SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 2000
Commission file number 0-4217
ACETO CORPORATION
_______________________________________________________
(Exact name of the company as specified in its charter)
NEW YORK 11-1720520
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification No.)
One Hollow Lane, Suite 201 11042
LAKE SUCCESS, NEW YORK
(Address of principal (Zip Code)
executive offices)
Company's telephone number, including area code: (516) 627-6000
Securities registered pursuant to Section 12 (b) of the Act:
TITLE OF EACH CLASS Name of each exchange
ON WHICH REGISTERED
None
___________________________________________________________________
Securities registered pursuant to Section 12 (g) of the Act:
Common Stock, par value $.01
_______________________________________________________
(Title of Class)
_______________________________________________________
[Cover page 1 of 2 pages]
Indicate by check mark whether the company (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
company was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No_____
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the Company's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the close of the period covered by this report.
6,034,717
The aggregate market value of the voting stock of the Company held by
non-affiliates of the Company as of September 1, 2000 was $44,094,414.
Documents incorporated by reference: The Company's Proxy Statement for
the annual meeting of the Company's shareholders to be held on December 7,
2000. (See Part III herein).
[Cover page 2 of 2 pages]
PART I
ITEM 1. BUSINESS
The Company, which was incorporated in 1947, is primarily engaged in the
marketing of fine and industrial chemicals used principally in the
agricultural, color producing, pharmaceutical, nutraceutical and surface
coating industries. The Company sells approximately 1,000 chemicals used in
these and other fields.
The Company is organized into six reportable segments. Net sales and gross
profit for each segment are set forth in Note 15 to the Company's consolidated
financial statements. The reportable segments are organized by products: (1)
Agrochemicals, whose products include herbicides, fungicides and insecticides,
as well as a sprout inhibitor for potatoes, (2) Industrial Chemicals, whose
products include a variety of specialty chemicals used in adhesives, coatings,
food, fragrance, cosmetics and many other areas, (3) Organic Intermediates and
Colorants, whose products include dye and pigment intermediates used in the
color-producing industries like textiles, inks, paper and coatings, as well as
intermediates used in production of agrochemicals, (4) Pharmaceutical
Biochemicals and Nutritionals products, which include the active ingredients
for generic pharmaceuticals, vitamins and nutritional supplements, (5)
Pharmaceutical Intermediates and Custom Manufacturing products, used in
preparation of pharmaceuticals, primarily by major ethical drug companies and
(6) Institutional Sanitary Supplies and Other, whose products include cleaning
solutions, fragrances and deodorants used by commercial and industrial
establishments. The Company does not allocate assets by segment as they are
not provided to the chief operating decision maker.
Most of the chemicals distributed by the Company are purchased abroad mainly
for sale throughout the United States; to a lesser extent, some chemicals are
sold abroad.
During the fiscal year ended June 30, 2000 and 1999, approximately 40% and 50%,
respectively, of the Company's purchases of chemicals came from Europe and
approximately 45% and 35%, respectively, from Asia.
There were no significant changes in the types of products sold by the Company,
markets served or methods of distribution.
The chemical industry is highly competitive. Most of the chemicals that the
Company sells are in competition with the products of chemical manufacturers,
including large chemical companies, who have substantially greater resources
than the Company. However, in the Company's opinion, based on reports from its
customers and suppliers, its competitive position is enhanced by the following:
the chemical products that it offers are prime quality products, many produced
by major chemical companies, some of whom are the largest chemical companies in
Europe and Asia, which products are offered by the Company at attractive and
competitive prices. For the most part the Company stores its inventory of
chemicals in public warehouses strategically located throughout the United
States, and can therefore fill orders rapidly from inventory. The Company has
developed ready access to key purchasing, research and technical executives of
both its customers and suppliers, and therefore one of its salient competitive
strengths is its ability to obtain quick decisions, when necessary, because of
such access. The technical support and services that the Company provides to
its customers is also a strength. The Company does not consider itself to be a
significant factor in the chemical industry taken as a whole.
One of the Company's products accounted for 15% of net sales in fiscal 1999 and
1998. No product accounted for as much as 10% of net sales in fiscal 2000.
One of the Company's customers, DuPont Pharmaceuticals Company, purchasing
primarily the aforementioned product, accounted for 16% and 15% of net sales in
fiscal 1999 and 1998, respectively. No customer accounted for as much as 10%
of net sales in fiscal 2000. One of the Company's suppliers accounted for 21%,
29%, and 25% of total purchases in fiscal 2000, 1999 and 1998, respectively.
Certain of the chemicals purchased by the Company are supplied to it on an
exclusive basis. Based on its relationships with its vendors, the Company
believes its vendors will continue to supply such chemicals on an exclusive
basis.
The Company holds no patents, trademarks, licenses, franchises or concessions
which it considers to be material to its operations.
Sales of certain of the Company's chemicals are higher in the last six months
of the fiscal year. For the most part, the Company warehouses the products
that it sells and fills orders from inventory. It, therefore, does not
consider information concerning backlogs to be applicable.
A subsidiary of the Company markets certain agricultural chemicals and
contracts for the manufacture of other agricultural chemicals which are subject
to the Federal Insecticide, Fungicide and Rodenticide Act (FIFRA). FIFRA
requires that test data be provided to the Environmental Protection Agency
(EPA) to register, obtain and maintain approved labels for pesticide products.
The EPA requires that follow-on registrants of these products compensate the
initial registrant for the cost of producing the necessary test data on a basis
prescribed in the FIFRA regulations. Follow-on registrants do not themselves
generate or contract for the data. However, when FIFRA requirements mandate
the generation of new test data to enable all registrants to continue marketing
a pesticide product, often both the initial and follow-on registrants establish
a task force to jointly undertake the testing effort. The Company is presently
a member of two such task force groups. The Company estimates the cost of test
data at the time it is first required, which estimates are amortized over a
period of up to five years, updated annually; and are included in cost of
sales.
Compliance with Federal, State and local provisions which have been enacted or
adopted regulating the discharge of materials into the environment has not had
a material effect on the capital expenditures and competitive position of the
Company. During fiscal 1993 the Company announced the closing of its
manufacturing subsidiary located in Carlstadt, New Jersey. At the same time an
environmental consultant was engaged by the Company to determine the extent of
contamination on the site and develop a plan of remediation. Based on the
initial estimates from the consultant a liability of $1.5 million was recorded
in fiscal 1993. During fiscal 1997, after additional testing was completed,
the Company received a revised estimate from the consultant. As a result, the
Company recorded an additional liability of $800,000. At June 30, 2000 and
1999, the remaining liability was $1.3 million. The Company believes it is
possible that such amount may not be sufficient to cover future environmental
remediation but does not believe there will be a material adverse effect on the
financial position or liquidity of the Company. However, depending on the
amount and timing of any required remediation over and above the liability
established, it is possible that the Company's future results could be
materially affected in a particular reporting period. Other than the
aforementioned remediation, the Company is not aware of any material
environmental liabilities.
At June 30, 2000, the Company employed approximately 125 persons, none of whom
were covered by a collective bargaining agreement.
ITEM 2. PROPERTIES
The Company's general headquarters and main sales office occupy approximately
26,000 square feet of leased space in a modern office building in Lake Success,
New York. The lease expires in April 2011.
Two of the Company's subsidiaries occupy 44,000 square feet of leased space in
an industrial park in New Hyde Park, New York. The lease expires in November
2009.
The Company's former manufacturing facility is located on an 11-acre parcel in
Carlstadt, New Jersey, owned by the Company. This parcel contains one building
with approximately 5,000 square feet of office space. The property is held for
sale.
ITEM 3. LEGAL PROCEEDINGS.
(None)
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
(None)
PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
The Company's common stock is traded in the National Market System of
NASDAQ (Symbol: ACET) and was quoted at prices* ranging as follows:
FISCAL 2000 HIGH LOW
First Quarter 12 3/8 10 1/2
Second Quarter 12 3/32 10
Third Quarter 11 9/16 8 1/8
Fourth Quarter 11 3/16 7 3/4
FISCAL 1999 HIGH LOW
First Quarter 15 15/16 12 7/8
Second Quarter 13 7/16 10 1/8
Third Quarter 13 13/16 11 3/4
Fourth Quarter 11 15/16 10 5/16
*Represents high and low prices for actual transactions.
Cash dividends of $0.15 per common share were paid in January and June 2000 and
$0.13 per common share were paid in January and June 1999.
As of September 1, 2000, there were approximately 700 holders of record of the
Company's common stock.
Shares held by the nominee of the Depository Trust Company, the country's
principal central depository, were approximately 4,900,000 shares and counted
as owned by one holder. Additional individual holdings in street name result
in a sizable number of beneficial owners represented on our records as owned by
various banks and stockbrokers.
ITEM 6. SELECTED FINANCIAL DATA
(In thousands, except per share amounts)
YEARS ENDED JUNE 30 2000 1999 1998 1997 1996
Net sales $184,789 $169,189 $182,954 $169,387 $183,163
Net income 6,344 6,091 7,557 6,228(1)(2) 7,154
Net income per
common share $ 1.01 $ 0.90 $ 1.08 $ 0.82(1)(2) $ 0.88
- diluted (3)
Total assets 88,081 86,159 84,379 86,145 87,302
Working capital 50,270 49,459 54,423 48,927 50,907
Long-term liabilities 908 925 - 500 1,000
Redeemable preferred - 750 750 750 750
stock
Shareholders' equity 63,604 63,982 63,261 60,434 63,161
Number of common 6,035 6,416 6,699 6,981 7,782
shares outstanding
at year end (3)
Book value per
common $ 10.54 $ 9.97 $ 9.44 $ 8.66 $ 8.12
share (3)
Cash dividends per $ 0.30 $ 0.26 $ 0.25 $ 0.24 $ 0.23
common share (3)
(1) Includes an after-tax charge of $187 ($.03/share)(3)in final settlement of
a complaint by the U.S. Department of Justice sent to the Company on
February 10, 1995. The complaint alleged violation of the Resource
Conservation and Recovery Act (RCRA) by a then wholly owned subsidiary in
Waterbury, CT. This subsidiary was sold on June 19, 1996.
(2) Includes an after-tax charge of $480 ($.06/share)(3)to cover a revised
estimate for remediation of the Company's former manufacturing site in
Carlstadt, NJ.
(3) Adjusted for stock split and dividend, as appropriate.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES:
The Company's primary source of liquidity is cash provided from operating
activities; $8.0 million in fiscal 2000 and $1.8 million in fiscal 1999. Cash
and short-term investments totaled $5.0 and $11.4 million and working capital
was $50.3 and $49.5 million at June 30, 2000 and 1999, respectively. In
addition, the Company's long-term investments totaled $7.3 and $11.9 million
for the same periods. These investments are highly liquid and can be used for
working capital if needed. The Company has sufficient lines of credit available
with banks, should any additional funds be required.
Certain components of working capital had significant changes. Inventory
increased $8.8 million to $38.5 million at June 30, 2000 from $29.6 million at
June 30, 1999. The primary reasons for this increase were the acquisition of
Schweizerhall Inc. (Schweizerhall) in January 2000 which added over $5 million
in inventory and a higher inventory level in our Organic Intermediates and
Colorant segment due to increasing sales. The decrease of $6.5 million in cash
and short-term investments was the result of the following initiatives: The
Company continued its stock repurchase program and purchased 567,000 shares of
common stock for $6.1 million. It also acquired certain assets of
Schweizerhall which required an initial cash outlay of $6.3 million and certain
assets of Magnum Research Corp. (Magnum) which required an initial outlay of
$0.7 million. Additional cash needed for the above mentioned initiatives
caused a decrease in long-term investments of $4.6 million. The total of
drafts and acceptances payable, accounts payable and accrued merchandise
purchases increased by $2.1 million from $13.2 million to $15.3 million
primarily due to the impact of the previously mentioned acquisitions.
Any funds required for additional acquisitions, stock buybacks, or
environmental remediation will be funded by the aforementioned sources of
liquidity.
RESULTS OF OPERATIONS:
Net Sales By Segment
Segment 2000 1999 1998
% of % of % of TOTAL
$ MILLION TOTAL $ MILLION TOTAL $ MILLION
Agrochemicals 11.4 6.2 10.4 6.2 14.6 8.0
Industrial
Chemicals 49.9 27.0 44.7 26.4 44.9 24.5
Organic
Intermediates &
Colorants 49.9 27.0 38.9 23.0 53.0 29.0
Pharmaceutical
Biochemicals &
Nutritionals 35.4 19.1 28.3 16.7 31.7 17.3
Pharmaceutical
Intermediates &
Custom Mfg. 33.2 18.0 44.3 26.2 38.4 21.0
Institutional
Sanitary
Supplies &
Other 5.0 2.7 2.6 1.5 0.4 0.2
TOTAL NET SALES
184.8 100.0 169.2 100.0 183.0 100.0
Gross Profit By Segment
Segment 2000 1999 1998
% of % of % of
$ MILLION TOTAL $ MILLION TOTAL $ MILLION TOTAL
Agrochemicals 3.9 12.2 3.7 14.1 3.7 14.0
Industrial
Chemicals 9.2 28.8 7.7 29.3 8.0 30.2
Organic
Intermediates &
Colorants 7.3 22.8 5.4 20.5 6.8 25.7
Pharmaceutical
Biochemicals &
Nutritionals 6.3 19.7 4.8 18.3 5.0 18.8
Pharmaceutical
Intermediates &
Custom Mfg. 2.7 8.4 3.3 12.5 3.0 11.3
Institutional
Sanitary
Supplies &
Other 2.6 8.1 1.4 5.3 - -
TOTAL GROSS
PROFIT 32.0 100.0 26.3 100.0 26.5 100.0
SALES AND GROSS PROFIT
In fiscal 2000 vs. 1999 net sales increased 9%. The acquisition of the
distribution business of Schweizerhall, completed in January 2000, accounted
for a majority of the 25% increase in the Pharmaceutical Biochemicals and
Nutritionals segment and a smaller portion of the 11% increase in the
Industrial Chemicals segment. The remainder of the Industrial Chemicals
increase was from a general strengthening of demand across its product lines.
The 28% increase in sales of the Organic Intermediates and Colorants segment
was due to a general rebound in demand from the very depressed levels of 1999,
coupled with new sales of agricultural intermediates. On the other hand, the
Pharmaceutical Intermediates and Custom Manufacturing segment declined 25%,
reflecting lower sales of one significant product which accounted for over 45%
of sales of this segment in 2000 and 55% in 1999. In fiscal 2001, we do not
anticipate that there will be any sales of this product.
The inclusion in the results for a full year of CDC Products Corp. (CDC) and,
for nine months, Magnum, both acquisitions in the Institutional Sanitary
Supplies and Other segment, accounted for that segment's increase.
Gross profit by segment for the entire corporation increased 22%. The
Industrial Chemicals, Organic Intermediates and Colorants, and Pharmaceutical
Biochemicals and Nutritionals segments all showed higher percentage increases
in gross profit than sales. Generally, this was the result of a corporate
focus on improved sourcing, especially from China. Also, the growth of the
Institutional Sanitary Supplies and Other segment contributed, as these
products have significantly higher gross profit percentages.
In fiscal 1999 vs. 1998 net sales decreased 8%. The Agrochemicals and Organic
Intermediates and Colorants segments showed the largest changes. The
Agrochemicals segment suffered the loss of two very low profit products.
Continued erosion in selling prices was the main factor in the sales decrease
in the Organic Intermediates and Colorants segment. The Pharmaceutical
Intermediates and Custom Manufacturing segment increased because of increased
sales of several relatively new products. The loss of sales of one biochemical
accounted for most of the 11% decrease in the Pharmaceutical Biochemicals and
Nutritionals segment. Lastly, the acquisition of CDC was the cause of the
increase in the Institutional Sanitary Supplies and Other segment.
Total gross profit by segment, corporatewide, decreased only slightly. The
Organic Intermediates and Colorants segment showed the largest decrease, and
this was in line with the sales decrease.
The aforementioned loss of sales in the agrochemicals segment had virtually no
impact on gross profit. Several segments showed slight decreases or increases
and the cumulative effect of these segments was offset by the increase in
Institutional Sanitary Supplies and Other from the CDC acquisition.
Selling, General and Administrative Expense
Selling, general and administrative expenses increased by $2.7 million to $18.0
million in fiscal 2000 compared to $15.3 million in fiscal 1999. The inclusion
of CDC and Magnum in the consolidated financial statements accounted for $1.5
million of this increase. Additional costs relating to the Schweizerhall
acquisition accounted for a large portion of the remaining increase.
Compensation expense and fringe benefits increased due to routine annual
increases. Selling expenses increased due to our expanding China office and
expenses relating to the increase in personnel from our recent acquisitions.
Bank charges increased significantly due to an informal compensating balance
agreement. A significant increase in legal fees was due to an ongoing
arbitration with the former owner of CDC. Offsetting some of these increases
was a decrease in bad debt expense.
Selling, general and administrative expenses increased by $2.5 million to $15.3
million from $12.8 million in fiscal 1999 compared to 1998. The inclusion of
CDC in the consolidated financial statements accounted for $750,000 of this
increase. A customer claim in the amount of $237,000 was recorded in March
1999. Compensation increased by $1,000,000 due to payments of bonuses, annual
salary increases and additional personnel. In addition, there were increases
in legal fees, bad debts and fringe benefits. Offsetting some of these
increases were decreases in bank charges, selling expenses and consulting fees.
INTEREST EXPENSE AND OTHER INCOME
Interest expense was $11,000, $18,000 and $59,000 in fiscal 2000, 1999 and
1998, respectively. A twelve year note, payable to the Prudential Insurance
Company of America, was paid in full in December 1998.
Interest and other income decreased by $1.3 million to $1.1 million in fiscal
2000 compared to $2.4 million in fiscal 1999. Lower cash available for
investments during the fiscal year due to the Company's continuing stock
repurchase program, along with the aforementioned acquisitions, caused a
significant decrease in interest income on investments. In addition, a loss on
marketable securities in fiscal 2000 compared to a gain in fiscal 1999,
accounted for $350,000 of this decrease. Royalty income decreased $315,000 in
comparing these two periods due to a decrease in sales of an agricultural
product sold in Europe.
Interest and other income increased slightly in fiscal 1999 compared to 1998.
Higher average cash available for investments during the fiscal year resulted
in a slight increase in investment income. Royalty income increased
significantly due to increased sales of an agricultural product in Europe.
Offsetting most of these increases was a decrease in proceeds from the sale of
inventory relating to a subsidiary sold in June 1996. Also, gains on
marketable securities decreased in fiscal 1999 compared to 1998.
TAX RATES
The effective tax rates were 37.9%, 37.5% and 35.6% in fiscal 2000, 1999 and
1998, respectively. Significant payments from the Company's non-qualified
retirement plan, which are deductible for tax purposes on the date of
distribution, caused an unusually low tax rate for the year ended June 30,
1998.
IMPACT OF NEW ACCOUNTING PRONOUNCEMENTS
In June 1999 and June 2000, respectively, the Financial Accounting Standards
Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 137,
"Accounting for Derivative Instruments and Hedging Activities-Deferral of the
Effective Date of FASB Statement No. 133" and SFAS No. 138, "Accounting for
Certain Derivative Instruments and Certain Hedging Activities". SFAS 137 and
138 amend SFAS 133, "Accounting for Derivative Instruments and Hedging
Activities," which was issued in June 1998. SFAS 137 deferred the effective
date of SFAS 133 to all fiscal quarters of fiscal years beginning after June
15, 2000. SFAS 133 establishes accounting and reporting standards for
derivative instruments, including certain derivative instruments embedded in
other contracts and for hedging activities. It requires that an entity
recognize all derivatives as either assets or liabilities in the statement of
financial position and measures those instruments at fair value. The impact of
the adoption of this new standard will not be material.
In March 2000, the FASB issued FASB Interpretation No. (FIN) 44 "Accounting for
Certain Transactions involving Stock Compensation" an interpretation of
Accounting Principles Board Opinion No. 25 (Opinion 25). This interpretation
clarifies the application of Opinion 25 for certain issues. With certain
exceptions, FIN 44 applies prospectively to new awards, exchanges of awards in
a business combination, modifications to outstanding awards and changes in
grantee status on or after July 1, 2000. The impact of this interpretation is
not expected to be material.
MARKET RISK
The Company maintains foreign currency contracts solely to hedge open purchase
commitments. It has established policies, procedures and internal processes
governing the management of this hedging to reduce market risks inherent in
foreign exchange. Also, the Company has interest rate exposure relating to
short and long term investments and minimal exposure in the equity markets.
Any change in these markets would not materially affect the consolidated
financial position, results of operations or cash flows of the Company.
FORWARD LOOKING STATEMENTS
This Annual Report on Form 10-K contains forward-looking statements relating to
such matters as anticipated financial performance and business prospects. When
used in this Annual Report, the words "anticipates," "expects," "may," "intend"
and similar expressions are intended to be among the statements that identify
forward-looking statements. From time to time, the Company may also publish
forward-looking statements. The Private Securities Litigation Reform Act of
1995 provides a safe harbor for forward-looking statements. In order to comply
with the terms of the safe harbor, the Company notes that a variety of factors,
including, but not limited to, foreign currency risks, political instability,
changes in foreign laws, regulations and tariffs, new technologies,
competition, customer and vendor relationships, seasonality, inventory
obsolescence and inventory availability, could cause the Company's actual
results and experience to differ materially from the anticipated results or
other expectations expressed in the Company's forward-looking statements.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The financial statements required by this item 8 are set forth at the end of
this report. The following is the applicable supplementary data:
The following is a summary of the unaudited quarterly results of operations for
the years ended June 30, 2000 and 1999.
QUARTERLY FINANCIAL DATA (Unaudited)
(In thousands except per share amounts)
Year Ended June 30, 2000
Quarter Ended
SEPT.30,1999 DEC.31,1999 MAR.31,2000 JUNE 30,2000
Net sales $37,818 $48,254 $55,476 $43,241
Gross profit 5,555 5,825 8,336 7,488
Net income 1,214 1,329 2,071 1,731
Net income per
common share
- diluted 0.19 0.21 0.33 0.28
Year Ended June 30, 1999
Quarter Ended
SEPT.30,1998 DEC.31,1998 MAR.31,1999 JUNE 30,1999
Net sales $36,365 $46,098 $45,420 $41,306
Gross profit 4,352 6,072 6,704 5,612
Net income 1,018 1,926 1,646 1,501
Net income per
common share
- diluted 0.15 0.28 0.25 0.23
Earnings per share calculation for each of the quarters is based on weighted
average number of shares outstanding in each period. Therefore, the sum of the
quarters in a year does not necessarily equal the year's earnings per share.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The Company's proxy statement relating to the annual meeting of the
Company's shareholders to be held on December 7, 2000, which will be filed with
the Commission not later than 120 days after the end of the fiscal year covered
by this Form 10-K (the Proxy Statement), is hereby incorporated by reference.
Based solely on its review of the copies of such forms received by it,
the Company believes that during the fiscal year covered by this Form 10-K all
filing requirements applicable to its officers, directors, and greater than
ten-percent beneficial owners were complied with.
ITEM 11. EXECUTIVE COMPENSATION.
The Company's Proxy Statement is hereby incorporated by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The Company's Proxy Statement is hereby incorporated by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The Company's Proxy Statement is hereby incorporated by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) See Index to Consolidated Financial Statements and Schedules
included elsewhere herein.
(b) No reports on Form 8-K were filed during the three months
ended June 30, 2000.
(c) Exhibits
3(i) Restated Certificate of Incorporation (incorporated by
reference to Exhibit 4(a)(iii) to Registration
Statement No. 2-70623 on Form S-8 (S-8 2-70623)).
3(ii) Certificate of Amendment dated November 21, 1985 to
Restated Certificate of Incorporation (incorporated by
reference to Exhibit 3(ii) to the Company's Annual
Report on Form 10-K for the fiscal year ended June
30, 1986).
3(iii)(c) By-laws, currently in effect (incorporated by reference to
Exhibit 3(iii)(c) to the Company's Annual Report
on Form 10-K for the fiscal year ended June 30, 1998)
(1998 10-K).
10(ii)(a) Profit Sharing Plan, as amended and restated
effective July 1, 1989 (incorporated by reference to
Exhibit 10(iii)(a) to the Company's Annual Report
on Form 10-K for the fiscal year ended June 30, 1995).
10(iii) 401(k) Plan, effective August 1, 1997, (incorporated by
reference to Exhibit 10 (iii) to the 1998 10-K).
10(iv)(a) Supplemental Executive Retirement Plan, effective
June 30, 1985, as amended and restated, effective
July 1, 1992 (incorporated by reference to Exhibit
10(iv)(a) to the Company's Annual Report on Form 10-K
for the fiscal year ended June 30, 1993)(1993 10-K)).
10(v) 1980 Stock Option Plan (incorporated by reference to
Item 4(a)(ii) of S-8 2-70623).
10(v)(a) 1980 Stock Option Plan (as amended and restated
effective as of September 19, 1990) (incorporated
by reference to exhibit 4(c) to Registration
Statement No. 33-38679 on Form S-8).
10(v)(b) Aceto Corporation Stock Option Plan (as Amended and
Restated effective as of September 19, 1990) (and as
further Amended effective June 9, 1992) (incorporated
by reference to Exhibit 10(v)(b) to the Company's
Annual Report on Form 10-K for the fiscal year ended
June 30, 1992).
10(v)(c) 1998 Aceto Corporation Omnibus Equity Award Plan (incorporated
by reference to Exhibit 10(v) to the Company's Annual Report
on Form 10-K for the fiscal year ended June 30, 1999)
(1999 10-K).
10(vi) Lease between Aceto Corporation and M. Parisi & Son
Construction Co., Inc. for office space at One
Hollow Lane, Lake Success, New York dated May 24,
1990 (incorporated by reference to Exhibit 10(vi)
to the Company's Annual Report on Form 10-K for the
fiscal year ended June 30, 1990).
10(vi)(a) Lease between Aceto Corporation and M. Parisi & Son
Construction Co., Inc. for office space at One Hollow Lane,
Lake Success, NY dated April 28, 2000.
10(vi)(b) Lease between Aceto Corporation and M. Parisi & Son
Construction Co., Inc. for office space at One Hollow Lane,
Lake Success, NY dated April 28, 2000.
10(vi)(c) Lease between CDC Products Corp. and Seaboard Estates for
manufacturing and office space at 1801 Falmouth Avenue, New
Hyde Park, NY dated October 31, 1999.
10(vii) Stock Purchase Agreement among Windham Family Limited
Partnership, Peter H. Kliegman, CDC Products Corp. and
Aceto Corporation (incorporated by reference to Exhibit
10(vii) to 1999 10-K).
10(viii) Asset Purchase Agreement among Magnum Research Corporation,
CDC Products Corp., Roy Gross and Aceto Corporation.
10(ix) Asset Purchase Agreement between Schweizerhall, Inc. and
Aceto Corporation.
21 Subsidiaries of the Company.
24 Consent of KPMG LLP.
Exhibit 10 (vi)(a)
THIS AGREEMENT OF LEASE (the Lease), made this 28 day of April, 2000 by and
between M. PARISI & SON CONSTRUCTION CO., INC., a New York corporation, having
offices at 54-65 48th Street, P.O. Box 780007, Maspeth, New York (hereinafter
designated as "Landlord") and ACETO CORPORATION, a New York corporation having
an office at One Hollow Lane, Lake Success, NY 11042 (hereinafter designated
as "Tenant")
W I T N E S S E T H :
Landlord hereby leases to Tenant and Tenant hereby hires from Landlord, in the
building known as LAKE SUCCESS PLAZA, (hereinafter referred to as the
"Building"), and located on land (hereinafter referred to as the "Land") at One
Hollow Lane, Lake Success, Nassau County, New York, 11378, that certain space,
containing approximately, without representation, 4,800 rentable square feet
(subject to a twenty percent (20%) loss factor) located on the second floor
together with all fixtures and equipment which at the commencement, or during
the term of this Lease are thereto attached (except items not deemed to be
included constitute and are hereby called "the demised premises"), which
demised premises are approximately as shown on the plan or plans or diagram or
diagrams set forth on Exhibit "A" attached hereto and made a part hereof (or
incorporated by reference into this Lease as though physically attached hereto)
and Tenant shall have the non-exclusive, revocable common or joint use of all
Common Areas as said term is hereinafter defined in and subject to the
provisions of Article 27.09, of the Land and Building (and such other
facilities as to which Tenant is entitled pursuant to the terms hereof; for a
term commencing on the Commencement Date (as herein defined), and ending on
April 30, 2011, unless sooner terminated in accordance herewith, at an annual
fixed rental rate as set forth on Schedule 1 annexed hereto and made a part
hereof. Landlord estimates, but does not warrant or represent, that Landlord's
Work (as set forth on Exhibit AD@ which is attached hereto and made a part
hereof), shall be substantially completed on or about April 12, 2001 and
Landlord shall use good faith efforts to commence and diligently complete such
work, subject to reasonable delay and force majure. Upon the date that
Landlords Work is actually substantially completed,(the Commencement Date)
Landlord and Tenant shall execute a commencement date agreement (A Commencement
Date Agreement) setting forth the Commencement Date of the term hereof, and the
date that the Tenant shall commence paying fixed annual rent as specified in
Schedule 1.
Tenant agrees to pay said fixed annual rent in lawful money of the United
States, in equal monthly installments in advance on the first day of each
calendar month during said term, at the office of Landlord or such other place
in the United States of America as Landlord may designate in writing, without
any setoff or deduction whatsoever, except that the first months rent,
irrespective of when the first months rent is due, shall be paid upon execution
of the within Lease. Should the obligation to pay rent commence on any day
other than the first day of a month, then the fixed rent for the unexpired
portion of such month shall be adjusted and pro-rated on a per diem basis.
The parties hereto, for themselves, their heirs, distributees, executors,
administrators, legal representatives, successors and assigns, hereby covenant
as follows:
ARTICLE 1
Rent
1.01. Tenant shall, commencing on the Commencement Date and throughout the
term of this Lease, pay the fixed annual rent and additional rent as above and
as hereinafter provided, by good and sufficient check drawn on a bank doing
business in the State of New York which is a member of the New York Clearing
House or a successor thereto. All sums other than fixed annual rent payable by
Tenant hereunder shall be deemed additional rent and payable on demand, unless
other payment dates are hereinafter provided, and Landlord shall have the same
remedies with respect to a default in payment of any items of additional rent
as Landlord has with respect to a default in payment of fixed rent. All rent
including fixed annual rent and all items of additional rent shall be payable
without setoff or deduction whatsoever. Each of the Witnesseth paragraphs above
are herein incorporated as if set forth verbatim herein.
ARTICLE 2
Occupancy
2.01. Tenant shall use and occupy the demised premises solely for general
offices for Tenant, its subsidiaries, related companies and divisions and
permitted assignees and subtenants, and for no other purpose. Without limiting
the foregoing, Tenant shall not use or occupy the demised premises as a savings
bank, state or Federal savings and loan association, commercial bank or trust
company, or any combination of uses incidental to the foregoing.
ARTICLE 3
Alterations and Installations
3.01. Tenant shall make no alterations, installations, additions or
improvements in or to the demised premises without Landlord's prior written
consent, which consent , shall not be unreasonably withheld or delayed,
provided that Tenant otherwise complies with all other applicable terms,
covenants and conditions of this Lease, including Section 3.09. All work,
including alterations, installations, additions or improvements in and to the
demised premises shall be done only by Landlord (or Landlords affiliate) as
general contractor with such subcontractors, materialmen and mechanics selected
by Landlord (or Landlords affiliate). All such work, alterations,
installations, additions and improvements shall be done at Tenant's sole cost
and expense and at such times and in such manner so as not to unreasonably
interfere with the peaceful enjoyment of the Building by other tenants,
provided however, that nothing herein shall require Landlord (or its affiliate)
as general contractor to perform any such work during non-business hours at
night, on weekends or on holidays. Prior to commencement of such work, for all
work over the sum of $50,000, Tenant must obtain and file a Payment or Surety
and Completion Bond with Landlord, from a licensed surety company reasonably
acceptable to Landlord and such bond shall otherwise be in form and content
acceptable to Landlord.
3.02. Any mechanic's lien (a "Lien") filed against the demised premises and/or
the Land and/or the Building for work claimed to have been done for or
materials claimed to have been furnished to Tenant shall be discharged of
record by Tenant at its expense within thirty (30) days after notice, by
payment, filing of the bond required by law or otherwise. If Tenant shall elect
to discharge any such Lien by bonding, Tenant shall, within ten (10) days after
the filing of such Lien apply for and diligently prosecute an application for a
court order to remove said Lien of record within not less than thirty (30)
thereafter.
3.03. All alterations, installations, additions and improvements made and
installed and paid for by Landlord shall become and be the property of Landlord
and shall remain upon and be surrendered with the demised premises as a part
thereof at the end of the term of this Lease, excluding Tenant's modular work
stations.
3.04. All non-structural alterations, installations, additions and
improvements made and installed by Tenant, or at Tenant's expense, upon or in
the demised premises shall be removed at the end of the term of the Lease at
Tenant's expense and the demised premises restored by Tenant, and any damages
created thereby shall be repaired, all at Tenant's cost and expense.
3.05. Where furnished by or at the expense of Tenant all movable furniture,
furnishings and trade fixtures, including without limitation, murals, business
machines and equipment, counters, screens, grille work, special paneled doors,
cages, partitions, metal railings, closets, paneling, lighting fixtures and
equipment, drinking fountains, refrigerators, and any other movable property
shall remain the property of Tenant which Tenant shall be obligated to remove
at any time prior to the expiration or sooner termination of the term of this
Lease, and without limiting Tenants other obligations, Tenant shall repair all
damage occasioned by such removal, at Tenant's sole cost and expense. All such
property which is not so removed by Tenant shall, without limiting Landlords
other rights and remedies, either be retained by Landlord as Landlords property
or may be removed from the demised premises by Landlord, at Tenants sole cost
and expense.
3.06. Tenant shall keep records of Tenant's alterations, installations,
additions and improvements, and the cost thereof. Tenant shall, within 45 days
after demand by Landlord, furnish to Landlord copies of such records and cost
if Landlord shall require same in connection with any proceeding to reduce the
assessed valuation of the Building, or in connection with any proceeding
instituted pursuant to Article 9 hereof.
3.07. During the course of Tenant's alterations, Tenant will carry or cause to
be carried adequate Worker's Compensation Insurance, Builders Risk,
Comprehensive General Liability and such other insurance as may be required by
law to be carried by Landlord or Tenant or required by Article 40 hereof in
connection with such construction, and such insurance (except the Worker's
Compensation Insurance) shall name Landlord, Landlord's managing agent, and all
mortgagees and ground lessors and such other parties as Landlord shall
designate as additional insureds.
3.08. "Structural Changes" shall mean changes or repairs to the "structural
elements" of the Building, which are the foundation, floor plate, exterior or
load-bearing walls, curtain wall, roof and the Building-wide plumbing,
electrical and heating, ventilation and air conditioning systems (said heating,
ventilation and air conditioning systems are sometimes hereinafter referred to
collective as the "HVAC System").
3.09. Notwithstanding anything contained elsewhere in this Lease, if Tenant
desires to make any alterations, installations, additions or improvements,
Tenant will, without limiting Tenant's other obligations, comply with all of
the following at Tenant's sole cost and expense:
a) Tenant shall furnish Landlord with the plans of the planned alterations
prior to construction.
b) Tenant must furnish Landlord with an "as-built" plan upon the completion of
any work.
c) Tenant will obtain all governmental permits and pay all applicable
government fees, including filing fees.
d) Tenant will file appropriate plans with governmental authorities, where
applicable.
e) Tenant will perform all alterations, installations, additions and other
improvements in a good and workmanlike manner in accordance with standards at
least equivalent to the standards prevailing in the building of which the
demised premises form a part.
f) Tenant shall pay for, and shall otherwise accept full responsibility for,
any additions and changes in sprinklers, passages, legal exits, entrances,
corridors, stairs, elevators and toilets, which may be necessitated by such
alterations, installations, additions or improvements and shall not do any work
which shall adversely affect the remainder of the building of which the demised
premises form a part, provided however, that Tenant shall not have any right to
make any such alterations, installations, additions or improvements or perform
any work without Landlords express prior written consent in each instance.
g) Tenant shall not make any installation, alteration, addition or other
improvement on or through the roof, nor shall Tenant or Tenant's agents enter
upon the roof or place objects thereon without the specific prior written
permission of Landlord, who, if such permission is granted, shall specify the
time and conditions under which such entry may be obtained. Landlord may make
such rules and regulations as they deem appropriate to govern Tenant's use or
access to the roof for any purpose whatsoever.
ARTICLE 4
Repairs
4.01. Tenant shall, at its sole cost and expense and only using Landlord (or
its affiliate) as general contractor, take good care of the demised premises
and the furniture, fixtures, equipment and appurtenances therein, and shall
keep and maintain the demised premises and the furniture, fixtures, equipment
and appurtenances therein, including but not limited to, any and all bathrooms
and kitchens which are located within the demised premises, in a condition of
good order and repair. Without limiting the foregoing, Tenant shall make all
repairs to the demised premises, the Building and the Land, using only Landlord
(or Landlords affiliate) as general contractor including the fixtures and
appurtenances in the demised premises and including further Structural Changes
of any kind which are necessitated by the act, omission, use, occupancy,
negligence or other misconduct of Tenant, its employees, agents, contractors,
servants, licensees or invitees or which are necessitated by any breach or
default of any of the terms, covenants and conditions of this Lease, as and
when needed to keep them in good working order and condition. In addition,
Tenant shall, at Tenant's sole cost and expense, using Landlord or its
affiliate as general contractor, maintain, repair and replace all HVAC,
electric, plumbing and other systems and facilities located within the demised
premises which are supplemental or special to the Buildings standard systems,
whether installed pursuant to this Lease or otherwise. In addition, all
damages or injury to the demised premises and to its fixtures, appurtenances,
systems, facilities or in and to the Building or to its fixtures,
appurtenances, systems, facilities and caused by Tenant, its agents, employees,
contractors, servants, licensees or invitees moving property in or out of the
Building or by installation or removal of , fixtures, or other property, shall
be repaired, restored or replaced promptly by Tenant at its sole cost and
expense, using Landlord or Landlords affiliate as general contractor, which
repairs restorations and replacements shall be in quality and class equal to
the original work or installations. Without limiting Landlords other rights
and remedies, Tenant shall pay to Landlord the full cost and expense incurred
by Landlord or its affiliate as general contractor in performing such repairs,
restorations or replacements which shall be payable by Tenant to Landlord
within 15 days after rendition of a bill therefor.
4.02. Tenant shall not place a load upon any floor of the demised premises
exceeding the floor load per square foot area which such floor was designed to
carry and which is allowed by law. Landlord represents that the floor load is
sufficient for Tenant's use for general office purposes.
4.03. Business machines and mechanical equipment belonging to Tenant which
cause vibration, noise, cold or heat that may be transmitted to the Building
structure or to any leased space to such a degree as to be reasonably
objectionable to Landlord or to any other tenant in the Building shall be
placed and maintained by Tenant at its expense in settings of cork, rubber or
spring-type vibration eliminators sufficient to absorb and prevent such
vibration or noise, cold or heat. The parties hereto recognize that the
operation of elevators, air conditioning and heating equipment will cause some
vibration, noise, heat or cold which may be transmitted to other parts of the
Building and demised premises. Landlord shall be under no obligation to
endeavor to reduce such vibration, noise, heat or cold beyond what is customary
in a first class office building such as the Building.
4.04. Unless expressly provided for in this Lease, there shall be no allowance
to Tenant for a diminution of rental value and no liability on the part of
Landlord by reason of inconvenience, annoyance or injury to business arising
from the making of any repairs, alterations, additions or improvements in or to
any portion of the Building or the demised premises or in or to fixtures,
appurtenances or equipment thereof.
4.05. Landlord, at its sole cost and expense, shall maintain and make all
necessary Structural Changes to (i) the Building and the demised premises, and
(ii) the Common Areas, (hereinafter defined in Section 27.09), except that: (a)
Landlord shall not be responsible for the maintenance, repair or replacement of
any systems including but not limited to heating, ventilating and air
conditioning, electric, plumbing including bathrooms and kitchens which are
located within the demised premises and are supplemental or special to the
Building standard systems, whether installed pursuant to this Lease or
otherwise; and (b) the cost of performing any maintenance, repairs or
replacements caused or necessitated by the negligence or other misconduct of
Tenant, its employees, agents, servants, contractors, licensees or invitees or
the failure of Tenant to perform its obligations under this Lease, shall be
paid by Tenant, except to the extent of insurance proceeds, if any, actually
collected by Landlord with regard to the damage necessitating such repairs; and
(c) Landlord shall not be responsible for the maintenance, repair or
replacement of any floor coverings located in the demised premises; and (d)
Landlord shall also not be responsible for the replacement, repair or
maintenance of any electric lighting (including but not limited to tubes,
bulbs, ballasts) and any wall finish or covering within the demised premises;
and (e) Landlord shall also not be responsible for any repairs, maintenance or
replacements which are the obligation of Tenant pursuant to the terms of this
Lease.
ARTICLE 5
Requirements of Law; Fire Insurance
5.01. Tenant, at its sole cost and expense, shall comply with all law, orders
and regulations of Federal, State, County, Municipal and other local
governments, departments, commissions, authorities, and boards and with any
direction of any public officer or officers, pursuant to law, which shall
impose any violation, order or duty upon Landlord or Tenant with respect to the
demised premises and arising out of Tenant's use or manner of use or occupancy
of the demised premises (including Tenant's permitted use) or with respect to
the Building or Land, if arising out of Tenants use or manner of use or
occupancy of the demised premises or the Building (including Tenant's permitted
use) or Land.
5.02. Tenant shall not do or permit to be done any act or thing upon the
Building, which will invalidate or be in conflict with New York Standard Fire
insurance policies covering the Building, and fixtures and property therein, or
which would increase the rate of fire insurance applicable to the Building to
an amount higher than it otherwise would be; and Tenant shall neither do nor
permit to be done any act or thing upon the Land and Building which shall or
might subject Landlord to any liability or responsibility for injury to any
person or persons or to property by reason of any business or operation being
carried on upon the Building; but nothing in this Section 5.02 shall prevent
Tenant's use of the demised premises for the purposes stated in Article 2
hereof.
5.03. If, as a result of any act or omission by Tenant or violation of this
Lease, the rate of fire insurance applicable to the Building shall be increased
to an amount higher than it otherwise would be, Tenant shall reimburse Landlord
for all increases of Landlord's fire insurance premiums so caused; such
reimbursement to be additional rent payable upon the first day of the month
following any outlay by Landlord for such increased fire insurance premiums.
In any action or proceeding wherein Landlord and Tenant are parties, a schedule
or "make up" of rates for the Building or demised premises issued by the body
making fire insurance rates, shall be presumptive evidence but not conclusive
of the facts therein stated and of the several items and charges in the fire
insurance rate than applicable to said Building.
5.04. Tenant shall not use or suffer the demised premises to be used in any
manner so as to create an environmental violation or hazard, nor shall Tenant
cause or suffer to be caused any chemical contamination or discharge of a
substance of any nature which is noxious, offensive or harmful or which under
any law, rule or regulation of any governmental authority having jurisdiction
constitutes Hazardous Materials as hereinafter defined.
5.05. Tenant shall also immediately notify Landlord in writing of any
environmental concerns of which Tenant is or becomes aware and which are raised
by any private party or government agency with regard to Tenant's business at
the demised premises. Tenant shall also notify Landlord immediately of any
hazardous waste spills at the demised premises and of any other Hazardous
Materials of which Tenant becomes aware.
5.06. Not in limitation of the generality of the foregoing, but as additional
covenants, Tenant specifically agrees that (i) Tenant shall not generate,
manufacture, refine, transport, treat, store, handle, dispose or otherwise deal
with any hazardous substances or hazardous waste as now or hereafter defined by
applicable law; and (ii) Tenant shall defend, indemnify and hold Landlord
harmless against any liability, loss, cost or expense, including reasonable
attorneys' fees and costs (whether or not legal action has been instituted)
incurred by reason of the existence of or any failure by Tenant to comply with
any environmental law now or hereafter in effect. Notwithstanding the
foregoing, but without limiting Tenant's other obligations under this Article
5, Tenant shall have the limited right to bring samples of its chemical
products into the demised premises subject to the following conditions:
1. All such samples shall be stored, transported, shipped or otherwise handled
in accordance with applicable local, state and federal environmental, fire,
health and safety laws, rules and regulations.
2. No such samples shall be disposed of within or on the demised premises, the
Building or the Land, whether by use of any plumbing, trash receptacles or
otherwise. Tenant shall only dispose of such samples off-site by using only
licensed and bonded hazardous waste removal contractors.
3. The Tenant shall provide a locked storage area for said chemicals, and
Tenant shall provide access to such storage area at all times to any and all
state or local fire, police or other public safety officers.
4. Tenant shall also comply with all requirements of Landlord's insurance
carrier and will pay any increase in policy premiums to Landlord which may
result from Tenant's storage, transportation, shipment or other handling of
such chemical samples at the demised premises. If Landlord's mortgagee gives
notice that the presence of such chemical samples is a default under any
mortgage or mortgage related instrument or if Landlord's insurance carrier
gives notice to Landlord that it intends to cancel any of Landlord's insurance
policies based upon the presence of such chemical samples, then Tenant shall
cease the storage, transportation, shipment or other handling of such chemical
samples within three (3) days after receipt of written demand from Landlord.
5.07. As used herein, the term "Hazardous Materials" means and includes all
potentially hazardous materials, including without limitation radon, oil, gas
and other petroleum products, lead paint, asbestos and asbestos containing
materials.
5.08. Tenant covenants and agrees that at any and all times during the term of
this Lease it shall be responsible for compliance with any federal, state,
county, local, or municipal
law (including without limitation Local Law 76, as same now exists or may
hereafter be amended, if the Building is located in New York City), statute,
ordinance, code, regulation or administrative recommendation pertaining to
Hazardous Materials which may have been introduced by the Tenant or its agents,
employees contractors, licensees or invitees (including without limitation any
requirements pertaining to the cleanup, removal, and/or encapsulation of any
Hazardous Materials that may be in or at the demised premises or may have
emanated therefrom). Tenant shall, at its sole cost and expense, undertake any
and all steps which may be required for compliance as aforesaid. In addition,
Tenant shall be solely responsible for restoring and repairing any damage to
the demised premises caused by or resulting from such compliance, e.g. the
replacement of any ceiling tiles or insulation with comparable products not
containing any Hazardous Materials.
5.09. Tenant shall indemnify and save harmless the Landlord, Landlord's
agents, servants, and employees, from and against all claims and demands
whether for injuries to persons or loss of life, or damage to property, related
to or arising in any manner whatsoever out of the clean-up, removal and/or
encapsulation of Hazardous Materials provided same is occasioned wholly or in
part by any act or omission of (or failure to comply with legal requirements
by) Tenant, its agents, contractors, employees, servants and licensees. In the
event Landlord shall, without fault on its part, be made a party to any
litigation or administrative proceedings commenced by or against Tenant, then
Tenant shall protect and hold Landlord harmless and shall pay all costs,
expenses and reasonable attorneys fees incurred or paid by Landlord in
connection with such litigation.
5.10. Notwithstanding anything herein to the contrary, Tenant shall file no
documents or take any other action under this Article without Landlord's prior
written approval thereof, and Landlord shall also have the right to file such
documents or take such action instead or on behalf of Tenant (but still at
Tenant's sole cost and expense), and Tenant shall cooperate with Landlord in so
doing. Tenant shall also (i) furnish Landlord with copies of any documents
filed by Tenant pursuant to any environmental law; (ii) permit Landlord to be
present at any inspection, on or off site, and at any meetings and substances
dealt with by Tenant at the demised premises, as well as any additional
information available to Tenant for government filings or determinations as to
whether there has been compliance with an environmental law.
5.11. Landlord shall also have the right, but not the obligation, to enter the
demised premises at any time to conduct tests to discover the facts of any
alleged or potential environmental problem. In the event Tenant fails to
comply as aforesaid with the clean-up, removal, and/or encapsulation of
Hazardous Materials when so required within the period of time permitted or
promulgated, then in such event Landlord (or its affiliate) may undertake said
work, but shall not be obligated to do so. Should Landlord (or its affiliate)
undertake said work required by Tenant as aforesaid, then in such event,
Landlord shall render a statement to Tenant for the cost and expenses of
undertaking said work plus a charge of twenty (20%) percent for administrative
costs and expenses, which statement shall be paid by Tenant as Additional Rent
within ten (10) days of receipt thereof. Failure of Tenant to undertake
compliance as aforesaid shall constitute a material default under this Lease
for which Landlord shall have all rights and remedies, including without
limitation the right to terminate this Lease and the right to hold Tenant
responsible for the entire cost of compliance as aforesaid and for all of
Landlord's damages resulting from Tenant's failure to so comply.
5.12. The provisions of this Article shall survive the expiration or earlier
termination of this Lease, and the Tenant shall require any permitted assignee
or sub-lessee of the demised premises to agree expressly in writing to comply
with all the provisions of this Article.
ARTICLE 6
Subordination
6.01. This Lease is subject and subordinate to all ground or underlying leases
and to all mortgages which may now or hereafter affect such leases or the real
property of which demised premises form a part, and to all renewals,
modifications, consolidations, replacements and extensions thereof. This
clause shall be self-operative and no further instrument of subordination shall
be required by any mortgagee. In confirmation of such subordination, Tenant
shall execute promptly any certificate that Landlord may reasonably request.
ARTICLE 7
Loss, Damage, Reimbursement, Liability, etc.
7.01. Landlord or its agents shall not be liable for any injury or damage to
persons or property resulting from fire, explosion, falling plaster, steam,
gas, electricity, water, rain or snow or leaks from any part of the Building,
or from the pipes, appliances or plumbing works or from the roof, street or
subsurface or from any other place or by dampness or by any other cause of
whatsoever nature, unless any of the foregoing shall be caused by or due to the
negligence, breach of guarantees, act or omissions of Landlord, its agents,
servants or employees.
7.02. Tenant shall reimburse Landlord for all expense, damages or fines
incurred or suffered by Landlord, and for which Landlord has not been or will
not be reimbursed by insurance, by reason of any breach, violation or
nonperformance by Tenant, or its agents, servants or employees, of any covenant
or provision of this Lease, or by reason of damage to persons or property
caused by moving property of or for Tenant in or out of the Building, or by the
Tenant or by reason of or arising out of the carelessness, negligence or
improper conduct of Tenant, or its agents, servants or employees in the use or
occupancy of the demised premises with out prejudice to Landlord's other rights
and remedies.
7.03. Tenant shall give Landlord notice in case of fire or accidents in the
demised premises promptly after Tenant is aware of such event.
7.04. As a material inducement for Landlord to execute and deliver this Lease,
Tenant agrees to look solely to Landlord's estate and interest in the Land and
Building, or the Lease of the Building, and the demised premises, for the
satisfaction of any right or remedy of Tenant for the collection of a judgment
(or order or other judicial process) requiring, in whole or in part, the
payment of money by Landlord, in the event of any liability by Landlord
hereunder, and no other property or assets of Landlord shall be subject to
levy, execution, attachment, or other enforcement procedure for the
satisfaction of Tenant's remedies under or with respect to this Lease, the
relationship of Landlord and Tenant hereunder, or Tenant's use and occupancy of
the demised premises, or for any other liability of Landlord to Tenant.
7.05. Each party hereby releases the other party (which term as used in this
paragraph includes the employees, agents, officers and directors of the other
party) from all liability whether for negligence or otherwise, in connection
with loss covered by any insurance policies which the releasor carries with
respect to the demised premises or any interest or property therein or, thereon
(whether or not such insurance is required to be carried under this Lease), but
only to the extent that such loss is collected under said insurance policies.
Such release is also conditioned upon the inclusion in the policy or policies
of a provision whereby any such release shall not adversely affect said
policies or prejudice any right of the releasor to recover thereunder. Each
party agrees that its insurance policies, aforesaid, will include such a
provision so long as the same shall be obtainable without extra cost, or if
extra cost shall be charged therefor, each party shall advise the other thereof
of the amount of the extra cost, and the other party, at its election, may pay
the same, but shall not be obligated to do so.
ARTICLE 8
Destruction - Fire or Other Cause
8.01. If the demised premises or any part thereof shall be damaged by fire or
other casualty, Tenant shall give immediate notice thereof to Landlord and this
Lease shall continue in full force and effect except as hereinafter set forth.
8.02. If the demised premises are partially damaged or rendered partially
unusable by fire or other casualty, the damages thereto shall be repaired by
and at the expense of Landlord and the rent, until such repair shall be
substantially completed, shall be apportioned from the day following the
casualty according to the part of the demised premises which is usable.
8.03. If the demised premises are totally damaged or rendered wholly unusable
by fire or other casualty, then the rent shall be proportionately paid up to
the time of the casualty and thenceforth shall cease until the date when the
demised premises shall have been repaired and restored by Landlord, subject to
Landlord's right to elect not to restore the same as hereinafter provided.
8.04. If the demised premises are rendered wholly unusable or (whether or not
the demised premises are damaged in whole or part) if the Building shall be so
damaged that Landlord shall decide to demolish it or not to rebuild it, then,
in any of such events Landlord may elect to terminate this Lease by written
notice to Tenant, given within 90 days after such fire or casualty, specifying
a date for the expiration of this Lease, which date shall not be more than 60
days after the giving of such notice, and upon the date specified in such
notice the term of this Lease shall expire as fully and completely as if such
date were the date set forth above for the termination of this Lease and Tenant
shall forthwith quit, surrender and vacate the demised premises without
prejudice however, to Landlord's rights and remedies against Tenant under the
Lease provisions in effect prior to such termination, and any rent owing shall
be paid up to such date and any rent paid for periods subsequent to such date
shall be returned to Tenant. Unless Landlord shall serve a termination notice
as provided for herein, Landlord shall make the repairs and restorations under
the conditions of 8.02 and 8.03 hereof, with all reasonable diligence, subject
to delays due to adjustment of insurance claims, labor troubles, the events set
forth or encompassed by the provisions of Article 25 and any and all other
causes beyond Landlord's control. After any such casualty, Tenant shall
cooperate with Landlord's restoration by removing from the demised premises as
promptly as reasonably possible, all of the Tenant's salvageable inventory and
movable equipment, furniture, and other property. Tenant's liability for rent
shall resume five (5) days after written notice from Landlord that the demised
premises are substantially ready for Tenant's occupancy excluding Tenant's
furniture, furnishings, fixtures, equipment, improvements or appurtenances
removable by Tenant which Landlord will not have any obligation to repair or
restore.
8.05. No damages, compensation or claim shall be payable by Landlord to Tenant
for inconvenience, loss of business or annoyance arising from any repair or
restoration of any portion of the demised premises or of the Building.
8.06. Nothing contained hereinabove shall relieve Tenant from liability that
may exist as a result of damage from fire or other casualty. Notwithstanding
the foregoing, each party shall look first to any insurance in its favor before
making any claim against the other party for recovery for loss or damage
resulting from fire or other casualty, and to the extent that such insurance is
in force and collectible and to the extent permitted by law, Landlord and
Tenant hereby releases and waives all right of recovery against the other or
anyone claiming through or under each of them by way of subrogation or
otherwise. The foregoing release and waiver shall be in force only if both
releasors' insurance policies contain a clause providing that such a release or
waiver shall not invalidate the insurance. If, and to the extent, that such
waiver can be obtained only by the payment of additional premiums, then the
party benefiting from the waiver shall pay such premium within ten (10) days
after written demand or shall be deemed to have agreed that the party obtaining
insurance coverage shall be free of any further obligation under the provisions
hereof with respect to waiver of subrogation. Tenant acknowledges that
Landlord will not carry insurance on Tenant's furniture and/or furnishings or
any fixtures or equipment, improvements, or appurtenances removable by Tenant
and agrees that Landlord will not be obligated to repair any damage thereto or
replace the same.
8.07. Tenant hereby waives the provisions of Section 227 of the Real Property
Law of the State of New York and agrees that the provisions of this Article
shall govern and control in lieu thereof.
ARTICLE 9
Eminent Domain
9.01. In the event that the whole of the demised premises shall be lawfully
condemned or taken in any manner for any public or quasi-public use or purpose,
this Lease and the term and estate hereby granted shall forthwith cease and
terminate as of the date of vesting of title (hereinafter referred to as the
"date of taking"), and Tenant shall have no claim against Landlord or the
condemning authority for, or make any claim for, the value of any expired term
of this Lease, nor any other claim, and the rent and additional rent shall be
apportioned as of such date.
9.02. In the event that any part of the demised premises shall be so condemned
or taken, then this Lease shall be and remain unaffected by such condemnation
or taking, except that the rent and additional rent allocable to the part so
taken shall be apportioned as of the date of taking, provided, however, that
Tenant or Landlord may each elect to cancel this Lease if more than twenty-five
(25%) percent of the demised premises shall be so condemned or taken, provided
such notice of election is given to the other party, not later than thirty (30)
days after the date when Landlord notifies Tenant of the date that title shall
vest or has vested in the condemning authority. Upon the giving of such
notice, this Lease shall terminate on the thirtieth day following the date of
such notice by Tenant. Upon such partial taking and this Lease continuing in
force as to any part of the demised premises, the rent and additional rent
shall be diminished by an amount representing the part of said rent and
additional rent properly applicable to the portion or portions of the demised
premises which may be condemned or taken. If as a result of the partial taking
(and this Lease continuing in force as to the part of the demised premises not
so taken), any part of the demised premises not taken is damaged, Landlord
agrees with reasonable promptness to commence the work necessary to restore the
damaged portion to the condition existing immediately prior to the taking, and
prosecute the same with reasonable diligence to its completion.
9.03. Nothing hereinabove provided shall preclude Tenant from appearing,
claiming, proving and receiving in the condemnation proceeding, Tenant's moving
expenses, and the value of Tenant's movable furniture, fixtures and equipment
which do not become part of the Building or property of Landlord, provided such
claims do not diminish Landlord's award.
