FindLaw | Find a Lawyer. Find Answers.
Are you a legal Professional?
My current location:
Los Angeles, CA
| Change location
| Featured Attorneys | |
Business and Corporate Law. Reasonable Rates. The Next Best Thing to Having Your Own Corporate Counsel. Call Now,
|
(310) 203-2249
|
GS LEASE
LEASE
dated June 11, 1985
METROPOLITAN LIFE INSURANCE COMPANY
and
GOLDMAN, SACHS & CO.
<PAGE> 2
TABLE OF CONTENTS
Page
----
1. Leased Premises; Term of Lease ............................. 1
1.1 Leased Premises ............................................ 1
1.2 Original Term .............................................. 2
1.3 Extended Terms ............................................. 2
2. Basic Rent, etc. ........................................... 4
2.1 Basic Rent ................................................. 4
2.2 Determination of Basic Rent ................................ 5
3. Manner of Payment .......................................... 8
4. Net Lease; No Counterclaim, Abatement ...................... 8
5. Condition and Use of Combined Premises ..................... 9
6. Maintenance; Alterations; Certain
Reimbursements; Etc. ..................................... 10
7. Removal and Replacement of Initial.
Tenant Improvements; Lessee's
Equipment ................................................ 37
8. Utility Services ........................................... 39
9. Indemnification by Lessee .................................. 40
10. Entry by Lessor ............................................ 42
11. Payment of Taxes, Impositions, etc. ........................ 43
11.1 General .................................................... 43
11.2 Exclusions from Impositions ................................ 45
11.3 Permitted Contests ......................................... 46
11.4 Tax Deposits ............................................... 48
12. Compliance with Legal and Insurance
Requirements, Permitted Encumbrances,
Leases ................................................... 50
13. Liens ...................................................... 50
14. Insurance .................................................. 51
14.1 Risks to be Insured ........................................ 51
14.2 Policy Provisions .......................................... 55
14.3 Delivery of Insurance Certificates;
Payment of Premium ........................................ 56
14.4 No Limitation of Damages ................................... 57
15. Damage to or Destruction of Property ....................... 57
15.1 Waiver of ss.227; Lessee to Give Notice .................... 57
15.2 Restoration ................................................ 58
15.3 Application of Insurance Proceeds .......................... 58
15.4 Termination in Lieu of Restoration ......................... 60
16. Taking of Property ......................................... 66
16.1 Notice ..................................................... 66
16.2 Total Taking ............................................... 66
<PAGE> 3
-ii-
16.3 Partial Taking ............................................. 67
16.4 Application of Awards ...................................... 68
16.5 Temporary Taking ........................................... 71
17. Disbursement of Deposited Sums ............................. 72
18. Certificate as to No Default, etc. ......................... 78
19. Right of Lessor to Perform
Lessee's Covenants, etc. ................................. 78
20. Assignments; Subleases ..................................... 82
20.1 Generally .................................................. 82
20.2 Non-disturbance ............................................ 84
20.3 Leasehold Mortgages ........................................ 86
21. Vaults ..................................................... 93
22. Events of Default; Termination ............................. 93
23. Repossession ............................................... 98
24. Reletting .................................................. 99
25. Survival of Lessee's Obligations;
Damages .................................................. 99
25.1 Termination of Lease Not to Relieve
Lessee of Obligations .................................... 99
25.2 Current Damages ............................................ 99
25.3 Final Damages .............................................. 101
26. No Waiver .................................................. 102
27. Remedies Cumulative ........................................ 102
28. Acceptance of Early Termination or Surrender ............... 103
29. No Merger of Title ......................................... 103
30. Exculpation ................................................ 104
31. Definitions ................................................ 106
32. End of Lease Term .......................................... 113
33. Notices .................................................... 113
34. Annual Reports ............................................. 115
35. Miscellaneous .............................................. 115
36. Structural Work ............................................ 117
37. Limitation on Interest ..................................... 120
Signatures ................................................. 120
Acknowledgments
Schedule A - Legal Description of the Land
Schedule B - Permitted Encumbrances;
Existing Leases
Schedule C - Form of non-disturbance agreement
Schedule D - Major Building Equipment
Schedule E - The Deed
Schedule F - Section 10.8 of Contract of Sale
<PAGE> 4
LEASE
THIS LEASE, dated June 11, 1985, between METROPOLITAN LIFE INSURANCE
COMPANY ("Lessor"), a New York corporation having its principal office at One
Madison Avenue, New York, New York 10010, and GOLDMAN, SACHS & CO. ("Lessee"), a
New York limited partnership having its principal office at 85 Broad Street, New
York, New York 10004.
W I T N E S S E T H:
That in consideration of the mutual agreements herein contained,
Lessor and Lessee hereby agree and covenant to and with each other as follows:
1. Leased Premises; Term of Lease.
1.1 Leased Premises. Lessor leases to Lessee, and Lessee rents from
Lessor, the land located in the City, County and State of New York more
particularly described in Schedule A hereto (the "Land"),
TOGETHER WITH the buildings, structures and improvements now or
hereafter appurtenant thereto or located thereon (the "Building"), and all
fixtures and personal property owned by Lessor now or hereafter attached thereto
or used in connection therewith,
TOGETHER WITH all the right, title and interest, if any, of Lessor
in and to:
<PAGE> 5
2
1. Any strips and gores of land adjoining the Land on any side
thereof;
2. Any land lying in the bed of any street or avenue abutting the
Land, to the center line thereof; and
3. Any easements or other rights in adjoining property enuring to
Lessor by reason of ownership of the Land;
EXCLUDING all Lessee's Equipment (as hereinafter defined) and the
Initial Tenant Improvements (as hereinafter defined).
All of the foregoing being herein called the "Leased Premises".
SUBJECT TO the Permitted Encumbrances and the Existing Leases, as
hereinafter defined.
1.2 Original Term. This Lease shall commence on the date hereof (the
"commencement date") and, unless sooner terminated pursuant to law or pursuant
to any of the terms hereof, shall expire at 11:59 p.m. on June 30, 2008.
1.3 Extended Terms. (a) Lessee shall have the right, exercisable as
hereinafter provided, to extend the term of this Lease for four successive
periods of five years each. Each such extended term shall be (except for the
amount of Basic Rent per annum and that there shall be no right to extend the
term of this Lease beyond the expiration of the fourth extended term) upon the
same covenants, terms and conditions as those provided in this Lease for the
<PAGE> 6
3
original term. If Lessee desires to preserve the right to extend the term of
this Lease for any extended term, it shall give Lessor a notice (the
"preservation notice") no earlier than the day 30 months prior to, and no later
than the day 20 months prior to, the expiration of the original term or the then
current extended term (the "then current term"), as the case may be (the "then
current scheduled expiration date"). If Lessee shall fail timely to give the
preservation notice, it shall have no right to extend the term of this Lease.
The Basic Rent per annum applicable to any extended term shall be determined in
accordance with section 2.2, but shall in no event be less than $35,862,435 per
annum. After the determination thereof pursuant to section 2.2, Lessee may, by
notice (the "exercise notice") to Lessor given no later than 30 days after the
date of such determination, exercise its right to extend the term of this Lease
at the Basic Rent so determined, but in no event less than $35,862,435 per
annum.
(b) If the term of this Lease is not extended for any of the four
extended terms, Lessee shall have no right to extend the term hereof for any of
the subsequent extended terms.
(c) Notwithstanding the foregoing provisions of this section 1.3, no
preservation notice shall be effective to preserve, and no exercise notice shall
be effective to exercise, Lessee's right to extend the term of this Lease
<PAGE> 7
4
for any extended term if an Event of Default under section 22(a), (b), (c) or
(d) shall have occurred and be continuing on the date on which Lessee gives such
notice with respect to such extended term.
2. Basic Rent, etc.
2.1 Basic Rent. Lessee shall pay to Lessor during the term of this
Lease a net annual basic rental for the Leased Premises (the "Basic Rent"), in
advance, in equal monthly installments, on the first day of each month computed
at the rate of
(a) $26,169,885 per annum for the period from the commencement date
to and including June 30, 1988;
(b) $31,016,160 per annum for the period from July 1, 1988 to and
including June 30, 1993;
(c) $35,862,435 per annum for the period from July 1, 1993 to and
including June 30, 1998;
(d) for the period from July 1, 1998 to and including June 30, 2003,
the amount per annum determined in accordance with section 2.2, but in no
event less than $35,862,435 per annum;
(e) for the period from July 1, 2003 to and including June 30, 2008,
the amount per annum determined in accordance with section 2.2, but in no
event less than $35,862,435 per annum; and
(f) if Lessee shall exercise its option to extend this Lease as
provided in section 1.3 for one or more
<PAGE> 8
5
extended terms, for such extended term, the amount per annum determined in
accordance with section 2.2.
If this Lease shall commence other than on the first day of a month, rent for
the period from the commencement date to and including the last day of the month
in which the commencement date occurs shall be due on the commencement date.
2.2 Determination of Basic Rent. (a) Each determination of Basic
Rent for the purposes of sections 1.3 and 2.1(d), (e) and (f) 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 Lessor; one designated by Lessee;
and one designated in the manner hereinafter described. Each arbitrator shall,
as of the date of his 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. Lessor shall,
by notice ("Lessor's Designation Notice") to Lessee given not later than the
applicable date indicated below, designate the name and address of its
arbitrator.
<PAGE> 9
6
<TABLE>
<CAPTION>
Arbitration Pursuant to Applicable Date
----------------------- ---------------
<S> <C>
Section 2.1(d) June 15, 1997
Section 2.1(e) June 15, 2002
Section 1.3 30 days after the
day on which Lessor
receives the
preservation notice
</TABLE>
Lessee shall, by notice to Lessor given not later than the applicable date
indicated below, designate the name and address of its arbitrator.
<TABLE>
<CAPTION>
Arbitration Pursuant to Applicable Date
----------------------- ---------------
<S> <C>
Section 2.1(d) July 1, 1997
Section 2.1(e) July 1, 2002
Section 1.3 30 days after the
day on which Lessee
receives Lessor's
Designation Notice
</TABLE>
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
Lessor and Lessee an agreement upon the Basic Rent in question. If, within 15
days after the designation of the second of the two arbitrators to be
designated, Lessor and Lessee have not agreed upon the Basic 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
<PAGE> 10
7
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. Lessor and
Lessee shall each pay the fees and disbursements of the arbitrator designated by
or on behalf of it, and Lessor and Lessee shall share equally the fees and
disbursements of the third arbitrator, if any; provided, however, that with
respect to any arbitration pursuant to section 1.3, if Lessee does not give the
exercise notice, Lessee shall pay (or reimburse Lessor for) all reasonable
out-of-pocket expenses incurred by Lessor in connection with such arbitration,
including attorneys' fees and disbursements and expert witness fees and
disbursements.
(b) The arbitrators shall determine the Basic Rent in question by
establishing the fair market amount thereof as of the date six months prior to
the date as of which such Basic Rent will take effect (in the case of
arbitration pursuant to section 2.1(d) or (e)) or the date six months prior to
the then current scheduled expiration date (in the case of arbitration pursuant
to section 1.3) that would be payable for the Leased Premises by a lessee having
the then creditworthiness of Lessee under a lease on all of the terms and
conditions of this Lease. Each arbitrator shall render as his determination of
the Basic Rent a fixed dollar amount per annum, and shall give a notice to the
other arbitrators
<PAGE> 11
8
and Lessor and Lessee 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 Lessor and Lessee and the other arbitrators)
at which all three arbitrators and Lessor and Lessee are present. The arithmetic
average of the two determinations closest to one another shall be and constitute
the determination of the arbitration; provided, however, if the highest and
lowest determinations are equidistant from the middle determination, then the
middle determination shall be and constitute the determination of the
arbitration.
