent, etc.
2.1 Basic Rent
(a) Tenant shall pay to Landlord, as fixed annual rent for the
Leased Premises, Basic Rent. Basic Rent shall be payable by Tenant to Landlord
in advance, in equal monthly installments, on the Rent Commencement Date and on
the first day of each and every month thereafter throughout the Term.
(b) As used herein:
(i) "Basic Rent" means (A) during the period commencing
on June 1, 1998 (the "Rent Commencement Date"), to and including May 31, 2003
(the "First Rent Period"), a per annum rate equal to $8,420,095.88, payable in
equal monthly installments of $701,674.66, (B) during the period commencing on
June 1, 2003 to and including June 30, 2008 (the "Second Rent Period"), a per
annum rate equal to $10,573,515.14, payable in equal monthly installments of
$881,126.26, (C) during the period commencing on July 1, 2008 to and including
June 30, 2013 (the "Third Rent Period"), a per annum rate equal to 95% of the
Fair Market Rent
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for such period and (D) during the period commencing on July 1, 2013 to and
including the Expiration Date (the "Fourth Rent Period") a per annum rate equal
to 95% of the Fair Market Rent for such period. Fair Market Rent shall be
determined in accordance with Section 2.2 below.
(ii) If (a) Tenant shall give a notice pursuant to
Section 6 of the Initial Improvements Agreement establishing the Base Building
Savings Commencement Date, and (b) there are any Base Building Savings, then
there shall be credited against the Basic Rent due for each of the months
beginning with the Base Building Savings Commencement Date and ending June 1,
2008, an amount equal to the Base Building Savings Constant Payment. The
aforesaid credit is herein called the "Base Building Savings Credit". In no
event shall Landlord ever be required to pay to Tenant any portion of the Base
Building Savings Credit.
2.2 Determination of Fair Market Rent
(a) Each determination of Fair Market Rent shall be made, to the
extent not inconsistent with this Section, in accordance with the rules from
time to time in effect of the American Arbitration Association or, if the
American Arbitration Association shall have ceased to function as an arbitration
association, of a successor or comparable organization (the "Rules"). There
shall be three arbitrators: one designated by Landlord; one designated by
Tenant; and one designated in the manner hereinafter described. Each arbitrator
shall, as of the date of his or her designation, be a real estate broker
licensed in the State of New York doing business in the Borough of Manhattan and
having at least 15 years experience in first-class Manhattan office building
leases. Not more than 30 months and not less than 24 months before the first day
of the Third Rent Period or the Fourth Rent Period, as applicable, Tenant shall
give to Landlord a notice designating the name and address of Tenant's
arbitrator ("Tenant's Designation Notice"). Landlord, by notice to Tenant given
not later than 20 days after the giving of Tenant's Designation Notice, shall
designate the name and address of Landlord's arbitrator.
If either party shall fail timely to designate its arbitrator, and such
failure shall continue for 10 days after receipt by the failing party of notice
of such failure, such other party may designate an arbitrator on behalf of the
failing party. Promptly after the designation of the second of the two
arbitrators to be designated, such two arbitrators shall meet and attempt to
mediate between Landlord and Tenant an agreement upon the Fair Market Rent in
question. If, within 15 days after the designation of the second of the two
arbitrators to be designated, Landlord and Tenant have not agreed upon the Fair
Market Rent in question, such two arbitrators shall jointly designate a third
arbitrator. If, within 30 days after the designation of the second of the two
arbitrators to be designated, no third arbitrator shall have been so jointly
designated, such third arbitrator shall be designated pursuant to the Rules. The
arbitrators shall render their decision within 60 days after the designation of
the third arbitrator to be designated. Landlord and Tenant shall each pay the
fees and disbursements of the arbitrator designated by or on behalf of it, and
Landlord and Tenant shall share equally the fees and disbursements of the third
arbitrator, if any.
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(b) "Fair Market Rent" means the fixed annual rent that
would be payable for the Leased Premises by a third-party tenant having the then
creditworthiness of Tenant under a five year lease commencing on the first day
of the Third Rent Period or the Fourth Rent Period (as the case may be) upon all
of the terms and conditions of this Lease to be applicable to the Third Rent
Period or Fourth Rent Period (as the case may be), including, without
limitation, the following:
(i) that such fixed annual rent is payable from and
after the first day of the Third Rent Period or
the Fourth Rent Period (as the case may be),
(ii) that the Initial Improvements Agreement is not
applicable to the Third Rent Period or the Fourth
Rent Period (as the case may be), and that Tenant
shall accept the Leased Premises in its "as-is"
condition at the commencement of the Third Rent
Period or the Fourth Rent Period (as the case may
be), and that in connection with the Third Rent
Period or the Fourth Rent Period (as the case may
be) Landlord shall not be required to perform any
work, pay any amount or render any services to
make the Leased Premises ready for Tenant's use
and occupancy or provide any abatement of Basic
Rent or other sums due hereunder,
(iii) that during the Third Rent Period or the Fourth
Rent Period (as the case may be), Tenant shall be
responsible for any increases in Taxes above the
Base Tax Amount, and
(iv) that the ground floor of the Improvements are
legally permitted to be used for retail purposes,
and taking into account all relevant factors.