9.04. In the event that more than twenty-five (25%) per cent of the demised
premises shall be so taken and neither Tenant nor Landlord have elected to
cancel this Lease as above provided, the entire award for partial taking shall
be paid to Landlord, and Landlord, at Landlord's own expense, shall to the
extent of the net proceeds (after deducting reasonable expenses including
attorneys' and appraisers' fees) of the award restore the unaffected part of
the Building to substantially the same condition and tenantability as existed
prior to the taking. Until said unaffected portion is restored, Tenant shall
be entitled to a proportionate abatement of rent for that portion of the
demised premises which is being restored and is not usable until the completion
of the restoration or until the said portion of the demised premises is used by
Tenant, whichever is sooner. Said unaffected portion shall be restored within
a reasonable time but not more than six (6) months after the taking provided,
however, if Landlord is delayed by strike, lockout, the elements, any of the
events set forth or encompassed by Article 25 or any other causes beyond
Landlord's control, the time for completion shall be extended for a period
equivalent to the delay. Should Landlord fail to complete the restoration
within the said six (6) months or the time as extended, Tenant may elect to
cancel this Lease and the term hereby granted in the manner and with the same
results as set forth in the next two sentences of this Section 9.04. If such
partial taking shall occur in the last two years of the term hereby granted,
either party, irrespective of the area of the space remaining, may elect to
cancel this Lease and the term hereby granted, provided such party shall,
within thirty (30) days after such taking, give notice to that effect, and upon
the giving of such notice, the rent shall be apportioned and paid to the date
of expiration of the term specified and this Lease and the term hereby granted
shall cease, expire and come to an end upon the expiration of said thirty days
specified in said notice. If either party shall so elect to end this Lease and
the term hereby granted, Landlord need not restore any part of the demised
premises and the entire award for partial condemnation shall be paid to
Landlord, and Tenant shall have no claim to any part thereof, except as to the
items set forth in Section 9.03 where same are applicable.
9.05. In the event all or any part of the demised premises shall be taken for
a temporary use or occupancy, (a) the Lease term shall not be reduced or
affected in any way except as provided in (d) below, (b) Tenant shall continue
to be responsible for all of its obligation hereunder and shall continue to pay
all rents and additional rents when due, (c) Tenant shall be entitled to
receive that portion of the award which represents reimbursement for the cost
of restoration of the demised premises, compensation for the use and occupancy
of the demised premises and for any taking of Tenant's property, except that,
if the temporary period of taking shall extend beyond the expiration of the
term of this Lease, the portion of the award representing compensation for the
use and occupancy of the demised premises shall be apportioned between Landlord
and Tenant as of said expiration date of said term and Landlord shall receive
that portion of the award which represents reimbursements for the cost of
restoration of the demised premises, and (d) if the date of taking shall occur
during the last three (3) years of the term of this Lease, Tenant may elect to
cancel this Lease by notice of election given by Tenant to Landlord not later
than thirty (30) days after the date when Landlord notifies Tenant of the date
that title shall vest or has vested in the condemning authority. Upon the
giving of such notice, this Lease shall terminate on the thirtieth day
following the date of such notice and the rent and additional rent shall be
apportioned as of such termination date, with Landlord and not Tenant, to
receive the portion of the award which represents reimbursement for the cost of
restoration of the demised premises and the portion of the award representing
compensation for the use and occupancy of the demised premises for the time
subsequent to the cancellation date.
9.06. In the event more than one-third (1/3) of the parking spaces shall be so
condemned or taken which parking spaces formulate part of the overall Land, and
the Landlord is not able to provide on-premises parking equal to two-thirds
(2/3) of the original parking areas, then in that event the Tenant may elect to
cancel this Lease and the terms hereby granted in accordance with the
provisions of Section 9.02 applicable to condemnation of more than twenty-five
(25%) percent of the demised premises. Landlord shall give notice to Tenant
within sixty (60) days of the date of such taking as to whether or not Landlord
will in fact restore sufficient parking facilities as herein set forth. If
Tenant does not elect to cancel this Lease, as aforesaid, then there shall be
no reduction or abatement in rent and this Lease shall otherwise remain in full
force and effect.
ARTICLE 10
Assignment and Subletting
10.01. Tenant, for itself, its heirs, distributees, executors, administrators,
legal representatives, successors and assigns, expressly covenants that it
shall not assign, mortgage or encumber this Lease, nor underlet, or suffer or
permit the demised premises or any part thereof to be used or occupied by
others, without the prior written consent of Landlord in each instance. If
this Lease be assigned, or if the demised premises or any part thereof be
underlet or occupied by anyone other than Tenant, Landlord may, after default
by Tenant, collect rent from the assignee, undertenant or occupant, and apply
the net amount collected to the rent herein reserved, but no assignment,
underletting, occupancy or collection or the acceptance of the assignee,
undertenant or occupant as tenant, shall be deemed a waiver of the provisions
hereof or a release of Tenant from the further performance by Tenant of
covenants on the part of Tenant herein contained; it being expressly understood
and agreed that Tenant shall remain fully liable for the performance and
observance of all terms, covenants and conditions of this Lease, including
without limitation, timely payment of all rent and items of additional rent.
The consent by Landlord to an assignment or underletting shall not in any wise
be construed to relieve Tenant from obtaining the express consent in writing of
Landlord to any further assignment or underletting. In no event shall any
permitted sublessee assign or encumber its sublease or further sublet all or
any portion of its sublet space, or otherwise suffer or permit the sublet space
or any part thereof to be used or occupied by others, without Landlord's prior
written consent in each instance.
10.02. If Tenant desires to assign this Lease or to sublet all or any portion
of the demised premises, it shall first submit in writing to Landlord the
description of the space and the terms for which Tenant intends to assign or
sublease and shall offer in writing, (i) with respect to a prospective
assignment, to assign this Lease to Landlord without any payment of monies or
other consideration therefor, or, (ii) with respect to prospective subletting,
to sublet to Landlord or its designee the portion of the demised premises
involved ("Leaseback Area") for the term intended by Tenant in its offer and at
the lower of (a) Tenant's proposed subrental or (b) at the same rate of fixed
rent and additional rent and otherwise on the same terms, covenants and
conditions (including provisions relating to escalation rents), as are
contained herein and as are applicable to the portion of the demised premises
to be covered by such subletting. The offer shall specify the date when the
Leaseback Area will be made available to Landlord which date shall be in no
event earlier than sixty (60) days nor later than one hundred eighty (180) days
following the acceptance of the offer by the Landlord. If an offer of sublease
is made, it shall in addition specify the duration of the term of the proposed
sublease as fixed by Tenant, except that if the proposed sublease will result
in all or substantially all of the demised premises being sublet, then Landlord
shall have the option to extend the term of this sublease to the term of the
underlying Lease, less one day. Landlord shall have a period of fifteen (15)
days from the receipt of such offer to either accept or reject the same. If
Landlord shall accept such offer Tenant shall then execute and deliver to
Landlord, or to anyone designated or named by Landlord of reasonable credit
standing, an assignment or sublease, as the case may be, in either case in a
form reasonably satisfactory to Landlord's counsel.
10.02.1 If a sublease is so made to Landlord or its designee, it shall
expressly:
(a) permit Landlord to make further subleases of all or any part of the
Leaseback Area and (at no cost or expense to Tenant) to make and authorize any
and all changes, alterations, installations and improvements in such space as
Landlord may deem necessary for such subletting, at Landlord's expense;
(b) provide that Tenant will at all times permit reasonably appropriate means
of ingress to and egress from the Leaseback Area;
(c) negate any intention that the estate created under such sublease be merged
with any other estate held by either of the parties;
(d) provide that Landlord shall accept the Leaseback Area "as is" except that
Landlord, at Tenant's expense, shall perform all such work physically to
separate the Leaseback Area from the remainder of the demised premises and to
permit lawful occupancy, it being intended that Tenant shall have no other cost
or expense in connection with the subletting of the Leaseback Area;
(e) provide that at the expiration or sooner termination of the term of such
sublease Tenant will accept the Leaseback Area in its then existing condition,
subject to the obligations of Landlord to make such repairs thereto as may be
necessary to preserve the Leaseback Area in good order and condition, ordinary
wear and tear expected.
10.02.2 Landlord, or its designee, as the case may be, shall indemnify and
save Tenant harmless from all obligations under this Lease as to the Leaseback
Area during the period of time it is so sublet except for any obligations which
are not performed by Landlord, or its designee, as such subtenant by reason of
the acts or omissions of Tenant, its agents, employees, contractors, servants,
licensees or invitees. Performance by Landlord, or its designee, under a
sublease of the Leaseback Area shall be deemed performance by Tenant of any
similar obligation contained in this Lease, and Tenant shall not be liable for
any default under this Lease or deemed to be in default hereunder if such
default is occasioned by or arises from any act or omission of the Landlord
under such sublease or is occasioned by or arises from any act or omission of
any occupant holding under or pursuant to any such sublease with Landlord or
its designee.
10.03. If Landlord shall not have accepted Tenant's offer, as provided in
Section 10.02, then Landlord will not unreasonably withhold or delay its
consent to Tenant's request for consent to such assignment or subletting. Any
such consent of Landlord shall be subject to the terms of this Article and
conditional upon there being no default by Tenant (which Tenant has not timely
cured or in good faith has commenced to cure and is diligently prosecuting the
cure thereof) during the period commencing on the date that Tenant shall have
made the offer as set forth in 10.02 to Landlord up to and including the date
of the commencement of the term of the proposed sublease or the effective date
of any such proposed assignment. In the event Tenant does not successfully
sublet or assign the space so designated in 10.02 within six (6) months, then
the Landlord's rights in 10.02 shall re-occur before Tenant may sublet or
assign such space.
10.04. If Tenant requests Landlord's consent to a specific assignment or
subletting, it shall submit in writing to Landlord (which writing shall be in
addition to the writing required pursuant to Section 10.02 hereof) (i) the name
and address of the proposed assignee or sublessee, (ii) a counterpart of the
proposed agreement or assignment or sublease, (iii) reasonably satisfactory
information as to the nature and character of the business of the proposed
assignee or sublessee, and as to the nature of its proposed use of the space,
and (iv) banking, financial or other credit information relating to the
proposed assignee or sublessee reasonably sufficient to enable Landlord to
determine the financial responsibility and character of the proposed assignee
or sublessee. The proposed sublessee or assignee must have a net worth equal
to not less than fifty (50%) percent of the net worth of Tenant.
10.05. Upon receiving Landlord's written consent, a duly executed copy of the
sublease or assignment shall be delivered to Landlord within ten (10) days
after execution thereof. Any such sublease shall provide that the sublessee
shall comply with all applicable terms and conditions of this Lease to be
performed by the Tenant hereunder. Any such assignment of Lease shall contain
an assumption by the assignee of all of the terms, covenants and conditions of
this Lease to be performed by the Tenant.
10.06. Anything herein contained to the contrary notwithstanding:
(a) Tenant shall not advertise (but may list with brokers) its space for
assignment or subletting at a rental rate lower than the rental rate then being
paid by Tenant to Landlord.
(b) The transfer of a majority of the issued and outstanding capital stock of
any corporate tenant or subtenant of this Lease or a majority of the total
interest in any partnership tenant or subtenant, or a majority of the
membership interests in a limited liability company, tenant or subtenant or a
majority of the total beneficial interests in any other form of tenant or
subtenant, however accomplished, and whether in a single transaction or in a
series of related or unrelated transactions, shall be deemed an assignment of
this Lease. The transfer of outstanding capital stock of any corporate tenant,
for purposes of this Article, shall not include sale of such stock by persons
other than those deemed "insiders" within the meaning of the Securities
Exchange Act of 1934 as amended and which sale is effected through "over-the-
counter market" or through any recognized stock exchange. In no event shall
there be an assignment or subletting it being understood and agreed that any
assignment or subletting must be to a bona fide operating entity for a bona
fide business purpose and which proposed assignment or subletting is not
designed to circumvent the restrictions on assignment and subletting set forth
in this Lease to a "shell" corporation - said assignment must be to the
operating entity.
(c) In addition to the restrictions set forth in this Article 10, no
assignments or subletting shall be made:
(i) To any person or entity which shall at that time be a tenant, subtenant or
other occupant of any part of the Building of which the demised premises form a
part, or any person or entity who has been dealing or negotiating with (or has
previously dealt or negotiated with) the Landlord or a broker for space in the
Building, or any person or entity with whom Landlord has been in negotiations
during the preceding one (1) year for any space in any Building owned or
managed by Landlord or its representatives.
(ii) By the legal representatives of Tenant or by any person to whom Tenant's
interest under this Lease passes by operation of law, except in compliance with
the provisions of this Article;
(iii) To any person or entity for the conduct of business which is not in
keeping with the standards and the general character of the Building of which
the demised premises form a part.
(iv) To any person or entity for the practice of medicine in any field.
10.07. Tenant may, with Landlord's prior written consent, which shall not be
unreasonably withheld, provided that Tenant otherwise complies with all other
terms, covenants and conditions of this Article 10, assign or transfer its
entire interest in this Lease and the leasehold estate hereby created or sublet
the whole of the demised premises to a successor entity (Successor Entity) of
Tenant (as hereinafter defined); provided, however, that (i) Tenant shall not
be in default in any of the terms, covenants and conditions of this Lease, (ii)
the proposed occupancy shall not increase the office cleaning requirements or
impose an extra burden upon the building equipment or building services and
(iii) the proposed subtenant or assignee shall not be entitled, directly or
indirectly, to diplomatic or sovereign immunity and shall be subject to the
service of process in, and the jurisdiction of the courts of New York State. A
"Successor Entity", as used in this Article 10 shall mean (a) a corporation,
partnership, limited liability company or other business entity into which or
with which Tenant, its permitted successors or assigns, is merged or
consolidated, in accordance with applicable statutory provisions for the merger
or consolidation of corporations or other business entities, or (b) a
corporation, partnership, limited liability company or other business entity
acquiring this Lease and the term hereof and estate hereby granted, together
with the goodwill and all or substantially all of the other property and
assets, its permitted successors or assigns, and assuming all or substantially
all of the liabilities of Tenant, its permitted successors and assigns, or (c)
any permitted successor to a Successor Entity becoming such by either of the
methods described in subdivisions (a) and (b) above; provided that, immediately
after giving effect to any such merger or consolidation, or such acquisition
and assumption, as the case may be, the business entity surviving such merger
or created by such consolidation or acquiring such assets and assuming such
liabilities, as the case may be, shall have assets, capitalization and a net
worth, as determined in accordance with generally accepted accounting
principles, at least equal to the assets, capitalization and net worth,
similarly determined, of Tenant, its permitted successors or assigns,
immediately prior to such merger or consolidation or such acquisition and
assumption, as the case may be. The acquisition by Tenant, its permitted
successors or assigns, of all or substantially all of the assets, together with
the assumption of all or substantially all of the obligations and liabilities
of any business entity, shall be deemed to be a merger for the purposes of this
Article.
10.08. In the event that Tenant sells, sublets, assigns or transfers this
Lease and at anytime receives periodic rent and/or other consideration which
exceeds that which Tenant would at that time be obligated to pay to Landlord,
Tenant shall pay to Landlord 50% of the gross increase, exclusive of the costs
of any improvements, in such rent as such rent is received by Tenant and 50% of
any other consideration received by Tenant for such subtenant of any other
consideration received by Tenant from such subtenant in connection with such
sublease or in the case of an assignment of this Lease by Tenant, Landlord
shall receive 50% of any consideration paid to Tenant by, such assignee in
connection with such assignment.
ARTICLE 11
Access to Demised Premises
11.01. Tenant shall permit Landlord to erect, use and maintain pipes, ducts
and conduits in and through the demised premises, provided the same are
installed concealed behind walls and ceilings of the demised premises and are
installed by such methods and at such locations as will not materially
interfere with or impair Tenant's layout or use of the demised premises or
damage the appearance thereof. Landlord or its agents or designees shall have
the right, upon reasonable notice, (except in the event of an emergency) but
only upon request (except in the event of an emergency) made to Tenant or any
authorized employee of Tenant at the demised premises to enter the demised
premises, other than vaults or other enclosures where money, securities or
other valuables or confidential documents are kept, at reasonable times during
business hours, for the making of such repairs or alterations as Landlord shall
be required or shall have the right to make by the provisions of this Lease or
any other lease in the Building and, subject to the foregoing, shall also have
the right to enter the demised premises for the purpose of inspecting them or
exhibiting them to prospective purchasers or lessees of the entire Building or
to prospective mortgagees of the fee or of the Landlord's interest in the
property of which the demised premises are a part or to prospective assignees
of any such mortgages or to the holder of any mortgage on the Landlord's
interest in the property, its agents or designees. Landlord shall be allowed
to take all material into and upon the demised premises that may be required
for the repairs or alterations above mentioned as the same is required for such
purpose without the same constituting an eviction of Tenant in whole or in
part, and the rent reserved shall in no wise abate, except as otherwise
provided in this Lease, while said repairs or alterations are being made, by
reason of loss or interruption of the business of Tenant because of the
prosecution of any such work, provided Landlord shall exercise reasonable
diligence so as to minimize the disturbance.
11.02. Landlord may, upon reasonable notice to the Tenant, during the six (6)
months prior to the expiration of the term of this Lease, exhibit the demised
premises to prospective tenants.
11.03. If Tenant shall not be personally present to open and permit an entry
into the demised premises at any time when for any reason an entry therein
shall be urgently necessary by reason of fire or other emergency, Landlord or
Landlord's agents may forcibly enter the same without rendering Landlord or
such agents liable therefor (if during such entry Landlord or Landlord's agents
shall accord reasonable care to Tenants property) and without in any manner
affecting the obligations and covenants of this Lease.
ARTICLE 12
Certificates of Occupancy
12.01. Tenant will not at any time use or occupy the demised premises in
violation of the certificate of occupancy issued for the Building. Landlord
represents to the best of its knowledge that the certificate of occupancy for
the Building permits the use of the demised premises for the purposes specified
in this Lease. Landlord will make no changes to the Building which will result
in the change to the Certificate of Occupancy for the Building that would
prevent the Tenant from using the demised premises for the use specified in
this Lease
ARTICLE 13
Bankruptcy
13.01. Subject to the provisions of Section 13.03 and the applicable
bankruptcy statutes, if at any time prior to the date herein fixed as the
commencement of the term of this Lease there shall be filed by or against
Tenant in any court pursuant to any statute either of the United States or of
any State a petition in bankruptcy or insolvency or for reorganization or for
the appointment of a receiver or a trustee of all or a portion of Tenant's
property, or if Tenant makes an assignment for the benefit of creditors, or
petitions for or enters into an arrangement with creditors, this Lease shall
ipso facto be cancelled and terminated, in which event neither Tenant nor any
person claiming through or under Tenant or by virtue of any statute or of an
order of any court shall be entitled to possession of the demised premises and
Landlord, in addition to the other rights and remedies given by Section 13.04
hereof and by virtue of any other provision herein or elsewhere in this Lease
contained or by virtue of any statute of rule of law, may retain as liquidated
damages any rent, security, deposit or monies received by it from Tenant or
others in behalf of Tenant upon the execution thereof.
13.02. Subject to the provisions of Section 13.03, if at the date fixed as the
commencement of the term of this Lease or if at any time during the term hereby
demised there shall be filed by or against Tenant in any court pursuant to any
statute either of the United States or of any State a petition in bankruptcy or
insolvency or for reorganization of the appointment of a receiver or trustee of
all or a portion of Tenant's property, or if Tenant makes an assignment for the
benefit of creditors, or petitions for or enters into an arrangement with
creditors, Landlord may at Landlord's option, serve upon Tenant or any such
trustee, receiver, or assignee, a notice in writing stating that this Lease and
the term hereby granted shall cease and expire on the date specified in said
notice, which date shall be not less than ten (10) days after the serving of
said notice and this Lease and the term hereof shall then expire on the date so
specified as if that date had originally been fixed in this Lease as the
expiration date of the term herein granted. Thereupon, neither Tenant nor any
person claiming through or under Tenant by virtue of any statute or of an order
of any court shall be entitled to possession or to remain in possession of the
demised premises but shall forthwith quit and surrender the demised premises,
and Landlord, in addition to the other rights and remedies Landlord has by
virtue of any other provision herein or elsewhere in this Lease contained or by
virtue of any statute or rule of law, may retain as liquidated damages any
rent, security, deposit or monies received by it from Tenant or others in
behalf of Tenant.
13.03. In the event that at any times mentioned in either Sections 13.01 and
13.02 there shall be instituted against Tenant an involuntary proceeding for
bankruptcy, insolvency, reorganization or any other relief described in
Sections 13.01 or 13.02, Tenant shall have ninety (90) days in which to vacate
or stay the same before this Lease shall terminate or before Landlord shall
have any right to terminate this Lease, provided the rent and additional rent
then in arrears, if any, are paid within fifteen (15) days after the
institution of such proceeding, and further provided that the rent and
additional rent which shall thereafter become due and payable are paid when
due, and Tenant shall not otherwise be in default in the performance of the
terms and covenants of this Lease.
13.04. In the event of the termination of this Lease pursuant to Sections
13.01, 13.02 or 13.03 hereof, Landlord shall forthwith, notwithstanding any
other provisions of this Lease to the contrary, be entitled to recover from
Tenant as and for liquidated damages an amount equal to the difference between
the rent reserved hereunder for the unexpired portion of the term demised and
the then fair and reasonable rental value of the demised premises for the same
period. If the demised premises or any part thereof be re-let by Landlord for
the unexpired term of this Lease, or any part thereof, before presentation of
proof of such liquidated damages to any court, commission or tribunal, the
amount of rent reserved upon such re-letting shall be prima facie evidence of
the fair and reasonable rental value for the part or the whole of the premises
so re-let during the term of the re-letting. Nothing herein contained shall be
limit or prejudice the right of Landlord to prove for and obtain as liquidated
damages by reason of such termination, an amount equal to the maximum allowed
by any statute or rule of law in effect at the time, and governing the
proceedings in which such damages are to be proved, whether or not such amount
be greater, equal to, or less than the amount of the difference referred to
above.
ARTICLE 14
Default
14.01. If Tenant defaults any of the terms, covenants and conditions of this
Lease, including the covenants for the payment of rent or additional rent, or
if the demised premises become vacant or deserted, or if any execution or
attachment shall be issued against Tenant or any of Tenants property whereupon
the demised premises shall be taken or occupied by someone other than Tenant;
or if this lease be rejected under the applicable bankruptcy code; or if Tenant
shall fail to move into or take possession of the premises within thirty (30)
days after the commencement of the term of this lease, then, in any one or more
of such events, upon Owner serving a written ten (10) days notice upon Tenant
specifying the nature of said default and upon the expiration of said ten (10)
days, if Tenant shall have failed to comply with or remedy such default of if
the said default or omission complained of shall be a non-monetary and is of a
nature that the same cannot be completely cured or remedied within said ten
(10) day period, and if Tenant shall not have diligently commenced curing such
non-monetary default within such ten (10) day period, and shall not thereafter
with reasonable diligence and in good faith proceed to remedy or cure such non-
monetary default, provided however, that in no event shall Tenant have in
excess of thirty (30) days to complete the cure of any such non-monetary
default which is of such a nature that same cannot be completely cured within
said ten (10) day period, then, in any one or more of such events, Owner may
serve a written ten (10) days notice of cancellation of this lease upon Tenant,
and upon the expiration of said ten (10) days this lease and the term
thereunder shall end and expire as fully and completely as if the expiration of
such ten (10) day period were the day herein definitely fixed for the end and
expiration of this lease and the term thereof and Tenant shall then quit and
surrender the demised premises to Owner, but Tenant shall remain liable as
hereinafter provided.
14.01.1 Reference is made to that certain other lease agreement which Landlord
and Tenant entered into in October 1990 covering certain space in the Building
which was modified by that certain modification of lease dated as of April 14,
1997 (collectively, the Existing Lease). Reference is further made to that
certain other lease agreement of even date entered into by and between Landlord
and Tenant covering the same premises demised under the Existing Lease (Other
Lease). A default by Tenant under the Existing Lease and/or a default by
Tenant under the Other Lease shall, at the option of Landlord, constitute a
default under this Lease. A default under this Lease by Tenant shall, at the
option of Landlord, constitute a default under the Existing Lease and/or the
Other Lease. Without limiting the foregoing, in the event that this Lease
terminates by reason of Tenant's default or otherwise, including by reason of
fire or other casualty or condemnation, then at Landlord's option, the Existing
Lease and/or the Other Lease shall also terminate and in the event that the
Existing Lease shall terminate by reason of Tenants default thereunder or
otherwise, including by reason of fire, casualty or condemnation, then at
Landlords option this Lease and/or the Other Lease shall also terminate and in
the event that the Other Lease shall terminate by reason of Tenants default
and/or otherwise, including by reason of fire, casualty or condemnation, then
at Landlords option this Lease and/or the Existing Lease shall also terminate,
without prejudice to Landlords other rights and remedies at law and in equity.
14.02. If the notices provided for in Section 14.01 hereof shall have been
given, and the term shall expire as aforesaid, or if Tenant shall default in
the payment of the rent reserved herein or any item of additional rent herein
provided or any part of either or in making any other payment herein provided
for, then and in any of such events Landlord may, without notice, re-enter the
demised premises, and dispossess Tenant, the legal representatives of Tenant or
other occupant of the demised premises, by summary proceedings and lawfully
remove their effects and hold the premises as if this Lease had not been made,
and Tenant hereby waives the service of notice of intention to re-enter or to
institute legal proceedings to that end.
14.03. Notwithstanding the provisions of Section 14.01 hereof, Tenant, at its
own cost and expense may contest, in any manner permitted by law (including
appeals to a court, or governmental department or authority having jurisdiction
in the matter), the validity or the enforcement of any governmental act,
regulation or directive with which Tenant is required to comply pursuant to
this Lease, and may defer compliance therewith provided that:
(a) such non-compliance shall not subject Landlord or any of its directors,
officers, employees or shareholders to criminal prosecution, criminal or civil
penalty or subject the Land and/or Building at One Hollow Road, Lake Success,
New York, to lien or sale;
(b) such non-compliance shall not be in violation of any mortgage, or of any
ground or underlying lease and/or any mortgage affecting the Building or Land;
(c) Tenant shall first deliver to Landlord a surety bond issued by a surety
company licensed in the State of New York or other security satisfactory to
Landlord in an amount satisfactory to Landlord, indemnifying and protecting
Landlord against any loss or injury by reason of such non-compliance; and
(d) Tenant shall promptly and diligently prosecute such contest.
(e) Tenant shall pay any and all costs and expenses associated with such
contest and shall reimburse Landlord for its reasonable attorneys fees
associated with the Landlord's review of or participation in Tenant's contest.
Landlord shall reasonably cooperate with Tenant, including the execution of
such documents as are reasonably necessary under the circumstances, provided
that Landlord agrees with the accuracy of such documents and that no provision
of this Lease is violated thereby.
ARTICLE 15
Remedies of Landlord; Waiver of Redemption
15.01. In case of any such re-entry, expiration and/or dispossess by summary
proceedings or otherwise as set forth in Article 14 hereof (a) the rent shall
become due thereupon and be paid up to the time of such re-entry, dispossess
and/or expiration, together with such expenses as Landlord may incur for legal
expenses, reasonable attorneys' fees, brokerage, and/or putting the demised
premises in good order, or for preparing the same for re-rental; (b) Landlord
may re-let the demised premises or any part or parts thereof, either in the
name of Landlord or otherwise, for a term or terms, which may at Landlord's
option be less than or exceed the period which would otherwise have constituted
the balance of the term of this Lease and may grant concessions or free rent;
and/or (c) Tenant shall also pay Landlord as liquidated damages for the failure
of Tenant to observe and perform said Tenant's covenants herein contained, any
deficiency between the rent hereby reserved and/or covenanted to be paid and
the net amount, if any, of the rents collected on account of the lease or
leases of the demised premises for each month of the period which would
otherwise have constituted the balance of the term this Lease. The failure of
Landlord to re-let the demised premises or any part or parts thereof shall not
release or affect Tenant's liability for damages. In computing such liquidated
damages there shall be added to the said deficiency such expenses as Landlord
may incur in connection with re-letting, such as legal expenses, reasonable
attorneys' fees, brokerage and for keeping the demised premises in good order
or for preparing the same for re-letting. Any such liquidated damages shall be
paid in monthly installments by Tenant on the rent days specified in this Lease
and any suit brought to collect the amount of the deficiency for any month
shall not prejudice in any way the rights of Landlord to collect the deficiency
for any subsequent month by a similar proceeding. Landlord, at Landlord's
option, may make such alterations, repairs, replacements and/or decorations in
the demised premises as Landlord, in Landlord's sole judgment, considers
advisable and necessary for the purpose of re-letting the demised premises; and
the making of such alterations and/or decorations shall not operate or be
construed to release Tenant from liability hereunder as aforesaid. Landlord
shall in no event be liable in any way whatsoever for the failure or refusal to
re-let the demised premises or any parts thereof, or, in the event that the
demised premises are re-let, for failure to collect the rent thereof under such
re-letting. In the event of a breach, or threatened breach by Tenant of any of
the covenants or provisions hereof, Landlord shall have the right to invoke any
remedy allowed at law or in equity as if re-entry, summary proceedings and
other remedies were not herein provided for. Mention in this Lease of any
particular remedy, shall not preclude Landlord from any other remedy, in law or
in equity. Without limiting Landlord's other rights and remedies, if Tenant
shall at any time default hereunder, and if Landlord shall institute an action
or summary proceedings against Tenant based upon such default, or if Landlord
is otherwise involved in any litigation against Tenant, then Tenant will
reimburse Landlord for the reasonable attorneys fees, costs and disbursements
incurred by Landlord.
15.02. Tenant hereby expressly waives any and all rights of redemption granted
by or under any present or future laws in the event of Tenant being evicted or
dispossessed for any cause, or in the event of Landlord obtaining possession of
demised premises, by reason of the violation by Tenant of any of the covenants
and conditions of this Lease or otherwise.
ARTICLE 16
Fees and Expenses; Interest
16.01. If Tenant shall default in the observance or performance of any term or
covenants on Tenant's part to be observed or performed under or by virtue of
any of the covenants, terms or provisions in any Article of this Lease, then,
without limiting Landlord's other rights and remedies (a) Landlord may remedy
such default for the account of Tenant, immediately and without notice in case
of emergency, or in any other case only provided that Tenant shall fail to
remedy such default with all reasonable dispatch after Landlord shall have
notified Tenant in writing of such default and the applicable grace period for
curing such default shall have expired; and (b) if Landlord makes any
expenditures or incurs any obligations for the payment of money in connection
with such default including, but not limited to, reasonable attorneys' fees in
instituting, prosecuting or defending any action or proceeding, such sums paid
or obligations incurred, with interest, shall be deemed to be additional rent
hereunder and shall be paid by Tenant to Landlord upon rendition of a bill to
Tenant therefor.
16.02. Without limiting Landlord's other rights and remedies, if Tenant is
late in making any payment due to Landlord from Tenant under this Lease, then
interest per annum ("interest") calculated at the rate of three percent (3%)
above the prime rate of interest charged by The Chase Manhattan Bank in New
York City shall become due and owing to Landlord on such payment from the
date when it was due (or the maximum amount as may then be legally permitted by
law whichever is lower).
16.03. If Landlord shall default in the observance or performance of any term
or covenants on Landlord's part to be observed or performed under or by virtue
of any of the covenants, terms or provisions in any Article of this Lease, and
if Landlord shall fail to commence to cure such default within forty-five (45)
days after receipt of written demand from Tenant (or if such default cannot be
cured within forty-five days, then Landlord shall have a reasonable period of
time after receipt of written notice from Tenant to cure such default), and
thereafter continue to prosecute such default, then Tenant may remedy such
default for the account of Landlord. If Tenant makes any reasonable
expenditures or incurs any obligations for the payment of money in connection
with the cure of such default, such sums paid or obligations incurred, shall
be deemed to be due by Landlord to Tenant within rendition of a bill in
reasonable detail to Landlord therefor.
ARTICLE 17
No Representations by Landlord
17.01. Landlord or Landlord's agents have made no representations or promises
with respect to the Building or demised premises except as herein expressly set
forth.
ARTICLE 18
End of Term
18.01. Upon the expiration or other termination of the term, Tenant shall quit
and surrender to Landlord the demised premises, broom clean, in good order and
condition, ordinary wear and tear and damage for which Tenant is not
responsible under the terms of this Lease excepted, Tenant's obligation to
observe or perform this covenant shall survive the expiration or sooner
termination of the term of this Lease. Tenant agrees to indemnify and save
Landlord harmless from all costs, claims, loss or liability resulting from
delay by Tenant in so surrendering the demised premises, including, without
limitation, any claims made by any succeeding tenant founded on such delay. If
the last day of the Term or any renewal thereof falls on Saturday or Sunday
this Lease shall expire on the business day immediately preceding. Tenant
expressly waives, for itself and for any person claiming through or under
Tenant, any rights which Tenant or any such person may have under the
provisions of Section 2201 of the New York Civil Practice Law and Rules and of
any successor law of like import then in force in connection with any holdover
summary proceedings which Landlord may institute to enforce the foregoing
provisions of this Article 18. In addition, the parties recognize and agree
that the damage to Landlord resulting from any failure by Tenant to timely
surrender possession of the demised premises as aforesaid will be substantial,
will exceed the amount of the monthly installments of the fixed annual rent
theretofore payable hereunder, and will be impossible to accurately measure.
Tenant therefor agrees that if possession of the demised premises is not
surrendered to Landlord within twenty-four (24) hours after the expiration date
or a sooner termination of the Term, in addition to any other rights or remedy
Landlord may have hereunder or at law Tenant shall pay to Landlord for each
month and for each portion of any month during which Tenant holds over in the
demised premises after the Expiration Date or sooner termination of this Lease,
a sum equal to two (2) times the fixed rent and all items of additional rent
which was payable under this Lease during the last month of the Term. Nothing
herein contained shall be deemed to permit Tenant to retain possession of the
demised premises after the Expiration Date or sooner termination of this Lease
and no acceptance by Landlord of payments from Tenant after the expiration or
sooner termination of the Lease shall be deemed to be other than on account of
the amount to be paid by Tenant in accordance with the provisions of this
Article 18, which provisions shall survive the expiration or sooner termination
of this Lease.
ARTICLE 19
Quiet Enjoyment
19.01. Landlord covenants and agrees with Tenant that upon Tenant paying the
rent and additional rent and observing and performing all the terms, covenants
and conditions, on Tenant's part to be observed and performed, Tenant may
peaceably and quietly enjoy the premises hereby demised, subject nevertheless,
to the terms and conditions of this Lease, and to any ground leases, underlying
leases and mortgages hereinbefore mentioned to which this Lease is subordinate.
ARTICLE 20
Definitions
20.01. The term "Landlord" as used in this Lease means only the owner, or the
mortgagee in possession, for the time being of the Land and Building (or the
owner of a lease of the Building or of the Land and Building), so that in the
event of any transfer of title to the Land and Building or said lease, or in
the event of a lease of the Building, or of the Land and Building, upon
notification to Tenant of such transfer or lease the said transferor Landlord
shall be and hereby is entirely freed and relieved of all existing or future
covenants, obligations and liabilities of Landlord hereunder, and it shall be
deemed and construed as a covenant running with the Land without further
agreement between the parties or their successors in interest, or between the
parties and the transferee of title to the Land and Building or said lease, or
the said lessee of the Building, or of the Land and Building, that the
transferee or the lessee has assumed and agreed to carry out any and all such
covenants, obligations and liabilities of Landlord hereunder.
20.02. The words "re-enter" and "re-entry" as used in this Lease are not
restricted to their technical legal meaning.
20.03. The term "business days" as used in this lease shall exclude Saturdays,
Sundays, New Year's Day, Memorial Day, Fourth of July, Labor Day, Thanksgiving
Day, and Christmas. For cleaning purposes, "business days" as used in this
Lease shall exclude all Saturdays, Sundays, and holidays as set forth in the
agreement between Realty Advisory Board on Labor Relations, Inc. or any
successor thereto and Local 32B-32J of the Building Service Employees
International Union (AFL-CIO). The term "business hours" as used in this Lease
shall mean the hours between 8:00 am and 6:00 pm during business days.
20.04. The term "Tenant's Proportionate Share" as used in this Lease shall
mean 4.37%.
ARTICLE 21
Adjacent Excavation - Shoring
21.01. If an excavation shall be made upon land adjacent to the demised
premises, or shall be authorized to be made, Tenant shall afford to the person
causing or authorized to cause such excavation, license to enter upon the
demised premises for the purpose of doing such work as shall be necessary to
preserve the wall of or the Building of which the demised premises form a part
from injury or damage and to support the same by proper foundations without any
claim for damages or indemnity against Landlord, or diminution or abatement of
rent. If said excavation is conducted by the Landlord or by an authorized
agent of the Landlord and it is done in such fashion so as to interrupt
Tenant's normal business, to the extent of said interruption the rent herein
shall be abated proportionately.
ARTICLE 22
Rules and Regulations
22.01. Tenant and Tenant's servants, employees and agents shall observe
faithfully and comply strictly with the Rules and Regulations set forth in
Exhibit B attached hereto and made part hereof entitled "Rules and Regulations"
and such other and further reasonable Rules and Regulations as Landlord or
Landlord's agents may from time to time adopt provided, however, that in case
of any conflict or inconsistency between the provisions of this Lease and of
any of the Rules and Regulations as originally or as hereafter adopted, the
provisions of this Lease shall control. Reasonable written notice of any
additional Rules and Regulations shall be given to Tenant. Nothing in this
Lease contained shall be construed to impose upon Landlord any duty or
obligation to enforce the Rules and Regulations or the terms, covenants or
conditions in any other lease, against any other tenant of the Building, and
Landlord shall not be liable to Tenant for violation of the same by any other
tenant, its servants, employees, agents, visitors or licensees. Landlord will
uniformly enforce or not enforce the Rules and Regulations.
ARTICLE 23
No Waiver
23.01. No agreement to accept a surrender of this Lease shall be valid unless
in writing signed by Landlord. No employee of Landlord or of Landlord's agents
shall have any power to accept the keys of the demised premises prior to the
termination of this Lease. The delivery of keys to any employee of Landlord or
of Landlord's agent shall not operate as a termination of this Lease or a
surrender of the premises. In the event of Tenant at any times desiring to
have Landlord sublet the demised premises for Tenant's account, Landlord or
Landlord's agents are authorized to receive said keys for such purpose without
releasing Tenant from any of the obligations under this Lease. The failure of
Landlord to seek redress for violation of or to insist upon the strict
performance of, any covenant or condition of this Lease or any of the Rules and
Regulations set forth herein, or hereafter adopted by Landlord, shall not
prevent a subsequent act, which would have originally constituted a violation,
from having all the force and effect of an original violation. The receipt by
Landlord of rent with knowledge of the breach of any covenant of this Lease
shall not be deemed a waiver of such breach. The failure of Landlord to
enforce any of the Rules and Regulations set forth herein, or hereafter
adopted, against Tenant and/or any other tenant in the Building shall not be
deemed a waiver of any such Rules and regulations. No provision of this Lease
shall be deemed to have been waived by Landlord, unless such waiver be in
writing signed by Landlord. No payment by Tenant or receipt by Landlord of a
lesser amount than the monthly rent herein stipulated shall be deemed to be
other than on account of the earliest stipulated rent, nor shall any
endorsement or statement on any check or any letter accompanying any check or
payment of rent be deemed an accord and satisfaction, and Landlord may accept
such check or payment without prejudice to Landlord's right to recover the
balance of such rent or pursue any other remedy in this Lease provided.
23.02. This Lease contains the entire agreement between the parties, and any
executory agreement hereafter made shall be ineffective to change, modify,
discharge or effect an abandonment of it in whole or in part unless such
executory agreement is in writing and signed by the party against whom
enforcement of the change, modification, discharge or abandonment is sought.
ARTICLE 24
Waiver of Trial by Jury
24.01. Landlord and Tenant do hereby waive trial by jury in any action,
proceeding or counterclaim brought by either of the parties hereto against the
other on any matter whatsoever arising out of or in any way connected with this
Lease, the relationship of Landlord and Tenant, Tenant's use or occupancy of
the demised premises, and/or any other claims (except claims for personal
injury or property damage), and any emergency statutory or any other statutory
remedy. It is further mutually agreed that in the event Landlord commences a
proceeding for non-payment of rent, Tenant will not interpose and does hereby
waive the rights to interpose any counterclaim of whatever nature or
description in any such proceeding except for compulsory counterclaims.
ARTICLE 25
Inability to Perform
25.01. If, by reason of (1) strike, (2) labor troubles, (3) governmental pre-
emption in connection with a national emergency, (4) any rule, order or
regulation of any governmental agency, (5) conditions of supply or demand which
are affected by war or other national, state or municipal emergency, or (6) any
cause beyond Landlord's control, Landlord shall be unable to fulfill its
obligations under this Lease or shall be unable to supply any service which
Landlord is obligated to supply, this Lease and Tenant's obligation to pay rent
hereunder shall in no way be affected, impaired or excused. As Landlord shall
learn of the happening of any of the foregoing conditions, Landlord shall
promptly notify Tenant of such event and, if ascertainable, its estimated
duration, and will proceed promptly and diligently with the fulfillment of its
obligations as soon as reasonably possible.
25.02. If, by reason of (1) strike, (2) labor troubles, (3) governmental pre-
emption in connection with a national emergency (4) any rule, order or
regulation of any governmental agency, (5) conditions of supply or demand which
are affected by war or other national, state or municipal emergency, or (6) any
cause beyond Tenant's control, Tenant shall be unable to fulfill its
obligations under this Lease, other than the obligation to pay rent or
additional rent hereunder, this Lease and Tenants obligation to pay rent and
additional rent hereunder shall in no way be affected, impaired or excused. As
Tenant shall learn of the happening of any of the foregoing conditions, Tenant
shall promptly notify Landlord of such event and, if ascertainable, its
estimated duration, and will proceed promptly and diligently with the
fulfillment of its obligations as soon as reasonably possible.
25.03 If, for any reason other than (i) the causes set forth as 1 through 6 of
Section 25.01, or (ii) as a result of the failure of any public utility
supplying heat or electricity to the Building, either (a) all of the elevators
serving the floors upon which the demised premises are located shall be
inoperative for more than seven (7) consecutive business days so that it would
be necessary to walk up or down more than two (2) flights of stairs( a flight
of stairs shall consist of all stairs in a public stairway of the Building),
unless elevator service is available from the floors above or below the demised
premises so that it would not be necessary to walk up or down more than two (2)
flights of stairs, or (b) if the heating or air conditioning system or the
entire electrical system serving the demised premiss shall be inoperative for
more than ten (10) consecutive business days during the days when such systems
are normally operating to service the demised premises so that Tenant's
employees cannot and do not use any part of the demised premises, except on an
emergency basis, then Tenant shall be entitled to an abatement of rents for
each day after said ten (10) day period for such portion of the demised
premises which is inaccessible or which cannot be used by Tenant's employees.
ARTICLE 26
Notices
26.01. Any notice or demand, consent, approval or disapproval required to be
given by the terms and provisions of this Lease, or by any law or governmental
regulation, either by Landlord to Tenant or by Tenant to Landlord, shall be in
writing. Unless otherwise required by such law or regulation, such notice or
demand shall be given, and shall be deemed to have been served and given by
Landlord and received by Tenant upon actual receipt by Tenant or first refusal
by Tenant, when Landlord shall have deposited such notice or demand by
registered or certified mail enclosed in a securely closed postpaid wrapper, in
a United States Government general or branch post office, or official
depository within the exclusive care and custody thereof, or by a receipted
overnight carrier package addressed to Tenant, at the address set forth after
Tenant's name on page 1 of this lease with a copy to Fischer & Burstein, P.C.,
98 Cutter Mill Road, Suite 294, Great Neck, NY 11021. After Tenant shall
occupy the demised premises, a copy of all notices, demand, consents, approvals
or disapprovals shall be sent to Tenant at the demised premises. Such notice,
demand, consent, approval or disapproval shall be given, and shall be deemed to
have been served and given by Tenant and received by Landlord, when Tenant
shall have deposited such notice or demand by registered or certified mail
enclosed in a securely closed postpaid wrapper, in a United States Government
general or branch post office or official depository with the exclusive care
and custody thereof, or by a receipted overnight carrier package addressed to
Landlord, 54-65 48th Street, P.O. Box 780007, Maspeth, New York 11378. Either
party may, by notice as aforesaid, designate a different address or addresses
for notices, demands, consents, approvals or disapprovals.
ARTICLE 27
Services
27.01. Tenant shall have access to the demised premises twenty-four (24)
hours a day, seven (7) days per week, subject to the Buildings normal operating
hours. Landlord shall provide automatic elevator service to the second floor at
all reasonable times. The Building shall be open Monday through Friday from
7:00 AM to 7:00 PM and on Saturday from 9:00 AM to 1:00 PM. At all other times,
Tenant's employees shall have access to enter the Building by pass key or
security card, provided that Tenant's employees immediately re-lock all doors.
27.02. Landlord shall cause the space in the demised premises to be kept clean
in accordance with the standards set forth in Exhibit "C" attached hereto and
made a part hereof entitled "Cleaning Schedule", except that if any areas shall
be used for the preparation and consumption of food, Landlord's responsibility
shall be strictly limited to the "Cleaning Schedule" set forth in Exhibit "C",
and Tenant shall be responsible for any and all other cleaning in that space.
Tenant may contract with Landlord's cleaning service to clean these areas at
Tenant's cost and expense.
27.03. (a) Landlord shall, through the HVAC system of the Building, furnish
to the demised premises, on an all year round basis, reasonably sufficient air
conditioning, ventilation and heating during the hours from 7:00 A.M. to 7:00
P.M. Monday through Friday and from 9:00 AM to 1:00 PM Saturday.
(b) Landlord will maintain the HVAC system in a manner befitting a first class
building and will use all reasonable care to keep the same in proper and
efficient operating condition. Landlord shall in no event be responsible for
the failure of the HVAC system to meet the requirements hereinbefore specified
if such failure results from the occupancy of the demised premises with more
than an average of one person for each 100 square feet of usable area or if
Tenant installs and operates lighting, machines and appliances the total
connected electrical load of which exceeds 4-1/2 watts per square foot of
usable area.
(c) Except if the HVAC System is not working, Tenant agrees to keep and cause
to be kept closed all the windows in and the exterior doors to the demised
premises at all times, and Tenant agrees to cooperate fully with Landlord and
to abide by all the regulations and requirements which Landlord may reasonably
prescribe for the proper functioning and protection of the HVAC System.
(d) Tenant acknowledges it has been advised that the Building has sealed
windows and that, therefore, the air in the demised premises can become stale
and even unbreathable when the HVAC system is not operating. Tenant agrees that
Landlord shall not be obligated to operate such HVAC System after or before
regular business hours as set forth in Section 27.03 (a).
27.04. Without limiting the provisions of Section 25.01, Landlord reserves the
right to stop services on the HVAC System, elevator, plumbing and electrical
systems when necessary by reason of accident or emergency or for repairs,
alterations, replacements or improvements, provided that except in case of
emergency, Landlord will notify Tenant in advance, if possible, of any such
stoppage and, if ascertainable, its estimated duration, and will proceed
diligently with the work necessary to resume such service as promptly as
possible and in a manner so as to minimize interference with the Tenant's use
and enjoyment of the demised premises.
27.05. Tenant shall employ or retain any contractor, including any
subcontractor to perform any work in the demised premises as such contractor,
including any subcontractor, is first approved in writing by Landlord and
without limiting the foregoing, Tenant shall only employ or retain such
contractor, subcontractor, supplier or materialmen as will not result in
jurisdictional disputes or strikes.
27.06. If Tenant is permitted hereunder to and does have a separate area for
the preparation or consumption of food in the demised premises, Tenant shall
employ, on a regular basis, an exterminator to keep the demised premises free
from vermin; and the Tenant will provide garbage storage areas to comply with
local codes and specifications thereof to be approved by Landlord, or other
means of disposing of garbage reasonably satisfactory to Landlord. Tenant is
responsible for all exterminating in the demised premises.
27.07. Tenant agrees to employ such office maintenance contractor as Landlord
may approve and upon further provision that employment of said contractor shall
not create labor disputes for all waxing, polishing, lamp replacement, cleaning
and maintenance work in the demised premises. Nothing herein contained shall
prohibit Tenant from performing such work for itself by use of its own regular
employees.
27.08. Landlord will not be required to furnish any other services, except as
provided in this Article 27, and except that Landlord agrees to provide on
business days (not including Saturdays, Sundays and holidays) the cleaning as
set forth in Exhibit "C" hereof. Tenant shall pay to Landlord, on demand, a
reasonable charge for the removal from the demised premises of any refuse and
rubbish of Tenant as shall not be contained in the waste receptacles described
in Exhibit "C" hereof. Landlord, its cleaning contractor and their employees
shall have after-hours access to the demised premises and the use of Tenant's
light, power and water in the demised premises as may be reasonably required
for the purpose of cleaning the demised premises.
27.09. For the purposes of this Lease, "Common Areas" shall mean all areas,
improvements, space, equipment and special services provided by Landlord for
the common or joint use and benefit of tenants and invitees, including access
roads, driveways, entrances and exits, retaining walls, landscaped areas,
pedestrian walk-ways, walls, courtyards, concourses, stairs, ramps, sidewalks,
building wide washrooms, hallways, lobbies, elevators and their housing rooms,
common window areas, walls and ceiling in Common Areas, and trash and rubbish
areas. Notwithstanding anything contained herein to the contrary, Landlord
shall have the right to increase, decrease, rearrange or otherwise change the
Common Areas, provided, however, that Landlord shall use good faith efforts to
minimize material interference with Tenant's use of the Common Areas which may
result in denial of ingress and egress to and from the demised premises.
27.10. Landlord shall manage and maintain the Building and the Common Areas as
a first class office building. Tenant and its employees shall occupy and use
the demised premises in a manner befitting such building.
ARTICLE 28
Electricity
28.01. Subject to the provisions of this Lease, including the provisions of
this Article 28, there will be furnished to Tenant, through transmission
facilities in the Building, alternating electric current to be used by Tenant
for the lighting fixtures and electric current and electrical receptacles
installed in the demised premises, but Landlord shall not be liable in any way
to Tenant for any failure or defect in supply or character of electric current
furnished to the demised premises. After initial installation by Landlord,
Tenant shall pay Landlord to furnish and install all lighting tubes, lamps,
bulbs and ballasts used in the demised premises. Tenant shall use said
electric current for lighting and, insofar as Landlord's facilities are not
burdened thereby and applicable laws and insurance regulations permit, for
operation, during normal business hours, of such equipment as is normally used
for the purposes herein leased. Under no circumstances shall Tenant, at any
time during the term of this Lease, use or permit the use of electric heaters
or similar heating devices. Landlord represents that there is sufficient
electrical capacity at the demised premises for general office use purposes.
28.02. Tenant's use of electric current in the demised premises shall not at
any time exceed the capacity of any of the electrical conductors and equipment
in or otherwise serving the demised premises. Tenant shall not make or perform
or permit the making or performing of any alterations to wiring installation or
other electrical facilities in or serving the demised premises or any additions
to the business machines, office equipment or other appliances in the demised
premises which utilize electrical energy without the prior consent of Landlord
in each instance (which shall not be unreasonably withheld).
28.03. All electric energy which Tenant requires in the demised premises shall
be furnished by the local electric company. Tenant shall be obligated to make
direct application to the local electric company for service. Tenant shall
make payment to and be billed directly from the local electric company.
28.04. Tenant agrees not to connect any additional electrical equipment of any
type to the Building electric distribution system, other than typewriters,
computers, fax machines, lamps and small office machines which consume
comparable amounts of electricity, without Landlord's prior written consent,
which consent shall not be unreasonably withheld or delayed. Any additional
risers, feeders, or other equipment proper or necessary to supply Tenant's
electrical requirements, upon written request of Tenant, will be installed by
Landlord, at the sole cost and expense of Tenant, if, in Landlord's judgment
the same are necessary and will not cause permanent damage or injury to the
Building or the demised premises or cause or create a dangerous or hazardous
condition or entail excessive or unreasonable alterations, repairs or expense
or interfere with or disturb other tenants or occupants.
ARTICLE 29
ARTICLE 30
Escalation of Taxes
30.01. For the purposes of this Lease, the term "Lease Year" shall be the
period commencing on the Commencement Date and ending on the last day of the
twelfth (12th) full calendar month thereafter and each successive period of
twelve (12) full calendar months during the term of this Lease, provided
however, that in no event shall the term of this Lease extend beyond April 30,
2011.
30.02. In the event that the amount of real estate taxes, assessments, sewer
rents, rates and charges, county and town taxes, school taxes, village taxes,
transit taxes, or any other Governmental charge, general, specific, or ordinary
or extra-ordinary, foreseen or unforeseen (hereinafter collectively called
"Taxes") which may now or hereafter be levied or assessed against the Land and
upon the Building and any and all other improvements (hereinafter for this
Article 30 only collectively called the "Real Property") attributable to any
Subsequent Tax Year, as hereinafter defined, shall be greater than the amount
of Taxes for the Base Tax Year, as hereinafter defined, for any or all of the
Town and County Tax (inclusive of all Taxes now or hereafter included on the
Town and County tax bill or additional bill), School Tax (inclusive of all
Taxes now or hereafter included on the Town and County tax bill or additional
bill) and/or Village Tax (inclusive of all Taxes now or hereafter included on
the Town and County tax bill or additional bill) (the Town and County Tax, the
School Tax and the Village Tax are sometimes herein singly referred to as
"Local Tax" and collectively as "Local Taxes") then Tenant shall pay to
Landlord as additional rent, Tenant's Proportionate Share of the increase in
taxes for the particular Local Tax for such Subsequent Tax Year. In addition,
in the event that at any time during the term hereof under the laws of the
State of New York, and/or any County, Town, Village, City, Hamlet or any other
political or other governmental subdivision whatsoever, including any school
district in which the Building is located, a tax or exercise on rents or any
and all other taxes of any kind whatsoever and howsoever described, is levied
or assessed by said State and/or any such County, Town, Village, City, Hamlet
or any other political or other governmental subdivision, school district or
taxing authority, as an additional tax or other charge and/or as a substitute,
in whole or in part, or Taxes assessed or imposed by said State, County, Town,
City, Village, Hamlet or any political or other governmental subdivision or
school district, on the land and/or Building any/or other improvements, then
any such tax or other charge shall be included in the terms Taxes, Local Tax
and Local Taxes.
30.02.1 For the purposes of the provisions of this Article, the term, "Taxes
for the Base Tax Year", shall mean the sum of all taxes at the applicable rate
for the fiscal tax years commencing as set forth below multiplied by the full
assessment of the County of Nassau of the Real Property.
The term "Base Tax Year" is hereby defined for the particular Local Tax as
follows:
The Town and County Tax rate for the year commencing January 1, 2000 and ending
December 31, 2000.
The School Tax rate for the year commencing
July 1, 1999 and ending June 30, 2000.
The Village Tax rate for the year commencing
June 1, 1999 and ending May 31, 2000.
30.02.2 The term "Subsequent Tax Year" shall mean the first full fiscal year
following the applicable Base Tax Year for the aforementioned Town and County
Tax, School Tax or Village Tax fiscal year as the case may be and each fiscal
year thereafter.
30.02.3 To arrive at the amount owed by Tenant for any and all Subsequent Tax
Years, Landlord shall calculate each Local Tax increase separately and then add
the increases owed by Tenant from each to determine the total amount of
increases in Taxes and such total increase shall be then multiplied by Tenant's
Proportionate Share to determine the amount owed by Tenant for each Subsequent
Tax Year. If such calculation shall result in a decrease for any Subsequent
Tax Year, then Tenant shall receive an increase of zero.
30.02.4 Landlord shall take the benefit of the provisions of any statute or
ordinance permitting any assessment to be paid over a period of time and Tenant
shall be obligated to pay only its proportionate share, determined as
aforesaid, of the installments of any such assessment as shall become due and
payable during the term of this Lease or any renewal hereof. Any amount due
Landlord under the provisions of this Article shall be paid semi-annually
within thirty (30) days after Landlord shall have submitted copies of all tax
bills and statements to Tenant showing in reasonable detail the computation of
the amounts due Landlord. Any such increase for less than a year shall be
prorated and apportioned.
30.03. Without limiting Tenant's other obligations, in the event Tenant shall
undertake to make installations other than office installations and thereby
cause extraordinary assessment to be levied against the Real Property, Tenant
shall pay all additional taxes resulting from such extraordinary assessment.
30.04 In addition, Tenant shall pay to Landlord, within thirty (30) days after
the same shall be payable by Landlord and as additional rent for the Lease Year
in which the same shall be so payable, an amount equal to Tenant's
Proportionate Share of any assessment (general, special or otherwise) or
installment thereof for betterment's or improvements which may be levied upon
the Real Property. Landlord shall take the benefit of the provisions of any
statute or ordinance permitting any such assessment to be paid over a period of
time and Tenant shall be obligated to pay only the said percentage of the
installments of any such assessments which shall become due and payable during
the term of this Lease.
30.05 In the event there shall be levied against the Landlord during the term
of this Lease an assessment for improvements or betterment's which is payable
in one sum, then in that event said assessment shall be divided by the number
of Lease Years equal to the term of this Lease and Tenant's responsibility
shall be the sum equal to its Proportionate Share of said amount times the
number of unexpired years in the Lease; for example, if an assessment is levied
for a lump sum of $10,000.00, and the Lease term has a period of ten (10) Lease
Years, the annual installments will be deemed to be $1,000.00 per year and in
the event Tenant's Proportionate Share is seventy-five (75%) percent, Tenant
will owe $750.00 times the number of Lease Years remaining under this Lease as
of the date of its assessment (with any partial Lease Year remaining under this
Lease being prorated on a per diem basis).
30.06 In no event shall any rent adjustment result in a decrease in the fixed
annual rent payable hereunder.
30.07. In the event the first or final Lease Year shall contain less than
twelve (12) calendar months the additional rent payable under Section 30 for
such lease year shall be adjusted and prorated by the fraction (a) the
numerator over which is the number of months in either the first or final year
and (b) the denominator of which is the number twelve (12).
30.08. Landlord's obligation to make the adjustments referred to in this
Article shall survive any expiration or termination of this Lease. Tenant
shall have a period of sixty (60) days after receipt of the billing to notify
Landlord of any discrepancy with the billing. Tenant will not be permitted at
any later date to dispute the billing.
30.09. Any delay or failure of Landlord in billing any Real Estate Taxes shall
not constitute a waiver of or in any way impair any continuing obligation of
Tenant to pay such Real Estate Taxes hereunder.
ARTICLE 31
Condition of Premises
31.01. Tenant expressly acknowledges that it has inspected the demised
premises, the Land and the Building and is fully familiar with the physical
condition thereof. Tenant agrees to accept the demised premises (and the Land
and the Building) in its "AS IS " condition as of the date hereof, subject only
to any work to be performed by Landlord (except for any surviving punch list
items as set forth on Exhibit D annexed hereto and made a part hereof).