3. Manner of Payment. The Basic Rent and all other sums payable by
Lessee to Lessor hereunder shall be payable in lawful money of the United States
of America and shall be paid to Lessor at Lessor's address set forth above or at
such other address of Lessor within the United States as Lessor 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 Lessor from time to
time may designate.
4. Net Lease; No Counterclaim, Abatement. Lessor shall not be
required to provide any services to the Combined Premises or any part thereof.
Subject to the last sentence of this section 4, this Lease is a net lease, and
Lessee shall pay all costs, charges, taxes, assessments and
<PAGE> 12
9
other expenses of every character, foreseen or unforeseen, ordinary or
extraordinary, for the payment of which Lessor or Lessee is or shall become
liable by reason of its respective estate, right, title or interest in the
Combined 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 Combined Premises or any part thereof, including, without
limitation, those specifically referred to in this Lease. Except as provided in
sections 16 and 20.1(a), the Basic Rent and all other sums payable by Lessee
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 section 4 shall not obligate Lessee
to pay any taxes which are not Impositions or relieve Lessor of its obligation
to make reimbursements to Lessee in accordance with section 6(e).
5. Condition and Use of Combined Premises. LESSOR DOES NOT MAKE, AND
LESSEE ACKNOWLEDGES THAT LESSOR 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 COMBINED PREMISES OR ANY PART THEREOF IN ANY RESPECT OR IN
CONNECTION WITH OR FOR THE PURPOSES AND USES OF LESSEE, OR ANY OTHER
<PAGE> 13
10
REPRESENTATION OR WARRANTY OF ANY KIND OR CHARACTER, EXPRESS OR IMPLIED, WITH
RESPECT THERETO. Lessee accepts the Leased Premises "as-is". Lessee may use the
Leased Premises only as an office building which may include retail facilities
and for purposes reasonably ancillary thereto. Lessee shall not suffer or permit
the Leased Premises or any part thereof 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.
(a) Generally.
(i) Maintenance; Alterations. Subject to the provisions of this
Lease, Lessee:
(x) shall, in accordance with first-class office building
maintenance and operating standards (collectively, the "First-Class
Standard"), keep the Combined Premises in overall first-class order,
condition and repair;
(y) shall promptly make all replacements in and to the
Combined Premises or any part thereof (whether interior or exterior,
structural or nonstructural, ordinary or extraordinary, foreseen or
unforeseen) which are necessary or appropriate in a first-class
office building (collectively, "Required Replacements"); and
<PAGE> 14
11
(z) may make additions, alterations, improvements and
replacements (other than Required Replacements) in and to and
removals from the Combined Premises or any part thereof
(collectively, "Voluntary Alterations"; Required Replacements,
Structural Work [as defined in section 36] and Voluntary Alterations
being collectively called "Alterations").
(ii) Requirements for All Alterations. No Alteration may be
undertaken if such Alteration would (a) result in the Building's not being a
first-class office building or (b) materially and adversely affect any
structural element of the Building or any item of Major Building Equipment (as
defined in section 31). 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. Lessor 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 Combined
Premises or any part thereof. Lessor shall not be required to maintain, alter,
repair, rebuild or replace the Combined Premises or any part thereof. Lessee
waives all rights to
<PAGE> 15
12
make Alterations at Lessor's expense, except that Lessor shall in accordance
with section 6(e) make reimbursements to Lessee on account of Reimbursable
Replacements, Reimbursable Structural Work and Reimbursable Legal Requirement
Alterations (each as defined in section 6(c)). All Alterations shall immediately
become the property of Lessor, shall be a part of the Leased Premises and shall
be subject to this Lease, and Lessee shall, upon demand of Lessor, execute and
deliver an appropriate instrument confirming Lessor's title thereto.
(b) Maintenance Programs.
(i) Initial Maintenance Program. On or before June 30, 1985, Lessee
shall submit to Lessor for its approval a maintenance program (the "Initial
Maintenance Program") for the period ending on May 31, 1986 with respect to the
following (collectively, the "Programmed Maintenance Items"): caulking and
acrylic treatment of the curtain wall and maintenance of the HVAC system, the
life safety system, the roof, the elevators, the escalators and the emergency
generators. Lessee's submission of the Initial Maintenance Program shall be
accompanied by an estimated budget for Reimbursable Replacements and
Reimbursable Structural Work for the period covered by such Program. Lessor
shall give notice to Lessee of Lessor's approval or disapproval of the Initial
Maintenance Program within 20 business days after such Program is received by
Lessor (which notice shall, in
<PAGE> 16
13
the case of a disapproval, be accompanied by a reasonably complete and specific
statement of the reasons for disapproval). Lessor may disapprove any part or
parts of the Initial Maintenance Program only if the same shall not be in
accordance with the First-Class Standard. If Lessee disputes Lessor's right to
disapprove, the part or parts of the Initial Maintenance Program affected by
such dispute shall be determined by the Appropriate Engineer (as defined in
section 6(i)) in accordance with the First-Class Standard.
(ii) Annual Maintenance Programs. On or before April 1, 1986 and on
or before April 1st of each year thereafter during the term of this Lease,
Lessee shall submit to Lessor for its approval a maintenance program with
respect to the Programmed Maintenance Items for the 12-month period commencing
on the next June 1st (an "Annual Maintenance Program"), together with an
estimated budget for Reimbursable Replacements and Reimbursable Structural Work
for the period covered thereby. Lessor shall give notice to Lessee of Lessor's
approval or disapproval of each Annual Maintenance Program within 20 business
days after such Program is received by Lessor (which notice shall, in the case
of a disapproval, be accompanied by a reasonably complete and specific statement
of the reasons for disapproval). Lessor may disapprove any part or parts of an
Annual Maintenance Program only if the same shall not be in
<PAGE> 17
14
accordance with the First-Class Standard. If Lessee disputes Lessor's right to
disapprove, the part or parts of the Annual Maintenance Program affected by such
dispute shall be determined by the Appropriate Engineer in accordance with the
First-Class Standard. Lessee shall not be in default under this Lease if any
estimated budget for Reimbursable Replacements and Reimbursable Structural Work
submitted pursuant to section 6(b)(i) or this section 6(b)(ii) proves to be
inaccurate, and no such budget shall be considered a part of the Initial
Maintenance Program or Annual Maintenance Program with which such budget was
submitted to Lessor.
(iii) Compliance by Lessee. Until the approval of the Initial
Maintenance Program by Lessor or the determination thereof by the Appropriate
Engineer, Lessee shall conduct a maintenance program with respect to the
Programmed Maintenance Items in accordance with the First-Class Standard. Lessee
shall comply with the Initial Maintenance Program for the period covered thereby
and each Annual Maintenance Program (as approved by Lessor or as determined by
the Appropriate Engineer) for the period covered thereby; provided, however,
that if any dispute as to an Annual Maintenance Program shall not be resolved
before the period intended to be covered thereby, Lessee shall be in compliance
with this section 6(b)(iii) if Lessee shall, pending the resolution of such
dispute, comply with
<PAGE> 18
15
the Initial Maintenance Program (if the dispute involves the first Annual
Maintenance Program) or the most recent Annual Maintenance Program in effect (if
the dispute involves any other Annual Maintenance Program).
(c) Certain Definitions. As used herein:
(i) "Legal Requirement Alteration" means any Alteration undertaken
in order to comply with a Legal Requirement.
(ii) "Reimbursable Replacement" means the replacement of an item of
Major Building Equipment in its entirety; provided, however, that:
(x) a replacement of any such item in its entirety shall be a
"Reimbursable Replacement" only if (a) such replacement (solely in light
of the physical condition of the item in question, and without regard to
whether or not such replacement may be necessitated by any Legal
Requirement) is consistent with the First-Class Standard and (b) the
repair of the item in question is inconsistent with the First-Class
Standard; and
(y) no replacement of an item of Major Building Equipment in its
entirety shall be a "Reimbursable Replacement" if such replacement is
necessitated by (a) fire, other casualty or a Taking or (b) the failure by
Lessee to comply with section 6(b)(iii).
(iii) "Reimbursable Legal Requirement Alteration" means any
Alteration undertaken solely in order to comply
<PAGE> 19
16
with a Legal Requirement enacted after the date hereof, other than:
(v) an Alteration (a) in any area designed for tenant occupancy
outside the Building's core (any restroom to be deemed such an area), (b)
to the paving, curbs or sidewalks within the Building's lobby or (c) in
the plaza area surrounding the Building (located outside of the Building's
curtain wall), including the paving and other parts thereof which serve as
the roof for the basement area of the Building;
(w) a Reimbursable Replacement;
(x) Reimbursable Structural Work;
(y) a replacement of an item whose replacement (solely in light of
the physical condition of the item in question, and without regard to
whether or not such replacement may be necessitated by any Legal
Requirement) is consistent with the First-Class Standard and whose repair
is inconsistent with the First-Class Standard; or
(z) an Alteration necessitated by fire, other casualty or a Taking,
or by Lessee's failure to comply with section 6(b)(iii).
(iv) "Reimbursable Structural Work" means any Structural Work which
(solely in light of a physical condition, and without regard to whether or not
such Structural Work may be necessitated by any Legal
<PAGE> 20
17
Requirement) is consistent with the First-Class Standard; provided, however,
that:
(w) Structural Work which is a replacement shall be "Reimbursable
Structural Work" only if (a) such replacement (solely in light of the
physical condition of the item in question, and without regard to whether
or not such replacement may be necessitated by any Legal Requirement) is
consistent with the First-Class Standard and (b) the repair of the item in
question is inconsistent with the First-Class Standard;
(x) no Structural Work shall be Reimbursable Structural Work if
necessitated by (a) fire, other casualty or a Taking or (b) the failure by
Lessee to comply with section 6(b)(iii);
(y) no Structural Work of the type described in clause (a) of
section 36 shall be "Reimbursable Structural Work" unless the Costs
thereof exceed $50,000 in any 12-month period; and
(z) no Structural Work of the type described in clause (b), (c), (d)
or (e) of section 36 shall be "Reimbursable Structural Work" unless the
work under the clause in question involves 5% or more of the curtain wall
windows above the ground floor in any 12-month period.
(v) "Qualified Alteration" means (x) any Alteration (other than the
replacement of an item of Major
<PAGE> 21
18
Building Equipment, any Structural Work or any Legal Requirement Alteration)
which affects any structural element of the Building or any item of Major
Building Equipment and (y) any Restoration (as defined in section 15.2).
If Lessor and Lessee shall disagree as to whether any item is an
item of Major Building Equipment, or as to whether the replacement of any item
of Major Building Equipment is a Reimbursable Replacement, or as to whether any
work is Structural Work, or as to whether any Structural Work is Reimbursable
Structural Work, or as to whether a Legal Requirement requires an Alteration, or
as to whether an Alteration is a Legal Requirement Alteration, or as to whether
any Legal Requirement Alteration is a Reimbursable Legal Requirement Alteration,
or as to whether any Alteration is a Qualified Alteration, the matter shall be
determined by the Appropriate Engineer.
