10000000444

In re:
UNITED STATES BANKRUPTCY COURT

DISTRICT OF DELAWARE
Chapter 11
ALLIED SYSTEMS HOLDINGS, INC.,
et al., Case No. 12-11564 (CSS)
(Jointly Administered)
Debtors.
Hearing Date: Sept. 28, 2012 at 11:00 a.m.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - ~ ( E D T )
LIMITED OBJECTION OF CITY OF NEW YORK TO DEBTORS' MOTION TO
EXTEND TIME TO ASSUME OR REJECT LEASES WITH RESPECT TO LEASE
PERTAINING TO SOUTH BROOKLYN MARINE TERMINAL
The City of New York (the "City"), by its counsel, MICHAEL A. CARDOZO,
Corporation Counsel of the City of New York, hereby files this limited objection to the motion
dated September 10, 2012, of the debtors and debtors-in-possession in the above captioned cases
(the "Debtors"), for entry of an order extending the time to assume or reject unexpired leases of
nonresidential real property pursuant to Section 365(d)(4) of the Bankruptcy Code (the "Lease
Extension Motion"). In support thereof, the City respectfully states as follows :
BACKGROUND
1. On May 17, 2012, involuntary petitions were filed against certain of the Debtors,
to which those Debtors later consented. On June 10, 2012, certain additional affiliated Debtors,
including Axis Group, Inc. ("Axis"), filed voluntary petitions before this Court for relief under
Chapter 11 ofthe Bankruptcy Code (11 U.S.C. 101, et seq.).
2. Axis is the tenant under an Agreement of Lease made as of November 1, 2006, by
and between the City, acting by and through its Commissioner of Small Business Services of the
City of New York Department of Small Business Services, as landlord, relating to property (the
"Property") at the South Brooklyn Marine Terminal in New York City (the "SBMT Lease").
The New York City Economic Development Corporation ("NYCEDC") administers the SBMT
Lease and acts for and on behalf of the City as landlord.
3. Although the Lease Extension Motion does not specifically list the leases for
which the Debtors are seeking extensions, the Debtors state that they are seeking extensions
regarding "the leases, subleases, or other agreements to which any of the Debtors are a party that
may be considered an unexpired lease of nonresidential real property .... " Lease Extension
Motion, at page 1. The City assumes, therefore, that the SBMT Lease is included.
4. In general, the City does not object to an extension of Axis' time to assume or
reject the SBMT Lease for an additional ninety days; however, the City asserts that any such
extension should be conditioned on Axis immediately complying with the provisions of Section
29.09() of the SBMT Lease, as is more fully discussed below.
THE BASES OF THE CITY'S UMITED OBJECTION
5. In order to understand the importance of Section 29.09 of the SBMT Lease to the
City, it is necessary to review briefly the circumstances under which the City entered into the
SBMT Lease in November 2006.
6. At that time, Axis was in its first Chapter 11 case, in Georgia (the "Georgia
Case"). To protect the City's interests if Axis ever went into another bankruptcy, and to prevent
uncertainty and delay, the parties agreed to a non-exclusive list of appropriate adequate
protection measures, including a security deposit "in an amount acceptable to Landlord, but in no
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event less than the Annual Base Rent payable hereunder" in Section 29.09(f),
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payable within
thirty days of commencement of the new case.
7. In the Georgia Case, Axis made a motion, dated August 29, 2006 (the "Lease
Authorization Motion") to the Bankruptcy Court (the "Georgia Bankruptcy Court") for
authority to enter into the SBMT Lease under Section 363. A copy of the Lease Authorization
Motion, with the attached copy of the SBMT Lease, is attached hereto as Exhibit "A." In that
motion, Axis stated that the "Lease is necessary to the success of Axis' bankruptcy case and is in
the best interests of Axis' estate and its creditors as it will enable Axis to develop a strong
maritime transport and automobile processing facility central to New York City." Lease
Authorization Motion, a t ~ 9. Further, Axis asserted that "Axis has the ability to perform all of
the terms, provisions and conditions of the Lease." (emphasis added). Lease Authorization
Motion, at ~ 7. Axis also asserted that "Axis has strong business justification for the relief
sought herein." Lease Authorization Motion, at ~ 14. The Lease Authorization Motion was
signed by Axis' bankruptcy counsel, Troutman Sanders LLP, which, as noted below, is also
Axis' bankruptcy counsel in the current case. A copy of the full SBMT Lease was attached to
1
Section 29.09(t) reads, in relevant part:
[In the event of the commencement of a subsequent bankruptcy case], Landlord shall be entitled to invoke
any and all rights and remedies available to it under such bankruptcy or insolvency code, statute or law or
this Lease, including, without limitation, such rights and remedies as may be necessary to adequately
protect Landlord's right, title and interest in and to the Premises, or any part thereof, and adequately assure
the complete and continuous future performance of Tenant's obligations under this Lease. Adequate
protection of Landlord's right, title and interest in and to the Premises, and adequate assurance of the
complete and continuous future performance of Tenant's obligations under this Lease, shall include, but
shall not be limited to, each and every one of the following requirements: [ .... ]
(t) that Tenant shall pay Landlord, within thirty (30) days after entry of such order or the
effective date of such stay, as partial adequate protection against future diminution in value of the
Premises and adequate assurance of the complete and continuous future performance of Tenant's
obligations under this Lease, a security deposit in an amount acceptable to Landlord but in no
event less than the Annual Base Rent payable hereunder, for the then current Lease Year;.