(c) Each arbitrator shall render as his or her
determination of the Fair Market Rent a fixed dollar amount per annum (in the
aggregate, not per rentable square foot), and shall give a notice to the other
arbitrators and Landlord and Tenant thereof. All notices pursuant to the
preceding sentence shall be given simultaneously at a meeting (called by the
third arbitrator on at least five Business Days' notice to Landlord and Tenant
and the other arbitrators) at which all three arbitrators and Landlord and
Tenant are present. The arithmetic average, of the two determinations closest to
one another shall be and constitute the determination of the arbitration;
provided, that if in any case the highest and lowest determinations are
equidistant from the middle determination, then the middle determination shall
be and constitute the determination of the arbitration.
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2.3 Supplemental Rent
In addition to Basic Rent, Tenant shall pay to Landlord additional
rental (the "Supplemental Rent"), (a) in advance, on September 1, 1998 and on
the first day of each and every month through and including June 1, 2008, in an
amount equal to the Fit-Out Work Constant Payment and (b) on June 1, 2008 (in
addition to the amount required to be paid on such date under clause (a) of this
Section 2.3), an additional amount equal to the Unamortized Fit-Out Work
Investment as of June 1, 2008.
3. Manner of Payment
(a) Basic Rent, Supplemental Rent, Tax Payments and all other sums
payable by Tenant to Landlord hereunder, all of which shall constitute rent,
shall be payable in lawful money of the United States of America and shall be
paid to Landlord (i) in the case of Basic Rent, Supplemental Rent and Tax
Payments, by wire transfer of immediately available federal funds as directed by
Landlord, and (ii) in the case of all other sums, either by wire transfer as
aforesaid or by check (subject to collection) drawn on a New York Clearing House
Association member bank at Landlord's address set forth above or at such other
address of Landlord within the United States as Landlord from time to time may
designate or to such agent or person or persons resident or having an office at
such other address within the United States as Landlord from time to time may
designate.
(b) If Tenant fails timely to pay any Basic Rent, Supplemental Rent,
Tax Payment or other sum payable by Tenant to Landlord under this Lease, Tenant
shall pay interest thereon from the date when such amount became due to the date
of Landlord's receipt thereof at the lesser of (i) the greater of (A) 18% per
annum, or (B) the Prime Rate, and (ii) the maximum rate permitted by law (the
lesser of such rates is called the "Interest Rate"). Any sums payable by Tenant
for which no due date is specified in this Lease shall be due and payable on the
30th day after the giving of an invoice therefor.
(c) If Landlord fails timely to pay any sum payable by Landlord to
Tenant under this Lease other than (i) a payment which Landlord is required to
make under Section 11.2, which failure to make such payments is governed by
Article 38, or (ii) a payment which Landlord is required to make under Section 6
or Section 7 of the Initial Improvements Agreement, which failure to make such
payment is governed by Article 39, or (iii) a payment of net annual rental
payable under the Ground Lease which Landlord is required to make under Section
12.3, which failure to make such payment is governed by Article 38, Landlord
shall pay interest thereon from the date when such amount became due to the date
of Tenant's receipt thereof at the Interest Rate. Any sum payable by Landlord
for which no due date is specified in this Lease shall be due and payable on the
30th day after the giving of an invoice therefor.
(d) If Tenant shall fail timely to pay the Cancellation Payment or
the Supplemental Rent payable under clause (b) of Section 2.3 when due then, in
addition to such Cancellation Payment or Supplemental Rent, Tenant shall pay as
additional rental upon demand (x) an amount equal to interest at the Interest
Rate on such Cancellation Payment (excluding the Rent-Based Cancellation
Payment) or on such Supplemental Rent from the Cancellation
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Payment Payment Date or June 1, 2008 (as the case may be) until payment in full
by Tenant of the Cancellation Payment or such Supplemental Rent and all amounts
required by this sentence, and (y) in case of any failure timely to pay the
Cancellation Payment when due on September 1, 2004 or September 1, 2006,
interest at the Interest Rate on the Rent-Based Cancellation Payment from the
Cancellation Payment Payment Date until payment in full of the Cancellation
Payment and all other amounts required by this sentence. If Tenant shall fail
timely to pay the Cancellation Payment or the Supplemental Rent payable under
clause (b) of Section 2.3 when due then, in addition to the amounts which Tenant
is required to pay under the preceding sentence, Tenant shall indemnify Landlord
against all other losses, damages, costs and expenses arising out of such
failure.
4. Net Lease; No Abatement
Except as otherwise provided in the Initial Improvements Agreement,
Landlord shall not be required to provide any services or utilities to the
Leased Premises. Subject to the last sentence of this Article 4, this Lease is a
net lease of the Leased Premises, and Tenant shall pay all costs, charges,
taxes, assessments and other expenses of every character, foreseen or
unforeseen, ordinary or extraordinary, for the payment of which Landlord or
Tenant is or shall become liable by reason of its respective estate, right,
title or interest in the Leased Premises or any part thereof, or which are
connected with or arise out of the possession, use, occupancy, maintenance,
addition to, repair or rebuilding of the Leased Premises, including, without
limitation, those specifically referred to in this Lease. Except as provided in
Article 16, Section 20(a), Article 38 and Article 39, the Basic Rent and all
other sums payable by Tenant hereunder shall be paid without notice, demand,
counterclaim, setoff, deduction or defense and without abatement, suspension,
deferment, diminution or reduction. The foregoing provisions of this
Article 4(a) shall not relieve Landlord of, or require Tenant to bear or
reimburse Landlord for, the costs of performing (i) Landlord's obligations under
the Initial Improvements Agreement, (ii) Landlord's obligations to make certain
reimbursements pursuant to Article 6, or (iii) Landlord's obligations under
Articles 3, 7, 11, 12, 38 or 39 or any other provision of this Lease which by
its terms imposes any obligation on Landlord, and (b) shall not obligate Tenant
to pay or reimburse Landlord for (A) any taxes or assessments which Tenant is
not required by the provisions of Article 11 to pay or to reimburse to Landlord
or (B) any interest, principal, or other costs or expenses relative to any
indebtedness or other financing of Landlord; provided that the foregoing shall
not relieve Tenant of its obligation to pay Supplemental Rent.