(d) Submission and Approval of Plans and Specifications in Certain
Instances.
(i) Required Submissions. Prior to:
(x) making any Alteration constituting the replacement of any item
of Major Building Equipment (whether or not such replacement is a
Reimbursable Replacement); or
(y) undertaking any Structural Work (whether or not Reimbursable
Structural Work), any Legal Requirement
<PAGE> 22
19
Alteration (whether or not a Reimbursable Legal Requirement Alteration) or
any Qualified Alteration,
Lessee shall (subject to section 6(d)(vi)) submit all of the Plans and
Specifications therefor to Lessor for Lessor's approval, together with, in case
Lessee contends that the work in question is a Reimbursable Replacement,
Reimbursable Structural Work or a Reimbursable Legal Requirement Alteration, a
good faith estimate of the Costs thereof prepared by a reputable architect,
engineer or contractor and a reasonable estimate of the date of substantial
completion of the work in question (the "Estimated Substantial Completion
Date"). Lessor shall give notice (the "Plans and Specifications Notice") to
Lessee of Lessor's approval or disapproval of any Plans and Specifications
within 20 business days after the date upon which the same are received by
Lessor (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, however, that if (a) at least 10
business days before the date upon which Lessee submits all of the Plans and
Specifications for the work in question to Lessor, Lessee gives notice to Lessor
that Lessee 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
<PAGE> 23
20
general nature of the work and an estimated date for the submission of all of
the Plans and Specifications therefor to Lessor) and (b) Lessee delivers all of
the Plans and Specifications for the work in question to Lessor within 2
business days of the estimated submission date set forth in Lessee's notice,
then Lessor shall give the Plans and Specifications Notice to Lessee within 10
business days after the date upon which all of the Plans and Specifications for
the work in question are received by Lessor.
(ii) Disapproval Only Under Certain Circumstances. Lessor shall not
disapprove any Plans and Specifications unless the work contemplated thereby
would (a) result in the Building's not being a first-class office building or
(b) materially and adversely affect any structural element of the Building or
any item of Major Building Equipment. If Lessee disputes Lessor's right to
disapprove, the matter shall be determined by the Appropriate Engineer.
(iii) Certain Conditions. Subject to sections 6(d)(iv) and (vi), Lessee
shall not make any replacement of an item of Major Building Equipment or
undertake any Structural Work, Legal Requirement Alteration or Qualified
Alteration unless and until (x) Lessor shall approve the Plans and
Specifications therefor in a Plans and Specifications Notice or (y) the
Appropriate Engineer shall
<PAGE> 24
21
determine that Lessor did not have the right to disapprove such Plans and
Specifications pursuant to this Lease.
(iv) Failure to Give Timely Notice. If Lessor shall fail timely to give
Lessee a Plans and Specifications Notice, Lessee may proceed with the work in
question, and if Lessor thereafter disapproves the Plans and Specifications
therefor Lessee may continue such work unless the Appropriate Engineer
determines that Lessor had the right to disapprove pursuant to this Lease. If
the Appropriate Engineer so determines, Lessee shall cease such work, but the
work done by Lessee to the date of the Appropriate Engineer's determination
shall not constitute a default hereunder if Lessee thereupon commences and
thereafter diligently prosecutes to completion such remedial work (including,
without limitation, the removal of the work theretofore done by Lessee and the
restoration of the affected area of the Combined Premises) as Lessor may
reasonably determine to be appropriate in the circumstances (unless Lessee shall
dispute Lessor's determination, in which case the remedial work, if any, to be
done by Lessee shall be determined by the Appropriate Engineer).
(v) Submission of Certain Plans and Specifications Not Requiring Approval.
At the request of Lessor (made not more frequently than once in any 12-month
period), Lessee shall submit to Lessor Plans and Specifications for all
Alterations (other than Plans and Specifications required to
<PAGE> 25
22
be submitted to Lessor pursuant to section 6(d)(i)) to the extent that such
Plans and Specifications have been prepared and have not theretofore been
submitted to Lessor. Lessor shall have no right to approve any Plans and
Specifications submitted by Lessee pursuant to this section 6(d)(v).
(vi) Emergencies. Provided that Lessee shall have given Lessor
prompt telephonic notice (confirmed in writing as soon as reasonably
practicable) of an emergency, Lessee may (without first complying with the
applicable provisions of sections 6(d)(i), (ii), (iii) and (v)) proceed with
such aspects of any Alteration as Lessee may reasonably deem necessary in light
of the emergency, but as promptly as reasonably practicable thereafter Lessee
shall comply with the applicable provisions of said sections. Any dispute as to
Lessee's right to avail itself of this section 6(d)(vi) shall be determined by
the Appropriate Engineer.
(e) Certain Reimbursements.
(i) Submission of Bids. In the case of any Reimbursable Replacement,
Reimbursable Structural Work or Reimbursable Legal Requirement Alteration,
Lessee shall (subject to section 6(e)(vi)), simultaneously with the submission
of all of the Plans and Specifications therefor to Lessor (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 Lessor is required to give the Plans
and Specifications Notice), deliver to Lessor a list
<PAGE> 26
23
of at least 3 reputable contractors (collectively, the "Original Bidders") from
whom Lessee proposes to obtain bids for the work. Lessor shall have the right,
exercisable by notice to Lessee delivered not later than 10 business days after
receipt by Lessor of the list of the Original Bidders, to designate no more than
3 additional reputable contractors (collectively, the "Additional Bidders") from
whom Lessor desires Lessee to obtain bids. Lessee shall, as promptly as
reasonably practicable, obtain bids from at least 2 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 Lessor, and within 5 business days after receipt thereof Lessor
shall give notice to Lessee designating the Original Bidder or the Additional
Bidder (in either case being a Bidder from whom Lessee has obtained a bid) which
in Lessor's judgment should perform the work in question (the Bidder so
designated by Lessor being called "Lessor's Preferred Bidder"). Lessee shall
have the right, exercisable by notice (the "Dispute Notice") given to Lessor
within 5 business days after the date upon which Lessee receives notice of the
identity of Lessor's Preferred Bidder (which Dispute Notice shall specify the
Original Bidder or the Additional Bidder ["Lessee's Selected Bidder"] which
Lessee proposes to select to do the work in question), to dispute Lessor's
designation of Lessor's Preferred Bidder,
<PAGE> 27
24
and if the Dispute Notice shall be timely given, the Appropriate Engineer shall
select either Lessor's Preferred Bidder or Lessee'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
Lessor's designation of, or the Appropriate Engineer's selection of, Lessor's
Preferred Bidder, Lessee may retain any Original Bidder or Additional Bidder
from whom Lessee has obtained a bid in accordance with this section 6(e)(i) to
do the work in question (the Bidder so retained being called the "Retained
Bidder").
(ii) Reimbursement Amount. Lessor shall, in accordance with section
6(e)(iv) or 6(e)(v), reimburse Lessee on account of any Reimbursable
Replacement, Reimbursable Structural Work or Reimbursable Legal Requirement
Alteration in an amount (the "Reimbursement Amount") equal to:
(x) in the case of any Reimbursable Replacement or Reimbursable
Structural Work, the sum of the following:
(a) the lesser of (i) all Costs reasonably incurred by Lessee
in connection with the work in question (exclusive, however, of the
fees and disbursements of any architect or engineer retained by
Lessee) or (ii) the original contract price of Lessor's Preferred
Bidder or, if Lessee shall have timely given the Dispute Notice and
the Appropriate
<PAGE> 28
25
Engineer shall have selected Lessee's Selected Bidder, the original
contract price of Lessee's Selected Bidder (the amount determined
pursuant to this clause (a) being called the "Base Amount" for the
work in question; the amount determined by subclause (ii) of this
clause (a) being called the "Determined Amount"); plus
(b) the reasonable fees and disbursements of any architect or
engineer retained by Lessee in connection with the work in question;
plus
(c) any Qualified Overruns (as hereinafter defined); or
(y) in the case of any Reimbursable Legal Requirement Alteration,
the sum of the following:
(a) the product of the Measuring Fraction (as hereinafter
defined) multiplied by the sum of (i) the Base Amount for the work
in question, plus (ii) any Qualified Overruns; plus
(b) the reasonable fees and disbursements of any architect or
engineer retained by Lessee in connection with the work in question.
Any dispute as to the reasonableness of the incurrence by Lessee of
any Cost 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.
<PAGE> 29
26
"Measuring Fraction" means, in respect of any Reimbursable Legal
Requirement Alteration, the fraction whose numerator is the number of months in
the period from the expiration of the then current term of this Lease to the end
of the expected useful life of such Alteration and whose denominator is the
number of months in the period from the Estimated Substantial Completion Date of
such Alteration to the end of the expected useful life thereof. Any dispute as
to the reasonableness of any Estimated Substantial Completion Date, or as to the
expected useful life of any Reimbursable Legal Requirement Alteration, shall be
determined by the Appropriate Engineer.
(iii) Overruns; Qualified Overruns. At any time during the
performance of any Reimbursable Replacement, Reimbursable Structural Work or
Reimbursable Legal Requirement Alteration, Lessee may give notice (an "Overrun
Notice") to Lessor specifying any cost (an "Overrun") in excess of the original
contract price of Lessee's Selected Bidder which Lessee expects to incur and
which Lessee contends was unforeseeable by Lessee 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, Lessor shall notify Lessee as
to whether or not in Lessor's judgment the Overrun in question is reasonable in
amount in
<PAGE> 30
27
the circumstances and was unforeseeable by Lessee at the time of commencement of
the work. If Lessee shall dispute Lessor's judgment, the reasonableness of the
amount of, and the foreseeability by Lessee of, the Overrun in question shall be
determined by the Appropriate Engineer. Any Overrun determined by Lessor or the
Appropriate Engineer to be reasonable in amount in the circumstances and
unforeseeable by Lessee at the time of commencement of the work shall be a
"Qualified Overrun". Lessee shall not be chargeable with the failure by any
Contractor (as defined in section 6(e)(iv)(w)) to foresee any Overrun.
(iv) Reimbursement Upon Full Completion. Except in the case of a
Reimbursable Replacement, Reimbursable Structural Work or a Reimbursable Legal
Requirement Alteration in respect of which an Extended Completion Notice (as
defined in section 6(e)(v)) has been given, Lessor shall upon the full
completion of the work in question and within 10 business days after Lessor's
receipt of Lessee's request therefor remit the Reimbursement Amount to Lessee;
provided, however, that Lessor shall not be obligated to make such remittance
unless:
(w) Lessee's request for remittance shall be accompanied by (a) a
certificate of Lessee (in form reasonably satisfactory to Lessor) stating
that an amount at least equal to the Reimbursement Amount has been paid to
contractors, subcontractors, materialmen,
<PAGE> 31
28
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 Lessee'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 Combined Premises or any part thereof, and (b) a certificate of the
architect or engineer who prepared the related Plans and Specifications
(in form reasonably satisfactory to Lessor) 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 Lessor or as determined
by the Appropriate Engineer to have been required to be approved by Lessor
pursuant to this Lease);
(x) Lessor shall have received (a) true copies of all bills paid by
Lessee to Contractors in connection with the work in question, (b) an
instrument in writing from any title company insuring Lessor's estate in
the Leased Premises certifying that there are no undischarged mechanics',
laborers' or materialmen's liens affecting any part of the Combined
Premises (other than liens, if any, in respect of which Lessor has
<PAGE> 32
29
consented to take security pursuant to section 13(a)(ii)) and (c) evidence
reasonably satisfactory to Lessor that Lessee has obtained waivers of
mechanics', laborers' or materialmen's liens or releases of such liens
from all Contractors engaged in the work in question;
(y) no certificate delivered to Lessor by Lessee or any architect or
engineer in connection with the work in question shall have been
materially incorrect at the time of delivery (any dispute pursuant to this
clause (y) to be determined by the Appropriate Engineer); and
(z) no Event of Default (including, without limitation, any Event of
Default specified in section 22(d)) shall have occurred and be continuing.