Without limiting the foregoing, Tenant acknowledges that Landlord shall have no
obligation to do any work in and to the demised premises in order to make them
suitable and ready for occupancy and use by Tenant except as set forth on said
Exhibit D.
ARTICLE 32
OMITTED
ARTICLE 33
Indemnity
33.01. Without limiting Tenant's other obligations, Tenant shall indemnify and
hold Landlord harmless from and against any all liabilities, obligations,
damages, penalties, claims, costs and expenses, including reasonable attorneys
fees, paid, suffered or incurred and/or arising from any one or more of the
following:
(i) the use of occupation of the demised premises by Tenant or any one in, on,
or about the demised premises with Tenant's permission; and/or
(ii) any breach by Tenant, Tenant's agents, contractors, employees, invitees,
servants and licensees of any term, covenant or condition of this Lease; and/or
(iii) the carelessness, negligence or improper conduct of Tenant's agents,
contractors, employees, invitees, servants or licensees. Tenant's liability
under this Lease extends to the acts or omissions of any subtenant, any agent,
contractor, employee, servant, invitee or licensee of any subtenant.
33.02 Without limiting the Landlord's other obligations, Landlord shall
indemnify and hold harmless from and against any and all liabilities,
obligations, damages, claim, costs and expenses, including reasonable attorneys
fees paid, suffered or incurred and/or arising from the carelessness,
negligence or improper conduct of the Landlord, Landlord's agents, employees,
invitees or licensees.
ARTICLE 34
INTENTIONALLY OMITTED
ARTICLE 35
Name of Building
35.01. Landlord shall have the full right at any time to name and change the
name of the Building and to change the designated address of the Building. The
Building may be named after any person, firm, or otherwise, whether or not such
name is, or resembles, the name of a tenant of the Building.
ARTICLE 36
Invalidity of Any Provision
36.01. If any term, covenant, condition or provision of this Lease or the
application thereof to any circumstance or to any person, firm or corporation
shall be invalid or unenforceable to any extent, the remaining terms,
covenants, conditions and provisions of this Lease or the application thereof
to any circumstances or to any person, firm or corporation other than those as
to which any term, covenant, condition and provision of this Lease shall be
valid and shall be enforceable to the fullest extent permitted by law.
ARTICLE 37
Captions
37.01. The captions are inserted only as a matter of convenience and for
reference, and in no way define, limit or describe the scope of this Lease nor
the intent of any provision thereof.
ARTICLE 38
Certificate of Tenant or Landlord
38.01. Tenant shall, without charge, at any time and from time to time, within
ten (10) days after request by Landlord, certify by written instrument, duly
executed, acknowledged and delivered, to any mortgagee, assignee of any
mortgage or purchaser, or any proposed mortgagee, assignee of any mortgage or
purchaser, or any other person, firm or corporation specified by Landlord:
(a) That this Lease is unmodified and in full force and effect (or, if there
has been modification, that the same is in full force and effect as modified
and stating the modifications);
(b) Whether or not there are then existing any set-offs or defenses against the
enforcement of any of the agreements, terms, covenants, or conditions hereof
upon the part of Tenant to be performed or complied with (and, if so,
specifying the same); and
(c) The dates, if any, to which the rental and other charges hereunder have
been paid in advance.
(d) Any other provisions which Landlord or any other party specified in this
Section may reasonably request.
(e) In connection with a permitted assignment or subletting by Tenant,
Landlord will, within ten (10) days after written request by Tenant, deliver a
duly executed written instrument to such permitted assignee or sublessee
certifying, to the best of Landlord's knowledge, those same items referred to
in (a), (b), (c) and (d) above.
38.02. Tenant agrees that, except for the first month's rent hereunder, it
will pay no rent under this Lease more than thirty (30) days in advance of its
due date, and, in the event of any act or omission by Landlord, Tenant will not
exercise any right to terminate this Lease or to remedy the default and deduct
the cost thereof from rent due hereunder until Tenant shall have given written
notice of such act or omission to the holder of any first mortgage who shall
have furnished in writing such holder's last address to Tenant, and until a
reasonable time for remedying such act or omission shall have elapsed following
the giving of such notices, during which time such mortgage holder shall have
the right, but shall not be obligated, to remedy or cause to be remedied such
act or omission.
38.03. Anything in this Lease contained to the contrary notwithstanding, under
no circumstances shall the holder of any institutional mortgage who shall have
succeeded to the interests of the Landlord under this Lease, be subject to or
liable for any offsets or deductions from rent, claims or defenses which the
Tenant might have against any prior landlord under this Lease.
ARTICLE 39
Successors and Assigns
39.01. The covenants, conditions and agreements contained in this Lease shall
bind and inure to the benefit of Landlord and Tenant and their respective
heirs, distributees, executors, administrators, successors, and assigns and,
except as otherwise provided in this Lease, their assigns, but nothing herein
shall constitute permission for Tenant to assign this Lease except upon
compliance with the provisions of this Lease.
ARTICLE 40
Liability Insurance by Tenant
40.01. Tenant shall, at Tenant's sole cost and expense, procure and obtain
comprehensive general public liability insurance with broad form extension and
contractual liability endorsement protecting against any and all claims for
damages to person or property or for loss of life or property occurring upon,
in, or about the demised premises or the sidewalks adjacent thereto, such
insurance to afford immediate protection in such amounts as Landlord shall
require. Such policies shall name Landlord and such other parties as shall be
specified by Landlord, including without limitation any one or more mortgagees
and managing agents, as additional insured. As of the Commencement Date, the
minimum coverage for combined single limit bodily injury and property damage
shall not be less than $3,000,000.00 per occurrence. The policy shall also be
extended to include the following endorsements:
1. Knowledge of Occurrence;
2. Notice of Occurrence;
3. Unintentional Errors or Omissions;
4. An endorsement to the effect that no statement,
declaration or representation made by Tenant to
its insurer or act of Tenant shall invalidate the
policy as to Landlord or prejudice any of
Landlord's rights thereunder, including, without
limitation, defense and indemnity;
5. Contractual Liability on a blanket basis and
specifically scheduling this Lease, without
limiting the form of coverage.
All said policies shall be obtained by Tenant and certificates thereof
delivered to Landlord upon the commencement of the term hereof with evidence of
stamping or otherwise of the payment of the premiums thereon, shall otherwise
be in form and content acceptable to Landlord and be taken in such amounts and
in such companies authorized to do business in the State of New York which are
acceptable to Landlord.
ARTICLE 41
Automobile Parking
41.01. Landlord herein is providing onsite parking facilities which will be
used by Tenant in conjunction with other tenants of the Building together with
the employees, guests and possible associates. However, said parking
facilities, except where restricted, shall be available to Tenant and its
employees, invitees and guests. There will be no charge to the Tenant for the
inside or outside parking area. It is agreed however, that Landlord shall have
no obligation to police the parking area. Landlord shall clean and maintain
the parking fields. Notwithstanding the foregoing, neither Tenant nor Tenants
employees, agents, contractors, servants, licensees, invitees or visitors shall
use parking spaces reserved for other tenants.
ARTICLE 42
INTENTIONALLY OMITTED
ARTICLE 43
No Recording
43.01. The parties hereto agree that neither Landlord nor Tenant shall record
this Lease nor shall either party record any memorandum of this Lease.
ARTICLE 44
INTENTIONALLY OMITTED
ARTICLE 45
INTENTIONALLY OMITTED
ARTICLE 46
Security
46.01. Tenant has deposited with Landlord the sum of $20,400.00 as security
for the faithful performance and observance by Tenant of the terms, provisions
and conditions of this Lease. It is agreed that in the event Tenant defaults in
respect of any of the terms, provisions, and conditions of this Lease,
including, but not limited to, the payment of rent and additional rent,
Landlord may use, apply or retain the whole or any part of the security as
deposited to the extent required for the payment of any rent and additional
rent or any other sum as to which Tenant is in default or for any sum which
Landlord may expend or may be required to expend by reason of Tenant's default
in respect to any of the terms, covenants, and conditions of this Lease,
including but not limited to, any damages or deficiency in the subletting of
the demised premises, whether such damages or deficiency accrues before or
after summary proceedings or other re-entry by Landlord. In the event that
Tenant shall fully and faithfully comply with all of the terms, provisions,
covenants and conditions of this Lease, the security shall be returned to
Tenant after the date fixed as of the end of this Lease and after delivery of
the entire possession of the demised premises to Landlord. In the event of a
sale of the Land and Building or leasing of the Building of which the demised
premises form a part, Landlord shall have the right to transfer the security to
the vendee or lessee and Landlord shall thereupon be released by Tenant from
all liability for the return of such security and Tenant agrees to look to the
new landlord solely for the return of said security; and it is agreed that the
provisions hereof shall apply to every transfer or assignment made of the
security to a new landlord. Tenant further covenants that it will not assign
or encumber or attempt to assign or encumber the monies deposited herein as
security and that neither Landlord nor its successors or assigns shall be bound
by any such assignment, encumbrance, attempted assignment or attempted
encumbrance.
ARTICLE 47
Broker
47.01. Tenant represents and warrants that it has dealt with NO BROKER in
connection with this Lease and Tenant does hereby agree to indemnify and hold
Landlord harmless of and from any and all loss, costs, damage or expense
(including, without limitation, attorneys' fees and disbursements) incurred by
Landlord by reason of any claim of any broker, sales person or other finder who
claims to have dealt with Tenant in connection with this Lease. The provision
of this Article 47 shall survive the expiration or earlier termination of this
Lease.
ARTICLE 48
Late Rent Clause
48.01. Tenant recognizes that late payment of any rent or other sum due
hereunder will result in administrative expense to Landlord, the extent of
which additional expense is extremely difficult and economically impractical to
ascertain. Tenant therefore agrees that if rent or any other sum is due and
payable pursuant to this Lease, and when such amount remains due and unpaid ten
(10) days after said amount is due, such amount shall be increased by a late
charge in an amount equal to five (5%) per cent of the unpaid rent or other
payment. The amount of late charge to be paid by Tenant shall be reassessed
and added to Tenant's obligation for each successive monthly period until paid.
The provisions of this Article in no way relieve Tenant of the obligation to
pay rent or other payments on or before the date on which they are due, nor do
the terms of this Article in any way affect Landlord's remedies pursuant to any
other Article of this Lease in the event said rent or other payment is unpaid
after the date due.
ARTICLE 49
Directory Listing
49.01. Landlord, at its expense, and on Tenant's request, shall maintain
listings on the Building directory of the name of Tenant provided that the
names so listed shall not take up more than Tenant's Proportionate Share of the
space on the Building's directory.
ARTICLE 50
INTENTIONALLY OMITTED
ARTICLE 51
Jurisdiction and Venue
51.01. Tenant irrevocably and unconditionally (a) agrees that any suit,
action, or other legal proceeding arising out of this Lease may be commenced in
any court of the State of New York situated in Nassau County and that any such
court shall have in personam jurisdiction of Tenant in any such suit, action or
other legal proceeding upon service as described above; (b) consents to the
jurisdiction of each such court in any suit, action or other legal proceeding;
and (c) waives any objection which Tenant may have to the laying of venue of
any such suit, action or proceeding in any such court.
ARTICLE 52
MISCELLANEOUS
52.01. Tenant shall not at any time prior to or during the term hereof, either
directly or indirectly, use any contractors or labor or materials whose use in
Landlord's reasonable judgment would create or creates any difficulty with
other contractors or labor employed by Tenant or Landlord or others in
construction, maintenance or operation of the demised premises or the Building.
52.02. As of the Commencement Date, except for the Existing Lease, this Lease
supersedes any and all prior leases between Landlord and Tenant with respect to
any of the space included within the Demised Premises.
52.03. This Lease sets forth the entire understanding and agreement with
respect to the subject matter hereof and all prior and contemporaneous
negotiations, understandings and agreements are herein merged and without
limiting the foregoing, Tenant acknowledges and agrees that there are no
express or implied warranties, representations, promises or agreements on the
part of Landlord nor any other person, firm, corporation, limited liability
company, including any broker or salesperson with reference to the condition,
suitability or usability of the demised premises nor for the purposes for which
Tenant intends to use same or with respect to any other matter, thing or
circumstance, except only as may be expressly set forth in this Lease. This
Lease may not be extended, renewed, terminated or otherwise modified except by
an instrument in writing signed by the party against whom enforcement of any
such modification is sought, unless such instrument provides that it shall not
be binding until signed by both parties, in which event it shall not be binding
until so signed.
52.04. If Tenant shall request Landlord's approval or consent and Landlord
shall fail or refuse to give such consent or approval, Tenant shall not be
entitled to any damages for any withholding or delay of such approval or
consent by Landlord, it being intended that Tenant's sole remedy shall be an
action for injunction or specific performance and that such remedy shall be
available only in those cases where Landlord shall have expressly agreed in
writing not to unreasonably withhold its consent or approval or where as a
matter of law Landlord may not unreasonably withhold its consent or approval.
The provisions of this Section 52.04 shall not apply if Landlord shall
capriciously, or arbitrarily or in bad faith withhold or delay its consent or
approval.
52.05. This Lease is offered to Tenant for signature with the understanding
that it shall not be binding upon Landlord unless and until Landlord shall have
executed and delivered a copy of this Lease to Tenant.
52.06. Irrespective of the place of execution or performance, this Lease shall
be governed by and construed in accordance with the laws of the State of New
York. If any provision of this Lease or the application thereof to any person
or circumstance shall, for any reason and to any extent, be invalid or
unenforceable, the remainder of this Lease and the application of that
provision to other persons or circumstances shall not be affected but rather
shall be enforced to the extent permitted by law. This Lease shall be
construed without regard to any presumption or other rule requiring
construction against the party causing this Lease to be drafted. Each
covenant, agreement, obligation or other provision of this Lease on Tenant's
part to be performed, shall be deemed and construed as a separate and
independent covenant of Tenant, not dependent on any provision of this Lease.
All terms and words used in this Lease, regardless of the number or gender in
which they are used, shall be deemed to include any other number and any other
gender as the context may require.
52.07. Notwithstanding any provision of this Lease to the contrary, all sums
of money, other than the fixed rent, as shall become due from and payable by
Tenant to Landlord under this Lease shall be deemed to be additional rent.
Landlord shall have the same rights and remedies for Tenant's failure to pay
any items of additional rent as Tenant's failure to pay fixed rent.
52.08. If Tenant is in arrears in the payment of fixed rent or additional
rent, Tenant waives its right, if any, to designate the items in arrears
against which any payments made by Tenant are to be credited and Landlord may
apply any of such payments to any such items in arrears as Landlord, it its
sole discretion, shall determine, irrespective of any designation or request by
Tenant as to the items against which any such payments shall be credited.
52.09. If Tenant is a corporation, each person executing this Lease on behalf
of Tenant hereby covenants, represents and warrants that Tenant is a duly
incorporated or duly qualified (if foreign) corporation and is authorized to do
business in the State of New York (a copy of evidence thereof to be supplied to
Landlord upon request); and that each person executing this Lease on behalf of
Tenant is an officer of Tenant and that he is duly authorized to execute,
acknowledge and deliver this Lease to Landlord (a copy of a resolution to that
effect to be supplied to Landlord upon request).
52.10. In the event of any litigation or other dispute between the parties to
this Lease, each party shall bear all of its own costs and expenses, whether
for attorneys fees or otherwise, without recourse to the other.
IN WITNESS WHEREOF, the parties hereto have set their
respective hands and seals the day and year first above written.
M. PARISI & SON CONSTRUCTION CO., INC.
BY:_________________________________ Name:
Title:
ACETO CORPORATION
BY:__________________________________
Name:
Title:
SCHEDULE "1"
FIXED ANNUAL RENT
LEASE RENT PER ANNUM MONTHLY
YEAR PERIOD FIXED RENT RENT
1 3/1/00-2/28/01 $122,400.00 $10,200.00
2 3/1/01-2/28/02 $126,378.00 $10,531.50
3 3/1/02-2/28/03 $130,485.29 $10,873.77
4 3/1/03-2/28/04 $134,726.06 $11,227.17
5 3/1/04-2/28/05 $139,104.66 $11,592.05
6 3/1/05-2/28/06 $143,625.56 $11,968.80
7 3/1/06-2/28/07 $148,293.39 $12,357.78
8 3/1/07-2/28/08 $153,112.93 $12,759.41
9 3/1/08-2/28/09 $158,089.10 $13,174.09
10 3/1/09-2/28/10 $163,227.00 $13,602.25
11 3/1/10-2/28/11 $168,531.87 $14,044.32
12 3/1/11-4/30/11 $174,009.16 $14,500.76
(but in no event shall the term of this Lease extend beyond April 30, 2011)
EXHIBIT "A"
EXHIBIT "B"
Rules and Regulations
1. The sidewalks, and public portions of the Building, such as entrances,
passages, courts, elevators, vestibules, stairways, corridors or halls shall
not be obstructed or encumbered by a tenant or used for any purpose other than
ingress and egress to and from the demised premises.
2. No awnings or other projections shall be attached to the outside walls of
the Building. No curtains, blinds, shades, louvered openings or screens shall
be attached to or hung in, or used in connection with, any window or door of
the demised premises, without the prior written consent of Landlord, unless
installed by Landlord.
3. No sign, advertisement, notice or other lettering shall be exhibited,
inscribed, painted or affixed by any tenant or any part of the outside of the
demised premises or Building or on corridor walls. Signs on entrance door or
doors shall conform to building standard signs, samples of which are on display
in Landlord's rental office. Signs on doors shall, at the tenant's expense, be
inscribed, painted or affixed for each tenant by sign makers approved by
Landlord. In the event of the violation of the foregoing by any tenant,
Landlord may remove same without any liability, and may charge the expense
incurred by such removal to the tenant or tenants violating this rule.
4. The sashes, sash doors, skylights, windows, ventilating and air
conditioning vents and doors that reflect or admit light and air into the
halls, passageways or other public places in the Building shall not be covered
or obstructed by any tenant, nor shall any bottles, parcels or other articles
be placed on the window sills.
5. No show cases or other articles shall be put in front of or affixed to any
part of the exterior of the Building, nor placed in the public halls, corridors
or vestibules without the prior written consent of Landlord.
6. Whenever Tenant shall submit to Landlord any plan agreement or other
document for Landlord's consent or approval, Tenant agrees to pay Landlord as
additional rent, on demand, a processing fee in a sum equal to the reasonable
fee of any architect, engineer or attorney employed by Landlord to review said
plan, agreement or document.
7. The water and wash closets and other plumbing fixtures shall not be used
for any purposes other than those for which they were constructed, and no
sweepings, rubbish rags, or other substances shall be thrown therein. All
damages resulting from any misuse of the fixtures shall be borne by the Tenant
who, or house servants, employees, agents, visitors or licensees, shall have
caused the same.
8. No tenant shall in any way deface any part of the demised premises or the
Building of which they form a part. No tenant shall lay linoleum, or other
similar floor covering, so that the same shall come in direct contact with the
floor of the demised premises, and, if linoleum or other similar floor covering
is desired to be used, an interlining of builder's deadening felt shall be
first affixed to the floor, by a paste or other material, soluble in water, the
use of cement or other similar adhesive material being expressly prohibited.
9. No bicycles, vehicles or animals of any kind shall be brought into or kept
in or about the premises. No cooking shall be done or permitted by any Tenant
on said premises except in conformity to law and then only in the utility
kitchen, if any, as set forth in Tenant's layout, which is to be primarily used
by Tenant's employees for heating beverages and light snacks. No tenant shall
cause or permit any unusual or objectionable odors to be produced upon or
permeate from the demised premises.
10. No space in the Building shall be used for manufacturing, distribution, or
for the storage of merchandise or for the sale of merchandise, goods or
property of any kind at auction.
11. No tenant shall make, or permit to be made, any unseemly or disturbing
noises or disturb or interfere with occupants of the Building or neighboring
buildings or premises or those having business with them, whether by the use of
any musical instrument, radio, talking machine, unmusical noise, whistling,
singing, or in any other way. No tenant shall throw anything out of the doors,
windows, or skylights or down the passageways.
12. No tenant, nor any of the tenant's servants, employees, agents, visitors
or licensees, shall at any time bring or keep upon the demised premises any
inflammable, combustible or explosive fluid, or chemical substance, other than
reasonable amounts of cleaning fluids and solvents required in the normal
operation of tenant's business offices.
13. No additional locks or bolts of any kind shall be placed upon any of the
exterior doors or windows by any tenant, nor shall any changes be made in
existing locks or the mechanism thereof, without the prior written approval of
the Landlord. Each tenant must, upon the termination of his tenancy, restore
to the Landlord all keys of stores, offices and toilet rooms, either furnished
to, or otherwise procured by, such tenant, and in the event of the loss of any
keys, so furnished, such tenant shall pay to Landlord the cost thereof.
14. All removals, or the carrying in or out of any safes, freight, furniture
or bulky matter of any description, must take place during the hours and
pursuant to such procedures as Landlord or its agent may determine from time to
time. Landlord reserves the right to inspect all freight to be brought into
the Building and to exclude from the Building all freight which violates any of
these Rules and Regulations or the Lease of which these Rules and Regulations
are a part.
15. No tenant shall occupy or permit any portion of the premises demised to it
to be occupied as an office for a public stenographer or typist, or for the
possession, storage, manufacture or sale of liquor, narcotics, dope, tobacco in
any form, or as a barber or manicure shop or as a public employment bureau or
agency, or for a public finance (personal loan) business. No tenant shall
engage or pay any employees on the demised premises, except those actually
working for such tenant on said premises, nor advertise for laborers giving an
address at said premises.
16. Tenant agrees to employ such contractors as Landlord may from time to time
designate, for waxing, polishing and other maintenance work of the demised
premises and of the Tenant's furniture, fixtures and equipment, provided that
the prices charged by other contractors are comparable to the prices charged by
other contractors for the same work. Tenant agrees that it shall not employ
any other cleaning and maintenance contractor, nor any individual, firm or
organization for such purpose without Landlord's prior written consent. If
Landlord and Tenant shall each obtain two bona fide bids for such work from
reputable contractors, and the average of the four bids thus obtained shall be
the standard of comparison.
17. Landlord shall have the right to prohibit any advertising by any tenant,
mentioning the Building, which, in Landlord's reasonable opinion, tends to
impair the reputation of the Building or its desirability as a building for
offices, and upon written notice from Landlord, tenants shall refrain from or
discontinue such advertising. The foregoing is not intended to prohibit mere
mention of Tenant's address as being at Lake Success Plaza, Lake Success, New
York.
18. Landlord reserves the right to exclude from the Building between the hours
of 6:00 P.M. and 8:00 A.M. and at all hours on Sundays and legal holidays all
persons who do not present a pass to the Building signed by a tenant. Each
tenant shall be responsible for all persons for whom such a pass is issued and
shall be liable to Landlord for all acts of such persons.
19. The premises shall not be used for lodging or sleeping or for any immoral
or illegal purpose.
20. The requirements of tenants will be attended to only upon application at
the office of the Building. Building employees shall not perform any work or
do anything outside of their regular duties, unless under special instructions
from the office of Landlord.
21. Canvassing, soliciting and peddling in the Building are prohibited and
each tenant shall cooperate to prevent the same.
22. There shall not be used in any space, or in the public halls of any
building, either by any tenant or by jobbers or others, in the delivery or
receipt of merchandise, any hand trucks, except those equipped with rubber
tires and side guards. No hand trucks shall be used in passenger elevators.
23. Tenants, in order to obtain maximum effectiveness of the cooling system,
shall lower and/or close venetian or vertical blinds or drapes when sun's rays
fall directly on windows of demised premises.
EXHIBIT "C"
Cleaning Schedule
General
All linoleum, rubber, asphalt tile and other similar
types of hard-surfaced flooring to be swept nightly,
using approved dust-check type of mop.
All carpeting and rugs to be vacuum-cleaned nightly.
Hand dust and wipe clean all furniture, fixtures and
window sills nightly; wash sills when necessary.
Empty and clean all waste receptacles nightly and remove
waste paper and waste materials.
Empty and clean all ash trays and screen all sand urns
nightly.
Dust interior of all waste disposal cans and baskets
nightly; damp-dust as necessary.
Wash clean all water fountains and coolers nightly.
Dust all telephones as necessary.
Sweep all private stairway structures nightly.
Lavatories in the Core
Sweep and wash all lavatory floors nightly using proper disinfectants. Wash
and polish all mirrors, powder shelves, bright work and enameled surfaces in
all lavatories nightly.
Scour, wash and disinfect all basins, bowls and urinals throughout all
lavatories, nightly.
Wash all toilet seats, nightly.
Empty paper towel receptacles and transport waste paper to designated area in
basement, nightly (towels, soap and receptacles to be furnished by Tenant).
Fill toilet tissue holders nightly (tissue and receptacles to be furnished by
Landlord).
Empty sanitary disposal receptacles, nightly.
Thoroughly wash and polish all wall tile and stall surface as often as
necessary.
High Dusting
Do all high dusting quarterly which includes the following:
Dust all pictures, frames, charts, graphs and similar wall hangings not reached
in nightly cleaning.
Cleaning of light fixtures shall be for account of Tenant.
Hand dust all door and other ventilating louvers within reach, as necessary.
Glass
Exterior windows to be cleaned inside and outside two (2) times per annum,
weather permitting.
Interior glass doors and glass partitions to be cleaned when necessary.
EXHIBIT "D"
Landlord's Work Letter
Exhibit 10 (vi)(b)
THIS AGREEMENT OF LEASE (the "Lease"), made this 28 day of April, 2000 by and
between M. PARISI & SON CONSTRUCTION CO., INC., a New York corporation, having
offices at 54-65 48th Street, P.O. Box 780007, Maspeth, New York (hereinafter
designated as "Landlord") and ACETO CORPORATION, a New York corporation having
an office at One Hollow Lane, Lake Success, NY 11042 (hereinafter designated
as "Tenant")
W I T N E S S E T H :
Landlord hereby leases to Tenant and Tenant hereby hires from Landlord, in the
building known as LAKE SUCCESS PLAZA, (hereinafter referred to as the
"Building"), and located on land (hereinafter referred to as the "Land") at One
Hollow Lane, Lake Success, Nassau County, New York, 11378, that certain space,
containing approximately, without representation, 21,557 rentable square feet
(subject to a twenty percent (20%) loss factor) and located on the second floor
together with all fixtures and equipment which at the commencement, or during
the term of this Lease are thereto attached (except items not deemed to be
included constitute and are hereby called "the demised premises"), which
demised premises are approximately as shown on the plan or plans or diagram or
diagrams set forth on Exhibit "A" attached hereto and made a part hereof (or
incorporated by reference into this Lease as though physically attached hereto)
and Tenant shall have the non-exclusive, revocable common or joint use of all
Common Areas as said term is hereinafter defined in and subject to the
provisions of Article 27.09, of the Land and Building (and such other
facilities as to which Tenant is entitled pursuant to the terms hereof; for a
term of Ten (10) Lease Years (as herein defined), commencing on April 12, 2001
(the "Commencement Date"), and ending on April 30, 2011, unless sooner
terminated in accordance herewith, at an annual fixed rental rate as set forth
on Schedule 1 annexed hereto and made a part hereof. "Landlord's Work" to be
performed by Landlord shall be as set forth on Exhibit "D" which is attached
hereto and made a part hereof. Landlord shall promptly commence Landlord's
Work upon execution of this Lease and shall use good faith efforts to commence
and diligently complete such work, subject to reasonable delay and force
majeure.
Tenant agrees to pay said fixed annual rent in lawful money of the United
States, in equal monthly installments in advance on the first day of each
calendar month during said term, at the office of Landlord or such other place
in the United States of America as Landlord may designate in writing, without
any setoff or deduction whatsoever. Should the obligation to pay rent commence
on any day other than the first day of a month, then the fixed rent for the
unexpired portion of such month shall be adjusted and pro-rated on a per diem
basis.
The parties hereto, for themselves, their heirs, distributees, executors,
administrators, legal representatives, successors and assigns, hereby covenant
as follows:
ARTICLE 1
Rent
1.01. Tenant shall, commencing on the Commencement Date and throughout the
term of this Lease pay the fixed annual rent and additional rent as above and
as hereinafter provided, by good and sufficient check drawn on a bank doing
business in the State of New York which is a member of the New York Clearing
House or a successor thereto. All sums other than fixed annual rent payable by
Tenant hereunder shall be deemed additional rent and payable on demand, unless
other payment dates are hereinafter provided, and Landlord shall have the same
remedies with respect to a default in payment of any items of additional rent
as Landlord has with respect to a default in payment of fixed rent. All rent
including fixed annual rent and all items of additional rent shall be payable
without setoff or deduction whatsoever. Each of the "Witnesseth" paragraphs
above are herein incorporated as if set forth verbatim herein.
ARTICLE 2
Occupancy
2.01. Tenant shall use and occupy the demised premises solely for general
offices for Tenant, its subsidiaries, related companies and divisions and
permitted assignees and subtenants, and for no other purpose. Without limiting
the foregoing, Tenant shall not use or occupy the demised premises as a savings
bank, state or Federal savings and loan association, commercial bank or trust
company, or any combination of uses incidental to the foregoing.
ARTICLE 3
Alterations and Installations
3.01. Tenant shall make no alterations, installations, additions or
improvements in or to the demised premises without Landlord's prior written
consent, which consent , shall not be unreasonably withheld or delayed,
provided that Tenant otherwise complies with all other applicable terms,
covenants and conditions of this Lease, including Section 3.09. All work,
including alterations, installations, additions or improvements in and to the
demised premises shall be done only by Landlord (or Landlord's affiliate) as
general contractor with such subcontractors, materialmen and mechanics selected
by Landlord (or Landlord's affiliate). All such work, alterations,
installations, additions and improvements shall be done at Tenant's sole cost
and expense and at such times and in such manner so as not to unreasonably
interfere with the peaceful enjoyment of the Building by other tenants,
provided however, that nothing herein shall require Landlord (or its affiliate)
as general contractor to perform any such work during non-business hours at
night, on weekends or on holidays. Prior to commencement of such work, for all
work over the sum of $50,000, Tenant must obtain and file a Payment or Surety
and Completion Bond with Landlord, from a licensed surety company reasonably
acceptable to Landlord and such bond shall otherwise be in form and content
acceptable to Landlord.
3.02. Any mechanic's lien (a "Lien") filed against the demised premises and/or
the Land and/or the Building for work claimed to have been done for or
materials claimed to have been furnished to Tenant shall be discharged of
record by Tenant at its expense within thirty (30) days after notice, by
payment, filing of the bond required by law or otherwise. If Tenant shall elect
to discharge any such Lien by bonding, Tenant shall, within ten (10) days after
the filing of such Lien apply for and diligently prosecute an application for a
court order to remove said Lien of record within not less than thirty (30)
thereafter.
3.03. All alterations, installations, additions and improvements made and
installed and paid for by Landlord shall become and be the property of Landlord
and shall remain upon and be surrendered with the demised premises as a part
thereof at the end of the term of this Lease, excluding Tenant's modular work
stations.
3.04. All non-structural alterations, installations, additions and
improvements made and installed by Tenant, or at Tenant's expense, upon or in
the demised premises shall be removed at the end of the term of the Lease at
Tenant's expense and the demised premises restored by Tenant, and any damages
created thereby shall be repaired, all at Tenant's cost and expense.
3.05. Where furnished by or at the expense of Tenant all movable furniture,
furnishings and trade fixtures, including without limitation, murals, business
machines and equipment, counters, screens, grille work, special paneled doors,
cages, partitions, metal railings, closets, paneling, lighting fixtures and
equipment, drinking fountains, refrigerators, and any other movable property
shall remain the property of Tenant which Tenant shall be obligated to remove
at any time prior to the expiration or sooner termination of the term of this
Lease, and without limiting Tenant's other obligations, Tenant shall repair all
damage occasioned by such removal, at Tenant's sole cost and expense. All such
property which is not so removed by Tenant shall, without limiting Landlord's
other rights and remedies, either be retained by Landlord as Landlord's
property or may be removed from the demised premises by Landlord, at Tenant's
sole cost and expense.
3.06. Tenant shall keep records of Tenant's alterations, installations,
additions and improvements, and the cost thereof. Tenant shall, within 45 days
after demand by Landlord, furnish to Landlord copies of such records and cost
if Landlord shall require same in connection with any proceeding to reduce the
assessed valuation of the Building, or in connection with any proceeding
instituted pursuant to Article 9 hereof.
3.07. During the course of Tenant's alterations, Tenant will carry or cause to
be carried adequate Worker's Compensation Insurance, Builders Risk,
Comprehensive General Liability and such other insurance as may be required by
law to be carried by Landlord or Tenant or required by Article 40 hereof in
connection with such construction, and such insurance (except the Worker's
Compensation Insurance) shall name Landlord, Landlord's managing agent, and all
mortgagees and ground lessors and such other parties as Landlord shall
designate as additional insureds.
3.08. "Structural Changes" shall mean changes or repairs to the "structural
elements" of the Building, which are the foundation, floor plate, exterior or
load-bearing walls, curtain wall, roof and the Building-wide plumbing,
electrical and heating, ventilation and air conditioning systems (said heating,
ventilation and air conditioning systems are sometimes hereinafter referred to
collective as the "HVAC System").
3.09. Notwithstanding anything contained elsewhere in this Lease, if Tenant
desires to make any alterations, installations, additions or improvements,
Tenant will, without limiting Tenant's other obligations, comply with all of
the following at Tenant's sole cost and expense:
a) Tenant shall furnish Landlord with the plans of the planned alterations
prior to construction.
b) Tenant must furnish Landlord with an "as-built" plan upon the completion of
any work.
c) Tenant will obtain all governmental permits and pay all applicable
government fees, including filing fees.
d) Tenant will file appropriate plans with governmental authorities, where
applicable.
e) Tenant will perform all alterations, installations, additions and other
improvements in a good and workmanlike manner in accordance with standards at
least equivalent to the standards prevailing in the building of which the
demised premises form a part.
f) Tenant shall pay for, and shall otherwise accept full responsibility for,
any additions and changes in sprinklers, passages, legal exits, entrances,
corridors, stairs, elevators and toilets, which may be necessitated by such
alterations, installations, additions or improvements and shall not do any work
which shall adversely affect the remainder of the building of which the demised
premises form a part, provided however, that Tenant shall not have any right to
make any such alterations, installations, additions or improvements or perform
any work without Landlord's express prior written consent in each instance.
g) Tenant shall not make any installation, alteration, addition or other
improvement on or through the roof, nor shall Tenant or Tenant's agents enter
upon the roof or place objects thereon without the specific prior written
permission of Landlord, who, if such permission is granted, shall specify the
time and conditions under which such entry may be obtained. Landlord may make
such rules and regulations as they deem appropriate to govern Tenant's use or
access to the roof for any purpose whatsoever.
ARTICLE 4
Repairs
4.01. Tenant shall, at its sole cost and expense and only using Landlord (or
its affiliate) as general contractor, take good care of the demised premises
and the furniture, fixtures, equipment and appurtenances therein, and shall
keep and maintain the demised premises and the furniture, fixtures, equipment
and appurtenances therein, including but not limited to, any and all bathrooms
and kitchens which are located within the demised premises, in a condition of
good order and repair. Without limiting the foregoing, Tenant shall make all
repairs to the demised premises, the Building and the Land, using only Landlord
(or Landlord's affiliate) as general contractor including the fixtures and
appurtenances in the demised premises and including further Structural Changes
of any kind which are necessitated by the act, omission, use, occupancy,
negligence or other misconduct of Tenant, its employees, agents, contractors,
servants, licensees or invitees or which are necessitated by any breach or
default of any of the terms, covenants and conditions of this Lease, as and
when needed to keep them in good working order and condition. In addition,
Tenant shall, at Tenant's sole cost and expense, using Landlord or its
affiliate as general contractor, maintain, repair and replace all HVAC,
electric, plumbing and other systems and facilities located within the demised
premises which are supplemental or special to the Building's standard systems,
whether installed pursuant to this Lease or otherwise. In addition, all
damages or injury to the demised premises and to its fixtures, appurtenances,
systems, facilities or in and to the Building or to its, fixtures,
appurtenances, systems, facilities and caused by Tenant, its agents,
employees, contractors, servants, licensees or invitees moving property in or
out of the Building or by installation or removal of, fixtures, or other
property, shall be repaired, restored or replaced promptly by Tenant at its
sole cost and expense, using Landlord or Landlord's affiliate as general
contractor, which repairs restorations and replacements shall be in quality and
class equal to the original work or installations. Without limiting Landlord's
other rights and remedies, Tenant shall pay to Landlord the full cost and
expense incurred by Landlord or its affiliate as general contractor in
performing such repairs, restorations or replacements which shall be payable by
Tenant to Landlord within 15 days after rendition of a bill therefor.
4.02. Tenant shall not place a load upon any floor of the demised premises
exceeding the floor load per square foot area which such floor was designed to
carry and which is allowed by law. Landlord represents that the floor load is
sufficient for Tenant's use for general office purposes.
4.03. Business machines and mechanical equipment belonging to Tenant which
cause vibration, noise, cold or heat that may be transmitted to the Building
structure or to any leased space to such a degree as to be reasonably
objectionable to Landlord or to any other tenant in the Building shall be
placed and maintained by Tenant at its expense in settings of cork, rubber or
spring-type vibration eliminators sufficient to absorb and prevent such
vibration or noise, cold or heat. The parties hereto recognize that the
operation of elevators, air conditioning and heating equipment will cause some
vibration, noise, heat or cold which may be transmitted to other parts of the
Building and demised premises. Landlord shall be under no obligation to
endeavor to reduce such vibration, noise, heat or cold beyond what is customary
in a first class office building such as the Building.
4.04. Unless expressly provided for in this Lease, there shall be no allowance
to Tenant for a diminution of rental value and no liability on the part of
Landlord by reason of inconvenience, annoyance or injury to business arising
from the making of any repairs, alterations, additions or improvements in or to
any portion of the Building or the demised premises or in or to fixtures,
appurtenances or equipment thereof.
4.05. Landlord, at its sole cost and expense, shall maintain and make all
necessary Structural Changes to (i) the Building and the demised premises, and
(ii) the Common Areas, (hereinafter defined in Section 27.09) in a manner
consistent with a first-class office building, except that: (a) Landlord shall
not be responsible for the maintenance, repair or replacement of any systems
including but not limited to heating, ventilating and air conditioning,
electric, plumbing including bathrooms and kitchens which are located within
the demised premises and are supplemental or special to the Building standard
systems, whether installed pursuant to this Lease or otherwise; and (b) the
cost of performing any maintenance, repairs or replacements caused or
necessitated by the negligence or other misconduct of Tenant, its employees,
agents, servants, contractors, licensees or invitees or the failure of Tenant
to perform its obligations under this Lease, shall be paid by Tenant, except to
the extent of insurance proceeds, if any, actually collected by Landlord with
regard to the damage necessitating such repairs; and (c) Landlord shall not be
responsible for the maintenance, repair or replacement of any floor coverings
located in the demised premises; and (d) Landlord shall also not be responsible
for the replacement, repair or maintenance of any electric lighting (including
but not limited to tubes, bulbs, ballasts) and any wall finish or covering
within the demised premises; and (e) Landlord shall also not be responsible for
any repairs, maintenance or replacements which are the obligation of Tenant
pursuant to the terms of this Lease.
ARTICLE 5
Requirements of Law; Fire Insurance
5.01. Tenant, at its sole cost and expense, shall comply with all law, orders
and regulations of Federal, State, County, Municipal and other local
governments, departments, commissions, authorities, and boards and with any
direction of any public officer or officers, pursuant to law, which shall
impose any violation, order or duty upon Landlord or Tenant with respect to the
demised premises and arising out of Tenant's use or manner of use or occupancy
of the demised premises (including Tenant's permitted use) or with respect to
the Building or Land, if arising out of Tenant's use or manner of use or
occupancy of the demised premises or the Building (including Tenant's permitted
use) or Land.
5.02. Tenant shall not do or permit to be done any act or thing upon the
Building, which will invalidate or be in conflict with New York Standard Fire
insurance policies covering the Building, and fixtures and property therein, or
which would increase the rate of fire insurance applicable to the Building to
an amount higher than it otherwise would be; and Tenant shall neither do nor
permit to be done any act or thing upon the Land and Building which shall or
might subject Landlord to any liability or responsibility for injury to any
person or persons or to property by reason of any business or operation being
carried on upon the Building; but nothing in this Section 5.02 shall prevent
Tenant's use of the demised premises for the purposes stated in Article 2
hereof.
5.03. If, as a result of any act or omission by Tenant or violation of this
Lease, the rate of fire insurance applicable to the Building shall be increased
to an amount higher than it otherwise would be, Tenant shall reimburse Landlord
for all increases of Landlord's fire insurance premiums so caused; such
reimbursement to be additional rent payable upon the first day of the month
following any outlay by Landlord for such increased fire insurance premiums.
In any action or proceeding wherein Landlord and Tenant are parties, a schedule
or "make up" of rates for the Building or demised premises issued by the body
making fire insurance rates, shall be presumptive evidence but not conclusive
of the facts therein stated and of the several items and charges in the fire
insurance rate than applicable to said Building.
5.04. Tenant shall not use or suffer the demised premises to be used in any
manner so as to create an environmental violation or hazard, nor shall Tenant
cause or suffer to be caused any chemical contamination or discharge of a
substance of any nature which is noxious, offensive or harmful or which under
any law, rule or regulation of any governmental authority having jurisdiction
constitutes Hazardous Materials as hereinafter defined.
5.05. Tenant shall also immediately notify Landlord in writing of any
environmental concerns of which Tenant is or becomes aware and which are raised
by any private party or government agency with regard to Tenant's business at
the demised premises. Tenant shall also notify Landlord immediately of any
hazardous waste spills at the demised premises and of any other Hazardous
Materials of which Tenant becomes aware.
5.06. Not in limitation of the generality of the foregoing, but as additional
covenants, Tenant specifically agrees that (i) Tenant shall not (at or from the
demised premises) generate, manufacture, refine, transport, treat, store,
handle, dispose or otherwise deal with any hazardous substances or hazardous
waste as now or hereafter defined by applicable law; and (ii) Tenant shall
defend, indemnify and hold Landlord harmless against any liability, loss, cost
or expense, including reasonable attorneys' fees and costs (whether or not
legal action has been instituted) incurred by reason of the existence of or any
failure by Tenant to comply with any environmental law now or hereafter in
effect. Notwithstanding the foregoing, but without limiting Tenant's other
obligations under this Article 5, Tenant shall have the limited right to bring
samples of its chemical products into the demised premises subject to the
following conditions:
1. All such samples shall be stored, transported, shipped or otherwise handled
in accordance with applicable local, state and federal environmental, fire,
health and safety laws, rules and regulations.
2. No such samples shall be disposed of within or on the demised premises, the
Building or the Land, whether by use of any plumbing, trash receptacles or
otherwise. Tenant shall only dispose of such samples off-site by using only
licensed and bonded hazardous waste removal contractors.
3. The Tenant shall provide a locked storage area for said chemicals, and
Tenant shall provide access to such storage area at all times to any and all
state or local fire, police or other public safety officers.
4. Tenant shall also comply with all requirements of Landlord's insurance
carrier and will pay any increase in policy premiums to Landlord which may
result from Tenant's storage, transportation, shipment or other handling of
such chemical samples at the demised premises. If Landlord's mortgagee gives
notice that the presence of such chemical samples is a default under any
mortgage or mortgage related instrument or if Landlord's insurance carrier
gives notice to Landlord that it intends to cancel any of Landlord's insurance
policies based upon the presence of such chemical samples, then Tenant shall
cease the storage, transportation, shipment or other handling of such chemical
samples within three (3) days after receipt of written demand from Landlord.
5.07. As used herein, the term "Hazardous Materials" means and includes all
potentially hazardous materials, including without limitation radon, oil, gas
and other petroleum products, lead paint, asbestos and asbestos containing
materials.
5.08. Tenant covenants and agrees that at any and all times during the term of
this Lease it shall be responsible for compliance with any federal, state,
county, local, or municipal law (including without limitation Local Law 76, as
same now exists or may hereafter be amended, if the Building is located in New
York City), statute, ordinance, code, regulation or administrative
recommendation pertaining to Hazardous Materials which may have been introduced
by the Tenant or its agents, employees contractors, licensees or invitees
(including without limitation any requirements pertaining to the cleanup,
removal, and/or encapsulation of any Hazardous Materials that may be in or at
the demised premises or may have emanated therefrom). Tenant shall, at its
sole cost and expense, undertake any and all steps which may be required for
compliance as aforesaid. In addition, Tenant shall be solely responsible for
restoring and repairing any damage to the demised premises caused by or
resulting from such compliance, e.g. the replacement of any ceiling tiles or
insulation with comparable products not containing any Hazardous Materials.
5.09. Tenant shall indemnify and save harmless the Landlord, Landlord's
agents, servants, and employees, from and against all claims and demands
whether for injuries to persons or loss of life, or damage to property, related
to or arising in any manner whatsoever out of the clean-up, removal and/or
encapsulation of Hazardous Materials provided same is occasioned wholly or in
part by any act or omission of (or failure to comply with legal requirements
by) Tenant, its agents, contractors, employees, servants and licensees. In the
event Landlord shall, without fault on its part, be made a party to any
litigation or administrative proceedings commenced by or against Tenant, then
Tenant shall protect and hold Landlord harmless and shall pay all costs,
expenses and reasonable attorneys fees incurred or paid by Landlord in
connection with such litigation.
5.10. Notwithstanding anything herein to the contrary, Tenant shall file no
documents or take any other action under this Article without Landlord's prior
written approval thereof, and Landlord shall also have the right to file such
documents or take such action instead or on behalf of Tenant (but still at
Tenant's sole cost and expense), and Tenant shall cooperate with Landlord in so
doing. Tenant shall also (i) furnish Landlord with copies of any documents
filed by Tenant pursuant to any environmental law; (ii) permit Landlord to be
present at any inspection, on or off site, and at any meetings and substances
dealt with by Tenant at the demised premises, as well as any additional
information available to Tenant for government filings or determinations as to
whether there has been compliance with an environmental law.
5.11. Landlord shall also have the right, but not the obligation, to enter the
demised premises at any time to conduct tests to discover the facts of any
alleged or potential environmental problem. In the event Tenant fails to
comply as aforesaid with the clean-up, removal, and/or encapsulation of
Hazardous Materials when so required within the period of time permitted or
promulgated, then in such event Landlord (or its affiliate) may undertake said
work, but shall not be obligated to do so. Should Landlord (or its affiliate)
undertake said work required by Tenant as aforesaid, then in such event,
Landlord shall render a statement to Tenant for the cost and expenses of
undertaking said work plus a charge of twenty (20%) percent for administrative
costs and expenses, which statement shall be paid by Tenant as Additional Rent
within ten (10) days of receipt thereof. Failure of Tenant to undertake
compliance as aforesaid shall constitute a material default under this Lease
for which Landlord shall have all rights and remedies, including without
limitation the right to terminate this Lease and the right to hold Tenant
responsible for the entire cost of compliance as aforesaid and for all of
Landlord's damages resulting from Tenant's failure to so comply.
5.12. The provisions of this Article shall survive the expiration or earlier
termination of this Lease, and the Tenant shall require any permitted assignee
or sub-lessee of the demised premises to agree expressly in writing to comply
with all the provisions of this Article.
ARTICLE 6
Subordination
6.01. This Lease is subject and subordinate to all ground or underlying leases
and to all mortgages which may now or hereafter affect such leases or the real
property of which demised premises form a part, and to all renewals,
modifications, consolidations, replacements and extensions thereof. This
clause shall be self-operative and no further instrument of subordination shall
be required by any mortgagee. In confirmation of such subordination, Tenant
shall execute promptly any certificate that Landlord may reasonably request.
ARTICLE 7
Loss, Damage, Reimbursement, Liability, etc.
7.01. Landlord or its agents shall not be liable for any injury or damage to
persons or property resulting from fire, explosion, falling plaster, steam,
gas, electricity, water, rain or snow or leaks from any part of the Building,
or from the pipes, appliances or plumbing works or from the roof, street or
subsurface or from any other place or by dampness or by any other cause of
whatsoever nature, unless any of the foregoing shall be caused by or due to the
negligence, breach of
guarantees, act or omissions of Landlord, its agents, servants or employees.
7.02. Tenant shall reimburse Landlord for all expense, damages or fines
incurred or suffered by Landlord, and for which Landlord has not been or will
not be reimbursed by insurance, by reason of any breach, violation or
nonperformance by Tenant, or its agents, servants or employees, of any covenant
or provision of this Lease, or by reason of damage to persons or property
caused by moving property of or for Tenant in or out of the Building, or by the
Tenant or by reason of or arising out of the carelessness, negligence or
improper conduct of Tenant, or its agents, servants or employees in the use or
occupancy of the demised premises with out prejudice to Landlord's other rights
and remedies.
7.03. Tenant shall give Landlord notice in case of fire or accidents in the
demised premises promptly after Tenant is aware of such event.
7.04. As a material inducement for Landlord to execute and deliver this Lease,
Tenant agrees to look solely to Landlord's estate and interest in the Land and
Building, or the Lease of the Building, and the demised premises, for the
satisfaction of any right or remedy of Tenant for the collection of a judgment
(or order or other judicial process) requiring, in whole or in part, the
payment of money by Landlord, in the event of any liability by Landlord
hereunder, and no other property or assets of Landlord shall be subject to
levy, execution, attachment, or other enforcement procedure for the
satisfaction of Tenant's remedies under or with respect to this Lease, the
relationship of Landlord and Tenant hereunder, or Tenant's use and occupancy of
the demised premises, or for any other liability of Landlord to Tenant.
7.05. Each party hereby releases the other party (which term as used in this
paragraph includes the employees, agents, officers and directors of the other
party) from all liability whether for negligence or otherwise, in connection
with loss covered by any insurance policies which the releasor carries with
respect to the demised premises or any interest or property therein or, thereon
(whether or not such insurance is required to be carried under this Lease), but
only to the extent that such loss is collected under said insurance policies.
Such release is also conditioned upon the inclusion in the policy or policies
of a provision whereby any such release shall not adversely affect said
policies or prejudice any right of the releasor to recover thereunder. Each
party agrees that its insurance policies, aforesaid, will include such a
provision so long as the same shall be obtainable without extra cost, or if
extra cost shall be charged therefor, each party shall advise the other thereof
of the amount of the extra cost, and the other party, at its election, may pay
the same, but shall not be obligated to do so.
ARTICLE 8
Destruction - Fire or Other Cause
8.01. If the demised premises or any part thereof shall be damaged by fire or
other casualty, Tenant shall give immediate notice thereof to Landlord and this
Lease shall continue in full force and effect except as hereinafter set forth.
8.02. If the demised premises are partially damaged or rendered partially
unusable by fire or other casualty, the damages thereto shall be repaired by
and at the expense of Landlord and the rent, until such repair shall be
substantially completed, shall be apportioned from the day following the
casualty according to the part of the demised premises which is usable.
8.03. If the demised premises are totally damaged or rendered wholly unusable
by fire or other casualty, then the rent shall be proportionately paid up to
the time of the casualty and thenceforth shall cease until the date when the
demised premises shall have been repaired and restored by Landlord, subject to
Landlord's right to elect not to restore the same as hereinafter provided.
8.04. If the demised premises are rendered wholly unusable or (whether or not
the demised premises are damaged in whole or part) if the Building shall be so
damaged that Landlord shall decide to demolish it or not to rebuild it, then,
in any of such events Landlord may elect to terminate this Lease by written
notice to Tenant, given within 90 days after such fire or casualty, specifying
a date for the expiration of this Lease, which date shall not be more than 60
days after the giving of such notice, and upon the date specified in such
notice the term of this Lease shall expire as fully and completely as if such
date were the date set forth above for the termination of this Lease and Tenant
shall forthwith quit, surrender and vacate the demised premises without
prejudice however, to Landlord's rights and remedies against Tenant under the
Lease provisions in effect prior to such termination, and any rent owing shall
be paid up to such date and any rent paid for periods subsequent to such date
shall be returned to Tenant. Unless Landlord shall serve a termination notice
as provided for herein, Landlord shall make the repairs and restorations under
the conditions of 8.02 and 8.03 hereof, with all reasonable diligence, subject
to delays due to adjustment of insurance claims, labor troubles, the events set
forth or encompassed by the provisions of Article 25 and any and all other
causes beyond Landlord's control. After any such casualty, Tenant shall
cooperate with Landlord's restoration by removing from the demised premises as
promptly as reasonably possible, all of the Tenant's salvageable inventory and
movable equipment, furniture, and other property. Tenant's liability for rent
shall resume five (5) days after written notice from Landlord that the demised
premises are substantially ready for Tenant's occupancy excluding Tenant's
furniture, furnishings, fixtures, equipment, improvements or appurtenances
removable by Tenant which Landlord will not have any obligation to repair or
restore.
8.05. No damages, compensation or claim shall be payable by Landlord to Tenant
for inconvenience, loss of business or annoyance arising from any repair or
restoration of any portion of the demised premises or of the Building.
8.06. Nothing contained hereinabove shall relieve Tenant from liability that
may exist as a result of damage from fire or other casualty. Notwithstanding
the foregoing, each party shall look first to any insurance in its favor before
making any claim against the other party for recovery for loss or damage
resulting from fire or other casualty, and to the extent that such insurance is
in force and collectible and to the extent permitted by law, Landlord and
Tenant hereby releases and waives all right of recovery against the other or
anyone claiming through or under each of them by way of subrogation or
otherwise. The foregoing release and waiver shall be in force only if both
releasors' insurance policies contain a clause providing that such a release or
waiver shall not invalidate the insurance. If, and to the extent, that such
waiver can be obtained only by the payment of additional premiums, then the
party benefitting from the waiver shall pay such premium within ten (10) days
after written demand or shall be deemed to have agreed that the party obtaining
insurance coverage shall be free of any further obligation under the provisions
hereof with respect to waiver of subrogation. Tenant acknowledges that
Landlord will not carry insurance on Tenant's furniture and/or furnishings or
any fixtures or equipment, improvements, or appurtenances removable by Tenant
and agrees that Landlord will not be obligated to repair any damage thereto or
replace the same.
8.07. Tenant hereby waives the provisions of Section 227 of the Real Property
Law of the State of New York and agrees that the provisions of this Article
shall govern and control in lieu thereof.
ARTICLE 9
Eminent Domain
9.01. In the event that the whole of the demised premises shall be lawfully
condemned or taken in any manner for any public or quasi-public use or purpose,
this Lease and the term and estate hereby granted shall forthwith cease and
terminate as of the date of vesting of title (hereinafter referred to as the
"date of taking"), and Tenant shall have no claim against Landlord or the
condemning authority for, or make any claim for, the value of any expired term
of this Lease, nor any other claim, and the rent and additional rent shall be
apportioned as of such date.
9.02. In the event that any part of the demised premises shall be so condemned
or taken, then this Lease shall be and remain unaffected by such condemnation
or taking, except that the rent and additional rent allocable to the part so
taken shall be apportioned as of the date of taking, provided, however, that
Tenant or Landlord may each elect to cancel this Lease if more than twenty-five
(25%) percent of the demised premises shall be so condemned or taken, provided
such notice of election is given to the other party, not later than thirty (30)
days after the date when Landlord notifies Tenant of the date that title shall
vest or has vested in the condemning authority. Upon the giving of such
notice, this Lease shall terminate on the thirtieth day following the date of
such notice by Tenant. Upon such partial taking and this Lease continuing in
force as to any part of the demised premises, the rent and additional rent
shall be diminished by an amount representing the part of said rent and
additional rent properly applicable to the portion or portions of the demised
premises which may be condemned or taken. If as a result of the partial taking
(and this Lease continuing in force as to the part of the demised premises not
so taken), any part of the demised premises not taken is damaged, Landlord
agrees with reasonable promptness to commence the work necessary to restore the
damaged portion to the condition existing immediately prior to the taking, and
prosecute the same with reasonable diligence to its completion.
9.03. Nothing hereinabove provided shall preclude Tenant from appearing,
claiming, proving and receiving in the condemnation proceeding, Tenant's moving
expenses, and the value of Tenant's movable furniture, fixtures and equipment
which do not become part of the Building or property of Landlord, provided such
claims do not diminish Landlord's award.
9.04. In the event that more than twenty-five (25%) per cent of the demised
premises shall be so taken and neither Tenant nor Landlord have elected to
cancel this Lease as above provided, the entire award for partial taking shall
be paid to Landlord, and Landlord, at Landlord's own expense, shall to the
extent of the net proceeds (after deducting reasonable expenses including
attorneys' and appraisers' fees) of the award restore the unaffected part of
the Building to substantially the same condition and tenantability as existed
prior to the taking. Until said unaffected portion is restored, Tenant shall
be entitled to a proportionate abatement of rent for that portion of the
demised premises which is being restored and is not usable until the completion
of the restoration or until the said portion of the demised premises is used by
Tenant, whichever is sooner. Said unaffected portion shall be restored within
a reasonable time but not more than six (6) months after the taking provided,
however, if Landlord is delayed by strike, lockout, the elements, any of the
events set forth or encompassed by Article 25 or any other causes beyond
Landlord's control, the time for completion shall be extended for a period
equivalent to the delay. Should Landlord fail to complete the restoration
within the said six (6) months or the time as extended, Tenant may elect to
cancel this Lease and the term hereby granted in the manner and with the same
results as set forth in the next two sentences of this Section 9.04. If such
partial taking shall occur in the last two years of the term hereby granted,
either party, irrespective of the area of the space remaining, may elect to
cancel this Lease and the term hereby granted, provided such party shall,
within thirty (30) days after such taking, give notice to that effect, and upon
the giving of such notice, the rent shall be apportioned and paid to the date
of expiration of the term specified and this Lease and the term hereby granted
shall cease, expire and come to an end upon the expiration of said thirty days
specified in said notice. If either party shall so elect to end this Lease and
the term hereby granted, Landlord need not restore any part of the demised
premises and the entire award for partial condemnation shall be paid to
Landlord, and Tenant shall have no claim to any part thereof, except as to the
items set forth in Section 9.03 where same are applicable.