3
the Lease Authorization Motion. Notice was given to the lenders and the unsecured creditors.
Absolutely absent from the Lease Authorization Motion was any hint that Axis or its counsel
believed that any part of the SBMT Lease was unenforceable or unwise. The Georgia
Bankruptcy Court authorized entry into the SBMT Lease by order dated September 25, 2006.
8. When the City learned of the commencement of Axis' current Chapter 11 case
before this Court, it sent to Axis a letter, dated June 19, 2012, which stated, among other things,
that "pursuant to Section 20.09() of the Lease, we will accept remittance of the current Annual
Base Rent of $2,929,426 as the agreed upon adequate assurance payment. In furtherance of that
provision, we will expect receipt of this payment on or before July 12, 2012."
9. Axis' president, Mr. Jorge Lopez-Colome, responded by letter dated June 29,
2012, which stated, on this issue: "I am advised, however, by Axis' bankruptcy counsel that, in
order to comply with Section 365(b)(2)(A),(B) of the Bankruptcy Code, Axis will not be
permitted to make payment pursuant to Section 29.09() of the Lease."
10. The City replied, by letter dated July 10, 2012, addressed to Axis' General
Counsel, disagreeing with Axis' position on this issue, primarily on the bases set forth in this
Limited Objection. First, Bankruptcy Code Section 365(b)(2)(A),(B), cited by Axis, applies
solely to a debtor's authority under the Bankruptcy Code to assume a lease that is in default, an
issue which was not in dispute at that time. Second, Section 29.09() of the SBMT Lease is not a
default provision. Rather, this section expressly relates to the City's right as landlord, in the
event of a subsequent bankruptcy case involving Axis, "to adequately protect Landlord's right,
title and interest in and to the Premises, or any part thereof, and adequately assure the complete
and continuous future performance of Tenant's obligations under this Lease." The City is
entitled to such adequate protection under Bankruptcy Code Sections 361 and 363(e).
4
11. The position now taken by Axis is directly contrary to the position it expressed
previously to the Georgia Bankruptcy Court in the Lease Authorization Motion, as discussed
above. The City negotiated and entered into the SBMT Lease in good faith. The City relied on
the statements made by Axis to the Georgia Bankruptcy Court, and relied on the terms of the
order approving Axis's entry into the lease. The City, of course, believed that Axis also had
acted in good faith. As noted above, Axis' bankruptcy counsel in the current case, Troutman
Sanders, is the same as its bankruptcy counsel in the Georgia Case. In fact, in support of its
current application to this Court for retention in this case, Troutman Sanders cited its experience
in the prior Georgia Case, and its continuing advice to the debtors regarding reorganization
matters in the interim. Against this background, it is difficult to understand how Axis could
assert, in good faith, on advise of counsel, that it now believes that Section 29.09() of the SBMT
Lease is an unenforceable ipso facto clause.
12. In support of the Lease Extension Motion, the Debtors generally assert that
several relevant factors justify the extensions requested. For example, they assert that they are
performing their obligations under the leases as required by Section 365(d)(3) of the Bankruptcy
Code. See Lease Extension Motion, a t ~ 8. However, as noted above, with respect to the SBMT
Lease, although Axis has made monthly lease payments, it has not complied with the provisions
of Section 29.09(), which is a clear and unequivocal obligation under the SBMT Lease.