(v) Reimbursement as Work Proceeds. If at any time prior to or
during the performance of any Reimbursable Replacement, Reimbursable Structural
Work or Reimbursable Legal Requirement Alteration Lessee determines that the
full completion thereof will not occur within six months of its commencement,
Lessee shall give Lessor notice of such determination (an "Extended Completion
Notice") and thereafter Lessor shall from time to time within 10 business days
after Lessor's receipt of Lessee's request therefor (but in no event more
frequently than once during any 30-day period) make advances to Lessee on
account of the
<PAGE> 33
30
Reimbursement Amount for the work in question (collectively, "Reimbursement
Advances"); provided, however, that:
(x) no Reimbursement Advance shall be made until Lessee shall have
delivered to Lessor evidence reasonably acceptable to Lessor that Lessee
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 Lessee to such Contractors which
are in excess of the Benchmark Amount;
(y) no Reimbursement Advance (other than the final Reimbursement
Advance) shall be due unless:
(a) Lessee's request for such Reimbursement Advance shall be
accompanied by (i) a certificate of Lessee (in form reasonably
satisfactory to Lessor) stating that the amount of the Reimbursement
Advance then requested has been paid by Lessee to Contractors (whose
names and addresses and a description of the work involved shall be
stated) engaged in the work in question, that the amount of the
Reimbursement Advance then requested (when taken together with the
aggregate amount of all Reimbursement Advances theretofore made by
<PAGE> 34
31
Lessor) 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, and that no part of 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 (ii) a certificate of the architect or engineer
who prepared the related Plans and Specifications (in form
reasonably satisfactory to Lessor) 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 Lessor or as determined
by the Appropriate Engineer to have been required to be approved by
Lessor pursuant to this Lease);
(b) Lessor shall have received true copies of all bills paid
or payable by Lessee to Contractors which form the basis for the
Reimbursement Advance in question; and
(c) the conditions specified in clauses (y) and (z) of section
6(e)(iv) shall have been
<PAGE> 35
32
fulfilled in respect of such Reimbursement Advance;
and
(z) the final Reimbursement Advance shall not be due unless all of
the conditions specified in clauses (w) through (z) of section 6(e)(iv)
shall have been fulfilled in respect of such Advance.
(vi) Emergencies. Provided that Lessee shall have given Lessor
prompt telephonic notice (confirmed in writing as soon as reasonably
practicable) of an emergency, Lessee may proceed with any Reimbursable
Replacement, Reimbursable Structural Work or Reimbursable Legal Requirement
Alteration without first complying with the applicable provisions of this
section 6(e), and Lessor shall, following full completion of the emergency work
in question and within 10 business days after Lessor's receipt of Lessee's
request therefor, remit the Emergency Reimbursement Amount (as hereinafter
defined) to Lessee; provided, however, that Lessor shall not be obligated to
make such remittance unless all of the conditions specified in clauses (w)
through (z) of section 6(e)(iv) shall have been fulfilled in respect of the work
in question (provided that (a) if no architect or engineer was retained for the
emergency work in question, subclause (b) of section 6(e)(iv)(w) shall be deemed
fulfilled if (x) Lessee shall deliver a certificate to Lessor stating that such
emergency work has been fully completed in a good and workmanlike manner and (y)
such emergency work
<PAGE> 36
33
has been fully completed in a manner consistent with the character of the
Building as a first-class office building [with due regard to the character of
the work as emergency work], and (b) if an architect or engineer was retained
for the emergency work in question but [due to the nature of the emergency] no
Plans and Specifications therefor were prepared, subclause (b) of section
6(e)(iv)(w) shall be deemed fulfilled if (x) Lessee shall deliver to Lessor a
certificate of such architect or engineer stating that such emergency work has
been fully completed in a good and workmanlike manner and (y) such emergency
work has been fully completed in a manner consistent with the character of the
Building as a first-class office building (with due regard to the character of
the work as emergency work]).
"Emergency Reimbursement Amount" means (a) in respect of any
Reimbursable Replacement or Reimbursable Structural Work undertaken in an
emergency, all Costs reasonably incurred by Lessee in connection with the
emergency work in question and (b) in the case of a Reimbursable Legal
Requirement Alteration undertaken in an emergency, the product of the Measuring
Fraction multiplied by an amount equal to all Costs reasonably incurred by
Lessee in connection with the emergency work in question.
Any dispute as to Lessee's right to avail itself of this section
6(d)(vi), or as to the reasonableness of the incurrence by Lessee of any Cost in
connection with the
<PAGE> 37
34
emergency work in question, or as to the reasonableness of the amount of any
such Cost, shall be determined by the Appropriate Engineer.
(f) Overdue Reimbursements. If any sum reimbursable by Lessor to Lessee
pursuant to section 6(e)(iv), 6(e)(v) or 6(e)(vi) shall not be paid to Lessee
within 10 business days after the same becomes due Lessee may give Lessor a
notice (a "Delinquency Notice") of the delinquency and if such sum remains
unpaid for a period of 10 business days after the date Lessor receives the
Delinquency Notice, such sum shall bear interest from the date Lessor receives
the Delinquency Notice until the date of payment at a rate per annum equal to
the prime rate of Morgan Guaranty Trust Company of New York (the "Delinquency
Rate") announced to be in effect as of the date of Lessor's receipt of the
Delinquency Notice.
(g) Inspection by Lessor; Cooperation by Lessee.
(i) Lessor and its representatives shall at all reasonable times and
(except in an emergency) upon reasonable notice have access to the Combined
Premises for the purposes of (x) inspecting the progress of construction of any
Alteration and (y) reviewing the implementation of, and Lessee's compliance
with, the Initial Maintenance Program and each Annual Maintenance Program.
(ii) Upon demand of Lessor, Lessee shall comply in all respects with any
reasonable and timely suggestions made
<PAGE> 38
35
by Lessor with respect to construction matters relating to any Reimbursable
Replacement, Reimbursable Structural Work or Reimbursable Legal Requirement
Alteration, and shall correct any defect in the work in question or any material
departure from the Plans and Specifications for the work in question. Any
dispute pursuant to this clause (ii) shall be determined by the Appropriate
Engineer.
(iii) Lessee shall, within 10 business days after receipt of a
statement therefor (accompanied by true copies of the bills paid by Lessor),
reimburse Lessor for all reasonable out-of-pocket expenses incurred for the
services of an architect or engineer making inspections of any Restoration. If
any sum reimbursable by Lessee to Lessor pursuant to section 2.2(a), section
6(h), section 7(b), section 11.1(c), section 11.3, section 20.2 or this clause
(iii) shall not be paid within 10 business days after the same becomes due,
Lessor may give Lessee a Delinquency Notice and if such sum remains unpaid for a
period of 10 business days after the date Lessee receives the Delinquency
Notice, such sum shall bear interest from the date Lessee receives the
Delinquency Notice to the date of payment at the Delinquency Rate announced to
be in effect as of the date of Lessee's receipt of the Delinquency Notice.
(h) Removal of Special Alterations. If Lessee makes any opening
through the slab of any floor of the Leased Premises or reduces the floor area
of, or lowers the
<PAGE> 39
36
ceiling height of, any part of the Leased Premises designed for tenant occupancy
(any of the foregoing being called a "Special Alteration"), Lessee shall (within
10 business days after request therefor) reimburse Lessor the reasonable
out-of-pocket expenses incurred by Lessor after the expiration or sooner
termination of this Lease in restoring the area affected by such Special
Alteration to its prior condition; provided, however, that Lessee shall not be
required to reimburse Lessor in respect of any Special Alteration unless Lessor
shall notify Lessee of Lessor's desire for reimbursement in respect thereof at
least 6 months prior to the expiration of this Lease or within 30 days following
any earlier termination of this Lease.
(i) Engineer; Appropriate Engineer.
(i) "Engineer" means each of the following:
(t) Syska & Hennessy Inc.;
(u) Meyer Strong & Jones P.C.,
(v) Jaros Baum & Bolles;
(w) Weidlinger Associates;
(x) Purdy & Henderson Associates Inc.;
(y) Weiskopf & Pickworth; and
(z) such other independent engineering firm or firms having at
least 15 years' experience in first-class Manhattan office buildings
as shall from time to time be designated by Lessor or Lessee and
approved by the other party (which approval
<PAGE> 40
37
shall not be unreasonably withheld or delayed; any dispute as to
whether either Lessor or Lessee has unreasonably withheld or delayed
such approval to be determined by arbitration).
(ii) "Appropriate Engineer" means, in respect of any matter required
by this Lease to be determined by an Appropriate Engineer, such Engineer as
Lessee may designate by notice (a "Lessee's Designation Notice") to Lessor;
provided, however, that if Lessee shall fail to give a Lessee's Designation
Notice within 7 business days after Lessee receives Lessor's request for the
same, the "Appropriate Engineer" for the matter in question shall be such
Engineer as Lessor may designate in a notice to Lessee delivered at any time
prior to receipt by Lessor of such Lessee's Designation Notice.
(iii) Each Appropriate Engineer shall make its determination as
promptly as reasonably practicable, but in any event within 30 days after
request therefor by Lessor or Lessee. Each determination made by an Appropriate
Engineer pursuant to this Lease shall be final and binding on Lessor and Lessee.
Lessor and Lessee shall each pay one-half of the fees and expenses of each
Appropriate Engineer which is called upon to act hereunder.
7. Removal and Replacement of Initial Tenant Improvements; Lessee's
Equipment. (a) Lessor acknowledges that Lessee owns the Initial Tenant
Improvements and that
<PAGE> 41
38
the Initial Tenant Improvements are of a quality superior to tenant improvements
ordinarily found in first-class office buildings. Lessee (subject to the
applicable provisions of section 6) may at any time during the term hereof
remove all or any of the Initial Tenant Improvements provided that promptly
following such removal Lessee shall replace the removed Initial Tenant
Improvements with items of a similar general nature to the extent necessary to
maintain the general character of the Combined Premises as that of a first-class
office building. Upon the expiration or sooner termination of this Lease, Lessee
shall be deemed to have abandoned the Initial Tenant Improvements, except to the
extent that Lessee shall have removed the same. At the request of Lessor at any
time after the expiration or earlier termination of this Lease, Lessee shall
execute, acknowledge and deliver to Lessor a quitclaim deed conveying to Lessor
all Initial Tenant Improvements remaining on the Land or in the Building, and if
Lessee shall default in the performance of the foregoing covenant for a period
of 10 days after Lessee's receipt of Lessor's request for the quitclaim deed,
Lessor is hereby appointed Lessee's attorney-in-fact for the purpose of
executing, acknowledging and delivering such deed. The foregoing appointment is
coupled with an interest and is irrevocable.