5. Condition and Use of Leased Premises
LANDLORD DOES NOT MAKE, AND TENANT ACKNOWLEDGES THAT LANDLORD HAS NOT
MADE, ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO THIS
LEASE, OR THE PRESENT OR FUTURE MERCHANTABILITY, HABITABILITY, CONDITION,
QUALITY, DURABILITY, FITNESS OR SUITABILITY OF THE LEASED PREMISES IN ANY
RESPECT OR IN CONNECTION WITH OR FOR THE PURPOSES AND USES OF TENANT, OR ANY
OTHER REPRESENTATION OR WARRANTY OF ANY KIND OR CHARACTER, EXPRESS OR IMPLIED,
WITH RESPECT THERETO, EXCEPT AS OTHERWISE
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PROVIDED IN THIS LEASE. Subject to the performance by Landlord of Landlord's
obligations under the Initial Improvements Agreement, Tenant accepts the Leased
Premises "as-is". Tenant may use the Leased Premises only as an office building
and, subject to applicable Legal Requirements, for purposes reasonably ancillary
thereto, including, without limitation, for one or more dining rooms,
cafeterias, restaurants, bars or other food service or preparation facilities
for use by Tenant's personnel and invitees and for one or more health or
exercise facilities for the use of Tenant's personnel. In addition, Tenant may
use any portion of the Improvements above the subcellar and below the 2nd floor
for retail uses so long as there remains throughout the Term a first-class
office building lobby on the ground floor of the Improvements. Tenant shall not
suffer or permit the Leased Premises or any part hereof, to be used by the
public in such a manner as would subject the Leased Premises or any part thereof
to a claim of adverse possession by the public.
6. Maintenance; Alterations; Certain Reimbursements; Etc.
6.1 Generally
(a) Subject to the provisions of this Lease, Tenant:
(i) shall, in accordance with first-class
office building maintenance and operating standards
generally applicable in 1998 (collectively, the
"First-Class Standard"), keep the Leased Premises in
overall first-class order, condition and repair;
(ii) shall promptly make all replacements in
and to the Leased Premises (whether interior or
exterior, structural or nonstructural, ordinary or
extraordinary, foreseen or unforeseen) which are
necessary or appropriate in a first-class office
building according to the standards thereof generally
applicable in 1998 (collectively, "Required
Replacements"); and
(iii) may make additions, alterations and
replacements (other than Required Replacements) in and
to and, subject to the provisions of Section 1.1,
removals from the Leased Premises (collectively,
"Voluntary Alterations"; Required Replacements,
Structural Work and Voluntary Alterations are
collectively called "Alterations").
Notwithstanding the foregoing, (x) Tenant's obligation with respect to the shell
of the Building (excluding the roof) shall be limited to maintaining the same in
such condition as the same is required by applicable Legal Requirements to be
maintained and also in a condition not materially worse than the condition in
which the same was in on the date of this Lease, and (y) if Landlord shall give
a Cost Participation Limitation Notice with respect to any Reimbursable
Replacement or Reimbursable Legal Requirement Alteration, Tenant shall not be
obligated to Landlord to make such Reimbursement Replacement or Reimbursable
Legal Requirement
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Alterations nor, with respect to any such Reimbursable Replacement, to repair
the item which was to have been replaced.
(b) No Alteration may be undertaken if such Alteration would
(i) result in the Improvements not being a first-class office building or (ii)
materially and adversely affect any structural element of the Improvements or
any item of Major Building Equipment. Each Alteration shall be effected with due
diligence, in a good and workmanlike manner, and in compliance with all Legal
Requirements, Insurance Requirements and Permitted Encumbrances. All Structural
Work and all replacements of items of Major Building Equipment shall be of a
quality at least equal to the original installation. Landlord shall not be
liable to any contractors, subcontractors, laborers, materialmen, suppliers or
vendors for services performed or material provided on or in connection with the
Leased Premises. Landlord shall not be required to maintain, alter, repair,
rebuild or replace the Leased Premises or any part thereof. Tenant waives all
rights to make Alterations at Landlord's expense, except that Landlord shall in
accordance with the further provisions of this Article 6 make reimbursements to
Tenant on account of Reimbursable Alterations. Except as provided in Section
1.1, all Improvements arising from the making of any Alterations shall
immediately become the property of Landlord, shall be a part of the Leased
Premises and shall be subject to this Lease, and Tenant shall, upon demand of
Landlord, execute and deliver an appropriate instrument confirming Landlord's
title thereto.
6.2 Certain Definitions
As used herein:
(a) "Legal Requirement Alteration" means any Alteration
undertaken in order to comply with a Legal Requirement.