9.05. In the event all or any part of the demised premises shall be taken for
a temporary use or occupancy, (a) the Lease term shall not be reduced or
affected in any way except as provided in (d) below, (b) Tenant shall continue
to be responsible for all of its obligation hereunder and shall continue to pay
all rents and additional rents when due, (c) Tenant shall be entitled to
receive that portion of the award which represents reimbursement for the cost
of restoration of the demised premises, compensation for the use and occupancy
of the demised premises and for any taking of Tenant's property, except that,
if the temporary period of taking shall extend beyond the expiration of the
term of this Lease, the portion of the award representing compensation for the
use and occupancy of the demised premises shall be apportioned between Landlord
and Tenant as of said expiration date of said term and Landlord shall receive
that portion of the award which represents reimbursements for the cost of
restoration of the demised premises, and (d) if the date of taking shall occur
during the last three (3) years of the term of this Lease, Tenant may elect to
cancel this Lease by notice of election given by Tenant to Landlord not later
than thirty (30) days after the date when Landlord notifies Tenant of the date
that title shall vest or has vested in the condemning authority. Upon the
giving of such notice, this Lease shall terminate on the thirtieth day
following the date of such notice and the rent and additional rent shall be
apportioned as of such termination date, with Landlord and not Tenant, to
receive the portion of the award which represents reimbursement for the cost of
restoration of the demised premises and the portion of the award representing
compensation for the use and occupancy of the demised premises for the time
subsequent to the cancellation date.
9.06. In the event more than one-third (1/3) of the parking spaces shall be so
condemned or taken which parking spaces formulate part of the overall Land, and
the Landlord is not able to provide on-premises parking equal to two-thirds
(2/3) of the original parking areas, then in that event the Tenant may elect to
cancel this Lease and the terms hereby granted in accordance with the
provisions of Section 9.02 applicable to condemnation of more than twenty-five
(25%) percent of the demised premises. Landlord shall give notice to Tenant
within sixty (60) days of the date of such taking as to whether or not Landlord
will in fact restore sufficient parking facilities as herein set forth. If
Tenant does not elect to cancel this Lease, as aforesaid, then there shall be
no reduction or abatement in rent and this Lease shall otherwise remain in full
force and effect.
ARTICLE 10
Assignment and Subletting
10.01. Tenant, for itself, its heirs, distributees, executors, administrators,
legal representatives, successors and assigns, expressly covenants that it
shall not assign, mortgage or encumber this Lease, nor underlet, or suffer or
permit the demised premises or any part thereof to be used or occupied by
others, without the prior written consent of Landlord in each instance. If
this Lease be assigned, or if the demised premises or any part thereof be
underlet or occupied by anyone other than Tenant, Landlord may, after default
by Tenant, collect rent from the assignee, undertenant or occupant, and apply
the net amount collected to the rent herein reserved, but no assignment,
underletting, occupancy or collection or the acceptance of the assignee,
undertenant or occupant as tenant, shall be deemed a waiver of the provisions
hereof or a release of Tenant from the further performance by Tenant of
covenants on the part of Tenant herein contained; it being expressly understood
and agreed that Tenant shall remain fully liable for the performance and
observance of all terms, covenants and conditions of this Lease, including
without limitation, timely payment of all rent and items of additional rent.
The consent by Landlord to an assignment or underletting shall not in any wise
be construed to relieve Tenant from obtaining the express consent in writing of
Landlord to any further assignment or underletting. In no event shall any
permitted sublessee assign or encumber its sublease or further sublet all or
any portion of its sublet space, or otherwise suffer or permit the sublet space
or any part thereof to be used or occupied by others, without Landlord's prior
written consent in each instance.
10.02. If Tenant desires to assign this Lease or to sublet all or any portion
of the demised premises, it shall first submit in writing to Landlord the
description of the space and the terms for which Tenant intends to assign or
sublease and shall offer in writing, (i) with respect to a prospective
assignment, to assign this Lease to Landlord without any payment of monies or
other consideration therefor, or, (ii) with respect to prospective subletting,
to sublet to Landlord or its designee the portion of the demised premises
involved ("Leaseback Area") for the term intended by Tenant in its offer and at
the lower of (a) Tenant's proposed subrental or (b) at the same rate of fixed
rent and additional rent and otherwise on the same terms, covenants and
conditions (including provisions relating to escalation rents), as are
contained herein and as are applicable to the portion of the demised premises
to be covered by such subletting. The offer shall specify the date when the
Leaseback Area will be made available to Landlord which date shall be in no
event earlier than sixty (60) days nor later than one hundred eighty (180) days
following the acceptance of the offer by the Landlord. If an offer of sublease
is made, it shall in addition specify the duration of the term of the proposed
sublease as fixed by Tenant, except that if the proposed sublease will result
in all or substantially all of the demised premises being sublet, then Landlord
shall have the option to extend the term of this sublease to the term of the
underlying Lease, less one day. Landlord shall have a period of fifteen (15)
days from the receipt of such offer to either accept or reject the same. If
Landlord shall accept such offer Tenant shall then execute and deliver to
Landlord, or to anyone designated or named by Landlord of reasonable credit
standing, an assignment or sublease, as the case may be, in either case in a
form reasonably satisfactory to Landlord's counsel.
10.02.1 If a sublease is so made to Landlord or its designee, it shall
expressly:
(a) permit Landlord to make further subleases of all or any part of the
Leaseback Area and (at no cost or expense to Tenant) to make and authorize any
and all changes, alterations, installations and improvements in such space as
Landlord may deem necessary for such subletting, at Landlord's expense;
(b) provide that Tenant will at all times permit reasonably appropriate means
of ingress to and egress from the Leaseback Area;
(c) negate any intention that the estate created under such sublease be merged
with any other estate held by either of the parties;
(d) provide that Landlord shall accept the Leaseback Area "as is" except that
Landlord, at Tenant's expense, shall perform all such work physically to
separate the Leaseback Area from the remainder of the demised premises and to
permit lawful occupancy, it being intended that Tenant shall have no other cost
or expense in connection with the subletting of the Leaseback Area;
(e) provide that at the expiration or sooner termination of the term of such
sublease Tenant will accept the Leaseback Area in its then existing condition,
subject to the obligations of Landlord to make such repairs thereto as may be
necessary to preserve the Leaseback Area in good order and condition, ordinary
wear and tear expected.
10.02.2 Landlord, or its designee, as the case may be, shall indemnify and
save Tenant harmless from all obligations under this Lease as to the Leaseback
Area during the period of time it is so sublet except for any obligations which
are not performed by Landlord, or its designee, as such subtenant by reason of
the acts or omissions of Tenant, its agents, employees, contractors, servants,
licensees or invitees. Performance by Landlord, or its designee, under a
sublease of the Leaseback Area shall be deemed performance by Tenant of any
similar obligation contained in this Lease, and Tenant shall not be liable for
any default under this Lease or deemed to be in default hereunder if such
default is occasioned by or arises from any act or omission of the Landlord
under such sublease or is occasioned by or arises from any act or omission of
any occupant holding under or pursuant to any such sublease with Landlord or
its designee.
10.03. If Landlord shall not have accepted Tenant's offer, as provided in
Section 10.02, then Landlord will not unreasonably withhold or delay its
consent to Tenant's request for consent to such assignment or subletting. Any
such consent of Landlord shall be subject to the terms of this Article and
conditional upon there being no default by Tenant (which Tenant has not timely
cured or in good faith has commenced to cure and is diligently prosecuting the
cure thereof) during the period commencing on the date that Tenant shall have
made the offer as set forth in 10.02 to Landlord up to and including the date
of the commencement of the term of the proposed sublease or the effective date
of any such proposed assignment. In the event Tenant does not successfully
sublet or assign the space so designated in 10.02 within six (6) months, then
the Landlord's rights in 10.02 shall re-occur before Tenant may sublet or
assign such space.
10.04. If Tenant requests Landlord's consent to a specific assignment or
subletting, it shall submit in writing to Landlord (which writing shall be in
addition to the writing required pursuant to Section 10.02 hereof) (i) the name
and address of the proposed assignee or sublessee, (ii) a counterpart of the
proposed agreement or assignment or sublease, (iii) reasonably satisfactory
information as to the nature and character of the business of the proposed
assignee or sublessee, and as to the nature of its proposed use of the space,
and (iv) banking, financial or other credit information relating to the
proposed assignee or sublessee reasonably sufficient to enable Landlord to
determine the financial responsibility and character of the proposed assignee
or sublessee. The proposed sublessee or assignee must have a net worth equal
to not less than fifty percent (50%) of the net worth of Tenant.
10.05. Upon receiving Landlord's written consent, a duly executed copy of the
sublease or assignment shall be delivered to Landlord within ten (10) days
after execution thereof. Any such sublease shall provide that the sublessee
shall comply with all applicable terms and conditions of this Lease to be
performed by the Tenant hereunder. Any such assignment of Lease shall contain
an assumption by the assignee of all of the terms, covenants and conditions of
this Lease to be performed by the Tenant.
10.06. Anything herein contained to the contrary notwithstanding:
(a) Tenant shall not advertise (but may list with brokers) its space for
assignment or subletting at a rental rate lower than the rental rate then being
paid by Tenant to Landlord.
(b) The transfer of a majority of the issued and outstanding capital stock of
any corporate tenant or subtenant of this Lease or a majority of the total
interest in any partnership tenant or subtenant, or a majority of the
membership interests in a limited liability company, tenant or subtenant or a
majority of the total beneficial interests in any other form of tenant or
subtenant, however accomplished, and whether in a single transaction or in a
series of related or unrelated transactions, shall be deemed an assignment of
this Lease. The transfer of outstanding capital stock of any corporate tenant,
for purposes of this Article, shall not include sale of such stock by persons
other than those deemed "insiders" within the meaning of the Securities
Exchange Act of 1934 as amended and which sale is effected through "over-the-
counter market" or through any recognized stock exchange. In no event shall
there be an assignment or subletting it being understood and agreed that any
assignment or subletting must be to a bona fide operating entity for a bona
fide business purpose and which proposed assignment or subletting is not
designed to circumvent the restrictions on assignment and subletting set forth
in this Lease to a "shell" corporation - said assignment must be to the
operating entity.
(c) In addition to the restrictions set forth in this Article 10, no
assignments or subletting shall be made:
(i) To any person or entity which shall at that time be a tenant, subtenant or
other occupant of any part of the Building of which the demised premises form a
part, or any person or entity who has been dealing or negotiating with (or has
previously dealt or negotiated with) the Landlord or a broker for space in the
Building, or any person or entity with whom Landlord has been in negotiations
during the preceding one (1) year for any space in any Building owned or
managed by Landlord or its representatives.
(ii) By the legal representatives of Tenant or by any person to whom Tenant's
interest under this Lease passes by operation of law, except in compliance with
the provisions of this Article;
(iii) To any person or entity for the conduct of business which is not in
keeping with the standards and the general character of the Building of which
the demised premises form a part.
(iv) To any person or entity for the practice of medicine in any field.
10.07. Tenant may, with Landlord's prior written consent, which shall not be
unreasonably withheld, provided that Tenant otherwise complies with all other
terms, covenants and conditions of this Article 10, assign or transfer its
entire interest in this Lease and the leasehold estate hereby created or sublet
the whole of the demised premises to a successor entity ("Successor Entity") of
Tenant (as hereinafter defined); provided, however, that (i) Tenant shall not
be in default in any of the terms, covenants and conditions of this Lease, (ii)
the proposed occupancy shall not increase the office cleaning requirements or
impose an extra burden upon the building equipment or building services and
(iii) the proposed subtenant or assignee shall not be entitled, directly or
indirectly, to diplomatic or sovereign immunity and shall be subject to the
service of process in, and the jurisdiction of the courts of New York State. A
"Successor Entity", as used in this Article 10 shall mean (a) a corporation,
partnership, limited liability company or other business entity into which or
with which Tenant, its permitted successors or assigns, is merged or
consolidated, in accordance with applicable statutory provisions for the merger
or consolidation of corporations or other business entities, or (b) a
corporation, partnership, limited liability company or other business entity
acquiring this Lease and the term hereof and estate hereby granted, together
with the goodwill and all or substantially all of the other property and
assets, its permitted successors or assigns, and assuming all or substantially
all of the liabilities of Tenant, its permitted successors and assigns, or (c)
any permitted successor to a Successor Entity becoming such by either of the
methods described in subdivisions (a) and (b) above; provided that, immediately
after giving effect to any such merger or consolidation, or such acquisition
and assumption, as the case may be, the business entity surviving such merger
or created by such consolidation or acquiring such assets and assuming such
liabilities, as the case may be, shall have assets, capitalization and a net
worth, as determined in accordance with generally accepted accounting
principles, at least equal to the assets, capitalization and net worth,
similarly determined, of Tenant, its permitted successors or assigns,
immediately prior to such merger or consolidation or such acquisition and
assumption, as the case may be. The acquisition by Tenant, its permitted
successors or assigns, of all or substantially all of the assets, together with
the assumption of all or substantially all of the obligations and liabilities
of any business entity, shall be deemed to be a merger for the purposes of this
Article.
10.08. In the event that Tenant sells, sublets, assigns or transfers this
Lease and at anytime receives periodic rent and/or other consideration which
exceeds that which Tenant would at that time be obligated to pay to Landlord,
Tenant shall pay to Landlord 50% of the gross increase, exclusive of the costs
of any improvements, in such rent as such rent is received by Tenant and 50% of
any other consideration received by Tenant for such subtenant of any other
consideration received by Tenant from such subtenant in connection with such
sublease or in the case of an assignment of this Lease by Tenant, Landlord
shall receive 50% of any consideration paid to Tenant by, such assignee in
connection with such assignment.
ARTICLE 11
Access to Demised Premises
11.01. Tenant shall permit Landlord to erect, use and maintain pipes, ducts
and conduits in and through the demised premises, provided the same are
installed concealed behind walls and ceilings of the demised premises and are
installed by such methods and at such locations as will not materially
interfere with or impair Tenant's layout or use of the demised premises or
damage the appearance thereof. Landlord or its agents or designees shall have
the right, upon reasonable notice, (except in the event of an emergency) but
only upon request (except in the event of an emergency) made to Tenant or any
authorized employee of Tenant at the demised premises to enter the demised
premises, other than vaults or other enclosures where money, securities or
other valuables or confidential documents are kept, at reasonable times during
business hours, for the making of such repairs or alterations as Landlord shall
be required or shall have the right to make by the provisions of this Lease or
any other lease in the Building and, subject to the foregoing, shall also have
the right to enter the demised premises for the purpose of inspecting them or
exhibiting them to prospective purchasers or lessees of the entire Building or
to prospective mortgagees of the fee or of the Landlord's interest in the
property of which the demised premises are a part or to prospective assignees
of any such mortgages or to the holder of any mortgage on the Landlord's
interest in the property, its agents or designees. Landlord shall be allowed
to take all material into and upon the demised premises that may be required
for the repairs or alterations above mentioned as the same is required for such
purpose without the same constituting an eviction of Tenant in whole or in
part, and the rent reserved shall in no wise abate, except as otherwise
provided in this Lease, while said repairs or alterations are being made, by
reason of loss or interruption of the business of Tenant because of the
prosecution of any such work, provided Landlord shall exercise reasonable
diligence so as to minimize the disturbance.
11.02. Landlord may, upon reasonable notice to the Tenant, during the six (6)
months prior to the expiration of the term of this Lease, exhibit the demised
premises to prospective tenants.
11.03. If Tenant shall not be personally present to open and permit an entry
into the demised premises at any time when for any reason an entry therein
shall be urgently necessary by reason of fire or other emergency, Landlord or
Landlord's agents may forcibly enter the same without rendering Landlord or
such agents liable therefor (if during such entry Landlord or Landlord's agents
shall accord reasonable care to Tenant's property) and without in any manner
affecting the obligations and covenants of this Lease.
ARTICLE 12
Certificates of Occupancy
12.01. Tenant will not at any time use or occupy the demised premises in
violation of the certificate of occupancy issued for the Building. Landlord
represents to the best of its knowledge that the certificate of occupancy for
the Building permits the use of the demised premises for the purposes specified
in this Lease. Landlord will make no changes to the Building which will
result in the change to the Certificate of Occupancy for the Building that
would prevent the Tenant from using the demised premises for the use specified
in this Lease.
ARTICLE 13
Bankruptcy
13.01. Subject to the provisions of Section 13.03 and the applicable
bankruptcy statutes, if at any time prior to the date herein fixed as the
commencement of the term of this Lease there shall be filed by or against
Tenant in any court pursuant to any statute either of the United States or of
any State a petition in bankruptcy or insolvency or for reorganization or for
the appointment of a receiver or a trustee of all or a portion of Tenant's
property, or if Tenant makes an assignment for the benefit of creditors, or
petitions for or enters into an arrangement with creditors, this Lease shall
ipso facto be cancelled and terminated, in which event neither Tenant nor any
person claiming through or under Tenant or by virtue of any statute or of an
order of any court shall be entitled to possession of the demised premises and
Landlord, in addition to the other rights and remedies given by Section 13.04
hereof and by virtue of any other provision herein or elsewhere in this Lease
contained or by virtue of any statute of rule of law, may retain as liquidated
damages any rent, security, deposit or monies received by it from Tenant or
others in behalf of Tenant upon the execution thereof.
13.02. Subject to the provisions of Section 13.03, if at the date fixed as the
commencement of the term of this Lease or if at any time during the term hereby
demised there shall be filed by or against Tenant in any court pursuant to any
statute either of the United States or of any State a petition in bankruptcy or
insolvency or for reorganization of the appointment of a receiver or trustee of
all or a portion of Tenant's property, or if Tenant makes an assignment for the
benefit of creditors, or petitions for or enters into an arrangement with
creditors, Landlord may at Landlord's option, serve upon Tenant or any such
trustee, receiver, or assignee, a notice in writing stating that this Lease and
the term hereby granted shall cease and expire on the date specified in said
notice, which date shall be not less than ten (10) days after the serving of
said notice and this Lease and the term hereof shall then expire on the date so
specified as if that date had originally been fixed in this Lease as the
expiration date of the term herein granted. Thereupon, neither Tenant nor any
person claiming through or under Tenant by virtue of any statute or of an order
of any court shall be entitled to possession or to remain in possession of the
demised premises but shall forthwith quit and surrender the demised premises,
and Landlord, in addition to the other rights and remedies Landlord has by
virtue of any other provision herein or elsewhere in this Lease contained or by
virtue of any statute or rule of law, may retain as liquidated damages any
rent, security, deposit or monies received by it from Tenant or others in
behalf of Tenant.
13.03. In the event that at any times mentioned in either Sections 13.01 and
13.02 there shall be instituted against Tenant an involuntary proceeding for
bankruptcy, insolvency, reorganization or any other relief described in
Sections 13.01 or 13.02, Tenant shall have ninety (90) days in which to vacate
or stay the same before this Lease shall terminate or before Landlord shall
have any right to terminate this Lease, provided the rent and additional rent
then in arrears, if any, are paid within fifteen (15) days after the
institution of such proceeding, and further provided that the rent and
additional rent which shall thereafter become due and payable are paid when
due, and Tenant shall not otherwise be in default in the performance of the
terms and covenants of this Lease.
13.04. In the event of the termination of this Lease pursuant to Sections
13.01, 13.02 or 13.03 hereof, Landlord shall forthwith, notwithstanding any
other provisions of this Lease to the contrary, be entitled to recover from
Tenant as and for liquidated damages an amount equal to the difference between
the rent reserved hereunder for the unexpired portion of the term demised and
the then fair and reasonable rental value of the demised premises for the same
period. If the demised premises or any part thereof be re-let by Landlord for
the unexpired term of this Lease, or any part thereof, before presentation of
proof of such liquidated damages to any court, commission or tribunal, the
amount of rent reserved upon such re-letting shall be prima facie evidence of
the fair and reasonable rental value for the part or the whole of the premises
so re-let during the term of the re-letting. Nothing herein contained shall be
limit or prejudice the right of Landlord to prove for and obtain as liquidated
damages by reason of such termination, an amount equal to the maximum allowed
by any statute or rule of law in effect at the time, and governing the
proceedings in which such damages are to be proved, whether or not such amount
be greater, equal to, or less than the amount of the difference referred to
above.
ARTICLE 14
Default
14.01. If Tenant defaults any of the terms, covenants and conditions of this
Lease, including the covenants for the payment of rent or additional rent, or
if the demised premises become vacant or deserted, or if any execution or
attachment shall be issued against Tenant or any of Tenant's property whereupon
the demised premises shall be taken or occupied by someone other than Tenant;
or if this lease be rejected under the applicable bankruptcy code; or if Tenant
shall fail to move into or take possession of the premises within thirty (30)
days after the commencement of the term of this lease, then, in any one or more
of such events, upon Owner serving a written ten (10) days notice upon Tenant
specifying the nature of said default and upon the expiration of said ten (10)
days, if Tenant shall have failed to comply with or remedy such default of if
the said default or omission complained of shall be a non-monetary and is of a
nature that the same cannot be completely cured or remedied within said ten
(10) day period, and if Tenant shall not have diligently commenced curing such
non-monetary default within such ten (10) days period, and shall not thereafter
with reasonable diligence and in good faith proceed to remedy or cure such non-
monetary default, provided however, that in no event shall Tenant have in
excess of thirty (30) days to complete the cure of any such non-monetary
default which is of such a nature that same cannot be completely cured within
said ten (10) day period, then, in any one or more of such events, Owner may
serve a written ten (10) days' notice of cancellation of this lease upon
Tenant, and upon the expiration of said ten (10) days this lease and the term
thereunder shall end and expire as fully and completely as if the expiration of
such ten (10) day period were the day herein definitely fixed for the end and
expiration of this lease and the term thereof and Tenant shall then quit and
surrender the demised premises to Owner, but Tenant shall remain liable as
hereinafter provided.
14.01.1 Reference is made to that certain other lease agreement which Landlord
and Tenant entered into in October 1990 covering certain space in the Building
which was modified by that certain modification of lease dated as of April 14,
1997 (collectively, the "Existing Lease"). Reference is further made to that
certain other lease agreement of even date entered into by and between Landlord
and Tenant covering other premises in the Building ("Other Lease"). A default
by Tenant under the Existing Lease and/or a default by Tenant under the Other
Lease shall, at the option of Landlord, constitute a default under this Lease.
A default under this Lease by Tenant shall, at the option of Landlord,
constitute a default under the Existing Lease and/or the Other Lease. Without
limiting the foregoing, in the event that this Lease terminates by reason of
Tenant's default or otherwise, including by reason of fire or other casualty or
condemnation, then at Landlord's option, the Existing Lease and/or the Other
Lease shall also terminate and in the event that the Existing Lease shall
terminate by reason of Tenant's default thereunder or otherwise, including by
reason of fire, casualty or condemnation, then at Landlord's option this Lease
and/or the Other Lease shall also terminate and in the event that the Other
Lease shall terminate by reason of Tenant's default and/or otherwise, including
by reason of fire, casualty or condemnation, then at Landlord's option this
Lease and/or the Existing Lease shall also terminate, without prejudice to
Landlord's other rights and remedies at law and in equity.
14.02. If the notices provided for in Section 14.01 hereof shall have been
given, and the term shall expire as aforesaid, or if Tenant shall default in
the payment of the rent reserved herein or any item of additional rent herein
provided or any part of either or in making any other payment herein provided
for, then and in any of such events Landlord may, without notice, re-enter the
demised premises, and dispossess Tenant, the legal representatives of Tenant or
other occupant of the demised premises, by summary proceedings and lawfully
remove their effects and hold the premises as if this Lease had not been made,
and Tenant hereby waives the service of notice of intention to re-enter or to
institute legal proceedings to that end.
14.03. Notwithstanding the provisions of Section 14.01 hereof, Tenant, at its
own cost and expense may contest, in any manner permitted by law (including
appeals to a court, or governmental department or authority having jurisdiction
in the matter), the validity or the enforcement of any governmental act,
regulation or directive with which Tenant is required to comply pursuant to
this Lease, and may defer compliance therewith provided that:
(a) such non-compliance shall not subject Landlord or any of its directors,
officers, employees or shareholders to criminal prosecution, criminal or civil
penalty or subject the Land and/or Building at One Hollow Road, Lake Success,
New York, to lien or sale;
(b) such non-compliance shall not be in violation of any mortgage, or of any
ground or underlying lease and/or any mortgage affecting the Building or Land;
(c) Tenant shall first deliver to Landlord a surety bond issued by a surety
company licensed in the State of New York or other security satisfactory to
Landlord in an amount satisfactory to Landlord, indemnifying and protecting
Landlord against any loss or injury by reason of such non-compliance; and
(d) Tenant shall promptly and diligently prosecute such contest.
(e) Tenant shall pay any and all costs and expenses associated with such
contest and shall reimburse Landlord for its reasonable attorneys fees
associated with the Landlord's review of or participation in Tenant's contest.
Landlord shall reasonably cooperate with Tenant, including the execution of
such documents as are reasonably necessary under the circumstances, provided
that Landlord agrees with the accuracy of such documents and that no provision
of this Lease is violated thereby.
ARTICLE 15
Remedies of Landlord; Waiver of Redemption
15.01. In case of any such re-entry, expiration and/or dispossess by summary
proceedings or otherwise as set forth in Article 14 hereof (a) the rent shall
become due thereupon and be paid up to the time of such re-entry, dispossess
and/or expiration, together with such expenses as Landlord may incur for legal
expenses, reasonable attorneys' fees, brokerage, and/or putting the demised
premises in good order, or for preparing the same for re-rental; (b) Landlord
may re-let the demised premises or any part or parts thereof, either in the
name of Landlord or otherwise, for a term or terms, which may at Landlord's
option be less than or exceed the period which would otherwise have constituted
the balance of the term of this Lease and may grant concessions or free rent;
and/or (c) Tenant shall also pay Landlord as liquidated damages for the failure
of Tenant to observe and perform said Tenant's covenants herein contained, any
deficiency between the rent hereby reserved and/or covenanted to be paid and
the net amount, if any, of the rents collected on account of the lease or
leases of the demised premises for each month of the period which would
otherwise have constituted the balance of the term this Lease. The failure of
Landlord to re-let the demised premises or any part or parts thereof shall not
release or affect Tenant's liability for damages. In computing such liquidated
damages there shall be added to the said deficiency such expenses as Landlord
may incur in connection with re-letting, such as legal expenses, reasonable
attorneys' fees, brokerage and for keeping the demised premises in good order
or for preparing the same for re-letting. Any such liquidated damages shall be
paid in monthly installments by Tenant on the rent days specified in this Lease
and any suit brought to collect the amount of the deficiency for any month
shall not prejudice in any way the rights of Landlord to collect the deficiency
for any subsequent month by a similar proceeding. Landlord, at Landlord's
option, may make such alterations, repairs, replacements and/or decorations in
the demised premises as Landlord, in Landlord's sole judgment, considers
advisable and necessary for the purpose of re-letting the demised premises; and
the making of such alterations and/or decorations shall not operate or be
construed to release Tenant from liability hereunder as aforesaid. Landlord
shall in no event be liable in any way whatsoever for the failure or refusal to
re-let the demised premises or any parts thereof, or, in the event that the
demised premises are re-let, for failure to collect the rent thereof under such
re-letting. In the event of a breach, or threatened breach by Tenant of any of
the covenants or provisions hereof, Landlord shall have the right to invoke any
remedy allowed at law or in equity as if re-entry, summary proceedings and
other remedies were not herein provided for. Mention in this Lease of any
particular remedy, shall not preclude Landlord from any other remedy, in law or
in equity. Without limiting Landlord's other rights and remedies, if Tenant
shall at any time default hereunder, and if Landlord shall institute an action
or summary proceedings against Tenant based upon such default, or if Landlord
is otherwise involved in any litigation against Tenant, then Tenant will
reimburse Landlord for the reasonable attorneys' fees, costs and disbursements
incurred by Landlord.
15.02. Tenant hereby expressly waives any and all rights of redemption granted
by or under any present or future laws in the event of Tenant being evicted or
dispossessed for any cause, or in the event of Landlord obtaining possession of
demised premises, by reason of the violation by Tenant of any of the covenants
and conditions of this Lease or otherwise.
ARTICLE 16
Fees and Expenses; Interest
16.01. If Tenant shall default in the observance or performance of any term or
covenants on Tenant's part to be observed or performed under or by virtue of
any of the covenants, terms or provisions in any Article of this Lease, then,
without limiting Landlord's other rights and remedies (a) Landlord may remedy
such default for the account of Tenant, immediately and without notice in case
of emergency, or in any other case only provided that Tenant shall fail to
remedy such default with all reasonable dispatch after Landlord shall have
notified Tenant in writing of such default and the applicable grace period for
curing such default shall have expired; and (b) if Landlord makes any
expenditures or incurs any obligations for the payment of money in connection
with such default including, but not limited to, reasonable attorneys' fees in
instituting, prosecuting or defending any action or proceeding, such sums paid
or obligations incurred, with interest, shall be deemed to be additional rent
hereunder and shall be paid by Tenant to Landlord upon rendition of a bill to
Tenant therefor.
16.02. Without limiting Landlord's other rights and remedies, if Tenant is
late in making any payment due to Landlord from Tenant under this Lease, then
interest per annum ("interest") calculated at the rate of three percent (3%)
above the prime rate of interest charged by The Chase Manhattan Bank in New
York City shall become due and owing to Landlord on such payment from the
date when it was due (or the maximum amount as may then be legally permitted by
law whichever is lower).
16.03. If Landlord shall default in the observance or performance of any term
or covenants on Landlord's part to be observed or performed under or by virtue
of any of the covenants, terms or provisions in any Article of this Lease, and
if Landlord shall fail to commence to cure such default within forty-five (45)
days after receipt of written demand from Tenant (or if such default cannot be
cured within forty-five days, then Landlord shall have a reasonable period of
time after receipt of written notice from Tenant to cure such default), and
thereafter continue to prosecute such default, then Tenant may remedy such
default for the account of Landlord. If Tenant makes any reasonable
expenditures or incurs any obligations for the payment of money in connection
with the cure of such default, such sums paid or obligations incurred, shall
be deemed to be due by Landlord to Tenant within rendition of a bill in
reasonable detail to Landlord therefor.
ARTICLE 17
No Representations by Landlord
17.01. Landlord or Landlord's agents have made no representations or promises
with respect to the Building or demised premises except as herein expressly set
forth.
ARTICLE 18
End of Term
18.01. Upon the expiration or other termination of the term, Tenant shall quit
and surrender to Landlord the demised premises, broom clean, in good order and
condition, ordinary wear and tear and damage for which Tenant is not
responsible under the terms of this Lease excepted, Tenant's obligation to
observe or perform this covenant shall survive the expiration or sooner
termination of the term of this Lease. Tenant agrees to indemnify and save
Landlord harmless from all costs, claims, loss or liability resulting from
delay by Tenant in so surrendering the demised premises, including, without
limitation, any claims made by any succeeding tenant founded on such delay. If
the last day of the Term or any renewal thereof falls on Saturday or Sunday
this Lease shall expire on the business day immediately preceding. Tenant
expressly waives, for itself and for any person claiming through or under
Tenant, any rights which Tenant or any such person may have under the
provisions of Section 2201 of the New York Civil Practice Law and Rules and of
any successor law of like import then in force in connection with any holdover
summary proceedings which Landlord may institute to enforce the foregoing
provisions of this Article 18. In addition, the parties recognize and agree
that the damage to Landlord resulting from any failure by Tenant to timely
surrender possession of the demised premises as aforesaid will be substantial,
will exceed the amount of the monthly installments of the fixed annual rent
theretofore payable hereunder, and will be impossible to accurately measure.
Tenant therefor agrees that if possession of the demised premises is not
surrendered to Landlord within twenty-four (24) hours after the expiration date
or a sooner termination of the Term, in addition to any other rights or remedy
Landlord may have hereunder or at law Tenant shall pay to Landlord for each
month and for each portion of any month during which Tenant holds over in the
demised premises after the Expiration Date or sooner termination of this Lease,
a sum equal to two (2) times the fixed rent and all items of additional rent
which was payable under this Lease during the last month of the Term. Nothing
herein contained shall be deemed to permit Tenant to retain possession of the
demised premises after the Expiration Date or sooner termination of this Lease
and no acceptance by Landlord of payments from Tenant after the expiration or
sooner termination of the Lease shall be deemed to be other than on account of
the amount to be paid by Tenant in accordance with the provisions of this
Article 18, which provisions shall survive the expiration or sooner termination
of this Lease.
ARTICLE 19
Quiet Enjoyment
19.01. Landlord covenants and agrees with Tenant that upon Tenant paying the
rent and additional rent and observing and performing all the terms, covenants
and conditions, on Tenant's part to be observed and performed, Tenant may
peaceably and quietly enjoy the premises hereby demised, subject nevertheless,
to the terms and conditions of this Lease, and to any ground leases, underlying
leases and mortgages hereinbefore mentioned to which this Lease is subordinate.
ARTICLE 20
Definitions
20.01. The term "Landlord" as used in this Lease means only the owner, or the
mortgagee in possession, for the time being of the Land and Building (or the
owner of a lease of the Building or of the Land and Building), so that in the
event of any transfer of title to the Land and Building or said lease, or in
the event of a lease of the Building, or of the Land and Building, upon
notification to Tenant of such transfer or lease the said transferor Landlord
shall be and hereby is entirely freed and relieved of all existing or future
covenants, obligations and liabilities of Landlord hereunder, and it shall be
deemed and construed as a covenant running with the Land without further
agreement between the parties or their successors in interest, or between the
parties and the transferee of title to the Land and Building or said lease, or
the said lessee of the Building, or of the Land and Building, that the
transferee or the lessee has assumed and agreed to carry out any and all such
covenants, obligations and liabilities of Landlord hereunder.
20.02. The words "re-enter" and "re-entry" as used in this Lease are not
restricted to their technical legal meaning.
20.03. The term "business days" as used in this lease shall exclude Saturdays,
Sundays, New Year's Day, Memorial Day, Fourth of July, Labor Day, Thanksgiving
Day, and Christmas. For cleaning purposes, "business days" as used in this
Lease shall exclude all Saturdays, Sundays, and holidays as set forth in the
agreement between Realty Advisory Board on Labor Relations, Inc. or any
successor thereto and Local 32B-32J of the Building Service Employees
International Union (AFL-CIO). The term "business hours" as used in this Lease
shall mean the hours between 8:00 am and 6:00 pm during business days.
20.04. The term "Tenant's Proportionate Share" as used in this Lease shall
mean 19.6%.
ARTICLE 21
Adjacent Excavation - Shoring
21.01. If an excavation shall be made upon land adjacent to the demised
premises, or shall be authorized to be made, Tenant shall afford to the person
causing or authorized to cause such excavation, license to enter upon the
demised premises for the purpose of doing such work as shall be necessary to
preserve the wall of or the Building of which the demised premises form a part
from injury or damage and to support the same by proper foundations without any
claim for damages or indemnity against Landlord, or diminution or abatement of
rent. If said excavation is conducted by the Landlord or by an authorized
agent of the Landlord and it is done in such fashion so as to interrupt
Tenant's normal business, to the extent of said interruption the rent herein
shall be abated proportionately.
ARTICLE 22
Rules and Regulations
22.01. Tenant and Tenant's servants, employees and agents shall observe
faithfully and comply strictly with the Rules and Regulations set forth in
Exhibit B attached hereto and made part hereof entitled "Rules and Regulations"
and such other and further reasonable Rules and Regulations as Landlord or
Landlord's agents may from time to time adopt provided, however, that in case
of any conflict or inconsistency between the provisions of this Lease and of
any of the Rules and Regulations as originally or as hereafter adopted, the
provisions of this Lease shall control. Reasonable written notice of any
additional Rules and Regulations shall be given to Tenant. Nothing in this
Lease contained shall be construed to impose upon Landlord any duty or
obligation to enforce the Rules and Regulations or the terms, covenants or
conditions in any other lease, against any other tenant of the Building, and
Landlord shall not be liable to Tenant for violation of the same by any other
tenant, its servants, employees, agents, visitors or licensees. Landlord will
uniformly enforce or not enforce the Rules and Regulations.
ARTICLE 23
No Waiver
23.01. No agreement to accept a surrender of this Lease shall be valid unless
in writing signed by Landlord. No employee of Landlord or of Landlord's agents
shall have any power to accept the keys of the demised premises prior to the
termination of this Lease. The delivery of keys to any employee of Landlord or
of Landlord's agent shall not operate as a termination of this Lease or a
surrender of the premises. In the event of Tenant at any times desiring to
have Landlord sublet the demised premises for Tenant's account, Landlord or
Landlord's agents are authorized to receive said keys for such purpose without
releasing Tenant from any of the obligations under this Lease. The failure of
Landlord to seek redress for violation of or to insist upon the strict
performance of, any covenant or condition of this Lease or any of the Rules and
Regulations set forth herein, or hereafter adopted by Landlord, shall not
prevent a subsequent act, which would have originally constituted a violation,
from having all the force and effect of an original violation. The receipt by
Landlord of rent with knowledge of the breach of any covenant of this Lease
shall not be deemed a waiver of such breach. The failure of Landlord to
enforce any of the Rules and Regulations set forth herein, or hereafter
adopted, against Tenant and/or any other tenant in the Building shall not be
deemed a waiver of any such Rules and regulations. No provision of this Lease
shall be deemed to have been waived by Landlord, unless such waiver be in
writing signed by Landlord. No payment by Tenant or receipt by Landlord of a
lesser amount than the monthly rent herein stipulated shall be deemed to be
other than on account of the earliest stipulated rent, nor shall any
endorsement or statement on any check or any letter accompanying any check or
payment of rent be deemed an accord and satisfaction, and Landlord may accept
such check or payment without prejudice to Landlord's right to recover the
balance of such rent or pursue any other remedy in this Lease provided.
23.02. This Lease contains the entire agreement between the parties, and any
executory agreement hereafter made shall be ineffective to change, modify,
discharge or effect an abandonment of it in whole or in part unless such
executory agreement is in writing and signed by the party against whom
enforcement of the change, modification, discharge or abandonment is sought.
ARTICLE 24
Waiver of Trial by Jury
24.01. Landlord and Tenant do hereby waive trial by jury in any action,
proceeding or counterclaim brought by either of the parties hereto against the
other on any matter whatsoever arising out of or in any way connected with this
Lease, the relationship of Landlord and Tenant, Tenant's use or occupancy of
the demised premises, and/or any other claims (except claims for personal
injury or property damage), and any emergency statutory or any other statutory
remedy. It is further mutually agreed that in the event Landlord commences a
proceeding for non-payment of rent, Tenant will not interpose and does hereby
waive the rights to interpose any counterclaim of whatever nature or
description in any such proceeding except for compulsory counterclaims.
ARTICLE 25
Inability to Perform
25.01. If, by reason of (1) strike, (2) labor troubles, (3) governmental pre-
emption in connection with a national emergency, (4) any rule, order or
regulation of any governmental agency, (5) conditions of supply or demand which
are affected by war or other national, state or municipal emergency, or (6) any
cause beyond Landlord's control, Landlord shall be unable to fulfill its
obligations under this Lease or shall be unable to supply any service which
Landlord is obligated to supply, this Lease and Tenant's obligation to pay rent
hereunder shall in no way be affected, impaired or excused. As Landlord shall
learn of the happening of any of the foregoing conditions, Landlord shall
promptly notify Tenant of such event and, if ascertainable, its estimated
duration, and will proceed promptly and diligently with the fulfillment of its
obligations as soon as reasonably possible.
25.02. If, by reason of (1) strike, (2) labor troubles, (3) governmental pre-
emption in connection with a national emergency (4) any rule, order or
regulation of any governmental agency, (5) conditions of supply or demand which
are affected by war or other national, state or municipal emergency, or (6) any
cause beyond Tenant's control, Tenant shall be unable to fulfill its
obligations under this Lease, other than the obligation to pay rent or
additional rent hereunder, this Lease and Tenant's obligation to pay rent and
additional rent hereunder shall in no way be affected, impaired or excused. As
Tenant shall learn of the happening of any of the foregoing conditions, Tenant
shall promptly notify Landlord of such event and, if ascertainable, its
estimated duration, and will proceed promptly and diligently with the
fulfillment of its obligations as soon as reasonably possible.
25.03 If, for any reason other than (i) the causes set forth as 1 through 6
of Section 25.01, or (ii) as a result of the failure of any public utility
supplying heat or electricity to the Building, either (a) all of the elevators
serving the floors upon which the demised premises are located shall be
inoperative for more than seven (7) consecutive business days so that it would
be necessary to walk up or down more than two (2) flights of stairs ( a flight
of stairs shall consist of all stairs in a public stairway of the Building),
unless elevator service is available from the floors above or below the demised
premises so that it would not be necessary to walk up or down more than two
flights of stairs, or (b) if the heating or air conditioning system or the
entire electrical system serving the demised premises shall be inoperative for
more than ten (10) consecutive business days during the days when such systems
are normally operating to service the demised premises so that Tenant's
employees cannot and do not use any part of the demised premises, except on an
emergency basis, then Tenant shall be entitled to an abatement of rents for
each day after said ten (10) day period for such portion of the demised
premises which is inaccessible or which cannot be used by Tenant's employees.
ARTICLE 26
Notices
26.01. Any notice or demand, consent, approval or disapproval required to be
given by the terms and provisions of this Lease, or by any law or governmental
regulation, either by Landlord to Tenant or by Tenant to Landlord, shall be in
writing. Unless otherwise required by such law or regulation, such notice or
demand shall be given, and shall be deemed to have been served and given by
Landlord and received by Tenant upon actual receipt by Tenant or first refusal
by Tenant, when Landlord shall have deposited such notice or demand by
registered or certified mail enclosed in a securely closed postpaid wrapper, in
a United States Government general or branch post office, or official
depository within the exclusive care and custody thereof, or by a receipted
overnight carrier package addressed to Tenant, at the address set forth after
Tenant's name on page 1 of this lease with a copy to Fischer & Burstein, P.C.,
98 Cutter Mill Road, Suite 294, Great Neck, NY 11021. After Tenant shall
occupy the demised premises, a copy of all notices, demand, consents, approvals
or disapprovals shall be sent to Tenant at the demised premises. Such notice,
demand, consent, approval or disapproval shall be given, and shall be deemed to
have been served and given by Tenant and received by Landlord, when Tenant
shall have deposited such notice or demand by registered or certified mail
enclosed in a securely closed postpaid wrapper, in a United States Government
general or branch post office or official depository with the exclusive care
and custody thereof, or by a receipted overnight carrier package addressed to
Landlord, 54-65 48th Street, P.O. Box 780007, Maspeth, New York 11378. Either
party may, by notice as aforesaid, designate a different address or addresses
for notices, demands, consents, approvals or disapprovals.
ARTICLE 27
Services
27.01. Tenant shall have access to the demised premises twenty-four (24)
hours a day, seven (7) days per week, subject to the Building's normal
operating hours. Landlord shall provide automatic elevator service to the
second floor at all reasonable times. The Building shall be open Monday through
Friday from 7:00 AM to 7:00 PM and on Saturday from 9:00 AM to 1:00 PM. At all
other times, Tenant's employees shall have access to enter the Building by pass
key or security card, provided that Tenant's employees immediately re-lock all
doors.
27.02. Landlord shall cause the space in the demised premises to be kept clean
in accordance with the standards set forth in Exhibit "C" attached hereto and
made a part hereof entitled "Cleaning Schedule", except that if any areas shall
be used for the preparation and consumption of food, Landlord's responsibility
shall be strictly limited to the "Cleaning Schedule" set forth in Exhibit "C",
and Tenant shall be responsible for any and all other cleaning in that space.
Tenant may contract with Landlord's cleaning service to clean these areas at
Tenant's cost and expense.
27.03. (a) Landlord shall, through the HVAC system of the Building, furnish
to the demised premises, on an all year round basis, reasonably sufficient air
conditioning, ventilation and heating during the hours from 7:00 A.M. to 7:00
P.M. Monday through Friday and from 9:00 AM to 1:00 PM Saturday.
(b) Landlord will maintain the HVAC system in a manner befitting a first class
building and will use all reasonable care to keep the same in proper and
efficient operating condition. Landlord shall in no event be responsible for
the failure of the HVAC system to meet the requirements hereinbefore specified
if such failure results from the occupancy of the demised premises with more
than an average of one person for each 100 square feet of usable area or if
Tenant installs and operates lighting, machines and appliances the total
connected electrical load of which exceeds 4-1/2 watts per square foot of
usable area.
(c) Except if the HVAC System is not working, Tenant agrees to keep and cause
to be kept closed all the windows in and the exterior doors to the demised
premises at all times, and Tenant agrees to cooperate fully with Landlord and
to abide by all the regulations and requirements which Landlord may reasonably
prescribe for the proper functioning and protection of the HVAC System.
(d) Tenant acknowledges it has been advised that the Building has sealed
windows and that, therefore, the air in the demised premises can become stale
and even unbreathable when the HVAC system is not operating. Tenant agrees that
Landlord shall not be obligated to operate such HVAC System after or before
regular business hours as set forth in Section 27.03 (a).
27.04. Without limiting the provisions of Section 25.01, Landlord reserves the
right to stop services on the HVAC System, elevator, plumbing and electrical
systems when necessary by reason of accident or emergency or for repairs,
alterations, replacements or improvements, provided that except in case of
emergency, Landlord will notify Tenant in advance, if possible, of any such
stoppage and, if ascertainable, its estimated duration, and will proceed
diligently with the work necessary to resume such service as promptly as
possible and in a manner so as to minimize interference with the Tenant's use
and enjoyment of the demised premises.
27.05. Tenant shall employ or retain any contractor, including any
subcontractor to perform any work in the demised premises as such contractor,
including any subcontractor, is first approved in writing by Landlord and
without limiting the foregoing, Tenant shall only employ or retain such
contractor, subcontractor, supplier or materialmen as will not result in
jurisdictional disputes or strikes.
27.06. If Tenant is permitted hereunder to and does have a separate area for
the preparation or consumption of food in the demised premises, Tenant shall
employ, on a regular basis, an exterminator to keep the demised premises free
from vermin; and the Tenant will provide garbage storage areas to comply with
local codes and specifications thereof to be approved by Landlord, or other
means of disposing of garbage reasonably satisfactory to Landlord. Tenant is
responsible for all exterminating in the demised premises.
27.07. Tenant agrees to employ such office maintenance contractor as Landlord
may approve and upon further provision that employment of said contractor shall
not create labor disputes for all waxing, polishing, lamp replacement, cleaning
and maintenance work in the demised premises. Nothing herein contained shall
prohibit Tenant from performing such work for itself by use of its own regular
employees.
27.08. Landlord will not be required to furnish any other services, except as
provided in this Article 27, and except that Landlord agrees to provide on
business days (not including Saturdays, Sundays and holidays) the cleaning as
set forth in Exhibit "C" hereof. Tenant shall pay to Landlord, on demand, a
reasonable charge for the removal from the demised premises of any refuse and
rubbish of Tenant as shall not be contained in the waste receptacles described
in Exhibit "C" hereof. Landlord, its cleaning contractor and their employees
shall have after-hours access to the demised premises and the use of Tenant's
light, power and water in the demised premises as may be reasonably required
for the purpose of cleaning the demised premises.
27.09. For the purposes of this Lease, "Common Areas" shall mean all areas,
improvements, space, equipment and special services provided by Landlord for
the common or joint use and benefit of tenants and invitees, including access
roads, driveways, entrances and exits, retaining walls, landscaped areas,
pedestrian walk-ways, walls, courtyards, concourses, stairs, ramps, sidewalks,
building wide washrooms, hallways, lobbies, elevators and their housing rooms,
common window areas, walls and ceiling in Common Areas, and trash and rubbish
areas. Notwithstanding anything contained herein to the contrary, Landlord
shall have the right to increase, decrease, rearrange or otherwise change the
Common Areas, provided, however, that Landlord shall use good faith efforts to
minimize material interference with Tenant's use of the Common Areas which may
result in denial of ingress and egress to and from the demised premises.
27.10. Landlord shall manage and maintain the Building and the Common Areas as
a first class office building. Tenant and its employees shall occupy and use
the demised premises in a manner befitting such building.
ARTICLE 28
Electricity
28.01. Subject to the provisions of this Lease, including the provisions of
this Article 28, there will be furnished to Tenant, through transmission
facilities in the Building, alternating electric current to be used by Tenant
for the lighting fixtures and electric current and electrical receptacles
installed in the demised premises, but Landlord shall not be liable in any way
to Tenant for any failure or defect in supply or character of electric current
furnished to the demised premises. After initial installation by Landlord,
Tenant shall pay Landlord to furnish and install all lighting tubes, lamps,
bulbs and ballasts used in the demised premises. Tenant shall use said
electric current for lighting and, insofar as Landlord's facilities are not
burdened thereby and applicable laws and insurance regulations permit, for
operation, during normal business hours, of such equipment as is normally used
for the purposes herein leased. Under no circumstances shall Tenant, at any
time during the term of this Lease, use or permit the use of electric heaters
or similar heating devices. Landlord represents that there is sufficient
electrical capacity at the demised premises for general office use purposes.
28.02. Tenant's use of electric current in the demised premises shall not at
any time exceed the capacity of any of the electrical conductors and equipment
in or otherwise serving the demised premises. Tenant shall not make or perform
or permit the making or performing of any alterations to wiring installation or
other electrical facilities in or serving the demised premises or any additions
to the business machines, office equipment or other appliances in the demised
premises which utilize electrical energy without the prior consent of Landlord
in each instance (which shall not be unreasonably withheld).
28.03. All electric energy which Tenant requires in the demised premises shall
be furnished by the local electric company. Tenant shall be obligated to make
direct application to the local electric company for service. Tenant shall
make payment to and be billed directly from the local electric company.
28.04. Tenant agrees not to connect any additional electrical equipment of any
type to the Building electric distribution system, other than typewriters,
computers, fax machines, lamps and small office machines which consume
comparable amounts of electricity, without Landlord's prior written consent,
which consent shall not be unreasonably withheld or delayed. Any additional
risers, feeders, or other equipment proper or necessary to supply Tenant's
electrical requirements, upon written request of Tenant, will be installed by
Landlord, at the sole cost and expense of Tenant, if, in Landlord's judgment
the same are necessary and will not cause permanent damage or injury to the
Building or the demised premises or cause or create a dangerous or hazardous
condition or entail excessive or unreasonable alterations, repairs or expense
or interfere with or disturb other tenants or occupants.
ARTICLE 29
INTENTIONALLY OMITTED
ARTICLE 30
Escalation of Taxes
30.01. For the purposes of this Lease, the term "Lease Year" shall be the
period commencing on the "Commencement Date" and ending on the last day of the
twelfth (12th) full calendar month thereafter and each successive period of
twelve (12) full calendar months during the term of this Lease, provided
however, that in no event shall the term of this Lease extend beyond April 30,
2011.
30.02. In the event that the amount of real estate taxes, assessments, sewer
rents, rates and charges, county and town taxes, school taxes, village taxes,
transit taxes, or any other Governmental charge, general, specific, or ordinary
or extra-ordinary, foreseen or unforeseen (hereinafter collectively called
"Taxes") which may now or hereafter be levied or assessed against the Land and
upon the Building and any and all other improvements (hereinafter for this
Article 30 only collectively called the "Real Property") attributable to any
Subsequent Tax Year, as hereinafter defined, shall be greater than the amount
of Taxes for the Base Tax Year, as hereinafter defined, for any or all of the
Town and County Tax (inclusive of all Taxes now or hereafter included on the
Town and County tax bill or additional bill), School Tax (inclusive of all
Taxes now or hereafter included on the Town and County tax bill or additional
bill) and/or Village Tax (inclusive of all Taxes now or hereafter included on
the Town and County tax bill or additional bill) (the Town and County Tax, the
School Tax and the Village Tax are sometimes herein singly referred to as
"Local Tax" and collectively as "Local Taxes") then Tenant shall pay to
Landlord as additional rent, Tenant's Proportionate Share of the increase in
taxes for the particular Local Tax for such Subsequent Tax Year. In addition,
in the event that at any time during the term hereof under the laws of the
State of New York, and/or any County, Town, Village, City, Hamlet or any other
political or other governmental subdivision whatsoever, including any school
district in which the Building is located, a tax or exercise on rents or any
and all other taxes of any kind whatsoever and howsoever described, is levied
or assessed by said State and/or any such County, Town, Village, City, Hamlet
or any other political or other governmental subdivision, school district or
taxing authority, as an additional tax or other charge and/or as a substitute,
in whole or in part, or Taxes assessed or imposed by said State, County, Town,
City, Village, Hamlet or any political or other governmental subdivision or
school district, on the land and/or Building any/or other improvements, then
any such tax or other charge shall be included in the terms "Taxes", "Local
Tax" and "Local Taxes".
30.02.1 For the purposes of the provisions of this Article, the term, "Taxes
for the Base Tax Year", shall mean the sum of all taxes at the applicable rate
for the fiscal tax years commencing as set forth below multiplied by the full
assessment of the County of Nassau of the Real Property.
The term "Base Tax Year" is hereby defined for the particular Local Tax as
follows:
The Town and County Tax rate for the year commencing January 1, 2001 and
ending December 31, 2001.
The School Tax rate for the year commencing
July 1, 2000 and ending June 30, 2001.
The Village Tax rate for the year commencing
June 1, 2000 and ending May 31, 2001.
30.02.2 The term "Subsequent Tax Year" shall mean the first full fiscal year
following the applicable Base Tax Year for the aforementioned Town and County
Tax, School Tax or Village Tax fiscal year as the case may be and each fiscal
year thereafter.
30.02.3 To arrive at the amount owed by Tenant for any and all Subsequent Tax
Years, Landlord shall calculate each Local Tax increase separately and then add
the increases owed by Tenant from each to determine the total amount of
increases in Taxes and such total increase shall be then multiplied by Tenant's
Proportionate Share to determine the amount owed by Tenant for each Subsequent
Tax Year. If such calculation shall result in a decrease for any Subsequent
Tax Year, then Tenant shall receive an increase of zero.
30.02.4 Landlord shall take the benefit of the provisions of any statute or
ordinance permitting any assessment to be paid over a period of time and Tenant
shall be obligated to pay only its proportionate share, determined as
aforesaid, of the installments of any such assessment as shall become due and
payable during the term of this Lease or any renewal hereof. Any amount due
Landlord under the provisions of this Article shall be paid semi-annually
within thirty (30) days after Landlord shall have submitted copies of all tax
bills and statements to Tenant showing in reasonable detail the computation of
the amounts due Landlord. Any such increase for less than a year shall be
prorated and apportioned.
30.03. Without limiting Tenant's other obligations, in the event Tenant shall
undertake to make installations other than office installations and thereby
cause extraordinary assessment to be levied against the Real Property, Tenant
shall pay all additional taxes resulting from such extraordinary assessment.
30.04 In addition, Tenant shall pay to Landlord, within thirty (30) days after
the same shall be payable by Landlord and as additional rent for the Lease Year
in which the same shall be so payable, an amount equal to Tenant's
Proportionate Share of any assessment (general, special or otherwise) or
installment thereof for betterments or improvements which may be levied upon
the Real Property. Landlord shall take the benefit of the provisions of any
statute or ordinance permitting any such assessment to be paid over a period of
time and Tenant shall be obligated to pay only the said percentage of the
installments of any such assessments which shall become due and payable during
the term of this Lease.
30.05 In the event there shall be levied against the Landlord during the term
of this Lease an assessment for improvements or betterments which is payable in
one sum, then in that event said assessment shall be divided by the number of
Lease Years equal to the term of this Lease and Tenant's responsibility shall
be the sum equal to its Proportionate Share of said amount times the number of
unexpired years in the Lease; for example, if an assessment is levied for a
lump sum of $10,000.00, and the Lease term has a period of ten (10) Lease
Years, the annual installments will be deemed to be $1,000.00 per year and in
the event Tenant's Proportionate Share is seventy-five (75%) percent, Tenant
will owe $750.00 times the number of Lease Years remaining under this Lease as
of the date of its assessment (with any partial Lease Year remaining under this
Lease being prorated on a per diem basis).
30.06 In no event shall any rent adjustment result in a decrease in the fixed
annual rent payable hereunder.
30.07. In the event the first or final Lease Year shall contain less than
twelve (12) calendar months the additional rent payable under Section 30 for
such lease year shall be adjusted and prorated by the fraction (a) the
numerator over which is the number of months in either the first or final year
and (b) the denominator of which is the number twelve (12).
30.08. Landlord's obligation to make the adjustments referred to in this
Article shall survive any expiration or termination of this Lease. Tenant
shall have a period of sixty (60) days after receipt of the billing to notify
Landlord of any discrepancy with the billing. Tenant will not be permitted at
any later date to dispute the billing.
30.09. Any delay or failure of Landlord in billing any Real Estate Taxes shall
not constitute a waiver of or in any way impair any continuing obligation of
Tenant to pay such Real Estate Taxes hereunder.
ARTICLE 31
Condition of Premises
31.01. Tenant expressly acknowledges that it has inspected the demised
premises, the Land and the Building and is fully familiar with the physical
condition thereof. Tenant agrees to accept the demised premises (and the Land
and the Building) in its "AS IS " condition as of the date hereof, subject only
to any work to be performed by Landlord (except for any surviving punch list
items as set forth on Exhibit D annexed hereto and made a part hereof).
Without limiting the foregoing, Tenant acknowledges that Landlord shall have no
obligation to do any work in and to the demised premises in order to make them
suitable and ready for occupancy and use by Tenant except as set forth on said
Exhibit D.
ARTICLE 32
OMITTED
ARTICLE 33
Indemnity
33.01. Without limiting Tenant's other obligations, Tenant shall indemnify and
hold Landlord harmless from and against any all liabilities, obligations,
damages, penalties, claims, costs and expenses, including reasonable attorneys
fees, paid, suffered or incurred and/or arising from any one or more of the
following:
(i) the use of occupation of the demised premises by Tenant or any one in, on,
or about the demised premises with Tenant's permission; and/or
(ii) any breach by Tenant, Tenant's agents, contractors, employees, invitees,
servants and licensees of any term, covenant or condition of this Lease; and/or
(iii) the carelessness, negligence or improper conduct of Tenant's agents,
contractors, employees, invitees, servants or licensees. Tenant's liability
under this Lease extends to the acts or omissions of any subtenant, any agent,
contractor, employee, servant, invitee or licensee of any subtenant.
33.02 Without limiting the Landlord's other obligations, Landlord shall
indemnify and hold harmless from and against any and all liabilities,
obligations, damages, claims, costs and expenses, including reasonable
attorneys fees paid, suffered or incurred and/or arising from the carelessness,
negligence or improper conduct of the Landlord, Landlord's agents, employees,
invitees or licensee's.
ARTICLE 34
INTENTIONALLY OMITTED
ARTICLE 35
Name of Building
35.01. Landlord shall have the full right at any time to name and change the
name of the Building and to change the designated address of the Building. The
Building may be named after any person, firm, or otherwise, whether or not such
name is, or resembles, the name of a tenant of the Building.