(b) Lessor shall have no ownership interest in Lessee's Equipment.
Lessee may remove all or any of
<PAGE> 42
39
Lessee's Equipment from the Combined Premises at any time. Any Lessee's
Equipment not removed within five days after the expiration of this Lease or 30
days after the sooner termination of this Lease shall be deemed abandoned and
may be disposed of by Lessor without notice and without obligation to account
therefor, and Lessee shall reimburse Lessor, upon demand, for all costs and
expenses incurred by Lessor in disposing thereof. After the expiration or sooner
termination of this Lease, Lessor may, without awaiting the lapse of the periods
referred to in the previous sentence, relocate and store in the Leased Premises
any Lessee's Equipment not removed. In case of the termination of this Lease
prior to its expiration, Lessee's liability for Basic Rent with respect to any
portion of the Leased Premises in which any Lessee's Equipment remains shall
continue for the period (not in excess of 30 days) ending on the date of the
removal of the same.
(c) Lessee shall immediately repair all damage to the Combined
Premises or any part thereof caused by its removal of any Lessee's Equipment,
Initial Tenant Improvements or Alterations.
8. Utility Services. Lessee shall pay all charges for all public or
private electrical, steam, gas, fuel, power and other utility services at any
time rendered to or in connection with the Combined Premises or any part
thereof.
<PAGE> 43
40
9. Indemnification by Lessee. (a) Lessee shall protect, indemnify and
save harmless Lessor from and against all liabilities, obligations, claims,
damages, penalties, causes of action, costs and expenses (including, without
limitation, attorneys' fees and expenses) imposed upon or incurred by or
asserted against Lessor or against the Combined Premises or any part thereof by
reason of the occurrence or existence of any of the following during the term
hereof: (1) the conduct, management or possession of the Combined Premises or
any part thereof, (2) any accident, injury to or death of persons or loss of or
damage to property occurring in, on or about the Combined Premises or any part
thereof or the adjoining sidewalks, curbs, vaults and vault space, if any,
streets or ways, (3) any use, non-use or condition of the Combined Premises or
any part thereof or the adjoining sidewalks, curbs, vaults and vault space, if
any, streets or ways, (4) any failure on the part of Lessee to perform or comply
with any of the terms, provisions or conditions of this Lease or with the terms,
provisions or conditions of this Lease or with the terms, provisions and
conditions of the Contract Section (as defined in section 36), (5) performance
of any labor or services or the furnishing of any materials or other property in
respect of the Combined Premises or any part thereof, (6) any negligence or
tortious act or omission on the part of Lessee or any of its partners, agents,
contractors, servants, employees, licensees or invitees, (7)
<PAGE> 44
41
any negligence or tortious act or omission on the part of any sublessee of
Lessee, or of any partners, agents, contractors, servants, employees, licensees
or invitees of any sublessee of Lessee, (8) any contest of any Imposition, Legal
Requirement, Permitted Encumbrance or any provision of an Existing Lease
conducted by Lessee pursuant to section 11.3, (9) any Existing Lease or other
sublease of all or any part of the Combined Premises or (10) any action taken by
Lessor at the request of Lessee pursuant to section 11.1(c) or 11.3.
(b) In case any claim is made against Lessor or in case any action,
suit or proceeding (a "proceeding") is brought against Lessor or the Combined
Premises or any part thereof by reason of any of the foregoing, Lessor shall
give prompt notice to Lessee and Lessee shall cause such claim or proceeding to
be defended by counsel ("Lessee's Counsel") designated by Lessee and approved by
Lessor (which approval shall not be unreasonably withheld). Lessee shall have
the right to control the defense and settlement of any such claim or proceeding
and shall not be required to indemnify Lessor from the costs and expenses of any
settlement agreed to without Lessee's consent; provided, however, that Lessor
shall have the right (a) to require Lessee and Lessee's Counsel to consult with
Lessor and counsel retained and paid by Lessor, (b) to assume control of the
defense and settlement of any such claim or proceeding at any time if
<PAGE> 45
42
Lessor waives its right to be indemnified by Lessee on account thereof and (c)
to make any settlement without Lessee's consent if Lessor pays the amount of
such settlement and waives its right to be indemnified by Lessee on account of
the claim or proceeding to which such settlement relates. Lessor shall cooperate
with Lessee, at Lessee's expense, in the defense of any such claim or
proceeding in such manner as Lessee may from time to time reasonably request.
10. Entry by Lessor. Lessee shall permit Lessor to enter the
Combined Premises or any part thereof at all reasonable times upon reasonable
notice (except in case of emergency) for the purpose of inspecting the same or
doing any work under section 19, and to keep and store all such materials
therein as may be reasonably necessary or appropriate for any such purpose
without the same constituting a partial or complete, constructive or actual
eviction (but nothing contained herein shall create or imply any duty on the
part of Lessor to do any work under section 19). Lessor shall not have any duty
to make any such inspection and shall not incur any liability or obligation by
making or for not making any such inspection. Lessee shall also permit Lessor to
enter the Combined Premises or any part thereof at all reasonable times upon
reasonable notice for the purposes of exhibiting the Leased Premises for sale or
mortgage or, during the last 24 months
<PAGE> 46
43
of the term or any extended term of this Lease, lease. Any entry pursuant to
this section shall be subject to the condition that, except in case of
emergency, if Lessee so desires, any representative of Lessor shall be
accompanied at all times by a representative of Lessee.
11. Payment of Taxes, Impositions, etc.
11.1 General. (a) Subject to the provisions of sections 11.2, 11.3
and 11.4, Lessee shall pay, before any fine, penalty, interest or cost may be
added for non-payment, all real estate taxes, personal property taxes, transit
taxes, occupancy taxes, assessments for public improvements or benefits, whether
or not commenced or completed prior to the date hereof and whether or not to be
completed within the term hereof, water, sewer or other rents, rates and
charges, excises, license fees, permit fees, inspection fees and other
authorization fees and charges, in each case whether general or special,
ordinary or extraordinary, or foreseen or unforeseen, of every character
(including all interest and penalties thereon) ("Impositions"), which at any
time during or in respect of the term hereof may be assessed, levied, confirmed
or imposed on or grow or become due and payable out of or in respect of or
become a lien on (a) the Combined Premises or any part thereof, (b) occupancy,
use or possession of or activity conducted in the Combined Premises or any part
thereof by Lessee or anybody else, and/or (c) this Lease or
<PAGE> 47
44
any other document to which Lessee is a party, creating or transferring an
interest or estate in the Combined Premises or any part thereof, provided that
(i) if any Imposition, by law, may at the option of the taxpayer be paid in
installments, Lessee may elect to pay the same in the maximum number of
installments permitted by law and Lessee shall be required to pay only those
installments (together with interest thereon) coming due during the term hereof
(each such installment and interest thereon to be paid by Lessee before any
fine, penalty, interest or cost may be added thereto for non-payment) and (ii)
all Impositions for the fiscal or tax year in which the term shall end shall be
apportioned.
(b) Lessee shall deliver to Lessor upon request an Officer's Certificate
certifying to the payment of all Impositions and shall furnish to Lessor upon
request copies of official receipts or other proof satisfactory to Lessor
evidencing such payment.
(c) Lessor, at Lessee's expense, shall promptly execute such reports,
certificates, instruments, applications and other documents which can be
executed only by the owner of the Leased Premises as Lessee may reasonably
request and shall take such other actions which can be taken only by the owner
of the Leased Premises as Lessee may reasonably request in connection with the
Impositions, any payment thereof or any exemption therefrom now or hereafter
<PAGE> 48
45
in effect or to be applied for. If in connection with any such request Lessor
consults with an engineer, an attorney or another professional, Lessee shall,
within 10 days of Lessee's receipt of demand therefor accompanied by copies of
the bills paid by Lessor, reimburse Lessor for the reasonable out-of-pocket
expenses incurred by Lessor for the services of such professionals. If such
professional advises Lessor in writing that Lessor's executing such document or
taking such action might result in Lessor's becoming criminally liable and
furnishes a reasonably detailed explanation of the liability in question and the
reasons therefor, Lessor shall promptly advise Lessee and furnish Lessee with a
copy of such professional's advice and explanation and Lessor need not execute
such document or take such action.
(d) The certificate or receipt of the department, officer or bureau
charged with the collection of any Imposition, showing that such Imposition is
due and payable or has been paid, shall be prima facie evidence that such
Imposition was due and payable or that it has been paid.
11.2 Exclusions from Impositions. The term "Impositions" shall not
include, and nothing herein contained shall require Lessee to pay, municipal,
state or federal income taxes assessed against Lessor, or municipal, state or
federal capital levy, gift, estate, succession, inheritance or transfer taxes of
Lessor, or corporation
<PAGE> 49
46
excess profits or franchise taxes imposed upon any corporate owner of the Leased
Premises, or any income, profits or revenue tax, assessment or charge imposed
upon Lessor; provided, however, that if, due to a future change in the method of
taxation, a franchise, income, transit, profit or other tax or governmental
imposition shall be levied against Lessor in substitution for any Imposition,
then such franchise, income, transit, profit or other tax or governmental
imposition levied against Lessor shall be deemed to be an Imposition.
11.3 Permitted Contests. Lessee without Lessor's consent may contest, by
appropriate legal proceedings conducted in good faith and with due diligence,
the amount or validity or application, in whole or in part, of any Imposition,
Legal Requirement, Permitted Encumbrance or any provision of any Existing Lease,
and may withhold payment or performance of the same pending such contest,
provided that (a) such proceedings shall suspend the collection thereof from
Lessor and the Leased Premises or any part thereof, (b) neither the Leased
Premises nor any part thereof, (b) neither the Leased Premises nor any part
thereof or interest therein would be in any danger of being sold, forfeited or
lost, (c) Lessor shall not be in any danger of any criminal liability by reason
thereof and (d) in the case of a contest involving any Legal Requirement, any
Permitted Encumbrance or any provision of any Existing Lease, if at any time
Lessor determines that Lessor is in danger of any civil
<PAGE> 50
47
liability in an amount in excess of one year's Basic Rent, Lessee shall (within
5 business days after Lessee receives Lessor's request therefor) furnish to
Lessor such security against such civil liability as Lessor may reasonably
request. Lessee shall give prompt notice to Lessor of the commencement of or of
Lessee's desire to commence any contest permitted by the preceding sentence and
Lessor shall, at Lessee's expense, cooperate with Lessee with respect to any
such contest and, if in connection with the commencement, prosecution or
settlement of such contest only Lessor can execute any report, certificate,
instrument, application or other document or take any other action, then, upon
Lessee's request, Lessor shall execute or take the same. If in connection with
any such request Lessor consults with an engineer, an attorney or other
professional, Lessee shall, within 10 days of Lessee's receipt of demand
therefor accompanied by copies of the bills paid by Lessor, reimburse Lessor
for the reasonable out-of-pocket expenses incurred by Lessor for the services
of such professionals. If such professional advises Lessor in writing that
Lessor's executing such document or taking such action might result in Lessor's
becoming criminally liable and furnishes a reasonably detailed explanation of
such liability and the reasons therefor, Lessor shall promptly advise Lessee
and furnish Lessee with a copy of such professional's advice and explanation
and Lessor need
<PAGE> 51
48
not execute such document or take such action. If, while contesting any
Imposition, Lessee withholds payment of the same, Lessee shall maintain the
amount withheld (together with penalties and interest from time to time accruing
thereon) on deposit in a separate interest-bearing account in Lessor's name with
a bank or trust company selected by Lessee having an office in the Borough of
Manhattan and a combined shareholders equity of at least $200 million (or, if
Lessee and Lessor so agree, with Lessor). If any of the conditions set forth in
the proviso to the first sentence of this section 11.3 are violated, Lessor
shall be entitled to withdraw the funds on deposit in said account in order to
make payment of the Imposition being contested. All interest earned on funds in
such an account shall be credited to such account and Lessee shall pay all taxes
thereon. Upon termination or settlement of such contest, any required payment of
the Imposition contested shall be made from such account and the balance
remaining in such account shall be paid to Lessee. If the amount in the account
is insufficient, Lessee shall pay the amount of the deficiency.