(b) "Reimbursable Replacement" means the replacement of any
item of Major Building Equipment in its entirety; provided, that (i) such
replacement is performed after completion of the Base Building Upgrade Work,
(ii) such replacement (in light of the physical condition of the item in
question) is consistent with the First-Class Standard, (iii) the repair of the
item in question is inconsistent with the First-Class Standard; (iv) such
replacement shall not have been necessitated by fire, other casualty or a
Taking, and (v) if the Witkoff Management Agreement shall have been terminated,
such replacement shall not have been necessitated by the negligence (including,
without limitation, failure to adhere to the manufacturer's suggested
maintenance procedures) or intentional misconduct of Tenant or the Building
management company employed by Tenant occurring after such termination.
(c) "Reimbursable Legal Recruitment Alteration" means any
Alteration undertaken solely in order to comply with a Legal Requirement enacted
after the date of this Lease and which (i) is performed after completion of the
Base Building Upgrade Work, (ii) in accordance with generally accepted
accounting principles consistently applied ("GAAP") should be capitalized, (iii)
is not an Alteration in any area designed for tenant occupancy, and (iv) is not
necessitated by fire, other casualty or a Taking.
(d) "Structural Work" consists solely of the following:
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(i) replacement and/or repair of the Building's
curtain wall in whole or in part, except that
Structural Work shall not include caulking
treatment of the curtain wall except for any such
caulking treatment done in conjunction with
repairs or replacement of the portion of the
curtain wall being caulked (other than any repairs
or replacement undertaken in order to avoid the
exclusion provided for in this clause (i)).
(ii) replacement and/or repair of the Building's steel
frame, footings, foundations, columns, beams,
floors (including concrete floors and the steel
floors supporting the concrete floors) and core
walls.
(iii) replacement (but not repair) of the roof in its
entirety (but not in part) required in order to
preserve the structural integrity of the Building
or the watertightness and airtightness of the
Building.
(iv) replacement of the watertight membrane or other
watertight barrier under the Building's plaza, and
any removal, reinstallation, repair or replacement
of the Building's plaza arising out of such
replacement
(e) "Reimbursable Structural Work" means any Structural Work
provided that (i) such Structural Work is performed after completion of the Base
Building Upgrades, (ii) such Structural Work (in light of a physical condition)
is consistent with the First-Class Standard, (iii) if such Structural Work is a
replacement, then (A) such replacement (in light of the physical condition of
the item in question) is consistent with the First-Class Standard and (B) the
repair of the item in question is inconsistent with the First-Class Standard,
(iv) such Structural Work shall not have been necessitated by fire, other
casualty or a Taking, and (v) if the Witkoff Management Agreement shall have
been terminated, such Structural Work shall not have been necessitated by the
negligence of Tenant or the Building management company employed by Tenant
occurring after such termination. Notwithstanding the foregoing, the first
$100,000 of Structural Work performed by Tenant in any calendar year which, but
for this sentence, would constitute Reimbursable Structural Work shall be deemed
not to be Reimbursable Structural Work.
(f) "Reimbursable Removal of Hazardous Substances" means the
removal of Qualified Hazardous Substances; provided, that (i) the term
"Reimbursable Removal of Hazardous Substances" shall not include any Asbestos
Removal Work or any Refireproofing Work except to the extent that Landlord fails
to perform the same on or before (a) the Partial Possession Date applicable to
the space in question with respect to any space other than the Stephaneze
Premises or (b) the Stephaneze Possession Date, in the case of the Stephaneze
Premises, and (ii) if the Costs of any removal of Qualified Hazardous Substances
(as reasonably
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estimated by Tenant) shall be less than $500,000 then, unless Tenant, by notice
to Landlord, shall elect to treat the same as a Reimbursable Removal of
Hazardous Substances, such removal shall be deemed not to be a Reimbursable
Removal of Hazardous Substance. In applying the provisions of this clause (ii)
each removal contracted for separately (unless done so solely in order to avoid
the provisions of this Section 6) shall be considered a separate removal.
(g) "Reimbursable Alterations" means, collectively,
Reimbursable Replacements, Reimbursable Structural Work, Reimbursable Legal
Requirement Alterations and Reimbursable Removal of Hazardous Substances.
(h) "Qualified Alteration" means (i) any Alteration (other
than any Reimbursable Replacement, any Structural Work or any Legal Requirement
Alteration) which affects any item of Major Building Equipment and (ii) any
Restoration.
(i) "Major Building Equipment" means any item listed on
Exhibit E and any replacement thereof.
(j) "Base Amount" means the lower of
1) the original contract price of the Retained
Bidder, less any portion of the original contract
price of the Retained Bidder not actually paid by
Tenant, or
2) the original contract price of Landlord's
Preferred Bidder or, if Tenant shall have timely
given the Dispute Notice and the Appropriate
Engineer shall have selected Tenant's Selected
Bidder, the original contract price of Tenant's
Selected Bidder.
(k) "Determined Amount" means the lower of
1) the original contract price of the Retained
Bidder, or
2) the original contract price of Landlord's
Preferred Bidder or, if Tenant shall have timely
given the Dispute Notice and the Appropriate
Engineer shall have selected Tenant's Selected
Bidder, the original contract price of Tenant's
Selected Bidder.
(l) "Cost Division Date" means, (i) with respect to any
Reimbursable Alteration (other than Reimbursable Removal of Hazardous
Substances) commenced during the First Rent Period or the Second Rent Period,
the last day of the Second Rent Period, (ii) with respect to any Reimbursable
Alterations commenced during the Third Rent Period, the last day of the Third
Rent Period, or (iii) with respect to any Reimbursable Alterations commenced
during the Fourth Rent Period, the last day of the Fourth Rent Period.