Therefore Axis is not in compliance with Section 365(d)(3) with regard to this lease.
13. In addition, the Debtors assert that the extension would not "damage" any of the
non-debtor parties, because the Debtors will perform their post-petition obligations "to the extent
required by section 365(d)(3) of the Bankruptcy Code, including the payment of post-petition
rent." Lease Extension Motion, a t ~ 9. However, again this assertion is not accurate with regard
s
to the SBMT Lease, because Axis refuses to comply with Section 29.09(f), which was
negotiated, agreed to, and court-approved, in order to specify the exact adequate protection to
which the City is entitled, in order to protect it from any potential damage arising from Axis'
current situation.
14. The City has offered to engage in a dialogue with Axis regarding an acceptable
plan for going forward. It has cooperated with Axis on an on-going basis, including with respect
to a short term license agreement between Axis and the City, acting by and through the
Department of Transportation, for the use of a portion of the premises. The City remains ready
to engage in such a dialogue. It believes, however, that Axis should not be permitted simply to
continue to ignore its obligations under Section 29.09(f) of the SBMT Lease.
WHEREFORE, the City respectfully requests that any order extending the time of
Axis to assume or reject the SBMT Lease be conditioned upon Axis' payment to the City of the
adequate protection payment specified in Section 29.09(f) of the SBMT Lease, and that the Court
grant to the City such other and further relief as the Court determines to be just.
Dated: New York, New York
September 21, 2012
MICHAEL A. CARDOZO
Corporation Counsel of the
City ofNew York
Attorney for the City ofNew York
100 Church Street, Room 5-213
New York, New York 10007
Tel. (212) 788-1186
Fax: (212) 788-0937
zkass@law.nyc.gov
By: Is/ Zachary B. Kass
6
Zachary B. Kass (ZK-1944)
Assistant Corporation Counsel
[Not Admitted in the District of Delaware]
CERTIFICATE OF SERVICE
The undersigned, an attorney duly admitted to practice in the United States
District Courts for the Southern and Eastern Districts of New York, but not admitted to practice
in the United States District Court for the District of Delaware, certifies that a copy of the
foregoing Limited Objection of City of New York to Debtors' Motion To Extend Time To
Assume or Reject Leases With Respect to Lease Pertaining to South Brooklyn Marine Terminal
was served via electronic mail on September 21, 2012, upon the following attorneys for the
Debtors and Debtors-in-Possession:
(1) at Richards, Layton & Finger, P.A.:
Mark D. Collins [collins@rlf.com];
Christopher M. Samis [samis@rlf.com];
Marisa A. Terranova [terranova@rlf.com];
and (2) at Troutman Sanders LLP:
Jeffrey W. Kelley [Jeffrey.kelley@troutmansander.com];
Ezra H. Cohen [ezra.cohen@troutmansander.com];
Carolyn P. Richter [carolyn.richter@troutmansander.com];
Matthew R. Brooks [matthew.brooks@troutmansander.com];
Benjamin R. Carlsen [Benjamin.carlsen@troutmansander.com]
This is the 21
1
h day of September, 2012
7
Is/ Zachary B. Kass
Zachary B. Kass, Esq. (ZK-1944)
[Not Admitted in District ofDelaware]
Assistant Corporation Counsel
Office of Corp. Counsel, City of NY
zkass@law.nyc.gov
EXHIBIT A PART 1
Case 05-12515-crm Doc 1992 Filed 08/29/06 Entered 08/29/06 17:25:39 Desc Main
In re:
Document Page 1 of 146
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION
Chapter 11
ALLIED HOLDINGS, INC., et al. Case Nos. 05-12515 through 05-12526
and 05-12528 through 05-12537
(Jointly Administered) Debtors.
Judge Mullins
NOTICE OF ASSIGNMENT OF HEARING
NOTICE IS HEREBY GIVEN that on August 29, 2006, Axis Group, Inc. filed its
Motion for Authority to Enter into a Non-Residential Real Property Lease with the City of
New York (the "Motion") and related papers with the Court.
PLEASE TAKE FURTHER NOTICE that the Court will hold a hearing on the Motion on
September 21, 2006 at 9:30a.m., Courtroom 1203, U.S. Courthouse, 75 Spring Street, Atlanta,
Georgia.
Your rights may be affected by the Court's ruling on this Motion. You should read these
papers carefully and discuss them with your attorney, if you have one in these bankruptcy cases.