ARTICLE 36
Invalidity of Any Provision
36.01. If any term, covenant, condition or provision of this Lease or the
application thereof to any circumstance or to any person, firm or corporation
shall be invalid or unenforceable to any extent, the remaining terms,
covenants, conditions and provisions of this Lease or the application thereof
to any circumstances or to any person, firm or corporation other than those as
to which any term, covenant, condition and provision of this Lease shall be
valid and shall be enforceable to the fullest extent permitted by law.
ARTICLE 37
Captions
37.01. The captions are inserted only as a matter of convenience and for
reference, and in no way define, limit or describe the scope of this Lease nor
the intent of any provision thereof.
ARTICLE 38
Certificate of Tenant or Landlord
38.01. Tenant shall, without charge, at any time and from time to time, within
ten (10) days after request by Landlord, certify by written instrument, duly
executed, acknowledged and delivered, to any mortgagee, assignee of any
mortgage or purchaser, or any proposed mortgagee, assignee of any mortgage or
purchaser, or any other person, firm or corporation specified by Landlord:
(a) That this Lease is unmodified and in full force and effect (or, if there
has been modification, that the same is in full force and effect as modified
and stating the modifications);
(b) Whether or not there are then existing any set-offs or defenses against the
enforcement of any of the agreements, terms, covenants, or conditions hereof
upon the part of Tenant to be performed or complied with (and, if so,
specifying the same); and
(c) The dates, if any, to which the rental and other charges hereunder have
been paid in advance.
(d) Any other provisions which Landlord or any other party specified in this
Section may reasonably request.
In connection with a permitted assignment or subletting by Tenant, Landlord
will, within ten (10) days after written request by Tenant, deliver a duly
executed written instrument to such permitted assignee or sublessee certifying,
to the best of Landlord's knowledge, those same items referred to in (a), (b),
(c) and (d) above.
38.02. Tenant agrees that, except for the first month's rent hereunder, it
will pay no rent under this Lease more than thirty (30) days in advance of its
due date, and, in the event of any act or omission by Landlord, Tenant will not
exercise any right to terminate this Lease or to remedy the default and deduct
the cost thereof from rent due hereunder until Tenant shall have given written
notice of such act or omission to the holder of any first mortgage who shall
have furnished in writing such holder's last address to Tenant, and until a
reasonable time for remedying such act or omission shall have elapsed following
the giving of such notices, during which time such mortgage holder shall have
the right, but shall not be obligated, to remedy or cause to be remedied such
act or omission.
38.03. Anything in this Lease contained to the contrary notwithstanding, under
no circumstances shall the holder of any institutional mortgage who shall have
succeeded to the interests of the Landlord under this Lease, be subject to or
liable for any offsets or deductions from rent, claims or defenses which the
Tenant might have against any prior landlord under this Lease.
ARTICLE 39
Successors and Assigns
39.01. The covenants, conditions and agreements contained in this Lease shall
bind and inure to the benefit of Landlord and Tenant and their respective
heirs, distributees, executors, administrators, successors, and assigns and,
except as otherwise provided in this Lease, their assigns, but nothing herein
shall constitute permission for Tenant to assign this Lease except upon
compliance with the provisions of this Lease.
ARTICLE 40
Liability Insurance by Tenant
40.01. Tenant shall, at Tenant's sole cost and expense, procure and obtain
comprehensive general public liability insurance with broad form extension and
contractual liability endorsement protecting against any and all claims for
damages to person or property or for loss of life or property occurring upon,
in, or about the demised premises or the sidewalks adjacent thereto, such
insurance to afford immediate protection in such amounts as Landlord shall
require. Such policies shall name Landlord and such other parties as shall be
specified by Landlord, including without limitation any one or more mortgagees
and managing agents, as additional insured. As of the Commencement Date, the
minimum coverage for combined single limit bodily injury and property damage
shall not be less than $3,000,000.00 per occurrence. The policy shall also be
extended to include the following endorsements:
1. Knowledge of Occurrence;
2. Notice of Occurrence;
3. Unintentional Errors or Omissions;
1. An endorsement to the effect that no statement, declaration or
representation made by Tenant to its insurer or act of Tenant
shall invalidate the policy as to Landlord or prejudice any of
Landlord's rights thereunder, including, without limitation,
defense and indemnity;
1. Contractual Liability on a blanket basis and specifically
scheduling this Lease, without limiting the form of coverage.
All said policies shall be obtained by Tenant and certificates thereof
delivered to Landlord upon the commencement of the term hereof with evidence of
stamping or otherwise of the payment of the premiums thereon, shall otherwise
be in form and content acceptable to Landlord and be taken in such amounts and
in such companies authorized to do business in the State of New York which are
acceptable to Landlord.
ARTICLE 41
Automobile Parking
41.01. Landlord herein is providing onsite parking facilities which will be
used by Tenant in conjunction with other tenants of the Building together with
the employees, guests and possible associates. However, said parking
facilities, except where restricted, shall be available to Tenant and its
employees, invitees and guests. There will be no charge to the Tenant for the
inside or outside parking area. It is agreed however, that Landlord shall have
no obligation to police the parking area. Landlord shall clean and maintain
the parking fields. Notwithstanding the foregoing, Landlord shall designate,
for Tenant's exclusive use, two (2) parking spaces in the subbasement parking
garage. In no event shall Tenant nor Tenants' employees, agents, contractors,
servants, licensees, invitees or visitors shall use parking spaces reserved for
other tenants.
ARTICLE 42
INTENTIONALLY OMITTED
ARTICLE 43
No Recording
3.01. The parties hereto agree that neither Landlord nor Tenant shall record
this Lease nor shall either party record any memorandum of this Lease.
ARTICLE 44
INTENTIONALLY OMITTED
ARTICLE 45
INTENTIONALLY OMITTED
ARTICLE 46
Security
46.01. Tenant has deposited with Landlord the sum of $45,808.63.00 as security
for the faithful performance and observance by Tenant of the terms, provisions
and conditions of this Lease, which consists of $41,000.00 held by Landlord
under the Existing Lease, together with an additional $4,808.63 for an
aggregate security deposit of $45,808.63. It is agreed that in the event Tenant
defaults in respect of any of the terms, provisions, and conditions of this
Lease, including, but not limited to, the payment of rent and additional rent,
Landlord may use, apply or retain the whole or any part of the security as
deposited to the extent required for the payment of any rent and additional
rent or any other sum as to which Tenant is in default or for any sum which
Landlord may expend or may be required to expend by reason of Tenant's default
in respect to any of the terms, covenants, and conditions of this Lease,
including but not limited to, any damages or deficiency in the subletting of
the demised premises, whether such damages or deficiency accrues before or
after summary proceedings or other re-entry by Landlord. In the event that
Tenant shall fully and faithfully comply with all of the terms, provisions,
covenants and conditions of this Lease, the security shall be returned to
Tenant after the date fixed as of the end of this Lease and after delivery of
the entire possession of the demised premises to Landlord. In the event of a
sale of the Land and Building or leasing of the Building of which the demised
premises form a part, Landlord shall have the right to transfer the security to
the vendee or lessee and Landlord shall thereupon be released by Tenant from
all liability for the return of such security and Tenant agrees to look to the
new landlord solely for the return of said security; and it is agreed that the
provisions hereof shall apply to every transfer or assignment made of the
security to a new landlord. Tenant further covenants that it will not assign
or encumber or attempt to assign or encumber the monies deposited herein as
security and that neither Landlord nor its successors or assigns shall be bound
by any such assignment, encumbrance, attempted assignment or attempted
encumbrance.
ARTICLE 47
Broker
47.01. Tenant represents and warrants that it has dealt with NO BROKER in
connection with this Lease and Tenant does hereby agree to indemnify and hold
Landlord harmless of and from any and all loss, costs, damage or expense
(including, without limitation, attorneys' fees and disbursements) incurred by
Landlord by reason of any claim of any broker, sales person or other finder who
claims to have dealt with Tenant in connection with this Lease. The provision
of this Article 47 shall survive the expiration or earlier termination of this
Lease.
ARTICLE 48
Late Rent Clause
48.01. Tenant recognizes that late payment of any rent or other sum due
hereunder will result in administrative expense to Landlord, the extent of
which additional expense is extremely difficult and economically impractical to
ascertain. Tenant therefore agrees that if rent or any other sum is due and
payable pursuant to this Lease, and when such amount remains due and unpaid ten
(10) days after said amount is due, such amount shall be increased by a late
charge in an amount equal to five (5%) per cent of the unpaid rent or other
payment. The amount of late charge to be paid by Tenant shall be reassessed
and added to Tenant's obligation for each successive monthly period until paid.
The provisions of this Article in no way relieve Tenant of the obligation to
pay rent or other payments on or before the date on which they are due, nor do
the terms of this Article in any way affect Landlord's remedies pursuant to any
other Article of this Lease in the event said rent or other payment is unpaid
after the date due.
ARTICLE 49
Directory Listing
49.01. Landlord, at its expense, and on Tenant's request, shall maintain
listings on the Building directory of the name of Tenant provided that the
names so listed shall not take up more than Tenant's Proportionate Share of the
space on the Building's directory.
ARTICLE 50
Storage Space
50.01 Landlord, in conjunction with Tenant's leasing of the demised premises,
hereby leases to Tenant 200 square feet of storage space (the "storage space")
in the basement garage area of the Building at a fixed annual rent of
$2,000.00, payable in equal monthly installments of $166.67 per month,
exclusive of all additional rent escalation charges only, but subject to other
additional charges passed along to Tenant (i.e. Articles 16, 20 et cetera) and
the leasing of such storage space shall otherwise be upon the same terms,
covenants and conditions as this Lease. Tenant shall have no right to
separately cancel, sublet or assign the storage space.
ARTICLE 51
Jurisdiction and Venue
51.01. Tenant irrevocably and unconditionally (a) agrees that any suit,
action, or other legal proceeding arising out of this Lease may be commenced in
any court of the State of New York situated in Nassau County and that any such
court shall have in personam jurisdiction of Tenant in any such suit, action or
other legal proceeding upon service as described above; (b) consents to the
jurisdiction of each such court in any suit, action or other legal proceeding;
and (c) waives any objection which Tenant may have to the laying of venue of
any such suit, action or proceeding in any such court.
ARTICLE 52
MISCELLANEOUS
52.01. Tenant shall not at any time prior to or during the term hereof, either
directly or indirectly, use any contractors or labor or materials whose use in
Landlord's reasonable judgment would create or creates any difficulty with
other contractors or labor employed by Tenant or Landlord or others in
construction, maintenance or operation of the demised premises or the Building.
52.02. As of the Commencement Date, except for the Existing Lease, this Lease
supersedes any and all prior leases between Landlord and Tenant with respect to
any of the space included within the Demised Premises.
52.03. This Lease sets forth the entire understanding and agreement with
respect to the subject matter hereof and all prior and contemporaneous
negotiations, understandings and agreements are herein merged and without
limiting the foregoing, Tenant acknowledges and agrees that there are no
express or implied warranties, representations, promises or agreements on the
part of Landlord nor any other person, firm, corporation, limited liability
company, including any broker or salesperson with reference to the condition,
suitability or usability of the demised premises nor for the purposes for which
Tenant intends to use same or with respect to any other matter, thing or
circumstance, except only as may be expressly set forth in this Lease. This
Lease may not be extended, renewed, terminated or otherwise modified except by
an instrument in writing signed by the party against whom enforcement of any
such modification is sought, unless such instrument provides that it shall not
be binding until signed by both parties, in which event it shall not be binding
until so signed.
52.04. If Tenant shall request Landlord's approval or consent and Landlord
shall fail or refuse to give such consent or approval, Tenant shall not be
entitled to any damages for any withholding or delay of such approval or
consent by Landlord, it being intended that Tenant's sole remedy shall be an
action for injunction or specific performance and that such remedy shall be
available only in those cases where Landlord shall have expressly agreed in
writing not to unreasonably withhold its consent or approval or where as a
matter of law Landlord may not unreasonably withhold its consent or approval.
The provisions of this Section 52.04 shall not apply if Landlord shall
capriciously, or arbitrarily or in bad faith withhold or delay its consent or
approval.
52.05. This Lease is offered to Tenant for signature with the understanding
that it shall not be binding upon Landlord unless and until Landlord shall have
executed and delivered a copy of this Lease to Tenant.
52.06. Irrespective of the place of execution or performance, this Lease shall
be governed by and construed in accordance with the laws of the State of New
York. If any provision of this Lease or the application thereof to any person
or circumstance shall, for any reason and to any extent, be invalid or
unenforceable, the remainder of this Lease and the application of that
provision to other persons or circumstances shall not be affected but rather
shall be enforced to the extent permitted by law. This Lease shall be
construed without regard to any presumption or other rule requiring
construction against the party causing this Lease to be drafted. Each
covenant, agreement, obligation or other provision of this Lease on Tenant's
part to be performed, shall be deemed and construed as a separate and
independent covenant of Tenant, not dependent on any provision of this Lease.
All terms and words used in this Lease, regardless of the number or gender in
which they are used, shall be deemed to include any other number and any other
gender as the context may require.
52.07. Notwithstanding any provision of this Lease to the contrary, all sums
of money, other than the fixed rent, as shall become due from and payable by
Tenant to Landlord under this Lease shall be deemed to be additional rent.
Landlord shall have the same rights and remedies for Tenant's failure to pay
any items of additional rent as Tenant's failure to pay fixed rent.
52.08. If Tenant is in arrears in the payment of fixed rent or additional
rent, Tenant waives its right, if any, to designate the items in arrears
against which any payments made by Tenant are to be credited and Landlord may
apply any of such payments to any such items in arrears as Landlord, it its
sole discretion, shall determine, irrespective of any designation or request by
Tenant as to the items against which any such payments shall be credited.
52.09. If Tenant is a corporation, each person executing this Lease on behalf
of Tenant hereby covenants, represents and warrants that Tenant is a duly
incorporated or duly qualified (if foreign) corporation and is authorized to do
business in the State of New York (a copy of evidence thereof to be supplied to
Landlord upon request); and that each person executing this Lease on behalf of
Tenant is an officer of Tenant and that he is duly authorized to execute,
acknowledge and deliver this Lease to Landlord (a copy of a resolution to that
effect to be supplied to Landlord upon request).
52.10 In the event of any litigation or other dispute between the parties to
this Lease, each party shall bear all of its own costs and expenses, whether
for attorney's fees or otherwise, without recourse to the other.
IN WITNESS WHEREOF, the parties hereto have set their
respective hands and seals the day and year first above written.
M. PARISI & SON CONSTRUCTION CO., INC.
BY:__________________________________
Name:
Title:
ACETO CORPORATION
BY:___________________________________
Name:
Title:
SCHEDULE "1"
FIXED ANNUAL RENT
LEASE YEAR PER ANNUM FIXED RENT MONTHLY RENT
1 $549,703.40 $45,808.63
2 $567,568.76 $47,297.40
3 $586,014.75 $48,834.56
4 $605,060.23 $50,421.69
5 $624,724.69 $52,060.39
6 $645,028.25 $53,752.35
7 $665,991.66 $55,499.30
8 $687,636.39 $57,303.03
9 $709,984.57 $59,165.38
10 $733,059.06 $61,088.25
(but in no event shall the term of this Lease extend beyond April 30, 2011)
EXHIBIT "A"
EXHIBIT "B"
Rules and Regulations
1. The sidewalks, and public portions of the Building, such as entrances,
passages, courts, elevators, vestibules, stairways, corridors or halls shall
not be obstructed or encumbered by a tenant or used for any purpose other than
ingress and egress to and from the demised premises.
2. No awnings or other projections shall be attached to the outside walls of
the Building. No curtains, blinds, shades, louvered openings or screens shall
be attached to or hung in, or used in connection with, any window or door of
the demised premises, without the prior written consent of Landlord, unless
installed by Landlord.
3. No sign, advertisement, notice or other lettering shall be exhibited,
inscribed, painted or affixed by any tenant or any part of the outside of the
demised premises or Building or on corridor walls. Signs on entrance door or
doors shall conform to building standard signs, samples of which are on display
in Landlord's rental office. Signs on doors shall, at the tenant's expense, be
inscribed, painted or affixed for each tenant by sign makers approved by
Landlord. In the event of the violation of the foregoing by any tenant,
Landlord may remove same without any liability, and may charge the expense
incurred by such removal to the tenant or tenants violating this rule.
4. The sashes, sash doors, skylights, windows, ventilating and air
conditioning vents and doors that reflect or admit light and air into the
halls, passageways or other public places in the Building shall not be covered
or obstructed by any tenant, nor shall any bottles, parcels or other articles
be placed on the window sills.
5. No show cases or other articles shall be put in front of or affixed to any
part of the exterior of the Building, nor placed in the public halls, corridors
or vestibules without the prior written consent of Landlord.
6. Whenever Tenant shall submit to Landlord any plan agreement or other
document for Landlord's consent or approval, Tenant agrees to pay Landlord as
additional rent, on demand, a processing fee in a sum equal to the reasonable
fee of any architect, engineer or attorney employed by Landlord to review said
plan, agreement or document.
7. The water and wash closets and other plumbing fixtures shall not be used
for any purposes other than those for which they were constructed, and no
sweepings, rubbish rags, or other substances shall be thrown therein. All
damages resulting from any misuse of the fixtures shall be borne by the Tenant
who, or house servants, employees, agents, visitors or licensees, shall have
caused the same.
8. No tenant shall in any way deface any part of the demised premises or the
Building of which they form a part. No tenant shall lay linoleum, or other
similar floor covering, so that the same shall come in direct contact with the
floor of the demised premises, and, if linoleum or other similar floor covering
is desired to be used, an interlining of builder's deadening felt shall be
first affixed to the floor, by a paste or other material, soluble in water, the
use of cement or other similar adhesive material being expressly prohibited.
9. No bicycles, vehicles or animals of any kind shall be brought into or kept
in or about the premises. No cooking shall be done or permitted by any Tenant
on said premises except in conformity to law and then only in the utility
kitchen, if any, as set forth in Tenant's layout, which is to be primarily used
by Tenant's employees for heating beverages and light snacks. No tenant shall
cause or permit any unusual or objectionable odors to be produced upon or
permeate from the demised premises.
10. No space in the Building shall be used for manufacturing, distribution, or
for the storage of merchandise or for the sale of merchandise, goods or
property of any kind at auction.
11. No tenant shall make, or permit to be made, any unseemly or disturbing
noises or disturb or interfere with occupants of the Building or neighboring
buildings or premises or those having business with them, whether by the use of
any musical instrument, radio, talking machine, unmusical noise, whistling,
singing, or in any other way. No tenant shall throw anything out of the doors,
windows, or skylights or down the passageways.
12. No tenant, nor any of the tenant's servants, employees, agents, visitors
or licensees, shall at any time bring or keep upon the demised premises any
inflammable, combustible or explosive fluid, or chemical substance, other than
reasonable amounts of cleaning fluids and solvents required in the normal
operation of tenant's business offices.
13. No additional locks or bolts of any kind shall be placed upon any of the
exterior doors or windows by any tenant, nor shall any changes be made in
existing locks or the mechanism thereof, without the prior written approval of
the Landlord. Each tenant must, upon the termination of his tenancy, restore
to the Landlord all keys of stores, offices and toilet rooms, either furnished
to, or otherwise procured by, such tenant, and in the event of the loss of any
keys, so furnished, such tenant shall pay to Landlord the cost thereof.
14. All removals, or the carrying in or out of any safes, freight, furniture
or bulky matter of any description, must take place during the hours and
pursuant to such procedures as Landlord or its agent may determine from time to
time. Landlord reserves the right to inspect all freight to be brought into
the Building and to exclude from the Building all freight which violates any of
these Rules and Regulations or the Lease of which these Rules and Regulations
are a part.
15. No tenant shall occupy or permit any portion of the premises demised to it
to be occupied as an office for a public stenographer or typist, or for the
possession, storage, manufacture or sale of liquor, narcotics, dope, tobacco in
any form, or as a barber or manicure shop or as a public employment bureau or
agency, or for a public finance (personal loan) business. No tenant shall
engage or pay any employees on the demised premises, except those actually
working for such tenant on said premises, nor advertise for laborers giving an
address at said premises.
16. Tenant agrees to employ such contractors as Landlord may from time to time
designate, for waxing, polishing and other maintenance work of the demised
premises and of the Tenant's furniture, fixtures and equipment, provided that
the prices charged by other contractors are comparable to the prices charged by
other contractors for the same work. Tenant agrees that it shall not employ
any other cleaning and maintenance contractor, nor any individual, firm or
organization for such purpose without Landlord's prior written consent. If
Landlord and Tenant shall each obtain two bona fide bids for such work from
reputable contractors, and the average of the four bids thus obtained shall be
the standard of comparison.
17. Landlord shall have the right to prohibit any advertising by any tenant,
mentioning the Building, which, in Landlord's reasonable opinion, tends to
impair the reputation of the Building or its desirability as a building for
offices, and upon written notice from Landlord, tenants shall refrain from or
discontinue such advertising. The foregoing is not intended to prohibit mere
mention of Tenant's address as being at Lake Success Plaza, Lake Success, New
York.
18. Landlord reserves the right to exclude from the Building between the hours
of 6:00 P.M. and 8:00 A.M. and at all hours on Sundays and legal holidays all
persons who do not present a pass to the Building signed by a tenant. Each
tenant shall be responsible for all persons for whom such a pass is issued and
shall be liable to Landlord for all acts of such persons.
19. The premises shall not be used for lodging or sleeping or for any immoral
or illegal purpose.
20. The requirements of tenants will be attended to only upon application at
the office of the Building. Building employees shall not perform any work or
do anything outside of their regular duties, unless under special instructions
from the office of Landlord.
21. Canvassing, soliciting and peddling in the Building are prohibited and
each tenant shall cooperate to prevent the same.
22. There shall not be used in any space, or in the public halls of any
building, either by any tenant or by jobbers or others, in the delivery or
receipt of merchandise, any hand trucks, except those equipped with rubber
tires and side guards. No hand trucks shall be used in passenger elevators.
23. Tenants, in order to obtain maximum effectiveness of the cooling system,
shall lower and/or close venetian or vertical blinds or drapes when sun's rays
fall directly on windows of demised premises.
EXHIBIT "C"
Cleaning Schedule
General
All linoleum, rubber, asphalt tile and other similar types of hard-surfaced
flooring to be swept nightly, using approved dust-check type of mop.
All carpeting and rugs to be vacuum-cleaned nightly.
Hand dust and wipe clean all furniture, fixtures and window sills nightly; wash
sills when necessary.
Empty and clean all waste receptacles nightly and remove waste paper and waste
materials.
Empty and clean all ash trays and screen all sand urns nightly.
Dust interior of all waste disposal cans and baskets nightly; damp-dust as
necessary.
Wash clean all water fountains and coolers nightly.
Dust all telephones as necessary.
Sweep all private stairway structures nightly.
Lavatories in the Core
Sweep and wash all lavatory floors nightly using proper disinfectants. Wash
and polish all mirrors, powder shelves, bright work and enameled surfaces in
all lavatories nightly.
Scour, wash and disinfect all basins, bowls and urinals throughout all
lavatories, nightly.
Wash all toilet seats, nightly.
Empty paper towel receptacles and transport waste paper to designated area in
basement, nightly (towels, soap and receptacles to be furnished by Tenant).
Fill toilet tissue holders nightly (tissue and receptacles to be furnished by
Landlord).
Empty sanitary disposal receptacles, nightly.
Thoroughly wash and polish all wall tile and stall surface as often as
necessary.
High Dusting
Do all high dusting quarterly which includes the following: Dust all pictures,
frames, charts, graphs and similar wall hangings not reached in nightly
cleaning.
Cleaning of light fixtures shall be for account of Tenant.
Hand dust all door and other ventilating louvers within reach, as necessary.
Glass
Exterior windows to be cleaned inside and outside two (2) times per annum,
weather permitting.
Interior glass doors and glass partitions to be cleaned when necessary.
EXHIBIT "D"
Landlord's Work Letter
Exhibit 10 (vi)(c)
THIS AGREEMENT OF LEASE, made as of the 31{st} day of October 1999 between
SEABOARD ESTATES, INC. having a place of business at 1 Jericho Turnpike, New
Hyde Park, New York 11040 party of the first part, hereinafter referred to as
OWNER, and CDC PRODUCTS CORP., 7416 Grand Avenue, Elmhurst, New York 11373
party of the second part, hereinafter referred to as TENANT,
W I T N E S S E T H :
Owner hereby leases to Tenant and Tenant hereby hires from Owner the building
known as 1801 Falmouth Avenue, New Hyde Park, New York for the term of ten (10)
years and two (2) months (or until such term shall sooner cease and expire as
hereinafter provided) to commence on the 1st day of November 1999, and to end
on the 31{st} day of December 2009, both dates inclusive, at an annual rental
rate of SEE RENT SCHEDULE AT END OF LEASE which Tenant agrees to pay in lawful
money of the United States which shall be legal tender in payment of all debts
and dues, public and private, at the time of payment, in equal monthly
installments in advance on the first day of each month during said term, at the
office of Owner or such other place as Owner may designate, without any set off
or deduction whatsoever, except that Tenant shall pay the first monthly
installment(s) on the execution hereof (unless this lease be a renewal).
In the event that, at the commencement of the term of this lease, or
thereafter, Tenant shall be in default in the payment of rent to Owner pursuant
to the terms of another lease with Owner or with Owner's predecessor in
interest, Owner may at Owner's option and without notice to Tenant add the
amount of such arrears to any monthly installment of rent payable hereunder and
the same shall be payable to Owner as additional rent.
The parties hereto, for themselves, their heirs, distributees, executors,
administrators, legal representatives, successors and assigns, hereby convenant
as follows:
Occupancy:
Tenant shall, commencing on the Commencement Date and throughout the term of
this Lease, pay the fixed annual rent and additional rent as above and as
hereinafter provided, by good and sufficient check drawn on a bank doing
business in the State of New York which is a member of the New York Clearing
House or a successor thereto. All sums other than fixed annual rent payable by
Tenant hereunder shall be deemed additional rent and payable on demand, unless
other payment dates are hereinafter provided, and Landlord shall have the same
remedies with respect to a default in payment of any items of additional rent
as Landlord has with respect to a default in payment of fixed rent. All rent
including fixed annual rent and all items of additional rent shall be payable
without setoff or deduction whatsoever. Each of the Witnesseth paragraphs above
are herein incorporated as if set forth verbatim herein.
Use:
Tenant shall use and occupy the demised premises solely for general offices for
Tenant, its subsidiaries, related companies and divisions and permitted
assignees and subtenants, and for no other purpose. Without limiting the
foregoing, Tenant shall not use or occupy the demised premises as a savings
bank, state or Federal savings and loan association, commercial bank or trust
company, or any combination of uses incidental to the foregoing.
Alterations and Installations:
Tenant shall make no alterations, installations, additions or improvements in
or to the demised premises without Landlord's prior written consent, which
consent , shall not be unreasonably withheld or delayed, provided that Tenant
otherwise complies with all other applicable terms, covenants and conditions of
this Lease, including Section 3.09. All work, including alterations,
installations, additions or improvements in and to the demised premises shall
be done only by Landlord (or Landlords affiliate) as general contractor with
such subcontractors, materialmen and mechanics selected by Landlord (or
Landlords affiliate). All such work, alterations, installations, additions and
improvements shall be done at Tenant's sole cost and expense and at such times
and in such manner so as not to unreasonably interfere with the peaceful
enjoyment of the Building by other tenants, provided however, that nothing
herein shall require Landlord (or its affiliate) as general contractor to
perform any such work during non-business hours at night, on weekends or on
holidays. Prior to commencement of such work, for all work over the sum of
$50,000, Tenant must obtain and file a Payment or Surety and Completion Bond
with Landlord, from a licensed surety company reasonably acceptable to Landlord
and such bond shall otherwise be in form and content acceptable to Landlord.
Any mechanic's lien (a "Lien") filed against the demised premises and/or the
Land and/or the Building for work claimed to have been done for or materials
claimed to have been furnished to Tenant shall be discharged of record by
Tenant at its expense within thirty (30) days after notice, by payment, filing
of the bond required by law or otherwise. If Tenant shall elect to discharge
any such Lien by bonding, Tenant shall, within ten (10) days after the filing
of such Lien apply for and diligently prosecute an application for a court
order to remove said Lien of record within not less than thirty (30)
thereafter.
All alterations, installations, additions and improvements made and installed
and paid for by Landlord shall become and be the property of Landlord and shall
remain upon and be surrendered with the demised premises as a part thereof at
the end of the term of this Lease, excluding Tenant's modular work stations.
All non-structural alterations, installations, additions and improvements made
and installed by Tenant, or at Tenant's expense, upon or in the demised
premises shall be removed at the end of the term of the Lease at Tenant's
expense and the demised premises restored by Tenant, and any damages created
thereby shall be repaired, all at Tenant's cost and expense.
Where furnished by or at the expense of Tenant all movable furniture,
furnishings and trade fixtures, including without limitation, murals, business
machines and equipment, counters, screens, grille work, special paneled doors,
cages, partitions, metal railings, closets, paneling, lighting fixtures and
equipment, drinking fountains, refrigerators, and any other movable property
shall remain the property of Tenant which Tenant shall be obligated to remove
at any time prior to the expiration or sooner termination of the term of this
Lease, and without limiting Tenants other obligations, Tenant shall repair all
damage occasioned by such removal, at Tenant's sole cost and expense. All such
property which is not so removed by Tenant shall, without limiting Landlords
other rights and remedies, either be retained by Landlord as Landlords property
or may be removed from the demised premises by Landlord, at Tenants sole cost
and expense.
Tenant shall keep records of Tenant's alterations, installations, additions and
improvements, and the cost thereof. Tenant shall, within 45 days after demand
by Landlord, furnish to Landlord copies of such records and cost if Landlord
shall require same in connection with any proceeding to reduce the assessed
valuation of the Building, or in connection with any proceeding instituted
pursuant to Article 9 hereof.
During the course of Tenant's alterations, Tenant will carry or cause to be
carried adequate Worker's Compensation Insurance, Builders Risk, Comprehensive
General Liability and such other insurance as may be required by law to be
carried by Landlord or Tenant or required by Article 40 hereof in connection
with such construction, and such insurance (except the Worker's Compensation
Insurance) shall name Landlord, Landlord's managing agent, and all mortgagees
and ground lessors and such other parties as Landlord shall designate as
additional insureds.
"Structural Changes" shall mean changes or repairs to the "structural elements"
of the Building, which are the foundation, floor plate, exterior or load-
bearing walls, curtain wall, roof and the Building-wide plumbing, electrical
and heating, ventilation and air conditioning systems (said heating,
ventilation and air conditioning systems are sometimes hereinafter referred to
collective as the "HVAC System").
Notwithstanding anything contained elsewhere in this Lease, if Tenant desires
to make any alterations, installations, additions or improvements, Tenant will,
without limiting Tenant's other obligations, comply with all of the following
at Tenant's sole cost and expense:
a) Tenant shall furnish Landlord with the plans of the planned alterations
prior to construction.
b) Tenant must furnish Landlord with an "as-built" plan upon the completion of
any work.
c) Tenant will obtain all governmental permits and pay all applicable
government fees, including filing fees.
d) Tenant will file appropriate plans with governmental authorities, where
applicable.
e) Tenant will perform all alterations, installations, additions and other
improvements in a good and workmanlike manner in accordance with standards at
least equivalent to the standards prevailing in the building of which the
demised premises form a part.
f) Tenant shall pay for, and shall otherwise accept full responsibility for,
any additions and changes in sprinklers, passages, legal exits, entrances,
corridors, stairs, elevators and toilets, which may be necessitated by such
alterations, installations, additions or improvements and shall not do any work
which shall adversely affect the remainder of the building of which the demised
premises form a part, provided however, that Tenant shall not have any right to
make any such alterations, installations, additions or improvements or perform
any work without Landlords express prior written consent in each instance.
g) Tenant shall not make any installation, alteration, addition or other
improvement on or through the roof, nor shall Tenant or Tenant's agents enter
upon the roof or place objects thereon without the specific prior written
permission of Landlord, who, if such permission is granted, shall specify the
time and conditions under which such entry may be obtained. Landlord may make
such rules and regulations as they deem appropriate to govern Tenant's use or
access to the roof for any purpose whatsoever.
Repairs:
Tenant shall, at its sole cost and expense and only using Landlord (or its
affiliate) as general contractor, take good care of the demised premises and
the furniture, fixtures, equipment and appurtenances therein, and shall keep
and maintain the demised premises and the furniture, fixtures, equipment and
appurtenances therein, including but not limited to, any and all bathrooms and
kitchens which are located within the demised premises, in a condition of good
order and repair. Without limiting the foregoing, Tenant shall make all
repairs to the demised premises, the Building and the Land, using only Landlord
(or Landlords affiliate) as general contractor including the fixtures and
appurtenances in the demised premises and including further Structural Changes
of any kind which are necessitated by the act, omission, use, occupancy,
negligence or other misconduct of Tenant, its employees, agents, contractors,
servants, licensees or invitees or which are necessitated by any breach or
default of any of the terms, covenants and conditions of this Lease, as and
when needed to keep them in good working order and condition. In addition,
Tenant shall, at Tenant's sole cost and expense, using Landlord or its
affiliate as general contractor, maintain, repair and replace all HVAC,
electric, plumbing and other systems and facilities located within the demised
premises which are supplemental or special to the Buildings standard systems,
whether installed pursuant to this Lease or otherwise. In addition, all
damages or injury to the demised premises and to its fixtures, appurtenances,
systems, facilities or in and to the Building or to its fixtures,
appurtenances, systems, facilities and caused by Tenant, its agents, employees,
contractors, servants, licensees or invitees moving property in or out of the
Building or by installation or removal of , fixtures, or other property, shall
be repaired, restored or replaced promptly by Tenant at its sole cost and
expense, using Landlord or Landlords affiliate as general contractor, which
repairs restorations and replacements shall be in quality and class equal to
the original work or installations. Without limiting Landlords other rights
and remedies, Tenant shall pay to Landlord the full cost and expense incurred
by Landlord or its affiliate as general contractor in performing such repairs,
restorations or replacements which shall be payable by Tenant to Landlord
within 15 days after rendition of a bill therefor.
Tenant shall not place a load upon any floor of the demised premises exceeding
the floor load per square foot area which such floor was designed to carry and
which is allowed by law. Landlord represents that the floor load is sufficient
for Tenant's use for general office purposes.
Business machines and mechanical equipment belonging to Tenant which cause
vibration, noise, cold or heat that may be transmitted to the Building
structure or to any leased space to such a degree as to be reasonably
objectionable to Landlord or to any other tenant in the Building shall be
placed and maintained by Tenant at its expense in settings of cork, rubber or
spring-type vibration eliminators sufficient to absorb and prevent such
vibration or noise, cold or heat. The parties hereto recognize that the
operation of elevators, air conditioning and heating equipment will cause some
vibration, noise, heat or cold which may be transmitted to other parts of the
Building and demised premises. Landlord shall be under no obligation to
endeavor to reduce such vibration, noise, heat or cold beyond what is customary
in a first class office building such as the Building.
Unless expressly provided for in this Lease, there shall be no allowance to
Tenant for a diminution of rental value and no liability on the part of
Landlord by reason of inconvenience, annoyance or injury to business arising
from the making of any repairs, alterations, additions or improvements in or to
any portion of the Building or the demised premises or in or to fixtures,
appurtenances or equipment thereof.
Landlord, at its sole cost and expense, shall maintain and make all necessary
Structural Changes to (i) the Building and the demised premises, and (ii) the
Common Areas, (hereinafter defined in Section 27.09), except that: (a) Landlord
shall not be responsible for the maintenance, repair or replacement of any
systems including but not limited to heating, ventilating and air conditioning,
electric, plumbing including bathrooms and kitchens which are located within
the demised premises and are supplemental or special to the Building standard
systems, whether installed pursuant to this Lease or otherwise; and (b) the
cost of performing any maintenance, repairs or replacements caused or
necessitated by the negligence or other misconduct of Tenant, its employees,
agents, servants, contractors, licensees or invitees or the failure of Tenant
to perform its obligations under this Lease, shall be paid by Tenant, except to
the extent of insurance proceeds, if any, actually collected by Landlord with
regard to the damage necessitating such repairs; and (c) Landlord shall not be
responsible for the maintenance, repair or replacement of any floor coverings
located in the demised premises; and (d) Landlord shall also not be responsible
for the replacement, repair or maintenance of any electric lighting (including
but not limited to tubes, bulbs, ballasts) and any wall finish or covering
within the demised premises; and (e) Landlord shall also not be responsible for
any repairs, maintenance or replacements which are the obligation of Tenant
pursuant to the terms of this Lease.
Requirements of Law; Fire Insurance, Floor Loads:
Tenant, at its sole cost and expense, shall comply with all law, orders and
regulations of Federal, State, County, Municipal and other local governments,
departments, commissions, authorities, and boards and with any direction of any
public officer or officers, pursuant to law, which shall impose any violation,
order or duty upon Landlord or Tenant with respect to the demised premises and
arising out of Tenant's use or manner of use or occupancy of the demised
premises (including Tenant's permitted use) or with respect to the Building or
Land, if arising out of Tenants use or manner of use or occupancy of the
demised premises or the Building (including Tenant's permitted use) or Land.
Tenant shall not do or permit to be done any act or thing upon the Building,
which will invalidate or be in conflict with New York Standard Fire insurance
policies covering the Building, and fixtures and property therein, or which
would increase the rate of fire insurance applicable to the Building to an
amount higher than it otherwise would be; and Tenant shall neither do nor
permit to be done any act or thing upon the Land and Building which shall or
might subject Landlord to any liability or responsibility for injury to any
person or persons or to property by reason of any business or operation being
carried on upon the Building; but nothing in this Section 5.02 shall prevent
Tenant's use of the demised premises for the purposes stated in Article 2
hereof.
If, as a result of any act or omission by Tenant or violation of this Lease,
the rate of fire insurance applicable to the Building shall be increased to an
amount higher than it otherwise would be, Tenant shall reimburse Landlord for
all increases of Landlord's fire insurance premiums so caused; such
reimbursement to be additional rent payable upon the first day of the month
following any outlay by Landlord for such increased fire insurance premiums.
In any action or proceeding wherein Landlord and Tenant are parties, a schedule
or "make up" of rates for the Building or demised premises issued by the body
making fire insurance rates, shall be presumptive evidence but not conclusive
of the facts therein stated and of the several items and charges in the fire
insurance rate than applicable to said Building.
Tenant shall not use or suffer the demised premises to be used in any manner so
as to create an environmental violation or hazard, nor shall Tenant cause or
suffer to be caused any chemical contamination or discharge of a substance of
any nature which is noxious, offensive or harmful or which under any law, rule
or regulation of any governmental authority having jurisdiction constitutes
Hazardous Materials as hereinafter defined.
Tenant shall also immediately notify Landlord in writing of any environmental
concerns of which Tenant is or becomes aware and which are raised by any
private party or government agency with regard to Tenant's business at the
demised premises. Tenant shall also notify Landlord immediately of any
hazardous waste spills at the demised premises and of any other Hazardous
Materials of which Tenant becomes aware.
Not in limitation of the generality of the foregoing, but as additional
covenants, Tenant specifically agrees that (i) Tenant shall not generate,
manufacture, refine, transport, treat, store, handle, dispose or otherwise deal
with any hazardous substances or hazardous waste as now or hereafter defined by
applicable law; and (ii) Tenant shall defend, indemnify and hold Landlord
harmless against any liability, loss, cost or expense, including reasonable
attorneys' fees and costs (whether or not legal action has been instituted)
incurred by reason of the existence of or any failure by Tenant to comply with
any environmental law now or hereafter in effect. Notwithstanding the
foregoing, but without limiting Tenant's other obligations under this Article
5, Tenant shall have the limited right to bring samples of its chemical
products into the demised premises subject to the following conditions:
1. All such samples shall be stored, transported, shipped or otherwise handled
in accordance with applicable local, state and federal environmental, fire,
health and safety laws, rules and regulations.
2. No such samples shall be disposed of within or on the demised premises, the
Building or the Land, whether by use of any plumbing, trash receptacles or
otherwise. Tenant shall only dispose of such samples off-site by using only
licensed and bonded hazardous waste removal contractors.
3. The Tenant shall provide a locked storage area for said chemicals, and
Tenant shall provide access to such storage area at all times to any and all
state or local fire, police or other public safety officers.
4. Tenant shall also comply with all requirements of Landlord's insurance
carrier and will pay any increase in policy premiums to Landlord which may
result from Tenant's storage, transportation, shipment or other handling of
such chemical samples at the demised premises. If Landlord's mortgagee gives
notice that the presence of such chemical samples is a default under any
mortgage or mortgage related instrument or if Landlord's insurance carrier
gives notice to Landlord that it intends to cancel any of Landlord's insurance
policies based upon the presence of such chemical samples, then Tenant shall
cease the storage, transportation, shipment or other handling of such chemical
samples within three (3) days after receipt of written demand from Landlord.
As used herein, the term "Hazardous Materials" means and includes all
potentially hazardous materials, including without limitation radon, oil, gas
and other petroleum products, lead paint, asbestos and asbestos containing
materials.
Tenant covenants and agrees that at any and all times during the term of this
Lease it shall be responsible for compliance with any federal, state, county,
local, or municipal
law (including without limitation Local Law 76, as same now exists or may
hereafter be amended, if the Building is located in New York City), statute,
ordinance, code, regulation or administrative recommendation pertaining to
Hazardous Materials which may have been introduced by the Tenant or its agents,
employees contractors, licensees or invitees (including without limitation any
requirements pertaining to the cleanup, removal, and/or encapsulation of any
Hazardous Materials that may be in or at the demised premises or may have
emanated therefrom). Tenant shall, at its sole cost and expense, undertake any
and all steps which may be required for compliance as aforesaid. In addition,
Tenant shall be solely responsible for restoring and repairing any damage to
the demised premises caused by or resulting from such compliance, e.g. the
replacement of any ceiling tiles or insulation with comparable products not
containing any Hazardous Materials.
Tenant shall indemnify and save harmless the Landlord, Landlord's agents,
servants, and employees, from and against all claims and demands whether for
injuries to persons or loss of life, or damage to property, related to or
arising in any manner whatsoever out of the clean-up, removal and/or
encapsulation of Hazardous Materials provided same is occasioned wholly or in
part by any act or omission of (or failure to comply with legal requirements
by) Tenant, its agents, contractors, employees, servants and licensees. In the
event Landlord shall, without fault on its part, be made a party to any
litigation or administrative proceedings commenced by or against Tenant, then
Tenant shall protect and hold Landlord harmless and shall pay all costs,
expenses and reasonable attorneys fees incurred or paid by Landlord in
connection with such litigation.
Notwithstanding anything herein to the contrary, Tenant shall file no documents
or take any other action under this Article without Landlord's prior written
approval thereof, and Landlord shall also have the right to file such documents
or take such action instead or on behalf of Tenant (but still at Tenant's sole
cost and expense), and Tenant shall cooperate with Landlord in so doing.
Tenant shall also (i) furnish Landlord with copies of any documents filed by
Tenant pursuant to any environmental law; (ii) permit Landlord to be present at
any inspection, on or off site, and at any meetings and substances dealt with
by Tenant at the demised premises, as well as any additional information
available to Tenant for government filings or determinations as to whether
there has been compliance with an environmental law.
Landlord shall also have the right, but not the obligation, to enter the
demised premises at any time to conduct tests to discover the facts of any
alleged or potential environmental problem. In the event Tenant fails to
comply as aforesaid with the clean-up, removal, and/or encapsulation of
Hazardous Materials when so required within the period of time permitted or
promulgated, then in such event Landlord (or its affiliate) may undertake said
work, but shall not be obligated to do so. Should Landlord (or its affiliate)
undertake said work required by Tenant as aforesaid, then in such event,
Landlord shall render a statement to Tenant for the cost and expenses of
undertaking said work plus a charge of twenty (20%) percent for administrative
costs and expenses, which statement shall be paid by Tenant as Additional Rent
within ten (10) days of receipt thereof. Failure of Tenant to undertake
compliance as aforesaid shall constitute a material default under this Lease
for which Landlord shall have all rights and remedies, including without
limitation the right to terminate this Lease and the right to hold Tenant
responsible for the entire cost of compliance as aforesaid and for all of
Landlord's damages resulting from Tenant's failure to so comply.
The provisions of this Article shall survive the expiration or earlier
termination of this Lease, and the Tenant shall require any permitted assignee
or sub-lessee of the demised premises to agree expressly in writing to comply
with all the provisions of this Article.
Subordination:
This Lease is subject and subordinate to all ground or underlying leases and to
all mortgages which may now or hereafter affect such leases or the real
property of which demised premises form a part, and to all renewals,
modifications, consolidations, replacements and extensions thereof. This
clause shall be self-operative and no further instrument of subordination shall
be required by any mortgagee. In confirmation of such subordination, Tenant
shall execute promptly any certificate that Landlord may reasonably request.
Property - Loss, Damage, Reimbursement, Indemnity:
Landlord or its agents shall not be liable for any injury or damage to persons
or property resulting from fire, explosion, falling plaster, steam, gas,
electricity, water, rain or snow or leaks from any part of the Building, or
from the pipes, appliances or plumbing works or from the roof, street or
subsurface or from any other place or by dampness or by any other cause of
whatsoever nature, unless any of the foregoing shall be caused by or due to the
negligence, breach of guarantees, act or omissions of Landlord, its agents,
servants or employees.
Tenant shall reimburse Landlord for all expense, damages or fines incurred or
suffered by Landlord, and for which Landlord has not been or will not be
reimbursed by insurance, by reason of any breach, violation or nonperformance
by Tenant, or its agents, servants or employees, of any covenant or provision
of this Lease, or by reason of damage to persons or property caused by moving
property of or for Tenant in or out of the Building, or by the Tenant or by
reason of or arising out of the carelessness, negligence or improper conduct of
Tenant, or its agents, servants or employees in the use or occupancy of the
demised premises with out prejudice to Landlord's other rights and remedies.
Tenant shall give Landlord notice in case of fire or accidents in the demised
premises promptly after Tenant is aware of such event.
As a material inducement for Landlord to execute and deliver this Lease, Tenant
agrees to look solely to Landlord's estate and interest in the Land and
Building, or the Lease of the Building, and the demised premises, for the
satisfaction of any right or remedy of Tenant for the collection of a judgment
(or order or other judicial process) requiring, in whole or in part, the
payment of money by Landlord, in the event of any liability by Landlord
hereunder, and no other property or assets of Landlord shall be subject to
levy, execution, attachment, or other enforcement procedure for the
satisfaction of Tenant's remedies under or with respect to this Lease, the
relationship of Landlord and Tenant hereunder, or Tenant's use and occupancy of
the demised premises, or for any other liability of Landlord to Tenant.
Each party hereby releases the other party (which term as used in this
paragraph includes the employees, agents, officers and directors of the other
party) from all liability whether for negligence or otherwise, in connection
with loss covered by any insurance policies which the releasor carries with
respect to the demised premises or any interest or property therein or, thereon
(whether or not such insurance is required to be carried under this Lease), but
only to the extent that such loss is collected under said insurance policies.
Such release is also conditioned upon the inclusion in the policy or policies
of a provision whereby any such release shall not adversely affect said
policies or prejudice any right of the releasor to recover thereunder. Each
party agrees that its insurance policies, aforesaid, will include such a
provision so long as the same shall be obtainable without extra cost, or if
extra cost shall be charged therefor, each party shall advise the other thereof
of the amount of the extra cost, and the other party, at its election, may pay
the same, but shall not be obligated to do so.
Destruction - Fire and Other Casualty:
If the demised premises or any part thereof shall be damaged by fire or other
casualty, Tenant shall give immediate notice thereof to Landlord and this Lease
shall continue in full force and effect except as hereinafter set forth.
If the demised premises are partially damaged or rendered partially unusable by
fire or other casualty, the damages thereto shall be repaired by and at the
expense of Landlord and the rent, until such repair shall be substantially
completed, shall be apportioned from the day following the casualty according
to the part of the demised premises which is usable.
If the demised premises are totally damaged or rendered wholly unusable by fire
or other casualty, then the rent shall be proportionately paid up to the time
of the casualty and thenceforth shall cease until the date when the demised
premises shall have been repaired and restored by Landlord, subject to
Landlord's right to elect not to restore the same as hereinafter provided.
If the demised premises are rendered wholly unusable or (whether or not the
demised premises are damaged in whole or part) if the Building shall be so
damaged that Landlord shall decide to demolish it or not to rebuild it, then,
in any of such events Landlord may elect to terminate this Lease by written
notice to Tenant, given within 90 days after such fire or casualty, specifying
a date for the expiration of this Lease, which date shall not be more than 60
days after the giving of such notice, and upon the date specified in such
notice the term of this Lease shall expire as fully and completely as if such
date were the date set forth above for the termination of this Lease and Tenant
shall forthwith quit, surrender and vacate the demised premises without
prejudice however, to Landlord's rights and remedies against Tenant under the
Lease provisions in effect prior to such termination, and any rent owing shall
be paid up to such date and any rent paid for periods subsequent to such date
shall be returned to Tenant. Unless Landlord shall serve a termination notice
as provided for herein, Landlord shall make the repairs and restorations under
the conditions of 8.02 and 8.03 hereof, with all reasonable diligence, subject
to delays due to adjustment of insurance claims, labor troubles, the events set
forth or encompassed by the provisions of Article 25 and any and all other
causes beyond Landlord's control. After any such casualty, Tenant shall
cooperate with Landlord's restoration by removing from the demised premises as
promptly as reasonably possible, all of the Tenant's salvageable inventory and
movable equipment, furniture, and other property. Tenant's liability for rent
shall resume five (5) days after written notice from Landlord that the demised
premises are substantially ready for Tenant's occupancy excluding Tenant's
furniture, furnishings, fixtures, equipment, improvements or appurtenances
removable by Tenant which Landlord will not have any obligation to repair or
restore.
No damages, compensation or claim shall be payable by Landlord to Tenant for
inconvenience, loss of business or annoyance arising from any repair or
restoration of any portion of the demised premises or of the Building.
Nothing contained hereinabove shall relieve Tenant from liability that may
exist as a result of damage from fire or other casualty. Notwithstanding the
foregoing, each party shall look first to any insurance in its favor before
making any claim against the other party for recovery for loss or damage
resulting from fire or other casualty, and to the extent that such insurance is
in force and collectible and to the extent permitted by law, Landlord and
Tenant hereby releases and waives all right of recovery against the other or
anyone claiming through or under each of them by way of subrogation or
otherwise. The foregoing release and waiver shall be in force only if both
releasors' insurance policies contain a clause providing that such a release or
waiver shall not invalidate the insurance. If, and to the extent, that such
waiver can be obtained only by the payment of additional premiums, then the
party benefiting from the waiver shall pay such premium within ten (10) days
after written demand or shall be deemed to have agreed that the party obtaining
insurance coverage shall be free of any further obligation under the provisions
hereof with respect to waiver of subrogation. Tenant acknowledges that
Landlord will not carry insurance on Tenant's furniture and/or furnishings or
any fixtures or equipment, improvements, or appurtenances removable by Tenant
and agrees that Landlord will not be obligated to repair any damage thereto or
replace the same.
Tenant hereby waives the provisions of Section 227 of the Real Property Law of
the State of New York and agrees that the provisions of this Article shall
govern and control in lieu thereof.
Eminent Domain:
In the event that the whole of the demised premises shall be lawfully condemned
or taken in any manner for any public or quasi-public use or purpose, this
Lease and the term and estate hereby granted shall forthwith cease and
terminate as of the date of vesting of title (hereinafter referred to as the
"date of taking"), and Tenant shall have no claim against Landlord or the
condemning authority for, or make any claim for, the value of any expired term
of this Lease, nor any other claim, and the rent and additional rent shall be
apportioned as of such date.
In the event that any part of the demised premises shall be so condemned or
taken, then this Lease shall be and remain unaffected by such condemnation or
taking, except that the rent and additional rent allocable to the part so taken
shall be apportioned as of the date of taking, provided, however, that Tenant
or Landlord may each elect to cancel this Lease if more than twenty-five (25%)
percent of the demised premises shall be so condemned or taken, provided such
notice of election is given to the other party, not later than thirty (30) days
after the date when Landlord notifies Tenant of the date that title shall vest
or has vested in the condemning authority. Upon the giving of such notice,
this Lease shall terminate on the thirtieth day following the date of such
notice by Tenant. Upon such partial taking and this Lease continuing in force
as to any part of the demised premises, the rent and additional rent shall be
diminished by an amount representing the part of said rent and additional rent
properly applicable to the portion or portions of the demised premises which
may be condemned or taken. If as a result of the partial taking (and this
Lease continuing in force as to the part of the demised premises not so taken),
any part of the demised premises not taken is damaged, Landlord agrees with
reasonable promptness to commence the work necessary to restore the damaged
portion to the condition existing immediately prior to the taking, and
prosecute the same with reasonable diligence to its completion.
Nothing hereinabove provided shall preclude Tenant from appearing, claiming,
proving and receiving in the condemnation proceeding, Tenant's moving expenses,
and the value of Tenant's movable furniture, fixtures and equipment which do
not become part of the Building or property of Landlord, provided such claims
do not diminish Landlord's award.
In the event that more than twenty-five (25%) per cent of the demised premises
shall be so taken and neither Tenant nor Landlord have elected to cancel this
Lease as above provided, the entire award for partial taking shall be paid to
Landlord, and Landlord, at Landlord's own expense, shall to the extent of the
net proceeds (after deducting reasonable expenses including attorneys' and
appraisers' fees) of the award restore the unaffected part of the Building to
substantially the same condition and tenantability as existed prior to the
taking. Until said unaffected portion is restored, Tenant shall be entitled to
a proportionate abatement of rent for that portion of the demised premises
which is being restored and is not usable until the completion of the
restoration or until the said portion of the demised premises is used by
Tenant, whichever is sooner. Said unaffected portion shall be restored within
a reasonable time but not more than six (6) months after the taking provided,
however, if Landlord is delayed by strike, lockout, the elements, any of the
events set forth or encompassed by Article 25 or any other causes beyond
Landlord's control, the time for completion shall be extended for a period
equivalent to the delay. Should Landlord fail to complete the restoration
within the said six (6) months or the time as extended, Tenant may elect to
cancel this Lease and the term hereby granted in the manner and with the same
results as set forth in the next two sentences of this Section 9.04. If such
partial taking shall occur in the last two years of the term hereby granted,
either party, irrespective of the area of the space remaining, may elect to
cancel this Lease and the term hereby granted, provided such party shall,
within thirty (30) days after such taking, give notice to that effect, and upon
the giving of such notice, the rent shall be apportioned and paid to the date
of expiration of the term specified and this Lease and the term hereby granted
shall cease, expire and come to an end upon the expiration of said thirty days
specified in said notice. If either party shall so elect to end this Lease and
the term hereby granted, Landlord need not restore any part of the demised
premises and the entire award for partial condemnation shall be paid to
Landlord, and Tenant shall have no claim to any part thereof, except as to the
items set forth in Section 9.03 where same are applicable.
In the event all or any part of the demised premises shall be taken for a
temporary use or occupancy, (a) the Lease term shall not be reduced or affected
in any way except as provided in (d) below, (b) Tenant shall continue to be
responsible for all of its obligation hereunder and shall continue to pay all
rents and additional rents when due, (c) Tenant shall be entitled to receive
that portion of the award which represents reimbursement for the cost of
restoration of the demised premises, compensation for the use and occupancy of
the demised premises and for any taking of Tenant's property, except that, if
the temporary period of taking shall extend beyond the expiration of the term
of this Lease, the portion of the award representing compensation for the use
and occupancy of the demised premises shall be apportioned between Landlord and
Tenant as of said expiration date of said term and Landlord shall receive that
portion of the award which represents reimbursements for the cost of
restoration of the demised premises, and (d) if the date of taking shall occur
during the last three (3) years of the term of this Lease, Tenant may elect to
cancel this Lease by notice of election given by Tenant to Landlord not later
than thirty (30) days after the date when Landlord notifies Tenant of the date
that title shall vest or has vested in the condemning authority. Upon the
giving of such notice, this Lease shall terminate on the thirtieth day
following the date of such notice and the rent and additional rent shall be
apportioned as of such termination date, with Landlord and not Tenant, to
receive the portion of the award which represents reimbursement for the cost of
restoration of the demised premises and the portion of the award representing
compensation for the use and occupancy of the demised premises for the time
subsequent to the cancellation date.
In the event more than one-third (1/3) of the parking spaces shall be so
condemned or taken which parking spaces formulate part of the overall Land, and
the Landlord is not able to provide on-premises parking equal to two-thirds
(2/3) of the original parking areas, then in that event the Tenant may elect to
cancel this Lease and the terms hereby granted in accordance with the
provisions of Section 9.02 applicable to condemnation of more than twenty-five
(25%) percent of the demised premises. Landlord shall give notice to Tenant
within sixty (60) days of the date of such taking as to whether or not Landlord
will in fact restore sufficient parking facilities as herein set forth. If
Tenant does not elect to cancel this Lease, as aforesaid, then there shall be
no reduction or abatement in rent and this Lease shall otherwise remain in full
force and effect.
Assignment, Mortgage, Etc.:
Tenant, for itself, its heirs, distributees, executors, administrators, legal
representatives, successors and assigns, expressly covenants that it shall not
assign, mortgage or encumber this Lease, nor underlet, or suffer or permit the
demised premises or any part thereof to be used or occupied by others, without
the prior written consent of Landlord in each instance. If this Lease be
assigned, or if the demised premises or any part thereof be underlet or
occupied by anyone other than Tenant, Landlord may, after default by Tenant,
collect rent from the assignee, undertenant or occupant, and apply the net
amount collected to the rent herein reserved, but no assignment, underletting,
occupancy or collection or the acceptance of the assignee, undertenant or
occupant as tenant, shall be deemed a waiver of the provisions hereof or a
release of Tenant from the further performance by Tenant of covenants on the
part of Tenant herein contained; it being expressly understood and agreed that
Tenant shall remain fully liable for the performance and observance of all
terms, covenants and conditions of this Lease, including without limitation,
timely payment of all rent and items of additional rent. The consent by
Landlord to an assignment or underletting shall not in any wise be construed to
relieve Tenant from obtaining the express consent in writing of Landlord to any
further assignment or underletting. In no event shall any permitted sublessee
assign or encumber its sublease or further sublet all or any portion of its
sublet space, or otherwise suffer or permit the sublet space or any part
thereof to be used or occupied by others, without Landlord's prior written
consent in each instance.