(m) "Measuring Fraction" means, with respect to any
Reimbursable Alteration (other than any Reimbursable Removal of Hazardous
Substances), the fraction whose
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numerator is the number of months in the period from the Cost Division Date with
respect to such Reimbursable Alteration to the end of the expected useful life
of such Reimbursable Alteration and whose denominator is the number of months in
the period from the Estimated Substantial Completion Date of such Reimbursable
Alteration to the end of the expected useful life thereof. Any dispute as to the
reasonableness of any Estimated Substantial Completion Date, and any dispute as
to the expected useful life of any Reimbursable Alteration, shall be determined
by the Appropriate Engineer. As to any Reimbursable Removal of Hazardous
Substances, the Measuring Fraction shall be one (1.00).
If Landlord and Tenant shall disagree (i) as to whether any item is an item of
Major Building Equipment, or (ii) as to whether any replacement is a
Reimbursable Replacement, or (iii) as to whether any work is Structural Work, or
(iv) as to whether any Structural Work is Reimbursable Structural Work, or (v)
as to whether a Legal Requirement requires an Alteration, or (vi) as to whether
an Alteration is a Legal Requirement Alteration, or (vii) as to whether any
Legal Requirement Alteration is a Reimbursable Legal Requirement Alteration, or
(viii) as to whether any Alteration is a Qualified Alteration, or (ix) as to
whether any removal of any Hazardous Substance is a Reimbursable Removal of
Hazardous Substances, the matter shall in each case be determined by the
Appropriate Engineer. Notwithstanding the foregoing, any dispute under clause
(vii) - in so far as it relates to whether in accordance with GAAP an item
should be capitalized - shall be determined by the Accountant.
6.3 Submission and Approval of Plans and Specifications in Certain
Instances.
(a) Required Submissions. Prior to:
(i) performing any of the Base Building
Upgrade Work; or
(ii) undertaking any Reimbursable
Replacement, any Structural Work (whether or not
Reimbursable Structural Work), any Legal Requirement
Alteration (whether or not a Reimbursable Legal
Requirement Alteration) or any Qualified Alteration;
Tenant shall (subject to Section 6.3(f)) submit all of the Plans and
Specifications therefor to Landlord for Landlord's approval, together with, in
case Tenant contends that the work in question is a Reimbursable Alteration, (i)
a statement to that effect, and (ii) a good faith estimate of the Costs of such
Reimbursable Alteration prepared by a reputable architect, engineer or
contractor. Each such submission is herein called a "Plans Submission Notice".
Landlord shall give notice (the "Plans and Specifications Notice") to Tenant of
Landlord's approval or disapproval of any Plans and Specifications within 20
Business Days after the date upon which the same are given to Landlord (which
Plans and Specifications Notice shall, in the case of a disapproval, be
accompanied by a reasonably complete and specific statement of the reasons for
disapproval); provided, that
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(A) with respect to all Plans and
Specifications submitted by Tenant prior to Tenant's
occupancy of the Leased Premises for the conduct of
business, the aforesaid 20 Business Day period shall be
shortened to 10 Business Days, and
(B) with respect to all Plans and
Specifications submitted by Tenant after Tenant's
occupancy of the Leased Premises for the conduct of
business, if (i) at least 10 Business Days before the
date upon which Tenant submits all of the Plans and
Specifications for the work in question to Landlord,
Tenant gives notice to Landlord that Tenant intends to
make any replacement of an item of Major Building
Equipment or to undertake any Structural Work, Legal
Requirement Alteration or Qualified Alteration (which
notice shall specify the general nature of the work and
an estimated date for the submission of all of the Plans
and Specifications therefor to Landlord) and (ii) Tenant
delivers all of the Plans and Specifications for the
work in question to Landlord within 2 Business Days of
the estimated submission date set forth in Tenant's
notice, then the aforesaid 20 Business Day period shall
be shortened to 10 Business Days.
If Tenant's notice shall have included a statement that the work in question is
a Reimbursable Alteration, the Plans and Specifications Notice shall include
Landlord's agreement or disagreement with such statement.
(b) Disapproval Only Under Certain Circumstances. Landlord
shall not disapprove any Plans and Specifications unless the work contemplated
thereby would (i) result in the Improvements not being a first-class office
building or (ii) materially and adversely affect any structural element of the
Improvements or any item of Major Building Equipment. If Tenant disputes
Landlord's right to disapprove, the matter shall be determined by the
Appropriate Engineer.
(c) Certain Conditions. Subject to Sections 6.3(d) and (f),
Tenant shall not perform any Base Building Upgrade Work or undertake any
Reimbursable Replacement, Structural Work, Legal Requirement Alteration or
Qualified Alteration unless and until (i) Landlord shall approve (or be deemed
to have approved) the Plans and Specifications therefor in a Plans and
Specifications Notice or (ii) the Appropriate Engineer shall determine that
Landlord did not have the right to disapprove such Plans and Specifications
pursuant to this Lease.
(d) Failure to Give timely Notice. Subject to the provisions
of the next paragraph, if Landlord shall fail timely to give Tenant a Plans and
Specifications Notice, Tenant may proceed with the work in question, and if
Landlord thereafter disapproves the Plans and Specifications therefor Tenant may
continue such work unless the Appropriate Engineer determines that Landlord had
the right to disapprove pursuant to this Lease. If the Appropriate
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Engineer so determines, Tenant shall cease such work, but the work done by
Tenant to the date of the Appropriate Engineer's determination shall not
constitute a default hereunder if Tenant thereupon commences and thereafter
diligently prosecutes to completion such remedial work (including, without
limitation, the removal of the work theretofore done by Tenant and the
restoration of the affected area of the Leased Premises) as Landlord may
reasonably determine to be appropriate in the circumstances (unless Tenant shall
dispute Landlord's determination, in which case the remedial work, if any, to be
done by Tenant shall be determined by the Appropriate Engineer).