11.4 Tax Deposits. Notwithstanding the foregoing provisions of this
section 11, if at any time any Event of Default specified in section 22(d) shall
have occurred due to Lessee's failure to perform its obligations under section
11.1(a), Lessor may at any time thereafter give a notice to
<PAGE> 52
49
Lessee referring to this section 11.4 and if such notice shall be given Lessee
shall be obligated from and after the date which is 10 days after Lessee's
receipt of such notice to pay to Lessor in equal monthly installments, on the
first day of each month during the balance of the term and any extended term of
this Lease, an amount equal to one-twelfth of the annual real estate taxes
imposed upon the Combined Premises for each fiscal tax year (collectively, "Tax
Deposits"). Tax Deposits shall in the first instance be based on the real estate
taxes for the prior fiscal tax year, and when such real estate taxes shall be
ascertained for the current tax year, appropriate adjustments shall be made.
Lessor shall keep all Tax Deposits in a separate interest bearing escrow account
in a New York Clearing House member bank, and the interest thereon shall be
credited to Lessee (Lessee to pay all taxes on such interest). Lessor shall
apply Tax Deposits to the payment of the annual real estate taxes imposed upon
the Combined Premises as they become due and payable. From time to time upon
notice to Lessee by Lessor, Tax Deposits shall be increased to such amounts as
may be necessary from time to time to provide a fund sufficient to meet the
payment of the annual real estate taxes imposed upon the Combined Premises (or
any installment thereof) as and when due and payable, whether on the present
dates of payment or on such other dates as may be fixed by law.
<PAGE> 53
50
12. Compliance with Legal and Insurance Requirements, Permitted
Encumbrances, Leases. Subject to the provisions of sections 6 and 11.3, Lessee
shall promptly comply with all Legal Requirements, Insurance Requirements and
Permitted Encumbrances, whether or not compliance therewith shall require
Alterations or interefere with the use and enjoyment of the Combined Premises or
any part thereof. Subject to the provisions of section 11.3, Lessee shall
observe and perform all of the covenants and obligations, if any, on the part of
Lessor to be observed and performed under the Existing Leases.
13. Liens. (a) Within 60 days after the date on which Lessor gives
Lessee notice, referring to this section 13 and section 19(e), of the existence
of any mechanic's, laborer's or materialman's lien, any lien arising under any
Permitted Encumbrance or any security interest which might be or become a lien,
encumbrance or charge upon the Combined Premises or any part thereof (other than
any such lien, encumbrance or charge caused by Lessor) and directs Lessee to
remove or discharge the same, Lessee shall either (i) remove or discharge the
same, by bonding or otherwise, or (ii) if Lessor shall consent thereto, provide
Lessor with an unconditional and irrevocable letter of credit (issued by a New
York Clearing House member bank satisfactory to Lessor and in form satisfactory
to Lessor) or other security
<PAGE> 54
51
satisfactory to Lessor indemnifying Lessor against such lien or security
interest.
(b) Nothing contained in this Lease shall be deemed or construed in
any way as constituting the consent or request of Lessor, express or implied by
inference or otherwise, to any contractor, sub-contractor, laborer or
materialman for the performance of any labor or the furnishing of any materials
for any specific improvement, alteration to or repair of the Combined Premises
or any part thereof.
14. Insurance.
14.1 Risks to be Insured. (a) Lessee shall maintain or cause to be
maintained with insurers and pursuant to insuring agreements approved by Lessor:
(i) insurance with respect to all buildings, improvements, equipment
and machinery constituting a part of the Combined Premises against loss or
damage by perils customarily included under standard "all-risk" policies
(including specifically damage by water), in amounts sufficient to prevent
Lessor or Lessee from becoming a co-insurer of any partial loss under the
applicable policies, and in any event in amounts not less than 90% of the
then full replacement cost (without deducting depreciation) of such
buildings, improvements, equipment and machinery (exclusive of the costs
of foundations, excavations and footings) (the "full
<PAGE> 55
52
replacement cost") as determined at the request of Lessor, made not sooner
than one year after the previous determination, and at Lessee's expense by
the insurer or insurers or by an expert selected by Lessee and approved by
Lessor;
(ii) boiler and machinery coverage, either, as Lessee shall elect,
as part of the policy referred to in clause (i) of this section 14.1(a)
or, if by a separate policy, in an amount not less than $5,000,000 or such
greater amount as Lessor may reasonably require by notice to Lessee;
(iii) comprehensive 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 Combined Premises with a
combined single limit of not less than $100,000,000 (or, such greater
amount as Lessor may reasonably require by notice to Lessee) for all
claims with respect to bodily injury, property damage and personal injury
with respect to any one occurrence;
(iv) appropriate builder's risk insurance with respect to any
Alterations (including, without limitation, any Restoration) or other work
on or about the Combined Premises or any part thereof;
<PAGE> 56
53
(v) appropriate worker's compensation and employer's liability
insurance with respect to any Alteration (including, without limitation,
any Restoration) or other work on or about the Combined Premises or any
part thereof;
(vi) such other insurance with respect to the Combined Premises or any
part thereof in such amounts and against such insurable casualties as
Lessor from time to time may reasonably require by notice to Lessee; and
(vii) rental value or rental continuation insurance to take effect
upon 50% Untenantability (as defined in section 15.4(a)) ("Rent Insurance")
in an amount sufficient to prevent Lessor and Lessee from becoming
co-insurers, and in any event, in respect of each Required Item (as
hereinafter defined), in an amount not less than the amount of such
Required Item for the Required Period (as hereinafter defined) for such
Required Item.
All insurance required to be maintained under clause (i), (ii) or (iii) of this
section 14.1(a) may be subject to a deductible of not more than the Deductible
Amount. Lessor shall not unreasonably withhold any of the approvals referred to
in this section 14.1(a). Any dispute whether Lessor has unreasonably withheld
such an approval and any dispute regarding the dollar amounts of the limits of
<PAGE> 57
54
coverage under clause (ii) or (iii) of this section 14.1(a) and any dispute
under clause (iv), (v), (vi) or (vii) above shall be resolved by arbitration.
Pending the outcome of such arbitration, Lessee may act as if the dispute had
been resolved in its favor.
(b) "Required Item" means each of (i) Basic Rent, (ii) all
Impositions and (iii) all premiums on insurance required to be carried pursuant
to section 14.1(a); provided, however, that none of the foregoing shall be a
Required Item unless Rent Insurance therefor shall be available at a reasonable
cost. Rent Insurance shall be deemed available at a reasonable cost in respect
of any Required Item if the annualized premium per $1,000,000 of coverage does
not exceed the product of $1,000 multiplied by a fraction whose numerator is the
Index for the third month immediately preceding the month in which the
determination is made as to whether the item in question is a "Required Item"
and whose denominator is the Index for February, 1985.
(c) "Required Period" means, in respect of any Required Item, the
period following the date of 50% Untenantability for which Rent Insurance for
such Required Item is available at a reasonable cost (provided that in no event
shall the Required Period for any Required Item exceed an 18-month period).
(d) The determination as to whether any item is a "Required Item",
and the determination as to the Required
<PAGE> 58
55
Period, if any, for the item in question, shall be made at the request of Lessor
by Marsh & McLennan (or such other independent insurance firm as may be
reasonably acceptable to Lessor) and at the expense of Lessee, provided that no
such determination shall be required to be made more frequently than once every
6 months; provided, however, that Lessor and Lessee acknowledge that, as of the
date of this Lease, Basic Rent is the only Required Item and that the Required
Period therefor is a 12-month period.
14.2 Policy Provisions. All insurance maintained by Lessee pursuant to
section 14.1(a) shall: (a) except for any worker's compensation insurance and
employer's liability insurance, name as insureds, as their respective interests
may appear, Lessor and Lessee; (b) include a stipulation that premiums will be
paid by and are the responsibility of Lessee; (c) except for any comprehensive
general liability, worker's compensation insurance or employer's liability
insurance, provide that no act or omission of Lessee shall impair or affect the
rights of the insureds to receive and collect the proceeds under the relevant
policy; and (d) provide that no cancellation, reduction in amount or material
change in coverage thereof shall be effective until at least 30 days after
receipt by Lessor of written notice thereof. Lessee shall have the sole
authority to settle claims under insurance policies; provided, however, that,
in case of any damage or destruction affording Lessee the right
<PAGE> 59
56
to terminate this Lease pursuant to section 15.4(a), Lessee may not settle all
or any of the claims under the policies referred to in clauses (i), (ii), (iv)
or (vi) of section 14.1(a) arising from any damage or destruction unless it
shall waive such right with respect to such damage or destruction. Lessee may
obtain any of the insurance required hereby under blanket or umbrella policies;
provided, however, that any such policy of insurance provided for under clauses
(i), (ii), (iv), (vi) or (vii) of section 14.1(a): (i) shall permit recovery in
the amount required by the clause in question to be carried without regard to
other insured events with respect to other properties, and (ii) shall not
contain any clause which would result in the insured thereunder being required
to carry insurance with respect to the property covered thereby in an amount
equal to a minimum specific percentage of the full insurable value of such
property in order to prevent the insured therein named from becoming a
co-insurer of any loss with the insurer under such policy.
14.3 Delivery of Insurance Certificates; Payment of Premium. On the
date hereof and not less than 7 days prior to each policy expiration Lessee
shall deliver to Lessor certificates of all insurance policies required by this
Lease to be maintained. Lessee shall pay all premiums on each such insurance
policy within the time required under
<PAGE> 60
57
such policy and furnish Lessor with evidence of payment thereof within 10
business days after payment.
14.4 No Limitation of Damages. Lessor shall not be limited in the
proof of any damages which Lessor may claim against Lessee arising out of or by
reason of Lessee's failure during the term or any extended term of this Lease to
provide and keep in force the insurance required under this Lease to the amount
of the insurance premium or premiums not paid or incurred by Lessee and which
would have been payable upon such insurance, but Lessor shall also be entitled
to recover as damages for such breach the uninsured amount of any loss to the
extent of any deficiency between the insurance required by the provisions of
this Lease and the insurance carried by Lessee, together with all costs and
expenses incurred by Lessor which Lessor would not have incurred if the required
insurance had been maintained by Lessee. However, any such damages so recovered
by Lessor shall be subject to and limited by the provisions of section 25.
15. Damage to or Destruction of Property.
15.1 Waiver of ss.227; Lessee to Give Notice. Lessee hereby waives
the provisions of Section 227 of the Real Property Law and confirms that the
provisions of this section shall govern and control in lieu thereof. In case of
any damage to or destruction of the Combined Premises or any part thereof, if,
in Lessee's reasonable opinion, the
<PAGE> 61
58
cost to repair or rebuild the same will exceed $1,000,000, Lessee shall promptly
give notice thereof to Lessor, generally describing the nature and extent of
such damage or destruction.