(If you do not have an attorney, you may wish to consult one.) If you do not want the Court to
grant the relief requested in the Motion, or if you want the Court to consider your views on the
Motion, then you or your attorney must attend the hearing. You may also file a written response
to the Motion with the Clerk at the address stated below at least ten (1 0) days before the hearing.
The address of the Clerk's office is: United States Bankruptcy Court, Room 1340, 75 Spring
Street, Atlanta, Georgia 30303. You must also mail or fax a copy of your response to the
undersigned at the address stated below so that it is received at least ten ( 1 0) days before the
hearing. If you do not file and serve a written response to the Motion at least ten ( 1 0) days prior
to the hearing as set forth above, the Court may not consider your views on the Motion. If you
attend the hearing without filing and serving a written response to the Motion at least ten ( 1 0)
days prior to the hearing as set forth above, the Court may reset the hearing at the request of
Axis' counsel.
Within three (3) days of the date of this notice, Axis' counsel shall cause the Motion and
this notice to be served upon those entities on the Master Service List (as such term is defined in
the Order Establishing Notice Procedures entered on August 2, 2005 in these jointly
administered cases) and the City ofNew York by U.S. mail.
Dated: August 29, 2006.
/s/ Harris B. Winsberg
Ezra H. Cohen (GA State Bar No. 173800)
Jeffrey W. Kelley (GA State Bar No. 412296)
Harris B. Winsberg (GA State Bar No. 770892)
TROUTMANSANDERSLLP
Bank of America Plaza
600 Peachtree Street, N.E. -Suite 5200
Atlanta, Georgia 30308-2216
Telephone No.: (404) 885-3000
Facsimile No.: (404) 885-3900
Attorneys for Axis Group, Inc.
- 2-
In re:
ATLANTA DIVISION
Chapter 11
ALLIED HOLDINGS, INC., et al. Case Nos. 05-12515 through 05-12526
and 05-12528 through 05-12537
Judge Mullins
AXIS GROUP, INC.'S MOTION FOR AUTHORITY TO ENTER
INTO NON-RESIDENTIAL REAL PROPERTY LEASE
WITH THE CITY OF NEW YORK
Axis Group, Inc. as debtor and debtor-in-possession ("Axis"), respectfully submits this
Motion for Authority to Enter into Non-Residential Real Property Lease with the City of New
York ("NYC") (the "Motion"). In support of the Motion, Axis shows the Court as follows:
Jurisdiction
1. This Court has jurisdiction to consider this Motion pursuant to 28 U.S.C. 1334.
Consideration ofthis Motion is a core proceeding pursuant to 28 U.S.C. 157(b). Venue of this
proceeding is proper before this Court pursuant to 28 U.S.C. 1408 and 1409. The statutory
predicates for the relief sought herein are Sections 105 and 363 of title 11 of the United States
Code (the "Bankruptcy Code").
Background
2. On July 31, 2005, Axis filed a voluntary petition for relief under Chapter 11 of the
Bankruptcy Code. Axis is authorized to operate its businesses as a debtor-in-possession pursuant
to Sections 1107 and 1108 ofthe Bankruptcy Code.
3. Axis and its direct and indirect subsidiaries (the "Axis Group") provide vehicle
distribution and transportation support services to both the pre-owned and new vehicle markets
1690479 _2. DOC
as well as to other segments of the automotive and car rental industries. These services include
(a) carrier management and brokerage services for various automotive clients, (b) a variety of
related support services to the pre-owned and off-lease vehicle markets, including vehicle
inspections, title storage, marshalling and rail yard management, (c) a computerized vehicle
tracking service for Toyota which tracks over 1.5 million units per year, (d) vehicle processing
services at ports and inland distribution centers, and (e) logistics and distribution services to the
Mexican automobile industry (offered through its subsidiaries, Axis Logistica and ARETA SRL
(neither are Debtors)). The Axis Group operates 52 terminals located in the United States,
Canada and Mexico.
Relief Requested
4. By this Motion, Axis seeks an order from this Court authorizing it to enter into a
certain Lease Agreement with NYC (the "Landlord") to lease approximately seventy-four (74)
acres of land and the improvements thereon (the "Premises") on the terms set forth on the Lease
Agreement attached hereto as Exhibit A (the "Lease").
5. Axis will use and occupy the Premises for the development of a maritime
automobile processing facility handling newly manufactured domestically produced vehicles,
imported new vehicles, and pre-owned vehicles. Vehicles will arrive at the facility by truck,
barge and deep sea vessels. The lease contains an inducement to reduce the truck traffic in the
New York metropolitan area in the form of rent credits.