Notwithstanding the provisions of the foregoing paragraph, if
(i) Tenant's Plans Submission Notice shall include the following statement in
block capital letters: "THIS NOTICE IS BEING GIVEN UNDER SECTION 6.3(a) OF OUR
LEASE. YOUR FAILURE TIMELY TO RESPOND WILL RESULT IN YOUR BEING DEEMED TO HAVE
APPROVED THE PLANS AND SPECIFICATIONS INCLUDED HEREWITH", and (ii) Landlord
shall fail timely to give to Tenant a Plans and Specifications Notice with
respect to such Plans and Specifications, then Landlord shall be deemed to have
given to Tenant a Plans and Specifications Notice approving such Plans and
Specifications and any Plans and Specifications Notice thereafter given by
Landlord disapproving such Plans and Specifications shall be void and of no
effect.
If (i) Tenant's Plans Submission Notice shall include the
following statement in block capital letters: "THIS NOTICE IS BEING GIVEN UNDER
SECTION 6.3(a) OF OUR LEASE WITH RESPECT TO A REIMBURSABLE ALTERATION. YOUR
FAILURE TIMELY TO DISAGREE WITH TENANT'S STATEMENT THAT THE WORK CALLED FOR BY
THE PLANS AND SPECIFICATIONS INCLUDED HEREWITH CONSTITUTES A REIMBURSABLE
ALTERATION WILL RESULT IN YOUR BEING DEEMED TO AGREE THAT SUCH WORK CONSTITUTES
A REIMBURSABLE ALTERATION." and (ii) Landlord shall fail timely to give to
Tenant a Plans and Specifications Notice with respect to such Plans and
Specifications indicating that Landlord disagrees with Tenant's statement that
the work called for by such Plans and Specifications constitutes a Reimbursable
Alteration, then Landlord shall be deemed to have agreed that such work
constitutes a Reimbursable Alteration.
(e) Submission of Certain Plans and Specifications Not
Requiring Approval. At the request of Landlord (made not more frequently than
once in any 12-month period), Tenant shall submit to Landlord Plans and
Specifications for all Alterations (other than Plans and Specifications required
to be submitted to Landlord pursuant to Section 6.3(a)) to the extent that such
Plans and Specifications have been prepared and have not theretofore been
submitted to Landlord. Landlord shall have no right to approve any Plans and
Specifications submitted by Tenant pursuant to this Section 6.3(e) unless it is
determined that such Plan and Specifications should have been submitted for
approval under Section 6.3(a).
(f) Emergencies. Provided that Tenant shall have given
Landlord prompt telephonic notice (confirmed in writing as soon as reasonably
practicable) of an emergency, Tenant may (without first complying with the
applicable provisions of Sections
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6.3(a)(b), (c) and (e)) proceed with such aspects of any Alteration as Tenant
may reasonably deem necessary in light of the emergency, but as promptly as
reasonably practicable thereafter Tenant shall comply with the applicable
provisions of said sections. Any dispute as to Tenant's right to avail itself of
this Section 6.3(f) shall be determined by the Appropriate Engineer.
6.4 Reimbursable Alterations
(a) Submission of Bids; Different Score of Work Statement.
(1) In the case of any Reimbursable Alteration, Tenant shall
(subject to Section 6.4(f)), simultaneously with the submission of all of the
Plans and Specifications therefor to Landlord (or as soon thereafter as
reasonably practicable, but in no event later than the date which is 5 Business
Days prior to the date upon which Landlord is required to give the Plans and
Specifications Notice), deliver to Landlord a list of at least 3 reputable
contractors (collectively, the "Original Bidders") from whom Tenant proposes to
obtain bids for the work. Landlord shall have the right, exercisable by notice
to Tenant delivered not later than 10 Business Days after receipt by Landlord of
the list of the Original Bidders, to designate no more than three additional
reputable contractors (which may include Landlord or an affiliate of Landlord)
from whom Landlord desires Tenant to obtain bids (collectively, the "Additional
Bidders"). Tenant shall, as promptly as reasonably practicable, obtain bids from
at least two of the Original Bidders and solicit bids from all of the Additional
Bidders (if any) on a competitive basis and submit all bids obtained (together
with the proposed contracts relating thereto) to Landlord together with (x)
Tenant's reasonable estimate of the date of substantial completion of the work
in question (the "Estimated Substantial Completion Date") and (y) Tenant's
reasonable estimate of reasonable fees and disbursements of any architect or
engineer retained by Tenant in connection with the work in question, and within
5 Business Days after receipt thereof Landlord shall give notice to Tenant
designating the Original Bidder or the Additional Bidder (in either case being a
bidder from whom Tenant has obtained a bid) which in Landlord's judgment should
perform the work in question (the bidder so designated by Landlord being called
"Landlord's Preferred Bidder"). All such bids shall be on a lump sum or
guaranteed maximum amount basis. Tenant shall have the right, exercisable by
notice (the "Dispute Notice") given to Landlord within 5 Business Days after the
date upon which Tenant receives notice of the identity of Landlord's Preferred
Bidder (which Dispute Notice shall specify the Original Bidder or the Additional
Bidder ("Tenant's Selected Bidder") which Tenant proposes to select to do the
work in question), to dispute Landlord's designation of Landlord's Preferred
Bidder, and if the Dispute Notice shall be timely given, the Appropriate
Engineer shall select either Landlord's Preferred Bidder or Tenant's Selected
Bidder as the bidder which (in light of the bid, contract terms, reputation and
experience of such bidder) is most appropriate to do the work in question.