If Tenant desires to assign this Lease or to sublet all or any portion of the
demised premises, it shall first submit in writing to Landlord the description
of the space and the terms for which Tenant intends to assign or sublease and
shall offer in writing, (i) with respect to a prospective assignment, to assign
this Lease to Landlord without any payment of monies or other consideration
therefor, or, (ii) with respect to prospective subletting, to sublet to
Landlord or its designee the portion of the demised premises involved
("Leaseback Area") for the term intended by Tenant in its offer and at the
lower of (a) Tenant's proposed subrental or (b) at the same rate of fixed rent
and additional rent and otherwise on the same terms, covenants and conditions
(including provisions relating to escalation rents), as are contained herein
and as are applicable to the portion of the demised premises to be covered by
such subletting. The offer shall specify the date when the Leaseback Area will
be made available to Landlord which date shall be in no event earlier than
sixty (60) days nor later than one hundred eighty (180) days following the
acceptance of the offer by the Landlord. If an offer of sublease is made, it
shall in addition specify the duration of the term of the proposed sublease as
fixed by Tenant, except that if the proposed sublease will result in all or
substantially all of the demised premises being sublet, then Landlord shall
have the option to extend the term of this sublease to the term of the
underlying Lease, less one day. Landlord shall have a period of fifteen (15)
days from the receipt of such offer to either accept or reject the same. If
Landlord shall accept such offer Tenant shall then execute and deliver to
Landlord, or to anyone designated or named by Landlord of reasonable credit
standing, an assignment or sublease, as the case may be, in either case in a
form reasonably satisfactory to Landlord's counsel.
If a sublease is so made to Landlord or its designee, it shall expressly:
(a) permit Landlord to make further subleases of all or any part of the
Leaseback Area and (at no cost or expense to Tenant) to make and authorize any
and all changes, alterations, installations and improvements in such space as
Landlord may deem necessary for such subletting, at Landlord's expense;
(b) provide that Tenant will at all times permit reasonably appropriate means
of ingress to and egress from the Leaseback Area;
(c) negate any intention that the estate created under such sublease be merged
with any other estate held by either of the parties;
(d) provide that Landlord shall accept the Leaseback Area "as is" except that
Landlord, at Tenant's expense, shall perform all such work physically to
separate the Leaseback Area from the remainder of the demised premises and to
permit lawful occupancy, it being intended that Tenant shall have no other cost
or expense in connection with the subletting of the Leaseback Area;
(e) provide that at the expiration or sooner termination of the term of such
sublease Tenant will accept the Leaseback Area in its then existing condition,
subject to the obligations of Landlord to make such repairs thereto as may be
necessary to preserve the Leaseback Area in good order and condition, ordinary
wear and tear expected.
Landlord, or its designee, as the case may be, shall indemnify and save Tenant
harmless from all obligations under this Lease as to the Leaseback Area during
the period of time it is so sublet except for any obligations which are not
performed by Landlord, or its designee, as such subtenant by reason of the acts
or omissions of Tenant, its agents, employees, contractors, servants, licensees
or invitees. Performance by Landlord, or its designee, under a sublease of the
Leaseback Area shall be deemed performance by Tenant of any similar obligation
contained in this Lease, and Tenant shall not be liable for any default under
this Lease or deemed to be in default hereunder if such default is occasioned
by or arises from any act or omission of the Landlord under such sublease or is
occasioned by or arises from any act or omission of any occupant holding under
or pursuant to any such sublease with Landlord or its designee.
If Landlord shall not have accepted Tenant's offer, as provided in Section
10.02, then Landlord will not unreasonably withhold or delay its consent to
Tenant's request for consent to such assignment or subletting. Any such
consent of Landlord shall be subject to the terms of this Article and
conditional upon there being no default by Tenant (which Tenant has not timely
cured or in good faith has commenced to cure and is diligently prosecuting the
cure thereof) during the period commencing on the date that Tenant shall have
made the offer as set forth in 10.02 to Landlord up to and including the date
of the commencement of the term of the proposed sublease or the effective date
of any such proposed assignment. In the event Tenant does not successfully
sublet or assign the space so designated in 10.02 within six (6) months, then
the Landlord's rights in 10.02 shall re-occur before Tenant may sublet or
assign such space.
If Tenant requests Landlord's consent to a specific assignment or subletting,
it shall submit in writing to Landlord (which writing shall be in addition to
the writing required pursuant to Section 10.02 hereof) (i) the name and address
of the proposed assignee or sublessee, (ii) a counterpart of the proposed
agreement or assignment or sublease, (iii) reasonably satisfactory information
as to the nature and character of the business of the proposed assignee or
sublessee, and as to the nature of its proposed use of the space, and (iv)
banking, financial or other credit information relating to the proposed
assignee or sublessee reasonably sufficient to enable Landlord to determine the
financial responsibility and character of the proposed assignee or sublessee.
The proposed sublessee or assignee must have a net worth equal to not less than
fifty (50%) percent of the net worth of Tenant.
Upon receiving Landlord's written consent, a duly executed copy of the sublease
or assignment shall be delivered to Landlord within ten (10) days after
execution thereof. Any such sublease shall provide that the sublessee shall
comply with all applicable terms and conditions of this Lease to be performed
by the Tenant hereunder. Any such assignment of Lease shall contain an
assumption by the assignee of all of the terms, covenants and conditions of
this Lease to be performed by the Tenant.
Anything herein contained to the contrary notwithstanding:
(a) Tenant shall not advertise (but may list with brokers) its space for
assignment or subletting at a rental rate lower than the rental rate then being
paid by Tenant to Landlord.
(b) The transfer of a majority of the issued and outstanding capital stock of
any corporate tenant or subtenant of this Lease or a majority of the total
interest in any partnership tenant or subtenant, or a majority of the
membership interests in a limited liability company, tenant or subtenant or a
majority of the total beneficial interests in any other form of tenant or
subtenant, however accomplished, and whether in a single transaction or in a
series of related or unrelated transactions, shall be deemed an assignment of
this Lease. The transfer of outstanding capital stock of any corporate tenant,
for purposes of this Article, shall not include sale of such stock by persons
other than those deemed "insiders" within the meaning of the Securities
Exchange Act of 1934 as amended and which sale is effected through "over-the-
counter market" or through any recognized stock exchange. In no event shall
there be an assignment or subletting it being understood and agreed that any
assignment or subletting must be to a bona fide operating entity for a bona
fide business purpose and which proposed assignment or subletting is not
designed to circumvent the restrictions on assignment and subletting set forth
in this Lease to a "shell" corporation - said assignment must be to the
operating entity.
(c) In addition to the restrictions set forth in this Article 10, no
assignments or subletting shall be made:
(i) To any person or entity which shall at that time be a tenant, subtenant or
other occupant of any part of the Building of which the demised premises form a
part, or any person or entity who has been dealing or negotiating with (or has
previously dealt or negotiated with) the Landlord or a broker for space in the
Building, or any person or entity with whom Landlord has been in negotiations
during the preceding one (1) year for any space in any Building owned or
managed by Landlord or its representatives.
(ii) By the legal representatives of Tenant or by any person to whom Tenant's
interest under this Lease passes by operation of law, except in compliance with
the provisions of this Article;
(iii) To any person or entity for the conduct of business which is not in
keeping with the standards and the general character of the Building of which
the demised premises form a part.
(iv) To any person or entity for the practice of medicine in any field.
Tenant may, with Landlord's prior written consent, which shall not be
unreasonably withheld, provided that Tenant otherwise complies with all other
terms, covenants and conditions of this Article 10, assign or transfer its
entire interest in this Lease and the leasehold estate hereby created or sublet
the whole of the demised premises to a successor entity (Successor Entity) of
Tenant (as hereinafter defined); provided, however, that (i) Tenant shall not
be in default in any of the terms, covenants and conditions of this Lease, (ii)
the proposed occupancy shall not increase the office cleaning requirements or
impose an extra burden upon the building equipment or building services and
(iii) the proposed subtenant or assignee shall not be entitled, directly or
indirectly, to diplomatic or sovereign immunity and shall be subject to the
service of process in, and the jurisdiction of the courts of New York State. A
"Successor Entity", as used in this Article 10 shall mean (a) a corporation,
partnership, limited liability company or other business entity into which or
with which Tenant, its permitted successors or assigns, is merged or
consolidated, in accordance with applicable statutory provisions for the merger
or consolidation of corporations or other business entities, or (b) a
corporation, partnership, limited liability company or other business entity
acquiring this Lease and the term hereof and estate hereby granted, together
with the goodwill and all or substantially all of the other property and
assets, its permitted successors or assigns, and assuming all or substantially
all of the liabilities of Tenant, its permitted successors and assigns, or (c)
any permitted successor to a Successor Entity becoming such by either of the
methods described in subdivisions (a) and (b) above; provided that, immediately
after giving effect to any such merger or consolidation, or such acquisition
and assumption, as the case may be, the business entity surviving such merger
or created by such consolidation or acquiring such assets and assuming such
liabilities, as the case may be, shall have assets, capitalization and a net
worth, as determined in accordance with generally accepted accounting
principles, at least equal to the assets, capitalization and net worth,
similarly determined, of Tenant, its permitted successors or assigns,
immediately prior to such merger or consolidation or such acquisition and
assumption, as the case may be. The acquisition by Tenant, its permitted
successors or assigns, of all or substantially all of the assets, together with
the assumption of all or substantially all of the obligations and liabilities
of any business entity, shall be deemed to be a merger for the purposes of this
Article.
In the event that Tenant sells, sublets, assigns or transfers this Lease and at
anytime receives periodic rent and/or other consideration which exceeds that
which Tenant would at that time be obligated to pay to Landlord, Tenant shall
pay to Landlord 50% of the gross increase, exclusive of the costs of any
improvements, in such rent as such rent is received by Tenant and 50% of any
other consideration received by Tenant for such subtenant of any other
consideration received by Tenant from such subtenant in connection with such
sublease or in the case of an assignment of this Lease by Tenant, Landlord
shall receive 50% of any consideration paid to Tenant by, such assignee in
connection with such assignment.
Access to Premises:
Tenant shall permit Landlord to erect, use and maintain pipes, ducts and
conduits in and through the demised premises, provided the same are installed
concealed behind walls and ceilings of the demised premises and are installed
by such methods and at such locations as will not materially interfere with or
impair Tenant's layout or use of the demised premises or damage the appearance
thereof. Landlord or its agents or designees shall have the right, upon
reasonable notice, (except in the event of an emergency) but only upon request
(except in the event of an emergency) made to Tenant or any authorized employee
of Tenant at the demised premises to enter the demised premises, other than
vaults or other enclosures where money, securities or other valuables or
confidential documents are kept, at reasonable times during business hours, for
the making of such repairs or alterations as Landlord shall be required or
shall have the right to make by the provisions of this Lease or any other lease
in the Building and, subject to the foregoing, shall also have the right to
enter the demised premises for the purpose of inspecting them or exhibiting
them to prospective purchasers or lessees of the entire Building or to
prospective mortgagees of the fee or of the Landlord's interest in the property
of which the demised premises are a part or to prospective assignees of any
such mortgages or to the holder of any mortgage on the Landlord's interest in
the property, its agents or designees. Landlord shall be allowed to take all
material into and upon the demised premises that may be required for the
repairs or alterations above mentioned as the same is required for such purpose
without the same constituting an eviction of Tenant in whole or in part, and
the rent reserved shall in no wise abate, except as otherwise provided in this
Lease, while said repairs or alterations are being made, by reason of loss or
interruption of the business of Tenant because of the prosecution of any such
work, provided Landlord shall exercise reasonable diligence so as to minimize
the disturbance.
Landlord may, upon reasonable notice to the Tenant, during the six (6) months
prior to the expiration of the term of this Lease, exhibit the demised premises
to prospective tenants.
If Tenant shall not be personally present to open and permit an entry into the
demised premises at any time when for any reason an entry therein shall be
urgently necessary by reason of fire or other emergency, Landlord or Landlord's
agents may forcibly enter the same without rendering Landlord or such agents
liable therefor (if during such entry Landlord or Landlord's agents shall
accord reasonable care to Tenants property) and without in any manner affecting
the obligations and covenants of this Lease.
Occupancy:
Tenant will not at any time use or occupy the demised premises in violation of
the certificate of occupancy issued for the Building. Landlord represents to
the best of its knowledge that the certificate of occupancy for the Building
permits the use of the demised premises for the purposes specified in this
Lease. Landlord will make no changes to the Building which will result in the
change to the Certificate of Occupancy for the Building that would prevent the
Tenant from using the demised premises for the use specified in this Lease
Bankruptcy:
Subject to the provisions of Section 13.03 and the applicable bankruptcy
statutes, if at any time prior to the date herein fixed as the commencement of
the term of this Lease there shall be filed by or against Tenant in any court
pursuant to any statute either of the United States or of any State a petition
in bankruptcy or insolvency or for reorganization or for the appointment of a
receiver or a trustee of all or a portion of Tenant's property, or if Tenant
makes an assignment for the benefit of creditors, or petitions for or enters
into an arrangement with creditors, this Lease shall ipso facto be cancelled
and terminated, in which event neither Tenant nor any person claiming through
or under Tenant or by virtue of any statute or of an order of any court shall
be entitled to possession of the demised premises and Landlord, in addition to
the other rights and remedies given by Section 13.04 hereof and by virtue of
any other provision herein or elsewhere in this Lease contained or by virtue of
any statute of rule of law, may retain as liquidated damages any rent,
security, deposit or monies received by it from Tenant or others in behalf of
Tenant upon the execution thereof.
Subject to the provisions of Section 13.03, if at the date fixed as the
commencement of the term of this Lease or if at any time during the term hereby
demised there shall be filed by or against Tenant in any court pursuant to any
statute either of the United States or of any State a petition in bankruptcy or
insolvency or for reorganization of the appointment of a receiver or trustee of
all or a portion of Tenant's property, or if Tenant makes an assignment for the
benefit of creditors, or petitions for or enters into an arrangement with
creditors, Landlord may at Landlord's option, serve upon Tenant or any such
trustee, receiver, or assignee, a notice in writing stating that this Lease and
the term hereby granted shall cease and expire on the date specified in said
notice, which date shall be not less than ten (10) days after the serving of
said notice and this Lease and the term hereof shall then expire on the date so
specified as if that date had originally been fixed in this Lease as the
expiration date of the term herein granted. Thereupon, neither Tenant nor any
person claiming through or under Tenant by virtue of any statute or of an order
of any court shall be entitled to possession or to remain in possession of the
demised premises but shall forthwith quit and surrender the demised premises,
and Landlord, in addition to the other rights and remedies Landlord has by
virtue of any other provision herein or elsewhere in this Lease contained or by
virtue of any statute or rule of law, may retain as liquidated damages any
rent, security, deposit or monies received by it from Tenant or others in
behalf of Tenant.
In the event that at any times mentioned in either Sections 13.01 and 13.02
there shall be instituted against Tenant an involuntary proceeding for
bankruptcy, insolvency, reorganization or any other relief described in
Sections 13.01 or 13.02, Tenant shall have ninety (90) days in which to vacate
or stay the same before this Lease shall terminate or before Landlord shall
have any right to terminate this Lease, provided the rent and additional rent
then in arrears, if any, are paid within fifteen (15) days after the
institution of such proceeding, and further provided that the rent and
additional rent which shall thereafter become due and payable are paid when
due, and Tenant shall not otherwise be in default in the performance of the
terms and covenants of this Lease.
In the event of the termination of this Lease pursuant to Sections 13.01, 13.02
or 13.03 hereof, Landlord shall forthwith, notwithstanding any other provisions
of this Lease to the contrary, be entitled to recover from Tenant as and for
liquidated damages an amount equal to the difference between the rent reserved
hereunder for the unexpired portion of the term demised and the then fair and
reasonable rental value of the demised premises for the same period. If the
demised premises or any part thereof be re-let by Landlord for the unexpired
term of this Lease, or any part thereof, before presentation of proof of such
liquidated damages to any court, commission or tribunal, the amount of rent
reserved upon such re-letting shall be prima facie evidence of the fair and
reasonable rental value for the part or the whole of the premises so re-let
during the term of the re-letting. Nothing herein contained shall be limit or
prejudice the right of Landlord to prove for and obtain as liquidated damages
by reason of such termination, an amount equal to the maximum allowed by any
statute or rule of law in effect at the time, and governing the proceedings in
which such damages are to be proved, whether or not such amount be greater,
equal to, or less than the amount of the difference referred to above.
Default:
If Tenant defaults any of the terms, covenants and conditions of this Lease,
including the covenants for the payment of rent or additional rent, or if the
demised premises become vacant or deserted, or if any execution or attachment
shall be issued against Tenant or any of Tenants property whereupon the demised
premises shall be taken or occupied by someone other than Tenant; or if this
lease be rejected under the applicable bankruptcy code; or if Tenant shall fail
to move into or take possession of the premises within thirty (30) days after
the commencement of the term of this lease, then, in any one or more of such
events, upon Owner serving a written ten (10) days notice upon Tenant
specifying the nature of said default and upon the expiration of said ten (10)
days, if Tenant shall have failed to comply with or remedy such default of if
the said default or omission complained of shall be a non-monetary and is of a
nature that the same cannot be completely cured or remedied within said ten
(10) day period, and if Tenant shall not have diligently commenced curing such
non-monetary default within such ten (10) day period, and shall not thereafter
with reasonable diligence and in good faith proceed to remedy or cure such non-
monetary default, provided however, that in no event shall Tenant have in
excess of thirty (30) days to complete the cure of any such non-monetary
default which is of such a nature that same cannot be completely cured within
said ten (10) day period, then, in any one or more of such events, Owner may
serve a written ten (10) days notice of cancellation of this lease upon Tenant,
and upon the expiration of said ten (10) days this lease and the term
thereunder shall end and expire as fully and completely as if the expiration of
such ten (10) day period were the day herein definitely fixed for the end and
expiration of this lease and the term thereof and Tenant shall then quit and
surrender the demised premises to Owner, but Tenant shall remain liable as
hereinafter provided.
Reference is made to that certain other lease agreement which Landlord and
Tenant entered into in October 1990 covering certain space in the Building
which was modified by that certain modification of lease dated as of April 14,
1997 (collectively, the Existing Lease). Reference is further made to that
certain other lease agreement of even date entered into by and between Landlord
and Tenant covering the same premises demised under the Existing Lease (Other
Lease). A default by Tenant under the Existing Lease and/or a default by
Tenant under the Other Lease shall, at the option of Landlord, constitute a
default under this Lease. A default under this Lease by Tenant shall, at the
option of Landlord, constitute a default under the Existing Lease and/or the
Other Lease. Without limiting the foregoing, in the event that this Lease
terminates by reason of Tenant's default or otherwise, including by reason of
fire or other casualty or condemnation, then at Landlord's option, the Existing
Lease and/or the Other Lease shall also terminate and in the event that the
Existing Lease shall terminate by reason of Tenants default thereunder or
otherwise, including by reason of fire, casualty or condemnation, then at
Landlords option this Lease and/or the Other Lease shall also terminate and in
the event that the Other Lease shall terminate by reason of Tenants default
and/or otherwise, including by reason of fire, casualty or condemnation, then
at Landlords option this Lease and/or the Existing Lease shall also terminate,
without prejudice to Landlords other rights and remedies at law and in equity.
If the notices provided for in Section 14.01 hereof shall have been given, and
the term shall expire as aforesaid, or if Tenant shall default in the payment
of the rent reserved herein or any item of additional rent herein provided or
any part of either or in making any other payment herein provided for, then and
in any of such events Landlord may, without notice, re-enter the demised
premises, and dispossess Tenant, the legal representatives of Tenant or other
occupant of the demised premises, by summary proceedings and lawfully remove
their effects and hold the premises as if this Lease had not been made, and
Tenant hereby waives the service of notice of intention to re-enter or to
institute legal proceedings to that end.
Notwithstanding the provisions of Section 14.01 hereof, Tenant, at its own cost
and expense may contest, in any manner permitted by law (including appeals to a
court, or governmental department or authority having jurisdiction in the
matter), the validity or the enforcement of any governmental act, regulation or
directive with which Tenant is required to comply pursuant to this Lease, and
may defer compliance therewith provided that:
(a) such non-compliance shall not subject Landlord or any of its directors,
officers, employees or shareholders to criminal prosecution, criminal or civil
penalty or subject the Land and/or Building at One Hollow Road, Lake Success,
New York, to lien or sale;
(b) such non-compliance shall not be in violation of any mortgage, or of any
ground or underlying lease and/or any mortgage affecting the Building or Land;
(c) Tenant shall first deliver to Landlord a surety bond issued by a surety
company licensed in the State of New York or other security satisfactory to
Landlord in an amount satisfactory to Landlord, indemnifying and protecting
Landlord against any loss or injury by reason of such non-compliance; and
(d) Tenant shall promptly and diligently prosecute such contest.
(e) Tenant shall pay any and all costs and expenses associated with such
contest and shall reimburse Landlord for its reasonable attorneys fees
associated with the Landlord's review of or participation in Tenant's contest.
Landlord shall reasonably cooperate with Tenant, including the execution of
such documents as are reasonably necessary under the circumstances, provided
that Landlord agrees with the accuracy of such documents and that no provision
of this Lease is violated thereby.
Remedies of Owner and Waiver of Redemption:
In case of any such re-entry, expiration and/or dispossess by summary
proceedings or otherwise as set forth in Article 14 hereof (a) the rent shall
become due thereupon and be paid up to the time of such re-entry, dispossess
and/or expiration, together with such expenses as Landlord may incur for legal
expenses, reasonable attorneys' fees, brokerage, and/or putting the demised
premises in good order, or for preparing the same for re-rental; (b) Landlord
may re-let the demised premises or any part or parts thereof, either in the
name of Landlord or otherwise, for a term or terms, which may at Landlord's
option be less than or exceed the period which would otherwise have constituted
the balance of the term of this Lease and may grant concessions or free rent;
and/or (c) Tenant shall also pay Landlord as liquidated damages for the failure
of Tenant to observe and perform said Tenant's covenants herein contained, any
deficiency between the rent hereby reserved and/or covenanted to be paid and
the net amount, if any, of the rents collected on account of the lease or
leases of the demised premises for each month of the period which would
otherwise have constituted the balance of the term this Lease. The failure of
Landlord to re-let the demised premises or any part or parts thereof shall not
release or affect Tenant's liability for damages. In computing such liquidated
damages there shall be added to the said deficiency such expenses as Landlord
may incur in connection with re-letting, such as legal expenses, reasonable
attorneys' fees, brokerage and for keeping the demised premises in good order
or for preparing the same for re-letting. Any such liquidated damages shall be
paid in monthly installments by Tenant on the rent days specified in this Lease
and any suit brought to collect the amount of the deficiency for any month
shall not prejudice in any way the rights of Landlord to collect the deficiency
for any subsequent month by a similar proceeding. Landlord, at Landlord's
option, may make such alterations, repairs, replacements and/or decorations in
the demised premises as Landlord, in Landlord's sole judgment, considers
advisable and necessary for the purpose of re-letting the demised premises; and
the making of such alterations and/or decorations shall not operate or be
construed to release Tenant from liability hereunder as aforesaid. Landlord
shall in no event be liable in any way whatsoever for the failure or refusal to
re-let the demised premises or any parts thereof, or, in the event that the
demised premises are re-let, for failure to collect the rent thereof under such
re-letting. In the event of a breach, or threatened breach by Tenant of any of
the covenants or provisions hereof, Landlord shall have the right to invoke any
remedy allowed at law or in equity as if re-entry, summary proceedings and
other remedies were not herein provided for. Mention in this Lease of any
particular remedy, shall not preclude Landlord from any other remedy, in law or
in equity. Without limiting Landlord's other rights and remedies, if Tenant
shall at any time default hereunder, and if Landlord shall institute an action
or summary proceedings against Tenant based upon such default, or if Landlord
is otherwise involved in any litigation against Tenant, then Tenant will
reimburse Landlord for the reasonable attorneys fees, costs and disbursements
incurred by Landlord.
Tenant hereby expressly waives any and all rights of redemption granted by or
under any present or future laws in the event of Tenant being evicted or
dispossessed for any cause, or in the event of Landlord obtaining possession of
demised premises, by reason of the violation by Tenant of any of the covenants
and conditions of this Lease or otherwise.
Fees and Expenses:
If Tenant shall default in the observance or performance of any term or
covenants on Tenant's part to be observed or performed under or by virtue of
any of the covenants, terms or provisions in any Article of this Lease, then,
without limiting Landlord's other rights and remedies (a) Landlord may remedy
such default for the account of Tenant, immediately and without notice in case
of emergency, or in any other case only provided that Tenant shall fail to
remedy such default with all reasonable dispatch after Landlord shall have
notified Tenant in writing of such default and the applicable grace period for
curing such default shall have expired; and (b) if Landlord makes any
expenditures or incurs any obligations for the payment of money in connection
with such default including, but not limited to, reasonable attorneys' fees in
instituting, prosecuting or defending any action or proceeding, such sums paid
or obligations incurred, with interest, shall be deemed to be additional rent
hereunder and shall be paid by Tenant to Landlord upon rendition of a bill to
Tenant therefor.
Without limiting Landlord's other rights and remedies, if Tenant is late in
making any payment due to Landlord from Tenant under this Lease, then interest
per annum ("interest") calculated at the rate of three percent (3%) above the
prime rate of interest charged by The Chase Manhattan Bank in New York City
shall become due and owing to Landlord on such payment from the date when it
was due (or the maximum amount as may then be legally permitted by law
whichever is lower).
If Landlord shall default in the observance or performance of any term or
covenants on Landlord's part to be observed or performed under or by virtue of
any of the covenants, terms or provisions in any Article of this Lease, and if
Landlord shall fail to commence to cure such default within forty-five (45)
days after receipt of written demand from Tenant (or if such default cannot be
cured within forty-five days, then Landlord shall have a reasonable period of
time after receipt of written notice from Tenant to cure such default), and
thereafter continue to prosecute such default, then Tenant may remedy such
default for the account of Landlord. If Tenant makes any reasonable
expenditures or incurs any obligations for the payment of money in connection
with the cure of such default, such sums paid or obligations incurred, shall
be deemed to be due by Landlord to Tenant within rendition of a bill in
reasonable detail to Landlord therefor.
No Representations by Owner:
Landlord or Landlord's agents have made no representations or promises with
respect to the Building or demised premises except as herein expressly set
forth.
End of Term:
Upon the expiration or other termination of the term, Tenant shall quit and
surrender to Landlord the demised premises, broom clean, in good order and
condition, ordinary wear and tear and damage for which Tenant is not
responsible under the terms of this Lease excepted, Tenant's obligation to
observe or perform this covenant shall survive the expiration or sooner
termination of the term of this Lease. Tenant agrees to indemnify and save
Landlord harmless from all costs, claims, loss or liability resulting from
delay by Tenant in so surrendering the demised premises, including, without
limitation, any claims made by any succeeding tenant founded on such delay. If
the last day of the Term or any renewal thereof falls on Saturday or Sunday
this Lease shall expire on the business day immediately preceding. Tenant
expressly waives, for itself and for any person claiming through or under
Tenant, any rights which Tenant or any such person may have under the
provisions of Section 2201 of the New York Civil Practice Law and Rules and of
any successor law of like import then in force in connection with any holdover
summary proceedings which Landlord may institute to enforce the foregoing
provisions of this Article 18. In addition, the parties recognize and agree
that the damage to Landlord resulting from any failure by Tenant to timely
surrender possession of the demised premises as aforesaid will be substantial,
will exceed the amount of the monthly installments of the fixed annual rent
theretofore payable hereunder, and will be impossible to accurately measure.
Tenant therefor agrees that if possession of the demised premises is not
surrendered to Landlord within twenty-four (24) hours after the expiration date
or a sooner termination of the Term, in addition to any other rights or remedy
Landlord may have hereunder or at law Tenant shall pay to Landlord for each
month and for each portion of any month during which Tenant holds over in the
demised premises after the Expiration Date or sooner termination of this Lease,
a sum equal to two (2) times the fixed rent and all items of additional rent
which was payable under this Lease during the last month of the Term. Nothing
herein contained shall be deemed to permit Tenant to retain possession of the
demised premises after the Expiration Date or sooner termination of this Lease
and no acceptance by Landlord of payments from Tenant after the expiration or
sooner termination of the Lease shall be deemed to be other than on account of
the amount to be paid by Tenant in accordance with the provisions of this
Article 18, which provisions shall survive the expiration or sooner termination
of this Lease.
Quiet Enjoyment:
Landlord covenants and agrees with Tenant that upon Tenant paying the rent and
additional rent and observing and performing all the terms, covenants and
conditions, on Tenant's part to be observed and performed, Tenant may peaceably
and quietly enjoy the premises hereby demised, subject nevertheless, to the
terms and conditions of this Lease, and to any ground leases, underlying leases
and mortgages hereinbefore mentioned to which this Lease is subordinate.
Definitions:
The term "Landlord" as used in this Lease means only the owner, or the
mortgagee in possession, for the time being of the Land and Building (or the
owner of a lease of the Building or of the Land and Building), so that in the
event of any transfer of title to the Land and Building or said lease, or in
the event of a lease of the Building, or of the Land and Building, upon
notification to Tenant of such transfer or lease the said transferor Landlord
shall be and hereby is entirely freed and relieved of all existing or future
covenants, obligations and liabilities of Landlord hereunder, and it shall be
deemed and construed as a covenant running with the Land without further
agreement between the parties or their successors in interest, or between the
parties and the transferee of title to the Land and Building or said lease, or
the said lessee of the Building, or of the Land and Building, that the
transferee or the lessee has assumed and agreed to carry out any and all such
covenants, obligations and liabilities of Landlord hereunder.
The words "re-enter" and "re-entry" as used in this Lease are not restricted to
their technical legal meaning.
The term "business days" as used in this lease shall exclude Saturdays,
Sundays, New Year's Day, Memorial Day, Fourth of July, Labor Day, Thanksgiving
Day, and Christmas. For cleaning purposes, "business days" as used in this
Lease shall exclude all Saturdays, Sundays, and holidays as set forth in the
agreement between Realty Advisory Board on Labor Relations, Inc. or any
successor thereto and Local 32B-32J of the Building Service Employees
International Union (AFL-CIO). The term "business hours" as used in this Lease
shall mean the hours between 8:00 am and 6:00 pm during business days.
The term "Tenant's Proportionate Share" as used in this Lease shall mean 4.37%.
Shoring:
If an excavation shall be made upon land adjacent to the demised premises, or
shall be authorized to be made, Tenant shall afford to the person causing or
authorized to cause such excavation, license to enter upon the demised premises
for the purpose of doing such work as shall be necessary to preserve the wall
of or the Building of which the demised premises form a part from injury or
damage and to support the same by proper foundations without any claim for
damages or indemnity against Landlord, or diminution or abatement of rent. If
said excavation is conducted by the Landlord or by an authorized agent of the
Landlord and it is done in such fashion so as to interrupt Tenant's normal
business, to the extent of said interruption the rent herein shall be abated
proportionately.
Rules and Regulations:
Tenant and Tenant's servants, employees and agents shall observe faithfully and
comply strictly with the Rules and Regulations set forth in Exhibit B attached
hereto and made part hereof entitled "Rules and Regulations" and such other and
further reasonable Rules and Regulations as Landlord or Landlord's agents may
from time to time adopt provided, however, that in case of any conflict or
inconsistency between the provisions of this Lease and of any of the Rules and
Regulations as originally or as hereafter adopted, the provisions of this Lease
shall control. Reasonable written notice of any additional Rules and
Regulations shall be given to Tenant. Nothing in this Lease contained shall be
construed to impose upon Landlord any duty or obligation to enforce the Rules
and Regulations or the terms, covenants or conditions in any other lease,
against any other tenant of the Building, and Landlord shall not be liable to
Tenant for violation of the same by any other tenant, its servants, employees,
agents, visitors or licensees. Landlord will uniformly enforce or not enforce
the Rules and Regulations.
No Waiver:
No agreement to accept a surrender of this Lease shall be valid unless in
writing signed by Landlord. No employee of Landlord or of Landlord's agents
shall have any power to accept the keys of the demised premises prior to the
termination of this Lease. The delivery of keys to any employee of Landlord or
of Landlord's agent shall not operate as a termination of this Lease or a
surrender of the premises. In the event of Tenant at any times desiring to
have Landlord sublet the demised premises for Tenant's account, Landlord or
Landlord's agents are authorized to receive said keys for such purpose without
releasing Tenant from any of the obligations under this Lease. The failure of
Landlord to seek redress for violation of or to insist upon the strict
performance of, any covenant or condition of this Lease or any of the Rules and
Regulations set forth herein, or hereafter adopted by Landlord, shall not
prevent a subsequent act, which would have originally constituted a violation,
from having all the force and effect of an original violation. The receipt by
Landlord of rent with knowledge of the breach of any covenant of this Lease
shall not be deemed a waiver of such breach. The failure of Landlord to
enforce any of the Rules and Regulations set forth herein, or hereafter
adopted, against Tenant and/or any other tenant in the Building shall not be
deemed a waiver of any such Rules and regulations. No provision of this Lease
shall be deemed to have been waived by Landlord, unless such waiver be in
writing signed by Landlord. No payment by Tenant or receipt by Landlord of a
lesser amount than the monthly rent herein stipulated shall be deemed to be
other than on account of the earliest stipulated rent, nor shall any
endorsement or statement on any check or any letter accompanying any check or
payment of rent be deemed an accord and satisfaction, and Landlord may accept
such check or payment without prejudice to Landlord's right to recover the
balance of such rent or pursue any other remedy in this Lease provided.
This Lease contains the entire agreement between the parties, and any executory
agreement hereafter made shall be ineffective to change, modify, discharge or
effect an abandonment of it in whole or in part unless such executory agreement
is in writing and signed by the party against whom enforcement of the change,
modification, discharge or abandonment is sought.
Waiver of Trial by Jury:
Landlord and Tenant do hereby waive trial by jury in any action, proceeding or
counterclaim brought by either of the parties hereto against the other on any
matter whatsoever arising out of or in any way connected with this Lease, the
relationship of Landlord and Tenant, Tenant's use or occupancy of the demised
premises, and/or any other claims (except claims for personal injury or
property damage), and any emergency statutory or any other statutory remedy.
It is further mutually agreed that in the event Landlord commences a proceeding
for non-payment of rent, Tenant will not interpose and does hereby waive the
rights to interpose any counterclaim of whatever nature or description in any
such proceeding except for compulsory counterclaims.
Inability to Perform:
If, by reason of (1) strike, (2) labor troubles, (3) governmental pre-emption
in connection with a national emergency, (4) any rule, order or regulation of
any governmental agency, (5) conditions of supply or demand which are affected
by war or other national, state or municipal emergency, or (6) any cause beyond
Landlord's control, Landlord shall be unable to fulfill its obligations under
this Lease or shall be unable to supply any service which Landlord is obligated
to supply, this Lease and Tenant's obligation to pay rent hereunder shall in no
way be affected, impaired or excused. As Landlord shall learn of the happening
of any of the foregoing conditions, Landlord shall promptly notify Tenant of
such event and, if ascertainable, its estimated duration, and will proceed
promptly and diligently with the fulfillment of its obligations as soon as
reasonably possible.
If, by reason of (1) strike, (2) labor troubles, (3) governmental pre-emption
in connection with a national emergency (4) any rule, order or regulation of
any governmental agency, (5) conditions of supply or demand which are affected
by war or other national, state or municipal emergency, or (6) any cause beyond
Tenant's control, Tenant shall be unable to fulfill its obligations under this
Lease, other than the obligation to pay rent or additional rent hereunder, this
Lease and Tenants obligation to pay rent and additional rent hereunder shall in
no way be affected, impaired or excused. As Tenant shall learn of the
happening of any of the foregoing conditions, Tenant shall promptly notify
Landlord of such event and, if ascertainable, its estimated duration, and will
proceed promptly and diligently with the fulfillment of its obligations as soon
as reasonably possible.
If, for any reason other than (i) the causes set forth as 1 through 6 of
Section 25.01, or (ii) as a result of the failure of any public utility
supplying heat or electricity to the Building, either (a) all of the elevators
serving the floors upon which the demised premises are located shall be
inoperative for more than seven (7) consecutive business days so that it would
be necessary to walk up or down more than two (2) flights of stairs( a flight
of stairs shall consist of all stairs in a public stairway of the Building),
unless elevator service is available from the floors above or below the demised
premises so that it would not be necessary to walk up or down more than two (2)
flights of stairs, or (b) if the heating or air conditioning system or the
entire electrical system serving the demised premiss shall be inoperative for
more than ten (10) consecutive business days during the days when such systems
are normally operating to service the demised premises so that Tenant's
employees cannot and do not use any part of the demised premises, except on an
emergency basis, then Tenant shall be entitled to an abatement of rents for
each day after said ten (10) day period for such portion of the demised
premises which is inaccessible or which cannot be used by Tenant's employees.
Notices:
Any notice or demand, consent, approval or disapproval required to be given by
the terms and provisions of this Lease, or by any law or governmental
regulation, either by Landlord to Tenant or by Tenant to Landlord, shall be in
writing. Unless otherwise required by such law or regulation, such notice or
demand shall be given, and shall be deemed to have been served and given by
Landlord and received by Tenant upon actual receipt by Tenant or first refusal
by Tenant, when Landlord shall have deposited such notice or demand by
registered or certified mail enclosed in a securely closed postpaid wrapper, in
a United States Government general or branch post office, or official
depository within the exclusive care and custody thereof, or by a receipted
overnight carrier package addressed to Tenant, at the address set forth after
Tenant's name on page 1 of this lease with a copy to Fischer & Burstein, P.C.,
98 Cutter Mill Road, Suite 294, Great Neck, NY 11021. After Tenant shall
occupy the demised premises, a copy of all notices, demand, consents, approvals
or disapprovals shall be sent to Tenant at the demised premises. Such notice,
demand, consent, approval or disapproval shall be given, and shall be deemed to
have been served and given by Tenant and received by Landlord, when Tenant
shall have deposited such notice or demand by registered or certified mail
enclosed in a securely closed postpaid wrapper, in a United States Government
general or branch post office or official depository with the exclusive care
and custody thereof, or by a receipted overnight carrier package addressed to
Landlord, 54-65 48th Street, P.O. Box 780007, Maspeth, New York 11378. Either
party may, by notice as aforesaid, designate a different address or addresses
for notices, demands, consents, approvals or disapprovals.
Services:
Tenant shall have access to the demised premises twenty-four (24) hours a day,
seven (7) days per week, subject to the Buildings normal operating hours.
Landlord shall provide automatic elevator service to the second floor at all
reasonable times. The Building shall be open Monday through Friday from 7:00 AM
to 7:00 PM and on Saturday from 9:00 AM to 1:00 PM. At all other times,
Tenant's employees shall have access to enter the Building by pass key or
security card, provided that Tenant's employees immediately re-lock all doors.
Landlord shall cause the space in the demised premises to be kept clean in
accordance with the standards set forth in Exhibit "C" attached hereto and made
a part hereof entitled "Cleaning Schedule", except that if any areas shall be
used for the preparation and consumption of food, Landlord's responsibility
shall be strictly limited to the "Cleaning Schedule" set forth in Exhibit "C",
and Tenant shall be responsible for any and all other cleaning in that space.
Tenant may contract with Landlord's cleaning service to clean these areas at
Tenant's cost and expense.
(a) Landlord shall, through the HVAC system of the Building, furnish to the
demised premises, on an all year round basis, reasonably sufficient air
conditioning, ventilation and heating during the hours from 7:00 A.M. to 7:00
P.M. Monday through Friday and from 9:00 AM to 1:00 PM Saturday.
(b) Landlord will maintain the HVAC system in a manner befitting a first class
building and will use all reasonable care to keep the same in proper and
efficient operating condition. Landlord shall in no event be responsible for
the failure of the HVAC system to meet the requirements hereinbefore specified
if such failure results from the occupancy of the demised premises with more
than an average of one person for each 100 square feet of usable area or if
Tenant installs and operates lighting, machines and appliances the total
connected electrical load of which exceeds 4-1/2 watts per square foot of
usable area.
(c) Except if the HVAC System is not working, Tenant agrees to keep and cause
to be kept closed all the windows in and the exterior doors to the demised
premises at all times, and Tenant agrees to cooperate fully with Landlord and
to abide by all the regulations and requirements which Landlord may reasonably
prescribe for the proper functioning and protection of the HVAC System.
(d) Tenant acknowledges it has been advised that the Building has sealed
windows and that, therefore, the air in the demised premises can become stale
and even unbreathable when the HVAC system is not operating. Tenant agrees that
Landlord shall not be obligated to operate such HVAC System after or before
regular business hours as set forth in Section 27.03 (a).
Without limiting the provisions of Section 25.01, Landlord reserves the right
to stop services on the HVAC System, elevator, plumbing and electrical systems
when necessary by reason of accident or emergency or for repairs, alterations,
replacements or improvements, provided that except in case of emergency,
Landlord will notify Tenant in advance, if possible, of any such stoppage and,
if ascertainable, its estimated duration, and will proceed diligently with the
work necessary to resume such service as promptly as possible and in a manner
so as to minimize interference with the Tenant's use and enjoyment of the
demised premises.
Tenant shall employ or retain any contractor, including any subcontractor to
perform any work in the demised premises as such contractor, including any
subcontractor, is first approved in writing by Landlord and without limiting
the foregoing, Tenant shall only employ or retain such contractor,
subcontractor, supplier or materialmen as will not result in jurisdictional
disputes or strikes.
If Tenant is permitted hereunder to and does have a separate area for the
preparation or consumption of food in the demised premises, Tenant shall
employ, on a regular basis, an exterminator to keep the demised premises free
from vermin; and the Tenant will provide garbage storage areas to comply with
local codes and specifications thereof to be approved by Landlord, or other
means of disposing of garbage reasonably satisfactory to Landlord. Tenant is
responsible for all exterminating in the demised premises.
Tenant agrees to employ such office maintenance contractor as Landlord may
approve and upon further provision that employment of said contractor shall not
create labor disputes for all waxing, polishing, lamp replacement, cleaning and
maintenance work in the demised premises. Nothing herein contained shall
prohibit Tenant from performing such work for itself by use of its own regular
employees.
Landlord will not be required to furnish any other services, except as provided
in this Article 27, and except that Landlord agrees to provide on business days
(not including Saturdays, Sundays and holidays) the cleaning as set forth in
Exhibit "C" hereof. Tenant shall pay to Landlord, on demand, a reasonable
charge for the removal from the demised premises of any refuse and rubbish of
Tenant as shall not be contained in the waste receptacles described in Exhibit
"C" hereof. Landlord, its cleaning contractor and their employees shall have
after-hours access to the demised premises and the use of Tenant's light, power
and water in the demised premises as may be reasonably required for the purpose
of cleaning the demised premises.
For the purposes of this Lease, "Common Areas" shall mean all areas,
improvements, space, equipment and special services provided by Landlord for
the common or joint use and benefit of tenants and invitees, including access
roads, driveways, entrances and exits, retaining walls, landscaped areas,
pedestrian walk-ways, walls, courtyards, concourses, stairs, ramps, sidewalks,
building wide washrooms, hallways, lobbies, elevators and their housing rooms,
common window areas, walls and ceiling in Common Areas, and trash and rubbish
areas. Notwithstanding anything contained herein to the contrary, Landlord
shall have the right to increase, decrease, rearrange or otherwise change the
Common Areas, provided, however, that Landlord shall use good faith efforts to
minimize material interference with Tenant's use of the Common Areas which may
result in denial of ingress and egress to and from the demised premises.
Landlord shall manage and maintain the Building and the Common Areas as a first
class office building. Tenant and its employees shall occupy and use the
demised premises in a manner befitting such building.
Electricity:
Subject to the provisions of this Lease, including the provisions of this
Article 28, there will be furnished to Tenant, through transmission facilities
in the Building, alternating electric current to be used by Tenant for the
lighting fixtures and electric current and electrical receptacles installed in
the demised premises, but Landlord shall not be liable in any way to Tenant for
any failure or defect in supply or character of electric current furnished to
the demised premises. After initial installation by Landlord, Tenant shall pay
Landlord to furnish and install all lighting tubes, lamps, bulbs and ballasts
used in the demised premises. Tenant shall use said electric current for
lighting and, insofar as Landlord's facilities are not burdened thereby and
applicable laws and insurance regulations permit, for operation, during normal
business hours, of such equipment as is normally used for the purposes herein
leased. Under no circumstances shall Tenant, at any time during the term of
this Lease, use or permit the use of electric heaters or similar heating
devices. Landlord represents that there is sufficient electrical capacity at
the demised premises for general office use purposes.
Tenant's use of electric current in the demised premises shall not at any time
exceed the capacity of any of the electrical conductors and equipment in or
otherwise serving the demised premises. Tenant shall not make or perform or
permit the making or performing of any alterations to wiring installation or
other electrical facilities in or serving the demised premises or any additions
to the business machines, office equipment or other appliances in the demised
premises which utilize electrical energy without the prior consent of Landlord
in each instance (which shall not be unreasonably withheld).
All electric energy which Tenant requires in the demised premises shall be
furnished by the local electric company. Tenant shall be obligated to make
direct application to the local electric company for service. Tenant shall
make payment to and be billed directly from the local electric company.
Tenant agrees not to connect any additional electrical equipment of any type to
the Building electric distribution system, other than typewriters, computers,
fax machines, lamps and small office machines which consume comparable amounts
of electricity, without Landlord's prior written consent, which consent shall
not be unreasonably withheld or delayed. Any additional risers, feeders, or
other equipment proper or necessary to supply Tenant's electrical requirements,
upon written request of Tenant, will be installed by Landlord, at the sole cost
and expense of Tenant, if, in Landlord's judgment the same are necessary and
will not cause permanent damage or injury to the Building or the demised
premises or cause or create a dangerous or hazardous condition or entail
excessive or unreasonable alterations, repairs or expense or interfere with or
disturb other tenants or occupants.
Escalation of Taxes:
For the purposes of this Lease, the term "Lease Year" shall be the period
commencing on the Commencement Date and ending on the last day of the twelfth
(12th) full calendar month thereafter and each successive period of twelve (12)
full calendar months during the term of this Lease, provided however, that in
no event shall the term of this Lease extend beyond April 30, 2011.
In the event that the amount of real estate taxes, assessments, sewer rents,
rates and charges, county and town taxes, school taxes, village taxes, transit
taxes, or any other Governmental charge, general, specific, or ordinary or
extra-ordinary, foreseen or unforeseen (hereinafter collectively called
"Taxes") which may now or hereafter be levied or assessed against the Land and
upon the Building and any and all other improvements (hereinafter for this
Article 30 only collectively called the "Real Property") attributable to any
Subsequent Tax Year, as hereinafter defined, shall be greater than the amount
of Taxes for the Base Tax Year, as hereinafter defined, for any or all of the
Town and County Tax (inclusive of all Taxes now or hereafter included on the
Town and County tax bill or additional bill), School Tax (inclusive of all
Taxes now or hereafter included on the Town and County tax bill or additional
bill) and/or Village Tax (inclusive of all Taxes now or hereafter included on
the Town and County tax bill or additional bill) (the Town and County Tax, the
School Tax and the Village Tax are sometimes herein singly referred to as
"Local Tax" and collectively as "Local Taxes") then Tenant shall pay to
Landlord as additional rent, Tenant's Proportionate Share of the increase in
taxes for the particular Local Tax for such Subsequent Tax Year. In addition,
in the event that at any time during the term hereof under the laws of the
State of New York, and/or any County, Town, Village, City, Hamlet or any other
political or other governmental subdivision whatsoever, including any school
district in which the Building is located, a tax or exercise on rents or any
and all other taxes of any kind whatsoever and howsoever described, is levied
or assessed by said State and/or any such County, Town, Village, City, Hamlet
or any other political or other governmental subdivision, school district or
taxing authority, as an additional tax or other charge and/or as a substitute,
in whole or in part, or Taxes assessed or imposed by said State, County, Town,
City, Village, Hamlet or any political or other governmental subdivision or
school district, on the land and/or Building any/or other improvements, then
any such tax or other charge shall be included in the terms Taxes, Local Tax
and Local Taxes.
For the purposes of the provisions of this Article, the term, "Taxes for the
Base Tax Year", shall mean the sum of all taxes at the applicable rate for the
fiscal tax years commencing as set forth below multiplied by the full
assessment of the County of Nassau of the Real Property.
To arrive at the amount owed by Tenant for any and all Subsequent Tax Years,
Landlord shall calculate each Local Tax increase separately and then add the
increases owed by Tenant from each to determine the total amount of increases
in Taxes and such total increase shall be then multiplied by Tenant's
Proportionate Share to determine the amount owed by Tenant for each Subsequent
Tax Year. If such calculation shall result in a decrease for any Subsequent
Tax Year, then Tenant shall receive an increase of zero.
Landlord shall take the benefit of the provisions of any statute or ordinance
permitting any assessment to be paid over a period of time and Tenant shall be
obligated to pay only its proportionate share, determined as aforesaid, of the
installments of any such assessment as shall become due and payable during the
term of this Lease or any renewal hereof. Any amount due Landlord under the
provisions of this Article shall be paid semi-annually within thirty (30) days
after Landlord shall have submitted copies of all tax bills and statements to
Tenant showing in reasonable detail the computation of the amounts due
Landlord. Any such increase for less than a year shall be prorated and
apportioned.
Without limiting Tenant's other obligations, in the event Tenant shall
undertake to make installations other than office installations and thereby
cause extraordinary assessment to be levied against the Real Property, Tenant
shall pay all additional taxes resulting from such extraordinary assessment.
In addition, Tenant shall pay to Landlord, within thirty (30) days after the
same shall be payable by Landlord and as additional rent for the Lease Year in
which the same shall be so payable, an amount equal to Tenant's Proportionate
Share of any assessment (general, special or otherwise) or installment thereof
for betterment's or improvements which may be levied upon the Real Property.
Landlord shall take the benefit of the provisions of any statute or ordinance
permitting any such assessment to be paid over a period of time and Tenant
shall be obligated to pay only the said percentage of the installments of any
such assessments which shall become due and payable during the term of this
Lease.
In the event there shall be levied against the Landlord during the term of this
Lease an assessment for improvements or betterment's which is payable in one
sum, then in that event said assessment shall be divided by the number of Lease
Years equal to the term of this Lease and Tenant's responsibility shall be the
sum equal to its Proportionate Share of said amount times the number of
unexpired years in the Lease; for example, if an assessment is levied for a
lump sum of $10,000.00, and the Lease term has a period of ten (10) Lease
Years, the annual installments will be deemed to be $1,000.00 per year and in
the event Tenant's Proportionate Share is seventy-five (75%) percent, Tenant
will owe $750.00 times the number of Lease Years remaining under this Lease as
of the date of its assessment (with any partial Lease Year remaining under this
Lease being prorated on a per diem basis).
In no event shall any rent adjustment result in a decrease in the fixed annual
rent payable hereunder.
In the event the first or final Lease Year shall contain less than twelve (12)
calendar months the additional rent payable under Section 30 for such lease
year shall be adjusted and prorated by the fraction (a) the numerator over
which is the number of months in either the first or final year and (b) the
denominator of which is the number twelve (12).
Landlord's obligation to make the adjustments referred to in this Article shall
survive any expiration or termination of this Lease. Tenant shall have a
period of sixty (60) days after receipt of the billing to notify Landlord of
any discrepancy with the billing. Tenant will not be permitted at any later
date to dispute the billing.
Any delay or failure of Landlord in billing any Real Estate Taxes shall not
constitute a waiver of or in any way impair any continuing obligation of Tenant
to pay such Real Estate Taxes hereunder.
Condition of Premises:
Tenant expressly acknowledges that it has inspected the demised premises, the
Land and the Building and is fully familiar with the physical condition
thereof. Tenant agrees to accept the demised premises (and the Land and the
Building) in its "AS IS " condition as of the date hereof, subject only to any
work to be performed by Landlord (except for any surviving punch list items as
set forth on Exhibit D annexed hereto and made a part hereof). Without
limiting the foregoing, Tenant acknowledges that Landlord shall have no
obligation to do any work in and to the demised premises in order to make them
suitable and ready for occupancy and use by Tenant except as set forth on said
Exhibit D.
Indemnity:
Without limiting Tenant's other obligations, Tenant shall indemnify and hold
Landlord harmless from and against any all liabilities, obligations, damages,
penalties, claims, costs and expenses, including reasonable attorneys fees,
paid, suffered or incurred and/or arising from any one or more of the
following:
(i) the use of occupation of the demised premises by Tenant or any one in, on,
or about the demised premises with Tenant's permission; and/or
(ii) any breach by Tenant, Tenant's agents, contractors, employees, invitees,
servants and licensees of any term, covenant or condition of this Lease; and/or
(iii) the carelessness, negligence or improper conduct of Tenant's agents,
contractors, employees, invitees, servants or licensees. Tenant's liability
under this Lease extends to the acts or omissions of any subtenant, any agent,
contractor, employee, servant, invitee or licensee of any subtenant.
Without limiting the Landlord's other obligations, Landlord shall indemnify and
hold harmless from and against any and all liabilities, obligations, damages,
claim, costs and expenses, including reasonable attorneys fees paid, suffered
or incurred and/or arising from the carelessness, negligence or improper
conduct of the Landlord, Landlord's agents, employees, invitees or licensees.
Name of Building:
Landlord shall have the full right at any time to name and change the name of
the Building and to change the designated address of the Building. The
Building may be named after any person, firm, or otherwise, whether or not such
name is, or resembles, the name of a tenant of the Building.
Invalidity of Any Provision:
If any term, covenant, condition or provision of this Lease or the application
thereof to any circumstance or to any person, firm or corporation shall be
invalid or unenforceable to any extent, the remaining terms, covenants,
conditions and provisions of this Lease or the application thereof to any
circumstances or to any person, firm or corporation other than those as to
which any term, covenant, condition and provision of this Lease shall be valid
and shall be enforceable to the fullest extent permitted by law.
Captions:
The captions are inserted only as a matter of convenience and for reference,
and in no way define, limit or describe the scope of this Lease nor the intent
of any provision thereof.
Certificate of Tenant or Landlord:
Tenant shall, without charge, at any time and from time to time, within ten
(10) days after request by Landlord, certify by written instrument, duly
executed, acknowledged and delivered, to any mortgagee, assignee of any
mortgage or purchaser, or any proposed mortgagee, assignee of any mortgage or
purchaser, or any other person, firm or corporation specified by Landlord:
(a) That this Lease is unmodified and in full force and effect (or, if there
has been modification, that the same is in full force and effect as modified
and stating the modifications);
(b) Whether or not there are then existing any set-offs or defenses against the
enforcement of any of the agreements, terms, covenants, or conditions hereof
upon the part of Tenant to be performed or complied with (and, if so,
specifying the same); and
(c) The dates, if any, to which the rental and other charges hereunder have
been paid in advance.
(d) Any other provisions which Landlord or any other party specified in this
Section may reasonably request.
(e) In connection with a permitted assignment or subletting by Tenant,
Landlord will, within ten (10) days after written request by Tenant, deliver a
duly executed written instrument to such permitted assignee or sublessee
certifying, to the best of Landlord's knowledge, those same items referred to
in (a), (b), (c) and (d) above.
Tenant agrees that, except for the first month's rent hereunder, it will pay no
rent under this Lease more than thirty (30) days in advance of its due date,
and, in the event of any act or omission by Landlord, Tenant will not exercise
any right to terminate this Lease or to remedy the default and deduct the cost
thereof from rent due hereunder until Tenant shall have given written notice of
such act or omission to the holder of any first mortgage who shall have
furnished in writing such holder's last address to Tenant, and until a
reasonable time for remedying such act or omission shall have elapsed following
the giving of such notices, during which time such mortgage holder shall have
the right, but shall not be obligated, to remedy or cause to be remedied such
act or omission.
Anything in this Lease contained to the contrary notwithstanding, under no
circumstances shall the holder of any institutional mortgage who shall have
succeeded to the interests of the Landlord under this Lease, be subject to or
liable for any offsets or deductions from rent, claims or defenses which the
Tenant might have against any prior landlord under this Lease.
Successors and Assigns:
The covenants, conditions and agreements contained in this Lease shall bind and
inure to the benefit of Landlord and Tenant and their respective heirs,
distributees, executors, administrators, successors, and assigns and, except as
otherwise provided in this Lease, their assigns, but nothing herein shall
constitute permission for Tenant to assign this Lease except upon compliance
with the provisions of this Lease.
Liability Insurance by Tenant:
Tenant shall, at Tenant's sole cost and expense, procure and obtain
comprehensive general public liability insurance with broad form extension and
contractual liability endorsement protecting against any and all claims for
damages to person or property or for loss of life or property occurring upon,
in, or about the demised premises or the sidewalks adjacent thereto, such
insurance to afford immediate protection in such amounts as Landlord shall
require. Such policies shall name Landlord and such other parties as shall be
specified by Landlord, including without limitation any one or more mortgagees
and managing agents, as additional insured. As of the Commencement Date, the
minimum coverage for combined single limit bodily injury and property damage
shall not be less than $3,000,000.00 per occurrence. The policy shall also be
extended to include the following endorsements:
1. Knowledge of Occurrence;
2. Notice of Occurrence;
3. Unintentional Errors or Omissions;
4. An endorsement to the effect that no statement,
declaration or representation made by Tenant to
its insurer or act of Tenant shall invalidate the
policy as to Landlord or prejudice any of
Landlord's rights thereunder, including, without
limitation, defense and indemnity;
5. Contractual Liability on a blanket basis and
specifically scheduling this Lease, without
limiting the form of coverage.
All said policies shall be obtained by Tenant and certificates thereof
delivered to Landlord upon the commencement of the term hereof with evidence of
stamping or otherwise of the payment of the premiums thereon, shall otherwise
be in form and content acceptable to Landlord and be taken in such amounts and
in such companies authorized to do business in the State of New York which are
acceptable to Landlord.
Automobile Parking:
Landlord herein is providing onsite parking facilities which will be used by
Tenant in conjunction with other tenants of the Building together with the
employees, guests and possible associates. However, said parking facilities,
except where restricted, shall be available to Tenant and its employees,
invitees and guests. There will be no charge to the Tenant for the inside or
outside parking area. It is agreed however, that Landlord shall have no
obligation to police the parking area. Landlord shall clean and maintain the
parking fields. Notwithstanding the foregoing, neither Tenant nor Tenants
employees, agents, contractors, servants, licensees, invitees or visitors shall
use parking spaces reserved for other tenants.
No Recording:
The parties hereto agree that neither Landlord nor Tenant shall record this
Lease nor shall either party record any memorandum of this Lease.