15.2 Restoration. Subject to section 15.4, in case of any damage to
or destruction of the Combined Premises or any part thereof, this Lease shall
continue in full force and effect without abatement of any Basic Rent or other
amounts payable by Lessee hereunder. Lessee, whether or not the insurance
proceeds, if any, on account of such damage or destruction shall be sufficient
for the purpose, shall (subject to the applicable provisions of section 6)
promptly commence and proceed with due diligence to complete the restoration,
replacement or rebuilding of the Combined Premises (which may include demolition
of the remaining portions of the Combined Premises prior to rebuilding) as
nearly as possible to its condition immediately prior to such damage or
destruction with such Voluntary Alterations as Lessee shall (subject to the
applicable provisions of section 6) elect (such restoration, replacement and
rebuilding, together with any temporary repairs and property protection pending
completion of the work, being herein called "Restoration").
15.3 Application of Insurance Proceeds. (a) Promptly after the
occurrence of any damage to or destruction of the Combined Premises or any part
thereof the
<PAGE> 62
59
insurance proceeds with respect to which are expected by Lessee to exceed the
Significant Proceeds Amount, Lessee by notice to Lessor and the institution
appointed, shall appoint a depositary of the insurance proceeds under this
section 15.3 (the "Depositary"). Without limiting the foregoing, Lessee may
appoint a Depositary at any other time. The Depositary shall be a bank or trust
company having an office in the Borough of Manhattan and a combined shareholders
equity of at least $200 million. Funds held by the Depositary shall be invested
by the Depositary, upon the instructions of Lessee, in Permitted Investments.
(b) All insurance proceeds on account of any damage to or
destruction of the Combined Premises or any part thereof shall be payable as
follows:
(1) to Lessee, to the extent that such proceeds are equal to or less
than the Significant Proceeds Amount, and
(2) to the Depositary, to the extent that such proceeds are in
excess of the Significant Proceeds Amount;
provided, however, that if an Event of Default shall have occurred and be
continuing, the amounts paid or payable to Lessee in accordance with the
foregoing clause (1) shall be paid to the Depository and shall (without the
necessity of Lessee's compliance with the provisions of section 17) be returned
(together with the interest thereon) to Lessee only
<PAGE> 63
60
upon the curing of such Event of Default, but less the portion, if any, applied
and disbursed by the Depositary in accordance with the provisions of section 17.
15.4 Termination in Lieu of Restoration. (a) If:
(i) during the last three years of the then current term (x) the
Combined Premises shall be so damaged or destroyed that the Costs of
Restoration shall exceed the product of $10,000,000 multiplied by a
fraction whose numerator is the Index for the month which is three months
prior to the month in which the damage or destruction occurred and whose
denominator is the Index for February 1985, and (y) Lessee shall not have
exercised its right to extend the term hereof by giving the exercise
notice; or
(ii) at any time the Combined Premises shall be so damaged or
destroyed that 50% or more of the useable area thereof cannot, with the
exercise by Lessee of all due diligence, be rendered tenantable and fit
for the normal conduct of business within 30 days after the date of the
damage or destruction (the condition described in this clause (ii) being
called "50% Untenantability"),
then (subject to the further provisions of this section 15.4) Lessee may, by
notice (the "Damage Termination Notice") to Lessor given within the 180-day
period (the "Election Period") following the date (the "Damage Date") of damage
or destruction, elect to terminate this Lease as of a
<PAGE> 64
61
date specified in the Damage Termination Notice (the "Specified Damage
Termination Date"), which Specified Damage Termination Date:
(a) shall, in the case of a Damage Termination Notice given on
or prior to the 90th day following the Damage Date, be the date
which is 12 months (plus the positive remainder, if any, obtained
by subtracting 365 from the number of days in the Required Period
for Basic Rent as most recently determined pursuant to section
14.1(d) prior to the Damage Date) after the Damage Date; or
(b) shall, in the case of a Damage Termination Notice given
after the 90th day following the Damage Date and on or prior to the
180th day following the Damage Date, be the date which is 9 months
(plus the positive remainder, if any, obtained by subtracting 365
from the number of days in the Required Period for Basic Rent as
most recently determined pursuant to section 14.1(d) prior to the
Damage Date) after the date of the Damage Termination Notice.
(b) If Lessee shall timely give the Damage Termination Notice, this
Lease shall terminate on the Specified Damage Termination Date; provided,
however, that if on or prior to the date which is 45 days after Lessor receives
the Damage Termination Notice Lessor shall by
<PAGE> 65
62
notice to Lessee dispute Lessee's right to terminate this Lease pursuant to
section 15.4(a), the matter shall be determined by the Appropriate Engineer and
(i) if the Appropriate Engineer's determination is in Lessor's favor, this Lease
shall continue in full force and effect or (ii) if the Appropriate Engineer's
determination is in Lessee's favor, this Lease shall terminate effective as of
the Specified Damage Termination Date. At any time at the request of Lessor or
Lessee, the Appropriate Engineer shall make a determination as to whether Lessee
has the right to terminate this Lease pursuant to this section 15.4.
(c) At all times prior to the giving of the Damage Termination
Notice, Lessee shall prosecute the Restoration with all due diligence and in
accordance with the Plans and Specifications therefor (as approved by Lessor or
as determined by the Appropriate Engineer to have been required to be approved
by Lessor pursuant to this Lease); provided, however, that Lessee shall not be
obligated to expend more than the Significant Proceeds Amount with respect to
the Restoration of such damage or destruction unless (i) Lessee waives its
termination right under this section 15.4 with respect thereto or (ii) Lessee
does not give the Damage Termination Notice on or prior to the end of the
Election Period.
(d) Simultaneously with the giving of the Damage Termination Notice
Lessee shall:
<PAGE> 66
63
(i) assign to Lessor (by instruments reasonably satisfactory to Lessor)
all of Lessee's right, title and interest in and to the Plans and
Specifications (if any) for the Restoration and in and to that portion (if any)
of the Significant Proceeds Amount which has not yet been received by Lessee
from the insurer (provided that if and when Lessor receives such portion of the
Significant Proceeds Amount from the insurer, Lessor shall, within 10 business
days after receipt of a request therefor from Lessee, pay to Lessee an amount
equal to the lesser of (x) such portion of the Significant Proceeds Amount
received by Lessor from the insurer or (y) the amount, if any, by which the
aggregate amount expended by Lessee in connection with the Restoration on or
prior to the date of the Damage Termination Notice [exclusive, however, of any
amount expended for the restoration, repair or replacement of the Initial
Tenant Improvements] exceeds the sum of (a) the portion of the Significant
Proceeds Amount (if any) received by Lessee from the insurer on or prior to the
date of the Damage Termination Notice and (b) the Deductible Amount under the
insurance policy required to be maintained by Lessee under section 14.1(a));
(ii) pay to Lessor, in immediately available funds, an amount (the "Damage
Payment") equal to the sum of the positive remainder, if any, obtained by
subtracting the
<PAGE> 67
64
aggregate amount theretofore expended by Lessee in connection with the
Restoration (exclusive, however, of any amount expended for the
restoration, repair or replacement of the Initial Tenant Improvements) from
the sum of (a) that portion (if any) of the Significant Proceeds Amount
which Lessee received from the insurer on or prior to the date of the
Damage Termination Notice plus (b) the Deductible Amount under the
insurance policy required to be maintained by Lessee under section 14.1(a);
and
(iii) if the insurance policy required to be maintained by Lessee
under section 14.1(a) was for less than the full replacement cost most
recently determined pursuant to said section, deposit with the Depositary,
in immediately available funds, an amount equal to the excess of the amount
which would have been recoverable from the insurer if such policy had been
for the full replacement cost most recently determined pursuant to said
section over the amount which is recoverable from the insurer under such
policy on account of the damage or destruction.
(e) Subject to section 15.4(f), during the period commencing on the date
of the Damage Termination Notice and ending on the Specified Damage
Termination Date, Lessor shall have full control over the Restoration and may
use the Damage Payment and the amounts on deposit with the
<PAGE> 68
65
Depositary to defray the costs of the Restoration. Lessor and Lessee shall
reasonably cooperate with one another to effectuate the Restoration in an
efficient manner, and during the Restoration Lessor shall use reasonable efforts
to minimize interference with Lessee's use of the undamaged portion (if any) of
the Combined Premises. Lessor shall not be liable to Lessee for any matter
relating to or arising out of the Restoration unless due to Lessor's gross
negligence or wilful misfeasance; provided, however, that Lessor shall retain
reputable contractors who carry reasonable and customary public liability
insurance.
(f) If following the giving of the Damage Termination Notice, the
Appropriate Engineer shall determine that Lessee had no right to terminate this
Lease pursuant to section 15.4(a), then:
(i) Lessee shall thereupon assume full control of the Restoration
and shall prosecute the same with all due diligence to completion in
accordance with the requirements of this Lease; and
(ii) within 10 business days after the Appropriate Engineer's
determination, Lessor shall (x) reassign to Lessee that which was assigned
to Lessor pursuant to section 15.4(d)(i) and (y) pay to Lessee in
immediately available funds an amount equal to the positive remainder, if
any, obtained by subtracting the aggregate amount theretofore expended by
Lessor in connection with
<PAGE> 69
66
the Restoration (exclusive, however, of any amount disbursed to Lessor by
the Depositary) from the sum of (a) the amount, if any, received by Lessor
from the insurer by reason of the assignment referred to in section
15.4(d)(i) (exclusive, however, of any portion of such amount paid by
Lessor to Lessee pursuant to section 15.4(d)(i)), and (b) the Damage
Payment.
(g) Prior to the termination of this Lease pursuant to this section
15.4 there shall be no abatement of the Basic Rent or any other sum payable by
Lessee hereunder.
16. Taking of Property.
16.1 Notice. Lessor and Lessee shall each notify the other if it
becomes aware of a Taking, or the commencement of any proceedings or
negotiations which might result in a Taking.
16.2 Total Taking. In case of the Taking of the entire Combined
Premises or a Taking of 20% or more of the useable area of the Combined Premises
which renders the remainder thereof, in Lessee's reasonable opinion, not
reasonably susceptible to use as a first-class office building (a "Total
Taking"), this Lease shall terminate on the date of such Taking; provided,
however, that if Lessor shall dispute the reasonableness of Lessee's opinion,
the matter shall be determined by the Appropriate Engineer and (a) if the
Appropriate Engineer's determination is in favor of Lessor, the Taking in
question shall be deemed a Partial
<PAGE> 70
67
Taking (as defined in section 16.3) or (b) if the Appropriate Engineer's
determination is in favor of Lessee, this Lease shall terminate on the date of
the determination. Within 10 business days after termination of the Lease in
accordance with section 16.2, Lessor shall return to Lessee all Basic Rent
previously paid which is attributable to the period after such termination.