Notwithstanding Landlord's designation of, or the Appropriate Engineer's
selection of, Landlord's Preferred Bidder, Tenant may retain any Original Bidder
or Additional Bidder from whom Tenant has obtained a bid in accordance with this
Section 6.4(a) to do the work in question (the bidder so retained being called
the "Retained Bidder").
(2) If Landlord believes that the Reimbursable Alteration reflected
in the Plans and Specifications submitted by Tenant is not the most appropriate
Alteration to address
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<PAGE> 37
the condition in question (in the case of a Reimbursable Replacement or
Reimbursable Structural Work) or to comply with the Legal Requirement in
question (in the case of a Reimbursable Legal Requirement Alteration) or to
effect removal (in the case of Reimbursable Removal of Hazardous Substances)
then, Landlord shall include in its notice designating Landlord's Preferred
Bidder a statement to that effect (such statement being herein called a
"Different Scope of Work Statement") and shall include with such notice (x) such
revisions to or such replacement for the Plans and Specifications submitted by
Tenant as Landlord believes are needed to reflect such most appropriate
Alteration ("Landlord's Revised Plans"), (y) a list of at least 3 reputable
contractors from whom Landlord desires Tenant to obtain bids for the performance
of the Reimbursable Alteration in accordance with Landlord's Revised Plans
("Landlord's Alternate Bidders") and who may be the same as or different from
the Additional Bidders, and (z) if Landlord believes that the Alteration
reflected in Landlord's Revised Plans is not a Reimbursable Alteration, a
statement to that effect. In such a case, Tenant may elect to perform the
Alteration in question either pursuant to Landlord's Revised Plans or, subject
to Section 6.3(c), pursuant to the Plans and Specifications submitted by Tenant,
subject, in either case, to the provisions of Section 6.4(h). If Landlord shall
include the statement described in clause (z) above, and Tenant shall disagree
therewith, the dispute shall be resolved by the Appropriate Engineer.
If (A) Tenant's notice accompanying Tenant's submission to Landlord
of the bids required to be submitted to Landlord under Section 6.4(a)(1) shall
include the following statement in block capital letters: "THIS NOTICE IS BEING
GIVEN TO YOU UNDER SECTION 6.4(a) OF OUR LEASE WITH RESPECT TO A REIMBURSABLE
ALTERATION. YOUR FAILURE TIMELY TO FURNISH A DIFFERENT SCOPE OF WORK STATEMENT
WILL RESULT IN YOUR LOSING THE RIGHT TO FURNISH A DIFFERENT SCOPE OF WORK
STATEMENT. IF YOU FURNISH A DIFFERENT SCOPE OF WORK STATEMENT YOUR FAILURE TO
INCLUDE THEREIN A STATEMENT THAT YOU DO NOT BELIEVE THAT THE ALTERATION CALLED
FOR THEREBY IS NOT A REIMBURSABLE ALTERATION WILL RESULT IN YOUR BEING DEEMED TO
AGREE THAT SUCH ALTERATION CONSTITUTES A REIMBURSABLE ALTERATION" and (B)
Landlord shall fail to include in its notice designating Landlord's Preferred
Bidder a Different Scope of Work Statement or shall fail to include with such
notice Landlord's Revised Plans or shall fail to include with such notice a list
of Landlord's Alternate Bidders, then Landlord shall be deemed to have waived
its rights under this Section 6.4(a)(2) with respect to the Reimbursable
Alteration in question. If (i) Tenant's notice accompanying Tenant's submission
to Landlord of the bids required to be submitted to Landlord under Section
6.4(a)(1) shall include the statement set forth in clause (i) of the preceding
sentence, and (ii) Landlord shall furnish a Different Scope of Work Statement
and shall fail to include therein a statement that Landlord does not believe
that the Alteration called for thereby is not a Reimbursable Alteration, then
Landlord shall be deemed to have agreed that such Alteration is a Reimbursable
Alteration.
(b) Reimbursement Amount. Landlord shall, in accordance with Section
6.4(d) or 6.4(e), reimburse Tenant on account of any Reimbursable Alteration in
an amount (the "Reimbursement Amount") equal to the product of the Measuring
Fraction multiplied by the sum of (i) the Base Amount for the work in question,
plus (ii) any Qualified Overruns; plus (iii) the reasonable fees and
disbursements of any architect or engineer retained
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by Tenant in connection with the work in question (the sum of the amounts
referred to in clauses (i), (ii) and (iii) being herein called the "Gross
Amount"). Any dispute as to the reasonableness of the incurrence by Tenant of
any Cost under clause (ii) or (iii) above in connection with the work in
question, or as to the reasonableness of the amount of any such Cost, shall be
determined by the Appropriate Engineer.