Security:
Tenant has deposited with Landlord the sum of $20,400.00 as security for the
faithful performance and observance by Tenant of the terms, provisions and
conditions of this Lease. It is agreed that in the event Tenant defaults in
respect of any of the terms, provisions, and conditions of this Lease,
including, but not limited to, the payment of rent and additional rent,
Landlord may use, apply or retain the whole or any part of the security as
deposited to the extent required for the payment of any rent and additional
rent or any other sum as to which Tenant is in default or for any sum which
Landlord may expend or may be required to expend by reason of Tenant's default
in respect to any of the terms, covenants, and conditions of this Lease,
including but not limited to, any damages or deficiency in the subletting of
the demised premises, whether such damages or deficiency accrues before or
after summary proceedings or other re-entry by Landlord. In the event that
Tenant shall fully and faithfully comply with all of the terms, provisions,
covenants and conditions of this Lease, the security shall be returned to
Tenant after the date fixed as of the end of this Lease and after delivery of
the entire possession of the demised premises to Landlord. In the event of a
sale of the Land and Building or leasing of the Building of which the demised
premises form a part, Landlord shall have the right to transfer the security to
the vendee or lessee and Landlord shall thereupon be released by Tenant from
all liability for the return of such security and Tenant agrees to look to the
new landlord solely for the return of said security; and it is agreed that the
provisions hereof shall apply to every transfer or assignment made of the
security to a new landlord. Tenant further covenants that it will not assign
or encumber or attempt to assign or encumber the monies deposited herein as
security and that neither Landlord nor its successors or assigns shall be bound
by any such assignment, encumbrance, attempted assignment or attempted
encumbrance.
Broker:
Tenant represents and warrants that it has dealt with NO BROKER in connection
with this Lease and Tenant does hereby agree to indemnify and hold Landlord
harmless of and from any and all loss, costs, damage or expense (including,
without limitation, attorneys' fees and disbursements) incurred by Landlord by
reason of any claim of any broker, sales person or other finder who claims to
have dealt with Tenant in connection with this Lease. The provision of this
Article 47 shall survive the expiration or earlier termination of this Lease.
Late Rent Clause:
Tenant recognizes that late payment of any rent or other sum due hereunder will
result in administrative expense to Landlord, the extent of which additional
expense is extremely difficult and economically impractical to ascertain.
Tenant therefore agrees that if rent or any other sum is due and payable
pursuant to this Lease, and when such amount remains due and unpaid ten (10)
days after said amount is due, such amount shall be increased by a late charge
in an amount equal to five (5%) per cent of the unpaid rent or other payment.
The amount of late charge to be paid by Tenant shall be reassessed and added to
Tenant's obligation for each successive monthly period until paid. The
provisions of this Article in no way relieve Tenant of the obligation to pay
rent or other payments on or before the date on which they are due, nor do the
terms of this Article in any way affect Landlord's remedies pursuant to any
other Article of this Lease in the event said rent or other payment is unpaid
after the date due.
Directory Listing:
Landlord, at its expense, and on Tenant's request, shall maintain listings on
the Building directory of the name of Tenant provided that the names so listed
shall not take up more than Tenant's Proportionate Share of the space on the
Building's directory.
Jurisdiction and Venue:
Tenant irrevocably and unconditionally (a) agrees that any suit, action, or
other legal proceeding arising out of this Lease may be commenced in any court
of the State of New York situated in Nassau County and that any such court
shall have in personam jurisdiction of Tenant in any such suit, action or other
legal proceeding upon service as described above; (b) consents to the
jurisdiction of each such court in any suit, action or other legal proceeding;
and (c) waives any objection which Tenant may have to the laying of venue of
any such suit, action or proceeding in any such court.
MISCELLANEOUS:
Tenant shall not at any time prior to or during the term hereof, either
directly or indirectly, use any contractors or labor or materials whose use in
Landlord's reasonable judgment would create or creates any difficulty with
other contractors or labor employed by Tenant or Landlord or others in
construction, maintenance or operation of the demised premises or the Building.
As of the Commencement Date, except for the Existing Lease, this Lease
supersedes any and all prior leases between Landlord and Tenant with respect to
any of the space included within the Demised Premises.
This Lease sets forth the entire understanding and agreement with respect to
the subject matter hereof and all prior and contemporaneous negotiations,
understandings and agreements are herein merged and without limiting the
foregoing, Tenant acknowledges and agrees that there are no express or implied
warranties, representations, promises or agreements on the part of Landlord nor
any other person, firm, corporation, limited liability company, including any
broker or salesperson with reference to the condition, suitability or usability
of the demised premises nor for the purposes for which Tenant intends to use
same or with respect to any other matter, thing or circumstance, except only as
may be expressly set forth in this Lease. This Lease may not be extended,
renewed, terminated or otherwise modified except by an instrument in writing
signed by the party against whom enforcement of any such modification is
sought, unless such instrument provides that it shall not be binding until
signed by both parties, in which event it shall not be binding until so signed.
If Tenant shall request Landlord's approval or consent and Landlord shall fail
or refuse to give such consent or approval, Tenant shall not be entitled to any
damages for any withholding or delay of such approval or consent by Landlord,
it being intended that Tenant's sole remedy shall be an action for injunction
or specific performance and that such remedy shall be available only in those
cases where Landlord shall have expressly agreed in writing not to unreasonably
withhold its consent or approval or where as a matter of law Landlord may not
unreasonably withhold its consent or approval. The provisions of this Section
52.04 shall not apply if Landlord shall capriciously, or arbitrarily or in bad
faith withhold or delay its consent or approval.
This Lease is offered to Tenant for signature with the understanding that it
shall not be binding upon Landlord unless and until Landlord shall have
executed and delivered a copy of this Lease to Tenant.
Irrespective of the place of execution or performance, this Lease shall be
governed by and construed in accordance with the laws of the State of New York.
If any provision of this Lease or the application thereof to any person or
circumstance shall, for any reason and to any extent, be invalid or
unenforceable, the remainder of this Lease and the application of that
provision to other persons or circumstances shall not be affected but rather
shall be enforced to the extent permitted by law. This Lease shall be
construed without regard to any presumption or other rule requiring
construction against the party causing this Lease to be drafted. Each
covenant, agreement, obligation or other provision of this Lease on Tenant's
part to be performed, shall be deemed and construed as a separate and
independent covenant of Tenant, not dependent on any provision of this Lease.
All terms and words used in this Lease, regardless of the number or gender in
which they are used, shall be deemed to include any other number and any other
gender as the context may require.
Notwithstanding any provision of this Lease to the contrary, all sums of money,
other than the fixed rent, as shall become due from and payable by Tenant to
Landlord under this Lease shall be deemed to be additional rent. Landlord
shall have the same rights and remedies for Tenant's failure to pay any items
of additional rent as Tenant's failure to pay fixed rent.
If Tenant is in arrears in the payment of fixed rent or additional rent, Tenant
waives its right, if any, to designate the items in arrears against which any
payments made by Tenant are to be credited and Landlord may apply any of such
payments to any such items in arrears as Landlord, it its sole discretion,
shall determine, irrespective of any designation or request by Tenant as to the
items against which any such payments shall be credited.
If Tenant is a corporation, each person executing this Lease on behalf of
Tenant hereby covenants, represents and warrants that Tenant is a duly
incorporated or duly qualified (if foreign) corporation and is authorized to do
business in the State of New York (a copy of evidence thereof to be supplied to
Landlord upon request); and that each person executing this Lease on behalf of
Tenant is an officer of Tenant and that he is duly authorized to execute,
acknowledge and deliver this Lease to Landlord (a copy of a resolution to that
effect to be supplied to Landlord upon request).
In the event of any litigation or other dispute between the parties to this
Lease, each party shall bear all of its own costs and expenses, whether for
attorneys fees or otherwise, without recourse to the other.
IN WITNESS WHEREOF, Owner and Tenant have respectively signed and sealed this
lease as of theday and year first above written,
SEABOARD ESTATES, INC.
BY: Laurence Gordon
CDC PRODUCTS CORP
BY: DONALD HOROWITZ
RENT SCHEDULE
ANNUAL RENT MONTHLY RENT
11/1/99 Rent Concession $0
12/31/99 Rent Concession $0
1/1/00 - 12/31/00 $257,600.00 $21,466.67
1/1/01 - 12/31/01 $262,752.00 $21,896.00
1/1/02 - 12/31/02 $268,007.04 $22,333.92
1/1/03 - 12/31/03 $273,367.18 $22,780.60
1/1/04 - 12/31/04 $278,834.52 $23,236.21
1/1/05 - 12/31/05 $284,411.21 $23,700.93
1/1/06 - 12/31/06 $290,099.43 $24,174.95
1/1/07 - 12/31/07 $295,901.41 $24,658.45
1/1/08 - 12/31/08 $301,819.43 $25,151.62
1/1/09 - 12/31/09 $307,855.81 $25,654.65
RIDER TO LEASE BETWEEN SEABOARD ESTATES, INC., AS "LANDLORD" AND CDC PRODUCTS
CORP., AS "TENANT".
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
40. The terms "Landlord" and "Owner" are used interchangeably in this Lease.
41. GOVERNMENTAL AUTHORITY. Wherever in the printed portion of this lease
reference is made to the City of New York, such reference shall be deemed to be
a reference to the proper governmental authority having jurisdiction of the
premises.
42. CONFLICTS. In the event there shall be any conflicts between the
provisions of this "Rider" and the provisions of the printed portion of this
lease, the provisions of this "Rider" shall be controlling.
43. NET LEASE. This lease shall be deemed to be a net lease and the Landlord
shall only have those obligations under the lease as specifically set forth
herein in this "Rider". Landlord shall have no obligation to furnish any
services to the demised premises other than repairs as set forth in Article
"44" hereof.
44. REPAIRS. Notwithstanding any of the provisions of Paragraphs "4" and
"6" of this lease, Landlord's sole responsibility for making repairs shall be
limited to structural repairs to the footings, foundation, structural steel and
roof supports and repairs to any leaks occurring in the roof. If the necessity
for such repairs shall be due to any act or the omission to act of the Tenant,
its agents, employees, invitees or contractors, then Landlord shall make such
repairs at Tenant's sole cost and expense.
Tenant shall make all other repairs and/or replacements to the demised premises
throughout the term of this lease, including repairs and/or replacements to any
and all equipment contained therein. Tenant shall at all times keep the roof
and the gutters and leaders clean and free of debris and open for the passage
of drainage and shall paint all exterior doors every two (2) years, or as
necessary.
45. UTILITIES. Tenant does hereby agree that Tenant will pay to Landlord, or
directly to the utility supplying services, within ten (10) days of the
rendering of a bill therefor, all costs for: water, sprinkler stand-by water
charges, sprinkler maintenance, electricity, gas and heating in the building.
46. INSURANCE.
A. From and after the signing of this lease and continuing during the term
hereof any renewal or renewals hereof, Tenant shall, in respect to the demised
premises, at Tenant's own cost and expense, keep and maintain policies of:
(i) Comprehensive personal and public liability insurance in the customary
form, insuring Landlord and Tenant, in recognized and financially responsible
companies doing business in the State of New York with single limits of not
less than Three Million ($3,000,000.00) Dollars and to pay the premiums
thereon. There shall be no deductible or self-insurance amount under said
policies. Prior to the commencement of the term, Tenant shall deliver to
Landlord a certificate of the insurance company certifying that the aforesaid
liability policy is in full force and effect. Certificates evidencing the
renewal of such liability insurance policy shall be delivered to Landlord at
least twenty days before the expiration thereof and each such renewal
certificate shall include Landlord as an insured.
The insurance provided for above shall have attached thereto endorsements to
the effect that:
(a) Such policy shall not be canceled or terminated without at least thirty
days' prior written notice to the Landlord, and
(b) The insurance as to the coverage of the Landlord shall not be invalidated
by any act or omission of Tenant or any sub-tenant.
B. FIRE INSURANCE PREMIUMS. From and after the date of the signing of this
lease, Tenant shall pay to the Landlord, as Additional Rent, within fifteen
(15) days after Landlord renders a bill therefor, the amount of the premium
paid by the Landlord for carrying a multi-peril all risk fire and extended
coverage policy on the building constituting the demised premises in the amount
of the full replacement value thereof plus rent insurance covering all Rent and
Additional Rent payable hereunder for a period of one year after a casualty.
Notwithstanding the foregoing, TENANT may provide for a $200,000.00 deductible
amount or self-insurance retention pursuant to its policy, provided TENANT's
insurance company defends any suit, claim or action on LANDLORD's behalf at no
cost or expense to LANDLORD, or in the alternative, that if any action is
brought where LANDLORD is named therein, LANDLORD shall have the right to
defend such action using counsel of its choice, who will be paid by TENANT.
C. MUTUAL WAIVER OF SUBROGATION. Every policy of fire or other insurance
with or without extended coverage insuring any economic loss carried by either
Landlord or Tenant, with respect to the demised premises, and the improvements
erected thereon, whether or not required to be carried under this lease, shall
include provisions denying to the insurer acquisition by subrogation of rights
of recovery against the party hereto not insured under said policy, and each of
the parties hereto waive any rights against the other by reason of any insured
against casualty and each of the parties hereto shall include in its insurance
policies a provision that such insurance shall not be invalid by reason of such
waiver. If at any time either of the parties hereto are unable to obtain from
their insurers the aforesaid waivers, without additional premium therefor, then
the party in whose favor such waiver shall run shall have the option to either
pay the additional premium or relieve the other party of its obligations to
obtain such waivers.
D. LANDLORD represents that LANDLORD presently maintains a blanket liability
insurance policy covering the demised premises and other properties of LANDLORD
and LANDLORD's affiliates.
48. ALTERATIONS. In addition to the provisions of Paragraph "3" of the printed
portion of this lease, anything which shall attach to the demised premises
during the term of this lease, including lighting fixtures, shall become the
property of the Landlord and shall remain in the premises at the expiration or
sooner termination of this lease, unless the Landlord shall specifically direct
the Tenant to remove the same, in which event Tenant shall remove the same at
Tenant's own cost and expense and if not so removed, same shall be deemed
abandoned and Landlord shall remove the same at Tenant's cost and expense.
Tenant has the right to remove any fixtures installed by Tenant, so long as the
premises are restored to its original condition.
49. BROKER. Landlord and Tenant each warrants and represents to the other that
it dealt with no broker other than Real Estate Strategies, Ltd., in connection
with this transaction and Tenant hereby indemnifies the Landlord against any
claims of any other broker by reason of said broker having had any
conversations or dealings with the Tenant in connection with this transaction
and does hereby indemnify the Landlord against the same and agrees to reimburse
the Landlord for any damages the Landlord might sustain by reason of such
claims including the Landlord's cost of defending any action in connection
therewith and any reasonable legal fees of the Landlord in connection
therewith.
50. SIGNS. Tenant shall have the right to place a sign or signs on the
outside walls of the demised premises, provided the same are erected in
accordance with all governing laws or ordinances, Tenant has obtained any
necessary permits therefore, Tenant has obtained the Landlord's consent
thereto, which consent will not be unreasonably withheld or delayed, and
provided that upon the termination or cancellation of this lease, the Tenant
shall remove such sign and repair the wall where such sign was installed, which
repair shall include replacement of any chipped or cracked bricks, copings or
sills, at Tenant's own cost and expense and if not so remove and restored,
Landlord may do the same at Tenant's cost and expense. Tenant shall not use
any paint or other similar material on the outside walls of the building. The
tenancy created under this lease shall not include the outside of the roof deck
or parapet (if any) of the building and Tenant shall place no signs thereon.
51. LATE PAYMENT FEE. In the event Tenant shall fail to make any payment of
rent or other charges required to be paid hereunder within 10 days of the due
date thereof, Tenant shall pay to Landlord upon demand, an amount equal to 3%
of such payment in order to help defray costs for additional bookkeeping
services, loss of interest and other damages, it being impossible to determine
Landlords actual costs, expenses and damages, by reason of such late payment.
52. ESTOPPEL CERTIFICATES. Tenant hereby agrees that in the event the
Landlord shall place any mortgage or mortgages upon the land and/or building of
which the demised premises form a part, the Tenant will execute any documents
requested by the mortgagee in connection with such mortgage or mortgages. Such
documents shall include, inter alia, a memorandum of lease for recording, a
subordination agreement, a mortgagee's certificate and agreement, etc.
Whenever requested by the Landlord, the Tenant shall furnish, without charge,
an estoppel certificate setting forth the date of commencement and the date of
expiration of the term of this lease, that this lease has not been modified or
if it has been modified, set forth the date of modification, that the Landlord
is not in default under any of the terms, covenants and conditions of this
lease, if such be the case, and if such not be the case, setting forth any
claimed defaults by the Tenant and the date to which rent has been paid. Any
such documents shall be delivered by Tenant to Landlord, without cost, within
ten days after request therefor.
53. MECHANIC'S LIEN. Tenant will not create or permit to be created or to
remain, and will discharge or bond, any lien, encumbrance or charge upon the
demised premises or any part thereof, having any priority or preference over or
ranking on a parity with the estate, rights and interest of Landlord in the
demised premises or any part thereof.
If by reason of any work done by or on behalf of Tenant, any mechanic's
laborer's or materialmen's lien shall at any time be filed against the demised
premises or any part thereof, Tenant, within thirty days after notice of the
filing thereof, will cause the same to be discharged of record by payment,
deposit, bond, order of a court of competent jurisdiction or otherwise. If
Tenant shall fail to cause such lien to be discharged or bonded within the
period aforesaid, then, in addition to any other right or remedy, Landlord may,
but shall not be obligated to, discharge the same either by paying the amount
claimed to be due, by procuring the discharge of such lien by deposit or by
bonding proceedings, and in any such event, Landlord shall be entitled, if
Landlord so elects, to compel the prosecution of any such action for the
foreclosure of such lien by the lienor and to pay the amount of the judgment in
favor of the lienor with interest, costs and allowances. Any amount so paid by
Landlord and all reasonable costs and expenses incurred by Landlord in
connection therewith, including but not limited to premiums on any bonds filed
and attorneys' fees, shall constitute Additional Rental payable by Tenant under
this lease and shall be paid by Tenant to Landlord on demand.
Nothing in this lease contained shall be deemed or construed in any way as
constituting the consent or request of Landlord, expressed or implied by
inference or otherwise, to any contractor, sub-contractor, laborer or
materialmen for the performance of any labor or the furnishing of any materials
for any specific improvement, alteration to or repair of the demised premises
or any part thereof.
In the event any mechanic's lien shall be filed against the demised premises by
reason of any act or omission on the part of the Tenant, its agents, servants
and employees or any one acting on behalf of the foregoing, and if any action
be brought to foreclose such mechanic's lien, Tenant will reimburse the
Landlord for the Landlord's reasonable attorneys' fees in connection with
Landlord's appearance in any such action and will hold the Landlord harmless
from any damages arising out of such action.
Tenant shall not be obligated to discharge any lien filed against the premises
which may have resulted from work done or commissioned by Landlord unless such
work was done at Tenant's specific request or was an obligation of the Tenant
under this lease, which Tenant failed to perform.
54. Landlord agrees to hold Tenant's Security in an interest bearing account.
The interest earned thereon shall be accumulated and held by the Landlord as
Additional Security.
55. NOTICES. Any and all notices to be given by the Landlord to the Tenant
hereunder shall be sent either by certified mail, return receipt requested, or
by Federal Express or similar overnight carrier addressed to the Tenant: (a)
if prior to the commencement of the term at the address hereinabove set forth
and (b) if subsequent to the commencement of the term at the address of the
demised premises. Any and all notices to be given by the Tenant to the
Landlord hereunder shall be addressed to the Landlord at the address first
above written and shall be sent either by certified mail, return receipt
requested or by Federal Express or similar overnight carrier. Any notice sent
by the attorney for either party shall be deemed a notice given by such party.
All notices shall be deemed given when received or first refused by the
addressee or first returned as undeliverable.
56. INDEMNITY OF LANDLORD. A. The Tenant does hereby agree to hold the
Landlord harmless and defend it as against any and all claims, damages, suits
or causes of action for damages, and any orders, decrees or judgments which may
be entered therein brought for damages or alleged damages resulting from injury
to person or property or from loss of life sustained in or about the Demised
Premises, or in or upon the sidewalks, streets, rights-of-way abutting or
appurtenant thereto by any person or persons whatsoever. With reference to the
foregoing, the Tenant does also indemnify and save harmless the Landlord from
all reasonable legal expenses in connection with defending against any such
action, suit or claim.
B. The indemnity provided for in subdivision "A" above shall not apply to
any claim, suit, cause of action or damages arising solely out of LANDLORD's
willful or negligent acts or failures to act.
57. ADDITIONAL RENT. Any and all payments to be made by Tenant to Landlord
hereunder shall be deemed "Additional Rent" and Landlord shall have the same
rights and remedies in connection with the non-payment thereof as Landlord has
for the non-payment of rent.
58. BANKRUPTCY OR OTHER DEFAULT.
58.01 A. EVENTS OF BANKRUPTCY. The following shall be Events of Bankruptcy
under this lease:
(i) Tenant's becoming insolvent, as that term is defined in Title ll of the
United States Code, entitled Bankruptcy, ll U.S.C. Section 101 et seq. (the
"Bankruptcy Code") or under the insolvency laws of New York State;
(ii) The appointment of a receiver or custodian for any or all of Tenant's
property or assets;
(iii) The filing of a voluntary petition under the provisions of the
Bankruptcy Code or Insolvency Laws;
(iv) The filing of an involuntary petition against Tenant as the subject
debtor under the Bankruptcy Code or Insolvency Laws, which is either not
dismissed within thirty days of filing, or results in the issuance of an order
for relief against the debtor, whichever is later; or
(v) Tenant's making or consenting to an assignment for the benefit of
creditors of a common law composition of creditors.
B. LANDLORD'S REMEDIES.
(i) TERMINATION OF LEASE. Upon the occurrence of an Event of Bankruptcy,
Landlord shall have the right to terminate this lease by giving thirty days
prior written notice to Tenant, provided, however, that this Section "58.01 (B)
(i) shall have no effect while a case in which Tenant is the subject debtor
under the Bankruptcy Code is pending, unless Tenant or its Trustee in
Bankruptcy is unable to comply with the provisions of Section "58.01 (B) (v)"
and "58.01 (B) (vi)" below. If Tenant or its Trustee is unable to comply with
Sections "58.01 (B) (v)" and "58.01 (B) (vi)" below, this lease shall
automatically cease and terminate, and Tenant shall be immediately obligated to
quit the premises upon the giving of notice pursuant to this Section "58.01 (B)
(i)". Any other notice to quit, or notice of Landlord's intention to re-enter
is hereby expressly waived. If Landlord elects to terminate this lease,
everything contained in this lease on the part of Landlord to be done and
performed shall cease without prejudice, subject, however, to the right of
Landlord to recover from Tenant all rent and any other sums accrued up to the
time of termination or recovery of possession by Landlord, whichever is later,
and any other monetary damages or loss of reserved rent sustained by Landlord.
(ii) SUIT FOR POSSESSION. Upon termination of this lease pursuant to Section
"58.01 (B) (i)", Landlord may proceed to recover possession under and by virtue
of the provisions of the laws of the State of New York, or by such other
proceedings, including re-entry and possession, as may be applicable.
(iii) RELETTING OF PREMISES. Upon termination of this lease pursuant to
Section "58.01 (B) (i)", the premises may be relet by Landlord for such rent
and upon such terms as are not unreasonable under the circumstances and, if the
full rental reserved under this lease (and any of the costs, expenses or
damages indicated below) shall not be realized by Landlord, Tenant shall be
liable for all damages sustained by Landlord, including, without limitation,
deficiency in rent, reasonable attorneys' fees, brokerage fees, and expenses of
placing the premises in first class rentable condition. Landlord, in putting
the premises in good order or preparing the same for re-rental may, at
Landlord's option, make such alterations, repairs, or replacements in the
premises as Landlord, in Landlord's sole judgment, considers advisable and
necessary for the purpose of reletting the premises, and the making of such
alterations, repairs, or replacements shall not operate to be construed to
release Tenant from liability hereunder as aforesaid. Landlord shall in no
event be liable in any way whatsoever for failure to relet the premises, or in
the event that the premises are relet, for failure to collect the rent thereof
under such reletting, and in no event shall Tenant be entitled to receive any
excess, if any, of such net rent collected over the sums payable by Tenant to
Landlord hereunder.
(iv) MONETARY DAMAGES. Any damage or loss of rent sustained by Landlord as a
result of an Event of Bankruptcy may be recovered by Landlord, at Landlord's
option, at the time of the reletting, or in separate actions, from time to
time, as said damage shall have been made more easily ascertainable by
successive relettings, or, in a single proceeding deferred until the expiration
of the term of this lease (in which event Tenant hereby agrees that the cause
of action shall not be deemed to have accrued until the date of expiration of
said term) or in a single proceeding prior to either the time of reletting or
the expiration of the term of this lease, in which event Tenant agrees to pay
Landlord the difference between the present value of the rent reserved under
this lease on the date of breach, discounted at eight percent per annum, and
the fair market value of the lease on the date of breach. In the event Tenant
becomes the subject debtor in a case under the Bankruptcy Code, the provisions
of this Section "58.01 (B) (iv)' may be limited by the limitations of damage
provisions of the Bankruptcy Code.
(v) ASSUMPTION OR ASSIGNMENT BY TRUSTEE. In the event Tenant becomes the
subject debtor in a case pending under the Bankruptcy Code, Landlord's right to
terminate this lease pursuant to this Section "58.01" shall be subject to the
rights of the Trustee in Bankruptcy to assume or assign this lease. The Trustee
shall not have the right to assume or assign this lease unless the Trustee (A)
promptly cures all defaults under this lease, or (B) promptly compensates
Landlord for monetary damages incurred as a result of such default, and (C)
provides adequate assurance of future performance.
(vi) ADEQUATE ASSURANCE OF FUTURE PERFORMANCE. Landlord and Tenant hereby
agree in advance that adequate assurance of future performance, as used in
Section "58.01 (B) (v)" above, shall mean that all of the following minimum
criteria must be met: (A) the Trustee must pay to Landlord, at the time the
next payment of rent is then due under this lease, in addition to such payment
of rent, an amount equal to the next payment of rent due under this lease, or
the next three months' rent due under this lease, whichever is greater, said
amount to be held by Landlord in escrow until either the Trustee or Tenant
defaults in its payment of rent or other obligations under this lease
(whereupon Landlord shall have the right to draw such escrowed funds) or until
the expiration of this lease (whereupon the funds shall be returned to the
Trustee or Tenant); (B) The Tenant or Trustee must agree to pay to the
Landlord, at any time the Landlord is authorized to and does draw on the funds
escrowed pursuant to Section "58.01 (B) (vi) (A)" above, the amount necessary
to restore such escrow account to the original level required by said
provision; (C) Tenant must pay its estimated pro-rata share of the cost of all
services provided by Landlord (whether directly or through agents or
contractors, and whether or not the cost of such services is to be passed
through to Tenant) in advance of the performance or provision of such services;
(D) The Trustee must agree that Tenant's business shall be conducted in a
first class manner, and that no liquidating sales, auctions, or other non-first
class business operations shall be conducted on the premises; (E) The Trustee
must agree that the use of the premises as stated in this lease will remain
unchanged; (F) The Trustee must agree that the assumption or assignment of
this lease will not violate or affect the rights of other tenants in the
Building.
(vii) FAILURE TO PROVIDE ADEQUATE ASSURANCE. In the event Tenant is unable
to: (A) cure its defaults, (B) reimburse Landlord for its monetary damages,
(C) pay the rent due under this lease, or any other payments required of Tenant
under this lease, on time (or within five days of the due date), or (D) meet
the criteria and obligations imposed by Section "58.01 (B) (vi)" above, then
Tenant agrees in advance that it has not met its burden to provide adequate
assurance of future performance, and this lease may be terminated by Landlord
in accordance with Section "58.01 (B) (i)" above.
58.02 DEFAULT OF TENANT.
A. EVENTS OF DEFAULT. The following shall be Events of Default under this
lease:
(i) Tenant's failure to pay any monthly installment of Basic Annual Rent or
Additional Rent, the amount of which has been ascertained, (as required in this
lease) within five days after Landlord has served notice upon the Tenant that
the said installment of rent is unpaid; however, no notice of non-payment shall
be required of Landlord if Tenant has given Landlord a check which has been
dishonored by Tenant's bank;
(i) Tenant's failure to make any other payment required under this lease if
such failure shall continue beyond the time period specified for the making of
such payment, after notice of the amount of such payment from the Landlord. If
no time is specifically set forth within which Tenant must make such payments,
Tenant shall be required to make such payment within ten days of Landlord's
notice to Tenant of the amount of such payment.
(iii) Tenant's violation or failure to perform any of the other terms,
conditions, covenants or agreements herein made by Tenant, if such violation or
failure continues for a period of five days after Landlord's written notice
thereof to Tenant; provided that no such notice shall be required if Tenant has
received a similar notice within one hundred eighty days of such violation or
failure.
(iv) In the event that any violation or failure to perform a covenant as
contemplated in Section "58.02 (A) (iii)", and if such covenant cannot be
performed within the said five day period, then and in that event, providing
Tenant has promptly commenced to cure such violation and is diligently
proceeding with the cure, the time within which Tenant may cure the same shall
be extended to such reasonable time as may be necessary to cure the same with
all due diligence.
58.03A. If an event of default as hereinabove specified in Section "58.02 (A)
(i), (ii) or (iii)" shall occur, and shall not be cured within the time period
specified in Landlord's notice, or if TENANT shall commence a cure as provided
in Section '58.02(A)(iv)' and shall fail to diligently proceed with such cure,
then Landlord may give Tenant a five day notice of its intention to end the
term of this lease, and thereupon, at the expiration of said five day period,
this lease shall expire as fully and completely as if that day were the date
herein originally fixed for the expiration of the term, and Tenant shall then
quit and surrender the premises to Landlord but Tenant shall continue to remain
liable as hereinafter provided.
B. If an event of default shall occur and shall not have been remedied within
the time and the manner hereinabove provided, then in any of such event,
Landlord, without prejudice to any other right or remedy of Landlord, held
hereunder or by operation of law, and notwithstanding any waiver of any breach
of a condition or event of default hereunder, may, at its option and without
further notice, re-enter the Demised Premises or dispossess Tenant and any
legal representative or successor of Tenant or other occupant of the premises
by summary proceedings or other appropriate suit, action or proceeding or
otherwise, and remove his, her or its effects and hold the Demised Premises as
if this lease had not been made; and Tenant hereby expressly waives the service
of notice of intention to re-enter or to institute legal proceedings to that
end and any right of redemption.
58.04 If Landlord shall exercise its rights under "58.03A" or "58.03B" then
notwithstanding such default, re-entry, expiration and/or dispossession by
summary proceedings or otherwise, Tenant shall continue liable during the full
period which would otherwise have constituted the balance of the term hereof,
and shall pay as liquidated damages at the same times as the Basic Rent and
Additional Rent and other charges become payable under the terms hereof, a sum
equivalent to the Basic Rental and Additional Rental and other charges reserved
herein (less only the net proceeds of reletting as hereinafter provided), and
Landlord may rent the Demised Premises either in the name of Landlord or
otherwise, reserving the right to rent the Demised Premises for a term or terms
which may be less than or exceed the period which would otherwise have been the
balance of the term of this lease without releasing the original Tenant from
any liability, applying any monies collected, first to the expense of resuming
or obtaining possession, next to restoring the premises to a rentable
condition, and then to the payment of the Basic Annual Rent, Additional Rent
and other charges due and to grow due to Landlord hereunder, together with
reasonable legal fees of Landlord therefor.
58.05 WAIVER OF TRIAL BY JURY. Landlord and Tenant do hereby mutually agree
to waive trial by jury in any action, proceeding or counterclaim brought by
either Landlord or Tenant against the other with regard to any matters
whatsoever arising out of or in any way connected with this lease, the
relationship of Landlord and Tenant, and Tenant's use or occupancy of the
Demised Premises, provided such waiver is not prohibited by any laws of the
State of New York.
58.06 WAIVER OF COUNTERCLAIM AND SET-OFF AND CONSOLIDATION. Tenant hereby
agrees that in any action or summary proceeding brought by Landlord for the
recovery of rent or Additional Rent, it will not interpose any counterclaim or
set-off nor will Tenant seek to consolidate any such action or proceeding with
any other action or proceeding.
59. SEVERABILITY. In the event that any provision of this lease shall be
found to be contrary to law, this lease shall not be invalidated thereby but so
long as said clause is contrary to law the same shall be stricken from the
lease and all of the other terms, covenants and conditions of the lease shall
remain in full force and effect.
60. LIMITATION OF LANDLORD'S LIABILITY. In the event that the Landlord shall
default under the terms of this lease and the Tenant shall recover a judgment
against the Landlord by reason of such default or for any other reason arising
out of the tenancy or use of the premises by the Tenant, or the lease of the
premises to the Tenant, the Landlord's liability hereunder shall be limited to
the Landlord's interest in the land and building comprising the demised
premises, and no further, and the Tenant agrees that in any proceeding to
collect such judgment, the Tenant's right to recovery shall be limited to the
Landlord's interest in the land and building comprising the demised premises.
61. PARKING AREAS, SIDEWALKS, LANDSCAPING AND FENCES. Tenant shall, at Tenant's
expense, make all repairs and replacements to sidewalks and curbs adjacent to
the demised premises and to the parking area and shall remove all debris, ice
and snow therefrom. Tenant shall maintain the landscaping, if any, on the
Demised Premises in a first class condition. At any time that Tenant shall
fail to so maintain the landscaping, Landlord on two days' prior notice to
Tenant, may cause same to be maintained and Tenant shall pay the cost therefor
to Landlord upon Landlord's rendition of a bill therefor. All of the
foregoing shall be in good order and repair on the Commencement Date of the
Lease.
62. HAZARDOUS AND TOXIC MATERIALS. A. TENANT agrees that no part of the
Demised Premises will be used for, and TENANT shall not suffer or allow the
treatment, generation, manufacture, use, refining, production, storage,
disposal, burial, dispersal, release, or placement of hazardous or toxic
substances (as hereinafter defined), petroleum products, pollutants, or
contaminants, and the TENANT shall not release, suffer or permit the release of
any hazardous or toxic substance, petroleum products, pollutants or
contaminants onto the Demised Premises or into the subsurface thereof or onto
any property whatsoever, including without limitation, surface water and ground
waters unless in compliance with all applicable law(s), permit(s), order(s), or
other valid governmental approval(s), whether now in effect or hereafter
enacted. Furthermore, TENANT shall not cause or permit to occur any violation
of any federal, state or local law, ordinance, regulation or order now or
hereafter enacted, related to environmental conditions on, under or about the
Demised Premises, or arising from TENANT'S use or occupancy of the Demised
Premises, including, but not limited to, soil and ground water conditions.
TENANT shall, at TENANT'S own expense, comply with all laws regulating the use,
generation, storage, transportation or disposal of toxic or hazardous
substances. Furthermore, TENANT shall, at TENANT'S own expense, make all
submissions to, provide all information required by, and comply with all
requirements of all governmental authorities under the law. TENANT shall
provide all information regarding the use, generation, storage or disposal of
toxic or hazardous substances that is requested by LANDLORD. Promptly after
receipt of the same by TENANT, TENANT also agrees to provide LANDLORD with an
exact copy of any notice, directive, demand and correspondence received by
TENANT in connection with environmental conditions in, at, on or upon the
Demised Premises.
For the purposes hereof, the term hazardous or toxic substances shall include,
without limitation, flammables, inflammables, combustibles, explosives,
radioactive materials, asbestos, PCB's, chemicals known to cause cancer or
reproductive toxicity and substances declared to be hazardous or toxic under
any law or regulation now or hereafter enacted or promulgated by any
governmental authority.
Failure of TENANT to abide by each and every one of the foregoing obligations
shall be a default under this Lease which, if not cured within five (5) days of
a notice from LANDLORD, unless such obligation cannot be cured within five (5)
days but prior to the expiration of such five (5) days, TENANT has commenced
the cure and thereafter diligently prosecutes the cure of such obligation to
completion within a reasonable period of time, or sooner if an emergency,
dangerous or hazardous condition exists in, at, on, upon or about the Demised
Premises, shall entitle LANDLORD to pursue all remedies available in law, at
equity or under this Lease.
TENANT shall indemnify and save LANDLORD and its successors and assigns and
their respective officers, directors, shareholders, partners, agents and
employees and the Demised Premises harmless against any and all claims,
obligations, liabilities, violations, penalties, fines, suits, governmental
orders, causes of action, judgments, damages, whether civil or criminal or
both, of any and all kind or nature or which result from or are in any way
connected with a breach or default by TENANT of the forgoing agreement and/or
which the LANDLORD may be subject in connection with any toxic or hazardous
substances resulting from or in connection with the discharge, despoiler,
release or escape of smoke, vapors, soot, fumes, acids, alkalis, toxic
chemicals, liquids or gases, volatile organics, waste materials or other
irritants, contaminants or pollutants or otherwise at the Demised Premises,
caused by or resulting from the use and operation of the Demised Premises by
the TENANT, its successors and assigns, sublessee, and/or by reason of TENANT'S
invitees, licensees, employees, officers, agents, servants, etc. in any case
whether or not TENANT has complied with its obligations pursuant to this
Section. This indemnification and save harmless agreement shall also cover any
and all liens for hazardous waste clean up expenses in favor of the United
States, New York State or any political subdivision thereof, including the
County of Nassau, Town of Hempstead, and any governmental department of the
foregoing. All payments due from TENANT hereunder shall be due as additional
rent within ten (10) days of the date of statement therefor from LANDLORD
This indemnification shall include, but not be limited to, legal fees and other
charges to which LANDLORD may be put, including clean up costs, in defending
against any proceeding in connection with the foregoing.
B. 1. It is understood that TENANT's use entails the use of certain
chemicals, some of which may be toxic or hazardous. LANDLORD agrees that
TENANT may bring said chemicals into the demised premises. TENANT agrees that
it will comply with all laws applicable to said chemicals and will keep the
same in governmentally approved containers and will remove all of such
chemicals at the expiration or sooner termination of this Lease at TENANT's
cost and expense.
2. The indemnity contained in Section 62A shall not apply to any materials
which are not on, in or under the demised premises at the commencement of this
Lease.
63. GUARANTY. In consideration of the granting of this lease to the Tenant
named herein and in further consideration of the sum of One Dollar paid in hand
by the Landlord the receipt and sufficiency of which is hereby acknowledged,
Guarantor hereinafter named does hereby guarantee to the Landlord that in the
event the Tenant hereunder shall default under any of the terms, covenants and
conditions of this Lease, beyond its time to cure, then all of the obligations
of the Tenant, including but not limited to, payment of rent and/or Additional
Rent, shall be performed (including all covenants contained in this lease to
return the premises "broom clean", in good order and condition, ordinary wear
and tear and damage by elements excepted) by Guarantor.
The guarantees provided hereunder shall be deemed guarantees of payment and
performance as well but not merely of collection and Landlord may proceed
against the Guarantor without first having obtained any judgment or bringing
any proceeding against the Tenant.
For the purposes of this guarantee, ACETO CORP., with offices at 1 Hollow Lane,
Lake Success, New York, as Guarantor, has personally executed this Lease.
This guaranty shall in no way relieve the Tenant of any of the obligations as
Tenant under this lease and Tenant in the event of a default, not cured within
the time periods set forth herein, or a return of the premises, as provided for
in Article 22 hereof, shall remain liable for all damages as provided for
herein and any security deposited by Tenant pursuant to this lease shall
immediately become the property of the Landlord.
In any suit, action or proceeding brought by Landlord against Guarantor to
enforce any of the provisions of this Guaranty, and provided that Landlord is
successful in such suit, action or proceeding, or if the suit, action or
proceeding is settled by Guarantor paying a sum of money to Landlord, or by
Guarantor performing the act for which said suit, action or proceeding was
commenced, Guarantor shall, in any of the foregoing events pay to Landlord,
Landlord's reasonable attorneys' fees in connection therewith.
64. HOLD OVER. In the event Tenant or anyone holding through Tenant shall
remain in the premises after the expiration or termination date of this Lease,
no tenant by month-to-month shall be deemed to have occurred and Tenant shall
pay to Landlord for use and occupancy of the demised premises an amount equal
to two times the last monthly rent (pro rated) for each and every day until the
premises are returned to the Landlord in the condition provided for in the
Lease.
65. TAXES. Tenant shall pay to the Landlord within ten days after
Landlord renders a bill therefor one hundred (100%) percent (Tenant's
"Proportionate Share") of all real estate taxes levied against the land and/or
building constituting the demised premises and all other governmental charges
and assessments, general as well as special, which may be levied against the
said land and/or building. In the event that at any time during the term of
this lease, under the laws of the United States, the State of New York, or any
political subdivision thereof, in which the demised premises are situated, a
tax or excise on rents or other tax however described is levied or assessed
against the Landlord or the property comprising the demised premises as a
substitute in whole or in part for real estate taxes or in addition to the real
estate taxes, the same shall be deemed to be real estate taxes as herein
provided.
Notwithstanding the foregoing, at Landlord's option, Tenant shall deposit with
Landlord a tax escrow amount within fifteen days of Landlord's demand therefor
and thereafter one-twelfth of Tenant's Proportionate Share of the annual taxes
shall be paid together with the rent on a monthly basis, in advance, in such
amounts so that Landlord shall have sufficient amounts collected to pay any tax
coming due at least thirty days prior to the first day to pay Tenant's
Proportionate Share of such taxes and if said amounts are insufficient to pay
Tenant's Proportionate Share of the taxes coming due, Tenant shall be billed by
the Landlord for the difference.
Landlord may, at its option, contest the validity or amount of the assessed
valuation for real estate taxes levied upon the demised premises, for any or
all of the years during the term of this lease. In the event the Landlord is
successful in reducing the taxes and obtaining a tax saving and/or tax refund,
the net benefits, after payment of all counsel fees and disbursements, shall be
apportioned between the Landlord and the Tenant based upon the portion of the
taxes paid by each of them.
In the event that the recovery is represented by reduction in assessment for a
future year, resulting in a tax savings, Tenant agrees to pay Tenant's
Proportionate Share of the counsel fees and disbursements attributable to such
tax saving for the year for which such assessment reduction was granted.
66. LANDLORD'S WORK. LANDLORD shall, within two (2) weeks after notification
from TENANT as to which of the following items are to be completed, shall do
the following:
A. Remove the partitioning and tile floor and deliver such area broom clean.
B. Remove all debris from the parking lot.
C. Straighten perimeter fences.
D. At TENANT's direction, remove air conditioning unit and duct work.
LANDLORD will, as soon as practicable, repair sidewalks and curb abutting the
demised premises. If weather prevents LANDLORD from doing same, LANDLORD will
complete same as soon as reasonably practicable when weather permits.
67. ASSIGNMENT AND SUBLETTING. Notwithstanding anything to the contrary
contained herein, TENANT may sublet or license all or portions of the demised
premises to subsidiaries of Aceto Corp. provided said portions of the demised
premises are used for the purposes set forth in Article 2 hereof. Prior to any
subtenant or licensee taking possession of any portion of the demised premises,
a copy of the sublease or license agreement specifying the name and address of
such sublessee or licensee shall be delivered to LANDLORD. In the event of
any discrepancy between the provisions of this Lease and the provisions of
such sublease or license agreement, the provisions of this Lease shall be
controlling as between LANDLORD and TENANT.
SEABOARD ESTATES, INC.
By: Laurence Gordon, President
CDC PRODUCTS CORP.
BY:
FOR PURPOSES OF PARAGRAPH 63
ACETO CORP.
BY:___________________________
Exhibit 10(viii)
THIS ASSET PURCHASE AGREEMENT (this "Agreement") made as of the 7th day of
July, 1999, by and among: ACETO CORPORATION, a New York corporation, with
offices at One Hollow Lane, Lake Success, New York 11042 ("BUYER" or "ACETO");
MAGNUM RESEARCH CORP., a New York corporation, with offices at 10-5 Drew Court,
Ronkonkoma, New York 11779 ("SELLER" or "MAGNUM"); ROY GROSS, residing at 10
Wandering Way, Smithtown, New York 11787 ("GROSS"); and CDC PRODUCTS CORP., a
New York corporation, with offices at 74-16 Grand Avenue, Elmhurst, New York
11373 ("CDC").
WITNESSETH:
A. THE SELLER is engaged in the business of supplying maintenance and
sanitation chemicals and products for business and industrial users (sometimes
known as the sanitary supply industry) at its place of business at 10-5 Drew
Court, Ronkonkoma, New York (the "BUSINESS");
B. GROSS is the President and sole shareholder of the SELLER;
C. CDC is engaged in a business similar to the BUSINESS, of the SELLER, and
is a wholly owned subsidiary of ACETO;
D. The BUYER desires to purchase and acquire, and the SELLER desires to
sell, certain of the assets used in or relating to the BUSINESS on the terms
and conditions set for forth herein;
E. It is the intention of the parties that GROSS will be employed by CDC as
Vice President-Market Development, pursuant to an agreement to be executed
contemporaneously with the Closing of the transaction contemplated hereby.
NOW THEREFORE, it is mutually agreed as follows:
ARTICLE 1
1.1 PURCHASE AND SALE OF ASSETS. Upon the terms and subject to
conditions set forth in this Agreement, the SELLER agrees to sell assign,
transfer and deliver to the BUYER and the BUYER agrees to purchase and acquire
from the SELLER, at the Closing, for the consideration set forth herein, all of
the right, title and interest of the SELLER in and to all of the following
assets of the SELLER, both tangible and intangible (hereinafter referred to as
the "Acquired Assets"):
All inventory, including: raw materials; work in process; finished goods; and
related packaging and supplies of the SELLER used or consumed in the BUSINESS.
The inventory of the SELLER to be transferred to the BUYER is, and will at
closing be, good and usable in the ordinary course of business;
All customer lists and supplier lists, and copies of all books, records, files
and other data used in connection with the BUSINESS, product specifications,
marketing programs and all of the goodwill associated with the Acquired Assets
and the BUSINESS as a going concern;
All sales and promotional literature and other selling materials, mailing lists
catalogues, stationery and supplies used in connection with the BUSINESS;
All of the SELLER's machinery, equipment, furniture, fixtures and other items
of tangible personal property located at the SELLER's place of business;
Rights to the name "Magnum Research Corp.", and any variations thereof, and the
goodwill associated therewith;
All research, development and proprietary rights pertaining to the BUSINESS;
All trade secrets, secret processes, inventions and technology, formulae,
confidential and proprietary information relating to the BUSINESS, know-how and
show-how, together with any patents or patent applications that may exist; and
All other assets and properties of the SELLER not included in Retained Assets
set forth in Section 1.2 which follows.
(i) All employment and independent contractors agreements.
1.2 RETAINED ASSETS. Not included in the Acquired Assets, are any right or
interest of the SELLER in or to:
All or any of the accounts receivable of the SELLER;
All or any of the cash of the SELLER, whether cash on hand or in any bank; and
Any of SELLER's real property.
As of date of Closing BUYER assigns to SELLER any rights to bring actions to
collect accounts receivable.
1.3 EXCLUDED LIABILITIES. The BUYER shall not assume, and shall not be
responsible for the payment, performances or discharge of any debts,
liabilities or obligations of the SELLER of any kind or nature whatsoever.
Without limiting the generality of the foregoing, BUYER shall not assume and
shall not be responsible for the payment, performance or discharge of the
following:
Accounts payable of the SELLER;
Liabilities or obligations of the SELLER or GROSS for any federal, state, or
local taxes;
Obligations or liabilities to any officer, director or employee or former
officer, director or employee of the SELLER;
Obligations or liabilities to any shareholders of the SELLER as such;
Liabilities for breaches of warranties given by the SELLER prior to the
Closing, or imposed by law upon the SELLER;
Liabilities for product liability arising from the sale of any products by
SELLER prior to the Closing Date
Liabilities or obligations arising from illegal, fraudulent or negligent acts
of the SELLER or its agents, servants or employees;
Liabilities or obligations resulting from or in connection with any action,
suit or proceeding or other matter arising out of the operations of the SELLER
or the acts or omissions of its officers, directors, employees or agents prior
to the Closing; and
Any liability as a result of the transaction which is the subject of this
Agreement under applicable bulk transfer laws of any state.
1.4 PURCHASE PRICE FOR ACQUIRED ASSETS.
Payment to SELLER at Closing. At the Closing BUYER shall pay to SELLER SIX
HUNDRED FIFTY THOUSAND ($650,000) DOLLARS for the Acquired Assets.
Additional Payment to SELLER. BUYER shall pay to SELLER an additional FIVE
HUNDRED THOUSAND ($500,000) DOLLARS for the Acquired Assets, which shall be
payable in three (3) consecutive installments each in the amount of ONE HUNDRED
SIXTY SIX THOUSAND SIX HUNDRED SIXTY SIX AND 67/100 ($166,666.67) DOLLARS at
the end of twelve (12), twenty four (24) and thirty six (36) months after the
Closing, which payments are subject to downward adjustment in the event that
MAGNUM's net sales (as hereinafter defined), in any of such twelve (12) month
periods is less than ONE MILLION ONE HUNDRED FIFTY THOUSAND ($1,150,000)
DOLLARS. In which event the payment due for such twelve (12) month period
shall be reduced by twenty five (25%) percent of the difference between ONE
MILLION ONE HUNDRED FIFTY THOUSAND ($1,150,000) DOLLARS and the actual net
sales for that period. In no event shall the payment to SELLER for any such
twelve (12) month period be reduced by no more than FIFTY THOUSAND ($50,000)
DOLLARS. ("MAGNUM's net sales" shall mean the net sales in the ordinary course
of business of MAGNUM's line of products existent at or prior to the Closing).
Determination of MAGNUM Net Sales. MAGNUM net sales shall be determined by
ACETO's accounting department, using generally accepted accounting principles
applied in a consistent basis with prior periods predicated upon the business
practices, markets and products sold by MAGNUM prior to the Closing (the
selling prices for such products being usual and normal for the markets in
which they were sold).
ARTICLE 2
2.1 CLOSING. The "Closing" means the time at which the SELLER conveys
the Acquired Assets to the BUYER, in return for the BUYER's payment to the
SELLER of the Amount Due at Closing. The Closing shall take place after all
conditions of Closing pursuant to this Agreement have been met on or about
September 15, 1999, at 11:00 A.M., at BUYER's office One Hollow Lane, Suite
201, Lake Success, New York, or at such date, time or location as to which the
parties may mutually agree (the "Closing Date").
Transfer of Assets. On the Closing Date the SELLER will assign, transfer and
deliver to BUYER the Acquired Assets free and clear of all liens, charges,
encumbrances and restrictions.
Payment to SELLER. On the Closing Date BUYER shall pay to SELLER the SIX
HUNDRED FIFTY THOUSAND ($650,000) DOLLAR payment for the Acquired Assets
pursuant to Section 1.4 (a) hereof
Change of Name. If it has not done so prior to the Closing, SELLER shall
simultaneously with the Closing change its corporate name to a name different
from "MAGNUM RESEARCH CORP."; such change of name shall be accomplished by
SELLER preparing and executing a Certificate of Amendment of its Certificate of
Incorporation changing its corporate name to a name bearing no resemblance to
its current corporate name and delivering such Certificate to the BUYER
together with a check payable to the New York Secretary of State in the amount
of the required filing fee, including expedited service. It is contemplated
that BUYER (or if BUYER so desires, CDC) will at the same time file a
Certificate of Incorporation of MAGNUM RESEARCH CORP. in the Office of New York
Secretary of State.
ARTICLE 3
3.1 SELLER's REPRESENTATIONS AND WARRANTIES. SELLER represents and
warrants to the BUYER the following:
Organization. The SELLER is a corporation duly organized, validly existing and
in good standing under the laws of the State of New York, and has all requisite
power and authority to execute, deliver and perform its obligations under this
Agreement, and all other documents or agreements being delivered at or prior to
the Closing in connection with the transactions contemplated hereby;
Authorization of Agreement. The SELLER has taken all necessary corporate
action to authorize the execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby. This Agreement
has been duly and validly authorized, executed and delivered by SELLER and
constitutes the valid and binding obligations of SELLER enforceable against
SELLER in accordance with its terms;
Effect of Agreement. The execution, delivery and performance of this Agreement
by the SELLER and consummation by the SELLER of the transactions contemplated
hereby will not, with or without the giving of notice or the lapse of time, or
both, violate or conflict with, or result in a breach of, or a default under,
any indenture, mortgage, deed of trust, credit agreement, note or other
evidence of indebtedness or other material agreement of SELLER or its
Certificate of Incorporation or by-laws, or any law, rule, or regulation or any
judgment, decree, order, governmental permit or license or contract to which
the SELLER is a party or by which the SELLER or the Acquired Assets are bound
or materially affected;
No Consents. No consent, authorization or approval of, or waiver or exemption
by, or filing with, any governmental, public or self-regulatory body or
authority or any other third party is required in connection with the
execution, delivery and performances by the SELLER of this Agreement or the
consummation of the transactions contemplated hereby;
Acquired Assets. All the Acquired Assets are owned by the SELLER, and will be
transferred at the Closing to the BUYER, free and clear of all liabilities,
liens, charges and encumbrances;
Pending Litigation. There are no actions, suits or proceedings pending, or to
the knowledge of the SELLER, threatened against the SELLER in any court or
before any governmental body or authority, and SELLER is not subject to, or in
default with respect to, any order, writ, injunction or decree of any court or
governmental body or authority;
Compliance With the Law. SELLER is not in violation of any applicable federal,
state or local law or regulation or order or any other requirement of any
governmental, regulatory or administrative agency or authority or other
tribunal (including, but not limited to, any law, regulation order or
requirement relating to properties, business, products, manufacturing
processes, occupational safety, health and welfare conditions, product safety
or environmental matters); and
Product Liability. The SELLER has no liability (and there is no basis for any
present or future charge, complaint, action, suit, proceeding, hearing,
investigation, claim or demand against the SELLER giving rise to any liability)
arising out of any injury to persons or property as a result of the ownership,
possession or use of any product sold or delivered by the SELLER.
3.2 BUYER's REPRESENTATIONS AND WARRANTIES. BUYER represents and warrants to
the SELLER the following:
Organization. The BUYER is a corporation duly organized, validly existing and
in good standing under the laws of the State of New York, and has all requisite
power and authority to execute, deliver and perform its obligations under this
Agreement, and all other documents or agreements being delivered at or prior to
the Closing in connection with the transactions contemplated hereby;
Authorization of Agreement. The BUYER has taken all necessary corporate action
to authorize the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby. This Agreement has been
duly and validly authorized, executed and delivered by BUYER and constitutes
the valid and binding obligations of BUYER enforceable against BUYER in
accordance with its terms;
Effect of Agreement. The execution, delivery and performance of this Agreement
by BUYER and the consummation by BUYER of the transactions contemplated hereby
will not, with or without the giving of notice or the lapse of time, or both,
violate or conflict with, or result in a breach of, or a default under, any
indenture, mortgage, deed of trust, credit agreement, note or other evidence
indebtedness or other material agreement of BUYER or its Certificate of
Incorporation or by-laws, or any law, rule, or regulation or any judgment,
decree, order, governmental permit or license or contract to which BUYER is a
party or by which BUYER is bound or affected, or result in the creation of any
mortgage, lien, charge or encumbrance upon any of the assets of BUYER;
No Consents. No consent, authorization or approval of, or waiver or exemption
by, or filing with, any governmental, public or self regulatory body or
authority or any other third party is required in connection with the
execution, delivery and performance by BUYER of this Agreement, or the
consummation by BUYER of the transactions contemplated hereby;
Pending Litigation. There are no actions, suits or proceedings pending, or to
the knowledge of BUYER, threatened against BUYER in any court or before any
governmental body or authority which would impair BUYER's performance of its
obligations under this Agreement, and BUYER is not subject to, or in default
with respect to, any order, writ, injunction or decree of any court or
governmental body or authority.
ARTICLE 4
SELLER shall deliver to BUYER:
Copies of SELLER's financial statements for the periods indicated consisting
of:
(i) SELLER's current balance sheet as of June 30, 1999, and
balance sheets for the fiscal years ended December 31, 1998, 1997 and 1996,
which, in accordance with generally accepted accounting principles consistently
applied, fairly present as of the dates indicated the financial condition,
assets and liabilities of the SELLER;
(ii) SELLER's current profit and loss statement for the 6 months ending
June 30, 1999, and for the fiscal years ended December 31, 1998, 1997, and
1996, all of which, in accordance with generally accepted accounting principles
consistently applied, fairly present the results of operations of the SELLER
for the respective periods indicated; and
(iii) A breakdown of items of expenses and detailed listings of expenses
of the SELLER, all of which accurately reflect the financial condition and the
costs of doing business of the SELLER.
(b) Details and descriptions (whether written or oral) of employment, sales or
production agreements with all of the present employees or outside contractors
of the SELLER, including a description of the work responsibilities of such
persons or entities;
(c) A list of the following items (whether written or oral) relating to the
SELLER which list identifies and fairly summarizes each item:
(i) Agreements of the SELLER relating to the supply of raw
materials for, and the distribution of the products of, the BUSINESS; and
(ii) All other contracts of the SELLER material to the BUSINESS,
assets, liabilities, financial condition, results of operations or prospects of
the BUSINESS taken as a whole.
(d) A summarization of the salient facts concerning the condominium space from
which the BUSINESS is operated.
ARTICLE 5
5.1 SELLER's Indemnity. SELLER shall indemnify, defend and hold BUYER
harmless from and against all claims, damages, losses, liabilities, costs and
expenses (including reasonable legal fees) asserted against or incurred by
BUYER arising out of: (a) any breach of any of the representations, warranties
or covenants of SELLER contained in this Agreement; (b) any claims resulting
from the noncompliance by SELLER with the so-called "Bulk Sales" laws; and (c)
any product liability claims or suits arising from the sale of any products by
SELLER prior to the Closing Date.
5.2 BUYER's Indemnity. BUYER shall indemnify, defend and hold harmless
SELLER from and against all claims, damages, losses, liabilities, costs and
expenses (including reasonable legal fees) asserted against or incurred by
SELLER arising out of: (a) any breach of any of the representations, warranties
or covenants of BUYER contained in this Agreement; and (b) any product
liability claims or suits arising from the sale of any products by BUYER after
the Closing Date.
Procedures for Indemnification.