16.3 Partial Taking. In case of a Taking other than a Total Taking
(hereinafter called a "Partial Taking") (a) this Lease shall remain in full
force and effect; provided, however, that on the date of such Taking this Lease
shall terminate as to the portion of the Leased Premises taken (which portion
shall be deemed excluded from the Leased Premises) and the Basic Rent shall be
reduced by multiplying the same by a fraction, the numerator of which is the
area of the Building taken and the denominator of which is the area of the
Building immediately prior to such Taking, and (b) Lessee, whether or not the
awards or payments, if any, on account of such Taking shall be sufficient for
the purpose shall promptly commence Restoration of the Combined Premises
(exclusive of the taken portion) and thereafter diligently prosecute the same to
completion in accordance with the Plans and Specifications therefor (as approved
by Lessor or as determined by the Appropriate Engineer to be required to have
been approved by Lessor pursuant to this Lease).
<PAGE> 71
68
16.4 Application of Awards. (a) In the event of a Total Taking, the
award or awards for such Taking, less the cost of the determination of the
amount thereof (the "Condemnation Proceeds"), shall be paid as follows:
(i) if the Taking occurs at any time on or prior to June 30, 1998,
Lessor shall first be entitled to receive such portion of the Condemnation
Proceeds with interest thereon as shall equal the greater of:
(x) the sum (the "Recoverable Sum") of $310,000,000, plus the
aggregate amount of all reimbursements made by Lessor to Lessee
pursuant to section 6(e); or
(y) an amount equal to the greater of (a) the fair market
value of Lessor's fee estate in the Leased Premises, valued as
encumbered by this Lease, or (b) the fair market value of Lessor's
fee estate in the Land, valued as encumbered by this Lease;
(ii) if the Taking occurs at any time after June 30, 1998, Lessor
shall first be entitled to receive such portion of the Condemnation
Proceeds with interest thereon as shall equal the greater of (x) the fair
market value of Lessor's fee estate in the Leased Premises, valued as if
vacant and unencumbered by this Lease or otherwise, or (y) the fair market
value of
<PAGE> 72
69
Lessor's fee estate in the Land, valued as if vacant, unimproved and
unencumbered by this Lease or otherwise;
(iii) Lessee shall then be entitled to receive such portion of the
Condemnation Proceeds with interest thereon as shall equal the value of its
leasehold estate; and
(iv) Lessor shall then be entitled to receive the balance of the
Condemnation Proceeds.
(b) In the event of a Partial Taking, the Condemnation Proceeds
shall be paid as follows:
(i) Lessee shall first be entitled to receive such portion of the
Condemnation Proceeds with interest thereon as shall be awarded for
Restoration and such portion of the Condemnation Proceeds shall be payable
to the Depositary for disbursement in accordance with section 17;
(ii) if the Taking occurs at any time on or prior to June 30, 1998,
Lessor shall then be entitled to receive such portion of the Condemnation
Proceeds with interest thereon as shall equal the greater of:
(x) the Recoverable Sum multiplied by a fraction whose numerator
is the number of square feet in the portion of the Land so taken and
whose denominator is 58,223; or
(y) an amount equal to the greater of (x) the fair market value
of Lessor's fee estate in the
<PAGE> 73
70
part of the Leased Premises (if any) so taken, plus consequential damages,
if any, to Lessor's fee estate in the part of the Leased Premises not so
taken, the Leased Premises to be valued as encumbered by this Lease, or
(y) the fair market value of Lessor's fee estate in the part of the Land
(if any) so taken, plus consequential damages, if any, to the portion of
the Land not so taken, the Land to be valued as encumbered by this Lease;
(iii) if the Partial Taking occurs at any time after June 30, 1998, Lessor
shall then be entitled to receive such portion of the Condemnation Proceeds with
interest thereon as shall equal the greater of (x) the fair market value of
Lessor's fee estate in the part of the Leased Premises (if any) so taken, plus
consequential damages, if any, to the part of the Leased Premises not so taken,
the Leased Premises to be valued as if vacant and unencumbered by this Lease or
otherwise, or (y) the fair market value of Lessor's fee estate in the part of
the Land (if any) so taken, plus consequential damages, if any, to the portion
of the Land not so taken, the Land to be valued as if vacant, unimproved and
unencumbered by this Lease or otherwise; and
(iv) Lessor and Lessee shall then share equally in any balance of the
Condemnation Proceeds.
<PAGE> 74
71
(c) If the order or decree in any condemnation or similar proceeding
shall fail separately to state the amount to be awarded to Lessor and the amount
to be awarded to Lessee under section 16.4(a) or (b), or the amount of the
compensation for Restoration, and if Lessor and Lessee cannot agree thereon
within 30 days after the final award or awards shall have been fixed and
determined, the dispute shall be determined by arbitration.
(d) Nothing in this Lease shall preclude Lessee from claiming or
receiving from the condemning authority any compensation to which Lessee may
otherwise lawfully be entitled in respect of Lessee's Equipment and the Initial
Tenant Improvements, for moving to a new location, reimbursement for tenant
improvements or for interruption of, or damage to, Lessee's business; provided,
however, that any award made is separate to Lessee and not part of damages
recoverable by Lessor.
16.5 Temporary Taking. Sections 16.2 through 16.4 to the contrary
notwithstanding, the provisions of this section 16.5 shall govern any Taking for
temporary use. In the case of any Taking for temporary use, this Lease shall
remain in effect as to the Leased Premises (including the portion taken) and
there shall be no reduction in Basic Rent or (unless otherwise legally required)
other change in the obligations of Lessee hereunder. If the term of the
temporary Taking shall not extend beyond the term of this
<PAGE> 75
72
Lease and any extended term (for which Lessee has given the exercise notice)
the entire award shall be payable to Lessee and Lessee shall make Restoration
of the Leased Premises in accordance with the requirements of this Lease. If
the term of the temporary Taking shall extend beyond the term of this Lease and
any extended term (for which Lessee has given the exercise notice), Lessee need
not make Restoration, the portion of the award applicable to the Restoration
shall be paid to Lessor and the balance of the award shall be apportioned
between Lessee and Lessor by the condemning authority or, if the condemning
authority fails to act, by arbitration.
17. Disbursement of Deposited Sums. (a) Subject to the provisions of
this section 17, the Depositary shall, from time to time as any Restoration
proceeds and within 10 business days after receipt of Lessee's request therefor
(but in no event more frequently than once during any 30-day period), make
disbursements (collectively, "Restoration Advances") to Lessee from the funds
deposited with the Depositary pursuant to section 15.3(b), 15.4(d)(iii) or
16.4(b)(i) (collectively, the "Deposited Sums") for application to the Costs of
the Restoration in question. Simultaneously with the delivery of each such
request to the Depositary, Lessee shall give notice thereof to Lessor (which
notice shall be accompanied by copies of such request and all other papers
delivered to the Depositary).
<PAGE> 76
73
(b) No Restoration Advance shall be made on account of any fire or
other casualty until Lessee shall have delivered evidence reasonably
satisfactory to Lessor that an aggregate amount at least equal to the
Significant Proceeds Amount has been expended for Costs in connection with the
Restoration, and Restoration Advances on account of any fire or other casualty
shall be made only for amounts paid or payable by Lessee for Costs which are in
excess of the Significant Proceeds Amount.
(c) No Restoration Advance (other than the final Restoration
Advance) in respect of any fire or other casualty or any Partial Taking shall be
due unless Lessee's request for such Restoration Advance shall be accompanied
by:
(i) a certificate of Lessee addressed to the Depositary and Lessor
(in form reasonably satisfactory to Lessor) stating that the amount of the
Restoration Advance then requested has been paid or is then duly payable
by Lessee to Contractors (whose names and addresses and a description of
the work involved shall be stated), that the amount of the Restoration
Advance then requested (when taken together with the aggregate amount of
all Restoration Advances theretofore made by the Depositary) exceeds
neither 90% of the Deposited Sums (together with interest on such amount)
nor the value (the "Installed Value") of the Restoration work in
<PAGE> 77
74
question as actually installed in the Leased Premises (Lessee's
certificate to set forth a calculation of the Installed Value), and that
no part of cost of the work described in any previous or then pending
request for a Restoration Advance has been or is being made the basis for
the Restoration Advance then being requested; and
(ii) a certificate of the architect or engineer who prepared the
related Plans and Specifications addressed to the Depositary and Lessor
(in form reasonably satisfactory to Lessor) stating in substance that (x)
the calculation of Installed Value as set forth in the certificate
referred to in the foregoing clause (i) is correct, (y) the work has been
performed in a good and workmanlike manner and in accordance with the
Plans and Specifications (as approved by Lessor or as determined by the
Appropriate Engineer to have been required to be approved by Lessor
pursuant to this Lease) and (z) the unadvanced portion of the Deposited
Sums in question, together with any additional amount to be available from
the insurer, are at least equal to the Costs of the Restoration which will
remain unpaid after giving effect to the Restoration Advance in question.
(d) No Restoration Advance (including the final Restoration Advance)
in respect of any fire or other casualty or any Partial Taking shall be due
unless:
<PAGE> 78
75
(i) no certificate delivered to the Depositary or Lessor by Lessee or
by any architect or engineer in connection with the Restoration in question
shall have been materially incorrect at the time of delivery (Lessor to
give notice to Lessee within 10 business days after Lessor's receipt of the
certificate in question if Lessor contends that such certificate was
materially incorrect; any such dispute to be determined by the Appropriate
Engineer);
(ii) in the case of a Restoration Advance to be made on account of a
fire or other casualty, Lessee shall have waived its right to terminate
this Lease pursuant to section 15.4(a) on account of such damage or other
casualty;
(iii) Lessor shall have received true copies of all bills paid or
payable by Lessee to Contractors which form the basis for the Restoration
Advance in question; and
(iv) no Event of Default (including, without limitation, any
Event of Default specified in section 22(d)) shall have occurred and be
continuing.
(e) Neither any final Restoration Advance nor the release of any
remaining balance of Deposited Sums pursuant to section 17(f) shall be made
unless:
(i) Lessee's request for such Advance or such release shall be
accompanied by (x) a certificate of
<PAGE> 79
76
Lessee addressed to the Depositary and Lessor (in form reasonably
satisfactory to Lessor) stating that to Lessee's best knowledge (after due
inquiry) there shall (after giving effect to such Advance or release) be
no outstanding indebtedness due for labor, materials, supplies, permits or
services in any manner connected with the Restoration which if unpaid
might be the basis for any type of lien on the Combined Premises, or any
part thereof, and that (in the case of a request for a final Restoration
Advance) the amount requested has been paid or is then duly payable to
Contractors (whose names and addresses and a description of the work
involved shall be stated) and (y) a certificate of the architect or
engineer who prepared the related Plans and Specifications addressed to
the Depositary and Lessor (in form reasonably satisfactory to Lessor)
stating that the Restoration work has been fully completed in a good and
workmanlike manner and in accordance with the Plans and Specifications (as
approved by Lessor or as determined by the Appropriate Engineer to have
been required to be approved by Lessor pursuant to this Lease); and
(ii) the Depositary and Lessor shall have received (x) an instrument
in writing from any title company insuring Lessor's estate in the Leased
Premises certifying that there are no undischarged mechanics',
<PAGE> 80
77
laborers' or materialmen's liens affecting any part of the Combined
Premises (other than liens, if any, in respect of which Lessor has
consented to take security pursuant to section 13(a)(ii)) and (y) evidence
reasonably satisfactory to Lessor that Lessee has obtained waivers of
mechanics', laborers' or materialmen's liens or releases of such liens
from all Contractors engaged in the Restoration.
(f) Subject to section 17(g), any balance of a Deposited Sum
(together with inte