(c) Overruns; Qualified Overruns. At any time during the performance
of any Reimbursable Alteration, Tenant may give notice (an "Overrun Notice") to
Landlord specifying any cost (an "Overrun") in excess of the original contract
price of Tenant's Selected Bidder which Tenant expects to incur and which Tenant
contends was unforeseeable by Tenant at the time of commencement of the work
(each Overrun Notice to specify the nature of and reasons for the Overrun in
question in reasonably complete and specific detail). Within 10 Business Days
after receipt of an Overrun Notice, Landlord shall notify Tenant as to whether
or not in Landlord's judgment the Overrun in question is reasonable in amount in
the circumstances and was unforeseeable by Tenant at the time of commencement of
the work. If Tenant shall dispute Landlord's judgment, the reasonableness of the
amount of, and the foreseeability by Tenant of, the Overrun in question shall be
determined by the Appropriate Engineer. Any Overrun determined by Landlord or
the Appropriate Engineer to be reasonable in amount in the circumstances and
unforeseeable by Tenant at the time of commencement of the work shall be a
"Qualified Overrun". Tenant shall not be chargeable with the failure by any
Contractor to foresee any Overrun.
(d) Reimbursement Upon Full Completion. Except in the case of a
Reimbursable Alteration in respect of which an Extended Completion Notice has
been given, Landlord shall upon the full completion of the work in question and
within 30 days after Landlord's receipt of Tenant's request therefor remit the
Reimbursement Amount to Tenant; provided, that Landlord shall not be obligated
to make such remittance unless:
(i) Tenant's request for remittance shall be
accompanied by (A) a certificate of Tenant (in
form reasonably satisfactory to Landlord) stating
that an amount at least equal to the Reimbursement
Amount has been paid to contractors,
subcontractors, materialmen, engineers, architects
or other persons (whose names and addresses and a
description of the work involved shall be stated)
who have furnished labor, materials, supplies,
permits or services for the work in question
(collectively, "Contractors") and that to Tenant's
best knowledge (after due inquiry) there is no
outstanding indebtedness due for labor, materials,
supplies, permits or services in any manner
connected with the work in question which if
unpaid might be the basis for any type of lien on
the Leased Premises or any part thereof, and (B) a
certificate of the architect or engineer who
prepared the related Plans and Specifications (in
form reasonably
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satisfactory to Landlord) stating that such work
has been fully completed in a good and
workmanlike manner and in accordance with the
Plans and Specifications (as approved by Landlord
or as determined by the Appropriate Engineer to
have been required to be approved by Landlord
pursuant to this Lease);
(ii) Landlord shall have received (A) true copies of
all bills paid by Tenant to Contractors in
connection with the work in question, (B) an
instrument in writing from any title company
insuring Landlord's estate in the Project
certifying that there are no undischarged
mechanics', laborers' or materialmen's liens
affecting any part of the Project (other than
liens, if any, in respect of which Landlord has
consented to take security pursuant to Article
13(a)(ii)) and
(iii) no Event of Default shall have occurred and be
continuing.
(e) Reimbursement as Work Proceeds. If at any time prior to or
during the performance of any Reimbursable Alteration Tenant determines that the
full completion thereof will not occur within six months after the commencement
of such Reimbursable Alteration, Tenant shall give Landlord notice of such
determination (an "Extended Completion Notice") and thereafter Landlord shall
from time to time within 30 days after Landlord's receipt of Tenant's request
therefor (but in no event more frequently than once during any 30-day period)
make advances to Tenant on account of the Reimbursement Amount for the work in
question (collectively, "Reimbursement Advances"); provided, that:
(i) no Reimbursement Advance shall be made until
Tenant shall have delivered to Landlord evidence
reasonably acceptable to Landlord that Tenant has
paid Contractors engaged in the work in question
an aggregate amount (the "Benchmark Amount") equal
to the positive remainder, if any, obtained by
subtracting the Determined Amount for the work in
question from the original contract price of the
Retained Bidder, and Reimbursement Advances shall
be made only for amounts paid by Tenant to such
Contractors which are in excess of the Benchmark
Amount;
(ii) no Reimbursement Advance (other than the final
Reimbursement Advance) shall be due unless:
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(a) Tenant's request for such Reimbursement Advance
shall be accompanied by (x) a certificate of
Tenant (in form reasonably satisfactory to
Landlord) stating that (1) the amount of the
Reimbursement Advance then requested has been paid
by Tenant to Contractors (whose names and
addresses and a description of the work involved
shall be stated) engaged in the work in question,
(2) the amount of the Reimbursement Advance then
requested (when taken together with the aggregate
amount of all Reimbursement Advances theretofore
made by Landlord) exceeds neither 90% of the
Reimbursement Amount nor the product of the
Determined Amount multiplied by the percentage
(the "Completed Percentage") of the work called
for in the contract of the Retained Bidder which
has actually been installed in the Leased
Premises, (3) the amount of the Reimbursement
Advance, when added to all amounts paid by Tenant
to Contractors engaged in the work in question and
not reimbursed by Landlord by way of prior
Reimbursement Advances or the then Reimbursement
Advance (but excluding the Benchmark Amount) is at
least equal to the quotient obtained by dividing
the amount of the then requested Reimbursement
Advance by the Measuring Fraction and (4) no part
of the cost of the work described in any previous
or then pending request for a Reimbursement
Advance has been or is being made the basis for
the Reimbursement Advance then being requested,
and (y) a certificate of the architect or engineer
who prepared the related Plans and Specifications
(in form reasonably satisfactory to Landlord)
stating in substance that the Completed Percentage
has been reached and that the work has been
performed in a good and workmanlike manner and in
accordance with the Plans and Specifications (as
approved by Landlord or as determined by the
Appropriate Engineer to have been required to be
approved by Landlord p