Third Party Claims. Promptly after the receipt by the party or parties
entitled to indemnification under this Article 5 (the "Indemnified Party") of
written notice of the assertion or commencement of any action, proceeding or
claim for which indemnity may be sought hereunder (a "Third Party Claim"), the
Indemnified Party shall give written notice to the party from whom
indemnification is sought pursuant hereto (the "Indemnifying Party"). If any
such Third Party Claim shall be brought against the Indemnified Party, the
Indemnifying Party shall assume, with counsel reasonably acceptable to
Indemnified Party, the defense, appeal or settlement of such Third Party Claim
and the Indemnified Party will fully cooperate with the Indemnifying Party in
connection therewith. The Indemnified Party shall have the right to employ
separate counsel at its own expense and to participate in such defense, appeal
or settlement. The Indemnifying Party shall have complete control in the
defense of such Third Party Claim including the effecting of any settlement
therein. The Indemnifying Party shall not be liable for any settlement of any
Third Party Claim effected without its consent. Upon satisfaction of the
Indemnifying Party's obligations with respect to a Third Party Claim under this
Section 5.3, the Indemnifying Party shall become subrogated to all the rights
of the Indemnified Party with respect to such Third Party Claim.
Other Claims. Any claim that is not a Third Party Claim shall be asserted by
written notice from the Indemnified Party to the Indemnifying Party. The
Indemnifying Party shall have thirty (30) days within which it may respond to
such notice or contest the validity of such claim. If such claim is not
contested, the Indemnifying Party shall promptly pay or otherwise satisfy such
claim.
ARTICLE 6
6.1 Employment Agreement with GROSS. It is the intention of the
parties that at the Closing CDC and GROSS shall enter into an Employment
Agreement, to be negotiated prior to the Closing to the mutual satisfaction of
the parties. Said Employment Agreement, in addition to the other terms to be
negotiated, shall provide:
Term. The term of the Employment Agreement shall be five (5) years;
Position. GROSS shall serve as Vice President-Market Development;
Compensation:
(i) Salary. Gross shall receive ONE HUNDRED FIFTY THOUSAND ($150,000)
DOLLARS per year as salary and defined selling expenses (which selling expenses
shall be defined in the Employment Agreement to be negotiated, it being
understood that such defined expenses shall include reimbursement of expenses,
upon presentation of receipts or vouchers therefor, estimated to be TWENTY FIVE
THOUSAND ($25,000) DOLLARS plus reasonable telephone expenses incurred by
GROSS, but that CDC will be responsible for some part of reasonable selling
expenses). The salary and defined selling expenses to which GROSS shall be
entitled hereunder are based on GROSS achieving personal sales levels of THREE
HUNDRED SIXTY THOUSAND ($360,000) DOLLARS per year (the "Target Sales Levels").
If such Target Sales Levels are not achieved the salary and defined selling
expenses to which GROSS shall be entitled hereunder shall be reduced by twenty
five (25%) percent of the difference between the Target Sales Levels and the
reduced sales achieved;
(ii) Health Insurance. GROSS shall be entitled to health insurance
benefits for himself, his wife and daughter (which, shall be comparable to the
health insurance benefits supplied by ACETO to CDC's employees);
(iii) Additional Compensation. For a period of three (3) years from the
Closing Date. CDC shall pay to Gross an amount equal to five (5%) percent of
all MAGNUM products sold to MAGNUM's customers in excess of ONE MILLION ONE
HUNDRED FIFTY THOUSAND ($1,150,000) DOLLARS per year;
(iv) Royalty Payment. During the five (5) year period of GROSS's
employment, CDC will pay to GROSS a five (5%) percent royalty on sales of any
existing, or new, CDC products sold under MAGNUM's label to customers who were
customers of MAGNUM at or prior to the Closing Date.
6.2 Termination for Cause. CDC and/or ACETO may terminate the
employment of GROSS for cause if:
GROSS willfully fails to perform or comply with a material term, agreement,
representation, warranty or covenant contained in the Asset Purchase Agreement
or the employment Agreement; or
GROSS commits fraud, dishonesty, willful misconduct or neglect on the
performance of his duties; or
GROSS commits an act of larceny, embezzlement, conversion or any act involving
the misappropriation of the funds of CDC or MAGNUM or any of their customers in
the course of his employment; or
GROSS is convicted of a felony.
6.3 Death or Disability of GROSS. If the employment of GROSS under the
Employment Agreement shall terminate because of his death or if he is
continuously disabled for a period of six (6) consecutive months so that he is
unable to perform his duties under the Employment Agreement, and CDC
thereafter, by notice, terminates the Employment Agreement ("Notice of
Termination"), the Employment Agreement shall forthwith terminate, except that
GROSS or his personal representative as the case may be, shall be entitled to
receive all compensation accrued in favor of GROSS pursuant to 6.1 (c) (i) of
the Employment Agreement, but unpaid as of the date of the Notice of
Termination or of death as the case may be, and under the provisions for
Additional Compensation or Royalty Payments under 6.1 (c) (iii) and (iv) for
the entire period in which he became disabled or died ( as if GROSS remained
employed)
6.4 Non-Compete. During the period that GROSS is employed by CDC and
for a period of three (3) years after the termination of his employment, GROSS
agrees that he shall not, directly or indirectly, whether as principal or
agent, officer, director, employee, consultant or otherwise, compete with CDC,
MAGNUM or ACETO in any aspect of the sanitary supply industry, except with the
express written consent of ACETO. GROSS further agrees that during such period
he will not directly or indirectly reveal the name of, solicit or interfere
with, or endeavor to entice away from CDC, MAGNUM or ACETO any of their
suppliers, customers, or employees. Since a breach of the provisions of this
Section 6.4 could not be adequately compensated by money damages, CDC, ACETO or
MAGNUM shall be entitled in addition to any other right or remedy available to
them, to an injunction restraining such breach or threatened breach, and in
either case no bond or other security shall be required in connection
therewith. GROSS agrees that the provisions of this Section 6.4 are necessary
and reasonable to protect the BUYER in the conduct of business.
ARTICLE 7
ADDITONAL COVENANTS
7.1 Covenants of SELLER. SELLER covenants and agrees:
Access and Information. The SELLER shall give full access to the BUYER and its
accountants, and other representatives during normal business hours between the
date hereof and the Closing Date (and during the Due Diligence Period, provided
for in Article 8 hereof), to all of the properties, books, financial
statements, contracts, commitments and records of the SELLER relating to the
Acquired Assets, shall permit the BUYER to make extracts and copies therefrom,
and shall furnish to the BUYER all such information concerning the SELLER's
affairs as the BUYER may reasonably request, provided, however, that no such
inspection or examination shall in any way affect, diminish or terminate any of
the representations and warranties of the SELLER hereunder
Use of SELLER's Premises. It is BUYER's present intention to obtain premises
in which the operations of MAGNUM, CDC and certain of the operations of ACETO
will be conducted. SELLER agrees that MAGNUM will continue to operate at its
current premises under a month to month lease for approximately six (6) months
after the Closing, at which point, such operations will be merged into the
premises from which the CDC operations will be conducted.
Preservation of Organization. The SELLER and GROSS agree to use their best
efforts to preserve the SELLER's business organization intact; to keep
available to the BUYER (without making any commitment on its behalf) the
services of such of the SELLER's present employees, as the BUYER designates,
and the services of SELLER's material and service providers; and to preserve
for the BUYER the goodwill of the SELLER's suppliers, customers and others
having business relations with it.
Covenants of BUYER, ACETO covenants and agrees:
Guaranty of Performance. Aceto shall guaranty the performance and obligations
of all parties under any agreements with GROSS, hereunder.
Sales Tax. Buyer shall be responsible for the payment of such sales or use
taxes attributable to the purchase of SELLER's machinery, equipment,
furnitures, fixtures and other items of tangible personal property sold to
BUYER pursuant to Section 1.1(d) hereunder.
ARTICLE 8
8.1 Due Diligence Period. Within a period of thirty (30) days after
the receipt by BUYER of SELLER's current balance sheet and current profit and
loss statement provided for in Section 4.1 (a) (i) and (ii) hereof, or 45 days
from the date of this Agreement, whichever is later (the "Due Diligence
Period"), BUYER shall have the opportunity to examine, review and evaluate: the
financials; SELLER's customers and the market situation for the SELLER's
products; SELLER's equipment and inventory; the feasibility of entering into
agreements with any of the SELLER's present employees, material and service
providers; SELLER's environmental liabilities; and such other matters or
conditions involving the BUSINESS or its operations which BUYER, in its sole
discretion, deems pertinent. The parties have negotiated an employment
agreement between CDC and Gross and the month to month lease for Magnum's
current premises.
ARTICLE 9
9.1 Termination. This Agreement may be terminated at any time prior
to Closing:
By mutual written consent of BUYER and SELLER;
By BUYER, if there is material breach of any of the SELLER's representations
and warranties set forth in Article 3 of this Agreement or any covenant or
agreement to be complied with or performed by SELLER pursuant to Article 4 of
this Agreement or any additional covenants of SELLER to be satisfied or
complied with pursuant to Article 7 of this Agreement (and such condition is
not waived in writing by the BUYER) on or prior to the Closing Date;
By BUYER, if during the Due Diligence Period, BUYER, in its sole discretion,
determines that the business or affairs of the SELLER or the markets for its
products, or the business outlook for the SELLER or its products, are not up to
BUYER's expectations;
9.2 Effect of Termination. In the event of termination, no party shall
have any liability or further obligation to any other party, except for any
willful breach of this Agreement occurring prior to the proper termination of
this Agreement
ARTICLE 10
10.1 Additional and Miscellaneous Provisions Which are Part of this
Agreement:
Survival of Representations, Warranties and Covenants. The representations,
warranties and covenants contained in this Agreement shall survive the
execution and delivery of this Agreement and shall survive the Closing Date
Brokers' Fees. Each of the parties represent and warrant to each other that
there are no claims for brokerage commissions or finders' fees in connection
with the transactions contemplated by this Agreement resulting from any action
taken by any of the parties.
Section Headings. The headings contained in this Agreement are for reference
purposes only and shall not be given any effect on the construction or
interpretation of this Agreement
Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York
Arbitration. Any controversy or claim arising out of or relating to this
Agreement or the breach thereof, or the relationship of the parties to each
other, shall be settled by arbitration administered by the American Arbitration
Association ("AAA") under its Commercial Arbitration Rules, and judgment on the
reward rendered by the arbitrator(s) may be entered in any court having
jurisdiction thereof. Each party shall bear its own costs of arbitration
including legal fees. The fees and disbursements of the AAA shall be shared
equally by the parties to the arbitration.
Expenses. Each party shall pay the fees and expenses of its own advisors
including accountants and attorneys, in preparing and negotiating this
Agreement.
Assignment. This Agreement shall not be assignable by SELLER or BUYER, except
that (i) BUYER may assign any and all rights under this Agreement to any of its
direct or indirect wholly-owned subsidiaries; provided, however, that such
assignment shall not relieve BUYER from any of its obligations hereunder and
BUYER shall remain liable under, and bound by, the terms of this Agreement and
(ii) SELLER may assign its rights to receive payments due SELLER hereunder to
GROSS. GROSS may not assign to anyone his duties under the Employment
Agreement, nor any of his rights thereunder.
Entire Agreement; Amendment and Waiver. This Agreement constitutes the entire
understanding of the parties with respect to the transactions set forth herein,
and supersedes all prior understandings and agreements (whether written or
oral) of the parties with respect thereto. This Agreement may be amended or
terminated, and the observance of any term of this Agreement may be waived,
only by a written agreement signed by the parties hereto.
No Rule of Construction. All parties hereto and their respective counsel have
read, negotiated and participated in the drafting of the language and terms
used in this Agreement. Accordingly, no rule of construction shall apply to
this Agreement which construes any language, whether ambiguous, unclear or
otherwise, in favor of, or against any party by reason of that party's role in
drafting this Agreement
Notices. All notices or other communication under this Agreement shall be in
writing, and shall be deemed given on the date delivered, if by hand delivery,
or on the date sent, if by certified or registered mail, postage prepaid , or
by telefax, to SELLER or BUYER at the following addresses, or to such other
addresses as may thereafter be designated by a party in writing:
(i) to BUYER: Aceto Corporation
One Hollow Lane
Lake Success, New York 11042
Attention: Leonard Schwartz, Chairman
Telefax No.: (516) 627-6093
(ii) to SELLER: Magnum Research Corp.
10-5 Drew Court
Ronkonkoma, New York 11779
Attention: Roy Gross, President
Telefax No.: (516) 737-0217
Counterparts. This Agreement may be executed in one or more counterparts with
the same effect as if the parties executing the counterparts had each executed
one instrument as of the day and year first above written.
Benefits of this Agreement. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
permitted assigns. Nothing in this Agreement is intended to confer upon any
person, other than the parties hereto and their successors and permitted
assigns, any rights or remedied under or by reason of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date above written.
CDC PRODUCTS CORP. ACETO CORPORATION
by s/Leonard Schwartz by s/Leonard Schwartz
Leonard Schwartz, President Leonard Schwartz, Chairman
s/Roy Gross MAGNUM RESEARCH CORP.
Roy Gross
by s/Roy Gross
Roy Gross, President and sole
Shareholder
Exhibit 10 (ix)
AGREEMENT
This is an AGREEMENT made on the 18th day of January, 2000, by and
between SCHWEIZERHALL, INC. of 10 Corporate Place South, Piscataway, New Jersey
08854, hereinafter referred to as "Seller") and Aceto Corporation of One Hollow
Lane, Lake Success, New York 11042 ("Buyer").
WHEREAS, Seller and Buyer are parties to an Asset Purchase Agreement dated
November 8, 1999. The closing thereunder is taking place today.
WHEREAS, Seller (or its predecessor, Chemical Dynamics) may be or is a party to
a number of agreements (the "Agreements"), with those former employees of
Seller listed on Schedule 1 hereto (the "Employees") under which certain
conduct by the Employees is restricted in order to protect the legitimate
interests of Seller associated with its business (the "Business") of
distribution of Nutritionals, Aroma/Flavor Chemicals and Food and Beverage
Chemicals in the United States, and
WHEREAS, Seller and Buyer agree that the rights and privileges of Seller, if
any, under the Agreements, if any, with the Employees should be transferred to
Buyer to afford Buyer the same rights and privileges Seller would have enjoyed
in the event Seller had continued to be the owner of Seller's Business which is
being sold to Buyer under Asset Purchase Agreement; and that Seller will retain
concurrent and equal rights with Buyer under the Agreements concerning the
Employees.
Now, Therefore, based upon their mutual promises and other good and valuable
consideration, Seller and Buyer agree as follows:
1. Assignment and Transfer of Rights and Privileges. Subject
to Paragraph 3 below Seller hereby assigns and transfers to Buyer all rights
and privileges, if any, it now has or may in the future have under the
Agreements, if any, with the Employees under which conduct is restricted in
order to protect the Business of Seller. By way of example only and without
limitation, the rights and privileges transferred to Buyer hereunder shall
include any and all protections, if any, Seller now enjoys or may in the future
enjoy under the Agreements with the Employees regarding Seller's Business;
(a) Prohibiting or limiting disclosure of confidential information relating to
Seller.
(b) Prohibiting or limiting competition against Seller.
(c) Prohibiting or limiting solicitation of Seller's business.
(d) Prohibiting or limiting solicitation of Seller's employees.
(e) Prohibiting or limiting disparagement of the Seller and its goods and
services.
2. No Warranties or Representations. Seller does not warrant or represent
that it has Agreements with any or all of the Employees concerning any of the
rights referred to in Paragraph 1 above. Seller warrants to Buyer that the
Agreements with Harry Demetrios on which Seller would rely to enforce its
rights against Harry Demetrios concerning the rights and privileges referred to
in paragraph 1 above are those Agreements referred to in, and attached to, a
November 19, 1999 letter by Sanders M. Chattman to Mr. Harry Demetrios at 30
Surrey Drive, Old Bridge, New Jersey. Seller is transferring to Buyer only
it's rights, if any, under the Agreements, if any, with the Employees
concerning the Business.
3. Equal and concurrent Rights. Buyer acknowledges and agrees that
notwithstanding the terms of Paragraph 1 above, Seller is retaining, and has
retained, rights equal to and concurrent with Buyer under the Agreements with
the Employees and that Seller may or may not enforce those rights in its sole
discretion.
4. Enforcement Cooperation. Seller and Buyer shall cooperate with and assist
the other in the event either of them determines that it is necessary to
enforce any of the rights and privileges transferred to Buyer hereunder or
retained by Seller, in either event at no cost or expense to the party whose
cooperation is being requested.
5. Buyer's Consideration. In consideration of the Seller's undertakings
contained herein, Buyer shall pay Seller the sum of one thousand dollars
($1,000).
6. Successors. This Agreement shall be binding upon, inure to the benefit of
and be enforceable by Seller, Buyer and their respective successors and
assigns.
7. Headings. Headings are included herein solely for convenience of reference
and shall not affect the meaning or interpretation of any provision of this
Agreement.
IN WITNESS WHEREOF, Seller and Buyer have caused Agreement to be duly executed.
SCHWEIZERHALL, INC.
By: _____________________ Date: January 18, 2000
Kevin Carraher, Exec. V.P.
Aceto Corporation
By: _______________________ Date: January 18, 2000
Leonard S. Schwartz, CEO
Exhibit 21
SUBSIDIARIES OF ACETO CORPORATION
State of other Name Under
jurisdiction of which subsidiary
Subsidiary corporation or organization does business
ACCI REALTY CORP. New York Acci Realty Corp.
ACETO AGRICULTURAL CHEMICALS Aceto Agricultural
CORPORATION New York Chemicals Corporation
ACETO INDUSTRIAL CHEMICAL CORP. Aceto Industrial Chemical
New York - Roehr Division
ARSYNCO, INC. New Jersey Arsynco, Inc.
LARLABS, INC. New York Larlabs, Inc.
ROEHR CHEMICALS, INC. New York Roehr Chemicals
VGF CORPORATION New York VGF Corporation
CDC PRODUCTS CORP. New York CDC Products Corp.
MAGNUM RESEARCH CORP. New York Magnum Research Corp.
ACETO DO BRASIL LTDA. Brazil Aceto do Brasil Ltda.
Exhibit 24
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Aceto Corporation:
We consent to incorporation by reference in the registration statement (No. 33-
38679) on Form S-8 of Aceto Corporation of our report dated August 18, 2000,
relating to the consolidated balance sheets of Aceto Corporation and
subsidiaries as of June 30, 2000 and 1999, and the related consolidated
statements of income, shareholders' equity and cash flows for each of the years
in the three-year period ended June 30, 2000, and the related financial
statement schedule, which report appears in the June 30, 2000 annual report on
Form 10-K of Aceto Corporation.
/s/KPMG LLP
Melville, New York
September 25, 2000
SIGNATURES
Pursuant to the requirements of Section 13 or 5 (d) of the Securities Exchange
Act of 1934, the Company has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
ACETO CORPORATION
(Company)
By /S/LEONARD S. SCHWARTZ /S/DONALD HOROWITZ
Leonard S. Schwartz Donald Horowitz
Chairman, President Secretary/Treasurer and
and Chief Executive Officer Chief Financial Officer
Date: September 25, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the Company
and in the capacities and on the dates indicated.
SIGNATURES TITLE DATE
/S/LEONARD S. SCHWARTZ Chairman, President and 9-25-00
Leonard S. Schwartz Chief Executive Officer
/S/RICHARD AMITRANO Director 9-25-00
Richard Amitrano
/S/SAMUEL I. HENDLER Director 9-25-00
Samuel I. Hendler
ACETO CORPORATION AND SUBSIDIARIES
Index to Consolidated Financial Statements
Independent Auditors' Report
Consolidated financial statements:
Consolidated balance sheets as of June 30, 2000 and 1999
Consolidated statements of income for the years ended June 30,
2000, 1999 and 1998
Consolidated statements of cash flows for the years ended June
30, 2000, 1999 and 1998
Consolidated statements of shareholders' equity for the years
ended June 30, 2000, 1999 and 1998
Notes to consolidated financial statements
Schedules:
II - Valuation and qualifying accounts
All other schedules are omitted because they are not required
or the information required is given in the consolidated
financial statements or notes thereto.
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
Aceto Corporation:
We have audited the accompanying consolidated balance sheets of Aceto
Corporation and subsidiaries as of June 30, 2000 and 1999, and the related
consolidated statements of income, shareholders' equity, and cash flows for
each of the years in the three-year period ended June 30, 2000. In connection
with our audits of the consolidated financial statements, we have also audited
the financial statement schedule II as listed in the accompanying index. These
consolidated financial statements and financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Aceto Corporation
and subsidiaries as of June 30, 2000 and 1999, and the results of their
operations and their cash flows for each of the years in the three-year period
ended June 30, 2000 in conformity with accounting principles generally accepted
in the United States of America. Also in our opinion, the related financial
statement schedule II, when considered in relation to the basic consolidated
financial statements taken as a whole, present fairly, in all material
respects, the information set forth therein.
Melville, New York /s/KPMG LLP
August 18, 2000
ACETO CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
YEARS ENDED JUNE 30, 2000 AND 1999
2000 1999
(In thousands)
ASSETS
Current assets:
Cash $ 2,811 $ 3,991
Short-term investments 2,153 7,427
Receivables:
Trade, less allowance for
doubtful accounts:
2000, $239; 1999, $219 25,257 26,073
Other 2,651 942
27,908 27,015
Inventory 38,453 29,644
Prepaid expenses 622 240
Deferred income tax benefit, net 1,436 1,188
Property held for sale 456 456
Total current assets 73,839 69,961
Long-term investments 7,263 11,852
Long-term notes receivable 895 976
Property and equipment:
Machinery and equipment 712 639
Leasehold improvements 872 191
Computer equipment 1,293 1,085
Furniture and fixtures 803 733
Automobiles 136 135
3,816 2,783
Less accumulated depreciation and
amortization 2,527 2,238
1,289 545
Goodwill, less accumulated amortization 4,467 2,514
2000, $269; 1999, $76
Other assets 328 311
Total Assets $88,081 $86,159
See accompanying notes to consolidated financial statements.
2000 1999
(In thousands, except par value)
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Drafts and acceptances payable $ 464 $ 750
Current installments
on long-term liabilities 642 125
Accounts payable 2,788 2,972
Accrued merchandise purchases 12,021 9,447
Accrued compensation 3,171 2,569
Accrued environmental remediation 1,312 1,323
Accrued income taxes 1,147 956
Other accrued expenses 2,024 2,360
Total current liabilities 23,569 20,502
Long-term liabilities, excluding
current installments 908 925
Redeemable preferred stock,
$2.50 par value per share;
Authorized: 2,000 shares; issued and
outstanding: 2000, 0 shares;
1999, 300 shares - 750
Shareholders' equity:
Common stock, $.01 par value per share;
Authorized: 20,000 shares;
issued: 9,001 shares 90 90
Capital in excess of par value 57,054 57,637
Retained earnings 35,697 31,224
92,841 88,951
Less:
Cost of common shares held in treasury;
2000, 2,967 shares; 1999, 2,585 shares 29,237 24,969
Total shareholders' equity 63,604 63,982
Commitments and contingencies
Total Liabilities and Shareholders' Equity $ 88,081 $ 86,159
See accompanying notes to consolidated financial statements.
ACETO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED JUNE 30, 2000, 1999 AND 1998
2000 1999 1998
(In thousands, except per share amounts)
Net sales $184,789 $169,189 $182,954
Cost of sales 157,585 146,450 160,645
Gross profit 27,204 22,739 22,309
Selling, general and
administrative expenses 18,031 15,328 12,816
Operating profit 9,173 7,411 9,493
Other income (expense):
Interest expense (11) (18) (59)
Interest and other income 1,069 2,357 2,309
1,058 2,339 2,250
Income before income taxes 10,231 9,750 11,743
Income taxes:
Federal:
Current 3,544 3,634 3,299
Deferred (212) (369) 424
State and local:
Current 592 459 388
Deferred (37) (65) 75
3,887 3,659 4,186
Net income $ 6,344 $ 6,091 $ 7,557
Net income per common share:
Basic $ 1.02 $ 0.92 $ 1.11
Diluted 1.01 0.90 1.08
Weighted average shares outstanding:
Basic 6,188 6,543 6,732
Diluted 6,308 6,788 6,983
See accompanying notes to consolidated financial statements.
ACETO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED JUNE 30, 2000, 1999 AND 1998
2000 1999 1998
(In thousands)
Operating activities:
Net income $6,344 $6,091 $7,557
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 582 355 192
Gain on sale of assets (24) (178) -
Provision for doubtful accounts 141 213 27
Deferred tax provision (benefit) (248) (434) 499
Changes in assets and liabilities,
net of effect of the acquisitions:
Investments - trading securities 3,399 (258) (774)
Trade accounts receivable 675 (1,877) 614
Other receivables (1,709) 568 (139)
Inventory (3,505) (2,481) 4,427
Prepaid expenses (382) 56 7
Other assets - 12 30
Drafts & acceptances payable (285) 201 (194)
Accounts payable (184) 501 (1,744)
Accrued merchandise purchases 2,575 (1,458) (815)
Accrued compensation 602 20 (906)
Accrued environmental remediation (11) (55) (9)
Accrued income taxes 253 296 (70)
Other accrued expenses (243) 205 (107)
Net cash provided by operating activities 7,980 1,777 8,595
Investing activities:
Purchases of investments-held-to-maturity (8,337) (10,703) (4,732)
Proceeds from investments-held-to-maturity 14,802 11,568 6,844
Issuance of notes receivable - (159) -
Payments received on notes receivable 81 85 46
Purchases of property and equipment (1,091) (138) (253)
Proceeds from sale of property 10 183 -
Payments for purchase of acquisitions (6,996) (2,111) -
Net cash provided by (used in)
investing activities (1,531) (1,275) 1,905
Financing activities:
Payments of debt - (250) (500)
Proceeds from exercise of stock options 202 137 433
Payments for purchases of treasury stock (6,087) (4,252) (3,649)
Issuance of treasury stock to employees 127 431 -
Payments of cash dividends (1,871) (1,755) (1,748)
Net cash used in financing activities (7,629) (5,689) (5,464)
Net increase (decrease) in cash and
cash equivalents (1,180) (5,187) 5,036
Cash and cash equivalents at beginning of year 3,991 9,178 4,142
Cash and cash equivalents at end of year $2,811 $3,991 $9,178
See accompanying notes to consolidated financial statements.
ACETO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNADJUSTED FOR STOCK SPLIT PAID IN APRIL 1998)
Capital in Common
Common Excess of Retained Stock Held in
STOCK ISSUED PAR VALUE EARNINGS TREASURY TOTAL
BALANCE AT
JUNE 30, 1997 $60 $57,381 $21,079 $(18,086) $60,434
Net income - - 7,557 - 7,557
Stock split -
3 for 2 30 (30) - - -
Cash dividends:
Common stock
($0.31 per share) - - (1,678) - (1,678)
Preferred stock - - (70) - (70)
Exercise of stock
options (47 shares) - 24 - 487 511
Federal income tax
benefit from 1980
stock option plan - 156 - - 156
Purchase of treasury
stock (250 SHARES) - - - (3,649) (3,649)
BALANCE AT
JUNE 30, 1998 90 57,531 26,888 (21,248) 63,261
Net income - - 6,091 - 6,091
Stock distribution
to employees
(33 shares) - 117 - 312 429
Cash dividends:
Common stock
($0.26 per share) - - (1,685) - (1,685)
Preferred stock - (70) - (70)
Exercise of stock
options (23 shares) - (60) - 219 159
Federal income tax
benefit from 1980
stock option plan - 49 - - 49
Purchase of treasury
stock (339 SHARES) - - - (4,252) (4,252)
Balance at
June 30, 1999 90 57,637 31,224 (24,969) 63,982
Net income - - 6,344 - 6,344
Stock distribution
to employees
(12 shares) - 6 - 121 127
Cash dividends:
Conversion of
preferred stock
to common stock (616) - 1,367 751
Exercise of stock
options
(34 shares) - (99) - 331 232
Federal income tax
benefit from 1980
stock option plan - 61 - - 61
Purchase of treasury
stock (567 shares) - - - (6,087) (6,087)
Other 65 65
BALANCE AT
JUNE 30, 2000 $90 $57,054 $35,697 $(29,237) $63,604
See accompanying notes to consolidated financial statements.
ACETO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2000, 1999 AND 1998
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(1) DESCRIPTION OF BUSINESS
Aceto Corporation and subsidiaries (the Company) is primarily engaged in the
marketing of fine and industrial chemicals used principally in the
agricultural, color producing, pharmaceutical and surface coating industries.
Most of the chemicals distributed by the Company are purchased abroad mainly
for sale throughout the United States; to a lesser extent, some chemicals are
sold abroad.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the financial statements of the
Company and its wholly-owned subsidiaries. All significant intercompany
balances and transactions are eliminated in consolidation.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the disclosure
of contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reported period.
Actual results could differ from those estimates.
CASH EQUIVALENTS
The Company considers all highly liquid debt instruments with original
maturities of three months or less to be cash equivalents. There were no cash
equivalents at June 30, 2000 or 1999.
INVESTMENTS
The Company classifies investments in marketable securities as trading,
available-for-sale or held-to-maturity at the time of purchase and periodically
re-evaluates such classifications. Trading securities are carried at fair
value, with unrealized holding gains and losses included in earnings. Held-to-
maturity securities are recorded at cost and are adjusted for the amortization
or accretion of premiums or discounts over the life of the related security.
Unrealized holding gains and losses on available-for-sale securities are
excluded from earnings and are reported as a separate component of accumulated
other comprehensive income until realized. In determining realized gains and
losses, the cost of securities sold is based on the specific identification
method. Interest and dividends on the investments are accrued at the balance
sheet date.
INVENTORY
Inventory consists primarily of finished goods and is stated at the lower of
cost (principally on a specific identification basis) or market (net realizable
value).
ENVIRONMENTAL REMEDIATION
The Company accrues for losses associated with environmental remediation
obligations when such losses are probable and can be reasonably estimated.
Such accruals are adjusted as further information develops or circumstances
change.
STOCK OPTIONS
On July 1, 1996, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 123, "Accounting for Stock-Based Compensation", which
permits entities to recognize as expense over the vesting period the fair value
of all stock-based awards on the date of grant. Alternatively, SFAS 123 also
allows entities to continue to apply the provisions of Accounting Principles
Board (APB) 25 and provide pro forma net income and pro forma earnings per
share disclosures for employee stock option grants as if the fair-value-based
method defined in SFAS 123 had been applied. The Company has elected to
continue to apply the provisions of APB 25 and provide the pro forma disclosure
provisions of SFAS 123.
REVENUE RECOGNITION
Sales are recorded when products are shipped.
NET INCOME PER COMMON SHARE
Effective December 31, 1997, the Company adopted SFAS 128, "Earnings Per
Share". In accordance with the requirements of SFAS 128, net income per common
share amounts (basic EPS) were computed by dividing net income after deducting
preferred stock dividends on the Company's $2.50 cumulative redeemable
preferred stock by the weighted average number of common shares outstanding and
excluded any potential dilution. Net income per common share amounts, assuming
dilution (diluted EPS), were computed by reflecting potential dilution from the
exercise of stock options and conversion of preferred stock. Income per share
amounts for all periods presented have been restated to conform with the
provisions of SFAS 128.
INCOME TAXES
Income taxes are accounted for under the asset and liability method. Deferred
tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. Deferred tax
assets and liabilities are measured using enacted tax rates expected to apply
to taxable income in the years in which those differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost and are depreciated using straight
line, sum-of-the-years and declining balance methods. The estimated useful
lives range from three to ten years. Leasehold improvements are amortized over
the shorter of the life of the asset or the lease term.
GOODWILL
Goodwill is amortized on a straight-line basis over a twenty-year period. The
recoverability of goodwill is assessed by determining whether the amortization
over its remaining life can be recovered through undiscounted future operating
cash flows of the acquired operation. The amount of impairment, if any, is
measured based on projected discounted future operating cash flows using a
discount rate reflecting the Company's average cost of funds. The assessment
of the recoverability of the excess cost over fair value of assets acquired
will be impacted if estimated future operating cash flows are not achieved.
IMPAIRMENT OF LONG-LIVED ASSETS AND LONG-LIVED ASSETS TO BE DISPOSED OF
Long-lived assets and certain identifiable intangibles are reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Recoverability of assets to
be held and used is measured by a comparison of the carrying amount of an asset
to future net cash flows expected to be generated by the asset. If such assets
are considered to be impaired, the impairment to be recognized is measured by
the amount by which the carrying amount of the assets exceed the fair value of
the assets. Assets to be disposed of are reported at the lower of the carrying
amount or fair value less costs to sell.
Property held for sale, which includes land and buildings, is stated at cost.
Impairment, if any, is recognized if the estimated fair value less costs to
sell is lower than the carrying value.
DERIVATIVE FINANCIAL INSTRUMENTS
The Company purchases inventory in several foreign currencies and, as a result,
is subject to foreign currency fluctuations. To minimize the effects, the
Company enters into future foreign exchange contracts. The Company, as a
policy, does not enter into these contracts for trading purposes. The
contracts are entered into as hedges of inventory purchase commitments. Gains
and losses on future foreign exchange contracts are reported as a component of
the underlying transaction.
In June 1999 and June 2000, respectively, the Financial Accounting Standards
Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 137,
"Accounting for Derivative Instruments and Hedging Activities-Deferral of the
Effective Date of FASB Statement No. 133" and SFAS No. 138, "Accounting for
Certain Derivative Instruments and Certain Hedging Activities". SFAS 137 and
138 amend SFAS 133, "Accounting for Derivative Instruments and Hedging
Activities," which was issued in June 1998. SFAS 137 deferred the effective
date of SFAS 133 to all fiscal quarters of fiscal years beginning after June
15, 2000. SFAS 133 establishes accounting and reporting standards for
derivative instruments, including certain derivative instruments embedded in
other contracts and for hedging activities. It requires that an entity
recognize all derivatives as either assets or liabilities in the statement of
financial position and measures those instruments at fair value. Management
has determined that the impact of the new standard will not be material.
COMPREHENSIVE INCOME
The Company adopted the provisions of SFAS 130, "Reporting Comprehensive
Income", effective July 1, 1998. SFAS 130 requires that all items recognized
under accounting standards as components of comprehensive income be reported in
an annual financial statement that is displayed with the same prominence as
other annual financial statements. Other comprehensive income may include
foreign currency translation adjustments, minimum pension liability
adjustments, and unrealized gains and losses on marketable securities
classified as available-for-sale. The Company has no items of other
comprehensive income, therefore there is no difference between the Company's
comprehensive income and net income.
RECLASSIFICATIONS
Certain reclassifications have been made to the 1999 and 1998 consolidated
financial statements to conform to the 2000 presentation.
(1) BUSINESS ACQUISITIONS
a) On January 18, 2000, the Company purchased certain assets of Schweizerhall,
Inc. (Schweizerhall) for $6,345 in cash. In addition to the purchase price,
contingent consideration may be paid to Schweizerhall one year after the
closing. In the event any additional payments are made to Schweizerhall such
payments will be recorded as additional goodwill.
The acquisition was accounted for as a purchase and, accordingly, the cost of
the acquisition was initially allocated to the assets acquired, based upon
their estimated fair values at the date of acquisition. The allocation of the
purchase price is pending the final determination of the inventory acquired.
The excess of cost over the fair value of assets acquired amounted to $975 and
is being treated as goodwill. Amortization of goodwill amounted to $22 for the
year ended June 30, 2000. The assets acquired consisted of inventory and a
non-competition agreement. The non-competition agreement valued at $120 is
being amortized on a straight-line basis over three years. The results of
operations of Schweizerhall have been included in the accompanying consolidated
statement of income from the date of acquisition. Pro forma results of
operations were not provided as their effect on the consolidated results of
operations were not material.
b) On October 19, 1999 the Company purchased certain assets of Magnum Research
Corp. (Magnum) for a purchase price of $1,150. Of the purchase price $650 was
paid at closing and the balance is scheduled to be paid in equal installments
of $167 in October 2000, 2001 and 2002 (the October payments). The October
payments are subject to downward adjustment in the event Magnum's net sales, as
defined in the purchase agreement, are less than a specified amount. In the
event the October payments are adjusted downward such adjustments will be
recorded as reductions to goodwill.
The acquisition was accounted for as a purchase and, accordingly, the cost of
the acquisition was allocated to the assets acquired, based upon their
estimated fair values. The excess of cost over the fair value of assets
acquired amounted to $1,093 and is being treated as goodwill. Amortization
of goodwill amounted to $39 for the year ended June 30, 2000. The assets
acquired consisted primarily of inventory. The results of operations of
Magnum have been included in the accompanying consolidated statements of
income from the date of acquisition. Proforma results of operations were
not provided as their effect on the consolidated results of operations were
not material.
c) On November 24, 1998 the Company purchased all the capital stock of CDC
Products Corp. (CDC) for a purchase price of $3,161. Of the purchase price,
$2,111 was paid at closing and the balance of $1,050 is scheduled to be paid in
equal installments of $125 in January 2000, 2001 and 2002 and $225 in August
2000, 2001 and 2002 (the August payments). The January and August 2000
payments have not yet been paid due to current issues now in front of the
American Arbitration Association. The August payments are subject to downward
adjustment in the event certain earnings, as defined in the purchase agreement,
are not achieved. In the event the August payments are adjusted downward such
adjustments will be recorded as reductions to goodwill.
The acquisition was accounted for as a purchase and, accordingly, the cost of
the acquisition was allocated to the net assets acquired, based upon their
estimated fair values. The excess of cost over the fair value of net assets
acquired amounted to $2,637 and is being treated as goodwill. Amortization of
goodwill amounted to $132 and $76 for the years ended June 30, 2000 and 1999,
respectively. Accumulated amortization was $208 and $76 at June 30, 2000 and
1999, respectively. The assets acquired consisted primarily of inventory,
accounts receivable and fixed assets. The results of operations of CDC have
been included in the accompanying consolidated statements of income from the
date of acquisition. Proforma results of operations were not provided as their
effect on the consolidated results of operations were not material. In
connection with the acquisition, the Company entered into a three year non-
competition agreement, which value was estimated to be $75. The non-
competition agreement is being amortized on a straight-line basis over three
years.
(4) INVESTMENTS
A summary of trading securities, classified as short-term, follows:
JUNE 30, 2000 JUNE 30, 1999
Cost Cost
FAIR VALUE BASIS FAIR VALUE BASIS
U.S. Treasury securities $ - $ - $2,731 $2,705
Corporate securities 934 593 1,602 1,153
The change in the net unrealized holding gains (losses) on trading securities
was $(92), $17 and $103 for fiscal 2000, 1999 and 1998, respectively.
A summary of held-to-maturity securities as of June 30, 2000 and 1999 follows:
JUNE 30, 2000
Gross Gross
Amortized Unrealized Unrealized Fair
COST OR COST GAINS LOSSES VALUE
Held-to-maturity securities:
Short-term investments:
Corporate securities $ 996 $ - $ 2 $ 994
Municipal obligations 223 - 6 217
Long-term investments:
Corporate securities 6,894 - 56 6,838
Municipal obligations 369 - - 369
JUNE 30, 1999
Gross Gross
Amortized Unrealized Unrealized Fair
COST OR COST GAINS LOSSES VALUE
Held-to-maturity securities:
Short-term investments:
Corporate securities $ 2,014 $ 5 $ - $ 2,019
U.S. treasury securities 999 2 - 1,001
Municipal obligations 81 - - 81
Long-term investments:
Corporate securities 10,630 - 71 10,559
U.S. treasury securities 1,000 6 - 1,006
Municipal obligations 222 - 2 220
The contractual maturities on the long-term investments range between one and
three years.
(5) NOTES RECEIVABLE
The Company currently holds five notes receivable with outstanding balances
aggregating $983 and $1,062 at June 30, 2000 and 1999, respectively, which have
arisen from sales of property. The notes are either secured by a first
mortgage on the real property sold or collateralized by a security interest in
the asset sold. The notes range in length from seven to twenty-five years and
pay interest at either a fixed or variable rate. The fixed rates on three
notes are 8.00%, 9.25% and 9.50%. The variable rates on the other two notes,
which are based on either 1% or 2.5% over prime, were 10.50% and 12.00% at June
30, 2000 and 9.00% and 10.50% at June 30, 1999. Included in current asssets
are notes receivable due within one year totaling $88 and $86 at June 30, 2000
and 1999, respectively.
(6) ENVIRONMENTAL REMEDIATION
During fiscal 1993 the Company announced the closing of its manufacturing
subsidiary located in Carlstadt, New Jersey. At the same time an environmental
consultant was engaged by the Company to determine the extent of contamination
on the site and develop a plan of remediation. Based on the initial estimates
from the consultant a liability of $1,500 was established in fiscal 1993.
During fiscal 1997 after additional testing was completed, the Company received
a revised estimate from the consultant. As a result, the Company recorded an
additional liability of $800. The remaining liability was $1,300 at June 30,
2000 and 1999. The Company believes it is possible that such amount may not be
sufficient to cover future environmental remediation however it can not
estimate such additional amount at this time. The Company does not believe
there will be a material adverse effect on its financial position or liquidity.
However, depending on the amount and timing of any required remediation over
and above the liability established, it is possible that the Company's future
earnings could be materially affected in a particular reporting period. Other
than the aforementioned remediation, the Company is not aware of any material
environmental liabilities.
(7) FINANCING ARRANGEMENTS
At June 30, 2000 and 1999 the Company had available two lines of credit with
financial institutions totaling $15,000. The Company maintains compensating
balances under informal arrangements. There were no short-term loans
outstanding under the lines of credit at any time during the three-year period
ended June 30, 2000. The lines of credit can be withdrawn by the financial
institutions at any time.
(8) NET INCOME PER COMMON SHARE
A reconciliation between the numerators and denominators of the basic and
diluted income per share computation for net income follows:
2000 1999 1998
Net income $ 6,344 $ 6,091 $ 7,557
Preferred stock dividends (29) (70) (70)
Net income available for common
shareholders 6,315 6,021 7,487
Weighted average common shares 6,188 6,543 6,732
Effect of dilutive securities:
Stock options 68 106 112
Convertible preferred stock 52 139 139
Weighted average common and
potential common shares
outstanding 6,308 6,788 6,983
Basic income per share $ 1.02 $ 0.92 $ 1.11
Diluted income per share 1.01 0.90 1.08
Employee stock options of 220, 240, 233 and 233 for the first, second, third
and fourth quarters, respectively, of fiscal 2000 and 232, 280 and 280 for the
second, third and fourth quarters, respectively, of fiscal 1999 were not
included in the net income per share calculation because their effect would
have been anti-dilutive. For fiscal year 1998, all employee stock options were
included.
(9) REDEEMABLE PREFERRED STOCK
On November 15, 1999 the Aceto Corporation Profit Sharing Plan (the holder of
the redeemable preferred stock) converted all of the preferred stock to 139
shares of common stock. The Company purchased the shares on November 15, 1999,
at $11.1562 per share which was the market price of the common stock on such
date. The total amount paid to the Aceto Corporation Profit Sharing Plan
amounted to approximately $1,555.
(10) STOCK BASED COMPENSATION PLANS
In December 1998, the Company adopted the Aceto Corporation 1998 Omnibus Equity
Award Plan (1998 Plan). In accordance with the 1998 Plan the Company's Board
of Directors (Board) may grant up to 500 shares of common stock in the form of
stock options or restricted stock to eligible participants. The exercise price
per share, determined by the Board, for options granted cannot be less than the
fair market value of the stock on the date of grant. The options vest as
determined by the Board and expire no later than ten years from the date of
grant. Restricted stock may be granted to an eligible participant in lieu of a
portion of any annual cash bonus earned by such participant. Such award may
have a premium in shares greater than the portion of bonus paid in restricted
stock. The award vests ratably over a period of years as determined by the
Board. The premium vests when the award is fully vested, provided that the
participant is in the employ of the Company when vesting occurs. Under the
1998 Plan, there were 242 and 267 shares of common stock available for grant as
either options or restricted stock at June 30, 2000 and 1999, respectively.
Under the terms of the Company's 1980 Stock Option Plan (1980 Plan), options
may be issued to officers and key employees. The exercise price per share can
be greater or less than the market value of the stock on the date of grant. The
options vest either immediately or over a period of years and expire no later
than five or ten years from the date they are fully vested. Under the 1980
Plan, options to purchase 342 and 312 shares of common stock were available for
grant at June 30, 2000 and 1999, respectively. The Board does not intend to
issue additional options from this Plan.
The following tabulations summarize the shares of common stock under option for
both plans at June 30, 2000, 1999 and 1998, and the activity with respect to
options for the respective years then ended:
Shares Weighted average
subject to exercise price
OPTION PER SHARE
Balance at June 30, 1997 527 $ 7.96
Granted 81 10.00
EXERCISED (66) 6.54
Balance at June 30, 1998 542 $ 8.44
Granted 211 12.50
Exercised (23) 5.84
FORFEITED (12) 12.52
Balance at June 30, 1999 718 $ 9.65
Granted 20 11.75
Exercised (33) 6.06
FORFEITED (37) 8.58
Balance at June 30, 2000 668 $ 9.95
Options exercisable at June 30, 2000, 1999 and 1998 were 358, 283 and 245,
respectively. The weighted average exercise price for options exercisable at
June 30, 2000, 1999 and 1998 were $9.47, $8.35 and $8.16, respectively. At
June 30, 2000, outstanding options had expiration dates ranging from December
31, 2000 to December 31, 2015.
Under the 1980 Plan, during the period options become exercisable, compensation
is charged to operations for the excess of fair market value over the option
price at the date of grant. Such charges to operations were $91, $108 and $121
in fiscal 2000, 1999 and 1998, respectively. Under the 1998 Plan, compensation
is recorded for the value of restricted stock granted. There were 12 and 33
shares of restricted stock granted during fiscal 2000 and 1999, respectively.
Such charges to operations were $181 and $428 in fiscal 2000 and 1999,
respectively.
Summarized information about stock options outstanding and exercisable at June
30, 2000 was as follows:
Outstanding Exercisable
Exercise Number of Average Average Number of Average
PRICE RANGE SHARES LIFE(1) PRICE(2) SHARES PRICE(2)
$ 7- 8.99 157 2.5 $ 7.83 157 $ 7.83
9-11.50 278 10.8 9.03 105 9.07
11.50-13.00 233 8.0 12.48 96 12.59
(1) Weighted average contractual life remaining, in years.
(2) Weighted average exercise price.
The per share weighted average fair value of stock options granted during 2000,
1999 and 1998 was $3.13, $3.10 and $6.07, respectively, on the date of the
grant using the Black-Scholes option-pricing model with the following weighted
average assumptions:
Risk-free
Date of Expected Expected interest Dividend
GRANT VOLATILITY(%) LIFE(YEARS) RATE(%) YIELD(%)
2000
12/2/99 20 7.5 6.25 2.67
1999
12/10/98 20 7.5 4.53 2.08
1998
1/26/98 20 5.0 6.22 1.90
1/26/98 20 16.5 6.25 1.90
The Company applies APB 25 in accounting for its stock option grants and,
accordingly, no compensation cost has been recognized in the financial
statements for its stock options which have an exercise price equal to or
greater than the fair value of the stock on the date of the grant. Had the
Company determined compensation cost based on the fair value at the grant date
for its stock options under SFAS 123, the Company's net income and income per
share would have been reduced to the pro forma amounts indicated below:
2000 1999 1998
Net income:
As reported $6,344 $6,091 $7,557
Pro forma 6,043 5,808 7,281
Income per share-basic:
As reported $ 1.02 $ 0.92 $1.11
Pro forma 0.97 0.88 1.07
Income per share-diluted:
As reported $ 1.01 $ 0.90 $ 1.08
Pro forma 0.96 0.86 1.04
Pro forma net income reflects only options granted beginning in fiscal 1996.
Therefore, the full impact of calculating compensation costs for stock options
under SFAS 123 is not reflected in the pro forma net income amounts presented
above because compensation costs are reflected over the options' vesting period
and compensation cost for options granted prior to July 1, 1995 is not
considered.
(11) INTEREST AND OTHER INCOME
Interest and other income earned during fiscal 2000, 1999 and 1998 were
comprised of the following:
2000 1999 1998
Dividends $ 152 $ 142 $ 140
Interest 889 1,375 1,314
Net gain (loss) on investments (290) 62 114
Net gain on sale of assets 20 16 -
Royalty income 224 539 427
Miscellaneous 74 223 314
$1,069 $2,357 $2,309
(12) INCOME TAXES
The tax effects of temporary differences that give rise to the deferred tax
assets and liabilities at June 30, 2000 and 1999 are presented below:
2000 1999
Deferred tax assets:
Accrued environmental remediation
liabilities not currently
deductible $ 525 $ 529
Accrued retirement plan 469 361
Accrued compensation 196 197
Additional costs inventoried for
tax purposes 206 188
Allowance for doubtful accounts
receivable 80 88
Differences in depreciation of
property and equipment 14 14
Total gross deferred tax assets 1,490 1,377
Deferred tax liabilities:
Unrealized gain on investments 54 189
Total gross deferred tax liabilities: 54 189
Net deferred tax assets $1,436 $1,188
In assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred tax
assets will not be realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during the periods in
which those temporary differences become deductible. Management considers the
scheduled reversal of deferred tax liabilities, projected future taxable
income, and tax planning strategies in making this assessment. In order to
fully realize the deferred tax asset, the Company will need to generate
future taxable income of approximately $4,400. Taxable income for fiscal 2000
and 1999 was approximately $9,800 and $9,600, respectively.
Based upon the level of historical taxable income and projections for taxable
income over the periods which the deferred tax assets are deductible,
management believes it is more likely than not the Company will realize the
benefits of these deductible differences.
Reconciliation of the statutory Federal income tax rate and the effective tax
rate for the fiscal years ended June 30, 2000, 1999 and 1998 follows:
2000 1999 1998
Federal statutory tax rate 34.0% 34.0% 34.0%
State and local taxes, net
of Federal income tax
benefit 3.6 2.7 3.0
Other 0.4 0.8 (1.4)
Effective tax rate 38.0% 37.5% 35.6%
(13) SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for interest and income taxes during fiscal 2000, 1999 and 1998 was
as follows:
2000 1999 1998
Interest $ 21 $ 18 $ 59
Income taxes 3,920 3,841 3,759
In connection with the acquisitions of CDC and Magnum Research Corp., the
Company recorded $1,050 and $500 of amounts due to the previous owners as
liabilities.
In July 1998, the Company received a note in the amount of $170 in connection
with the sale of buildings and land.
(14) RETIREMENT PLANS
The Company has retirement plans in which employees are eligible to
participate. The Company's annual contribution per employee, which is at
management's discretion, is based on a percentage of the employee's
compensation. The Company's provisions for contributions amounted to $798, $725
and $607 in fiscal 2000, 1999 and 1998, respectively.
(15) SEGMENT INFORMATION
The Company has six reportable segments which are organized by products: (1)
Agrochemicals, whose products include herbicides, fungicides and insecticides,
as well as a sprout inhibitor for potatoes, (2) Industrial Chemicals, whose
products include a variety of specialty chemicals used in adhesives, coatings,
food, fragrance, cosmetics and many other areas, (3) Organic Intermediates and
Colorants, whose products include dye and pigment intermediates used in the
color-producing industries like textiles, inks, paper and coatings, as well as
intermediates used in production of agrochemicals, (4) Pharmaceutical
Biochemicals and Nutritionals products, which include the active ingredients
for generic pharmaceuticals, vitamins and nutritional supplements, (5)
Pharmaceutical Intermediates and Custom Manufacturing products, used in
preparation of pharmaceuticals, primarily by major ethical drug companies and
(6) Institutional Sanitary Supplies and Other (previously referred to as
"Other"), whose products include cleaning solutions, fragrances and deodorants
used by commercial and industrial establishments. The Company does not
allocate assets by segment as they are not provided to the chief operating
decision maker. The Company evaluates performance of the segments based on
gross profit.
The Company does not have any significant assets outside the United States.
Sales to customers located in foreign countries, primarily Canada, Mexico,
Brazil, Argentina, United Kingdom and Germany, totaled $26,500, $18,700 and
$23,400 for the years ended June 30, 2000, 1999 and 1998, respectively. One
customer of the Pharmaceutical Intermediates and Custom Manufacturing segment
accounted for 16% and 15% of net sales in fiscal 1999 and 1998, respectively.
No customer accounted for as much as 10% of net sales in fiscal 2000.
Summarized financial information for each of the segments for fiscal 2000,
1999 and 1998 follows:
Institutional
Organic Pharma- Pharma- Sanitary
Agro- Indus- Inter- ceutical ceutical Supplies Consolidated
chemicals trial mediates & Biochem- Inter- & Other Totals
Chem- Colorants icals & mediates
icals Nutri- & Custom
tionals Mfging.
2000
Net
sales $11,417 49,874 49,861 35,448 33,202 4,987 $184,789
Gross
profit $ 3,930 9,183 7,308 6,336 2,657 2,602 $ 32,016
Unallo-
cated
cost
of
sales(1) 4,812
Net gross
profit $ 27,204
1999
Net
sales $10,377 44,722 38,946 28,272 44,255 2,617 $169,189
Gross
profit $ 3,740 7,703 5,397 4,769 3,331 1,354 $ 26,294
Unallo-
cated
cost
of
sales(1) 3,555
Net gross
profit $ 22,739
1998
Net
sales $14,588 44,940 53,002 31,724 38,342 358 $182,954
Gross
profit $ 3,746 8,023 6,813 4,970 2,961 21 $ 26,534
Unallo-
cated
cost
of
sales(1) 4,225
Net gross
profit $ 22,309
(1) Represents freight and storage costs that are not allocated to a segment.
(16) FINANCIAL INSTRUMENTS
DERIVATIVE FINANCIAL INSTRUMENTS
At June 30, 2000 and 1999 the Company had future foreign exchange contracts in
the amount of $5,800 and $6,100, respectively. The contracts have varying
maturities extending to January 2001. At June 30, 2000 and 1999 the Company
had not hedged open purchase commitments of approximately $500 and $600,
respectively. For fiscal 2000, 1999 and 1998, gains and losses on foreign
currency transactions, including terminated hedges that occurred prior to the
transaction date, were not material.
The Company is exposed to credit losses in the event of non-performance by the
financial institutions, who are the counter parties, on its future foreign
currency contracts. The Company anticipates, however, that the financial
institutions will be able to fully satisfy their obligations under the
contracts. The Company does not obtain collateral to support financial
instruments, but monitors the credit standing of the financial institution.
OFF-BALANCE SHEET RISK
Commercial letters of credit are issued by the Company during the ordinary
course of business through major domestic banks as requested by certain
suppliers. The Company had open letters of credit of approximately $3,400 and
$5,700, as of June 30, 2000 and 1999, respectively. The terms of these letters
of credit are all less than one year. No material loss is anticipated due to
non-performance by the counter parties to these agreements.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying values of all financial instruments classified as a current asset
or current liability are deemed to approximate fair value because of the short
maturity of these instruments. The fair value of foreign currency contracts
(used for hedging purposes) was estimated by obtaining quotes from brokers and
the difference between the fair value and contract value was not material. The
difference between the fair value of long-term financial instruments and their
carrying value at both June 30, 2000 and 1999 was not material. Certain of the
Company's notes receivable have variable rates, therefore are recorded at
fair value, and the difference between the fair value and carrying amount
for the remaining notes receivables is immaterial to the consolidated
financial statements. Determination of the fair value of the Company's
long-term liabilities is not practicable to estimate given the nature of
such long-term liabilities.
BUSINESS AND CREDIT CONCENTRATION
Financial instruments, which potentially subject the Company to concentrations
of credit risk, consist principally of trade receivables. The Company's
customers are dispersed across many industries and are located primarily in the
United States. The Company estimates an allowance for doubtful accounts based
upon the creditworthiness of its customers as well as general economic
conditions. Consequently, an adverse change in those factors could affect the
Company's estimate of this allowance. The Company as a policy does not require
collateral from its customers. At June 30, 2000, five customers accounted for
15% and at June 30, 1999, three customers accounted for 18% of net trade
accounts receivable.
One of the Company's products accounted for 15% of net sales in fiscal 1999 and
1998. No product accounted for as much as 10% of net sales in fiscal 2000.
One of the Company's suppliers accounted for 21%, 29% and 25% of total
purchases in fiscal 2000, 1999 and 1998, respectively.
(17) COMMITMENTS AND CONTINGENCIES
A subsidiary of the Company markets certain agricultural chemicals which are
subject to the Federal Insecticide, Fungicide and Rodenticide Act (FIFRA).
FIFRA requires that test data be provided to the Environmental Protection
Agency (EPA) to register, obtain and maintain approved labels for pesticide
products. The EPA requires that follow-on registrants of these products
compensate the initial registrant for the cost of producing the necessary test
data on a basis prescribed in the FIFRA regulations. Follow-on registrants do
not themselves generate or contract for the data. However, when FIFRA
requirements mandate the generation of new test data to enable all registrants
to continue marketing a pesticide product, often both the initial and
follow-on registrants establish a task force to jointly undertake the testing
effort. The Company is presently a member of two such task force groups.
The Company estimates the cost of test data at the time it is first required,
which estimates are amortized over a period of up to five years, updated
annually, and are included in cost of sales.
The Company and its subsidiaries are subject to various claims which have
arisen in the normal course of business. The impact of the final resolution of
these matters on the Company's results of operations or liquidity in a
particular reporting period is not known. Management is of the opinion,
however, that the ultimate outcome of such matters will not have a material
adverse effect upon the Company's financial condition or liquidity.
The Company currently leases an office facility under an operating lease
expiring April 2011. In addition, a subsidiary leases a manufacturing facility
under an operating lease expiring December 2009. At June 30, 2000, future
minimum lease payments in the aggregate and for each of the five succeeding
years are as follows:
FISCAL YEAR AMOUNT
2001 $ 982
2002 949
2003 976
2004 1,005
2005 1,034
Thereafter 6,201
$11,147
Total rental expense amounted to approximately $871, $638 and $532 for fiscal
2000, 1999 and 1998, respectively.
Schedule II
ACETO CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
Years ended June 30, 2000, 1999 and 1998
Balance at Charged to Balance
beginning costs and Deduc- at end
DESCRIPTION OF YEAR EXPENSES TIONS OF YEAR
Year ended June 30, 2000:
Allowance for doubtful
accounts $ 219,366 141,459 121,978(a) $ 238,847
Year ended June 30, 1999:
Allowance for doubtful
accounts $ 219,366 212,808 212,808(a) $ 219,366
Year ended June 30, 1998:
Allowance for doubtful
accounts $ 219,366 26,857 26,857(a) $ 219,366
(a) Specific accounts written off as uncollectible.