6. The salient terms of the Lease are as follows:
Premises: 74 Acres at the South Brooklyn Marine Terminal in the
Borough of Brooklyn, city of New York, state of New York, Block 662,
portion of Lots 1 and 155.
Initial Term: 15 years.
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Initial Annual Base Rent: For period beginning on the Commencement
Date and ending on the day immediately preceding the two (2) year
anniversary of the date that Landlord has delivered the entire Premises to
Tenant as required under this Lease and Landlord's Work has been
completed with respect to the entire Premises in accordance with the
Development Plan, Tenant shall pay Annual Base Rent in the amount of
$1.00 per square foot.
Tenant's Construction Obligations: Tenant will construct and install two
security guardhouses; a carwash building and systems; a trucker support
building; office and administration.
Basis for Relief
7. Axis has determined that it would be advantageous to operations to secure a
leasehold interest in the Premises. Axis has the ability to perform all of the terms, provisions and
conditions of the Lease.
8. After carefully investigating the real estate market in the area and viewing other
possible commercial spaces available for rent, Axis has determined that the rent for Premises is a
good value.
9. The Lease is necessary to the success of Axis' bankruptcy case and is in the best
interests of Axis' estate and its creditors as it will enable Axis to develop a strong maritime
transport and automobile processing facility central to New Y ark City.
10. Section 363(c)(l) of the Bankruptcy Code provides that a debtor-in-possession
may enter into a transaction "in the ordinary course of business, without notice or a hearing, and
may use property of the estate in the ordinary course of business without notice or a hearing." 11
U.S.C. 363(c)(l).
11. Section 363(b)(1) of the Bankruptcy Code provides that a debtor-in-possession
"after notice and a hearing, may use, sell, or lease, other than in the ordinary course of business,
property ofthe estate." 11 U.S.C. 363(b)(1) and 1107(a).
- 3 -
12. While Section 363(b) of the Bankruptcy Code does not specify a standard to
guide courts in determining when it is appropriate to authorize a debtor's sale or disposition of
assets, courts have applied Section 363 to require such disposition or sale to be in the sound
business judgment of the debtor. See Official Comm. of Unsecured Creditors of LTV Aerospace
& Def. Cov. v. LTV Corp. (In re Chateaugay Corp.), 973 F.2d 141 (2d Cir. 1992) (holding that,
to grant a debtor's application under 363(b), a judge must find that the evidence presents a
good business reason to grant such application).
13. Axis believes that entering into the Lease with NYC is in the ordinary course of
business within the meaning of Bankruptcy Code Section 363(c) and not subject to Court
approval. In an abundance of caution, however, to the extent that entering into the Lease is not
deemed to be within their ordinary course of business, Axis seeks authority under Section 363(b)
to enter into the Lease.
14. Axis has strong business justifications for the relief sought herein. Accordingly,
the Court should authorize Axis to enter into the Lease with NYC.
15. Bankruptcy Rule 6004(g) provides that an "order authorizing the use, sale or lease
of property ... is stayed until the expiration of 10 days after the entry of the order, unless the
court orders otherwise." Fed. R. Bankr. P. 6004(g). Axis requests that the order on the Motion
be effective immediately and that the Court rule that the ten (1 0) day stay pursuant to Bankruptcy
Rule 6004(g) does not apply.
Notice
16. Notice of this Motion has been provided to those entities on the Master Service
List (as such term is defined in the Order Establishing Notice Procedures entered on August 2,
2005 in these jointly administered cases) and upon the City of New York by U.S. mail. In light
of the nature of relief requested, Axis submits that no further notice is necessary.
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Conclusion
WHEREFORE Axis Group, Inc. respectfully request entry of an order granting the
relief requested herein and granting it such other and further relief as may be just.
This 29th day of August 2006.
Is/ Harris B. Winsberg
TROUTMAN SANDERS LLP
600 Peachtree Street, N.E. -Suite 5200
Telephone No.: (404) 885-3000
Facsimile No.: (404) 885-3900
ATTORNEYS FOR AXIS GROUP, INC.
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Document P ~ e 8 of 146
EXHIBIT A
LEASE AGREEMENT
between
THE CITY OF NEW YORK
DEPARTMENT OF SMALL BUSINESS SERVICES,
Premises :
LANDLORD,
and
AXIS GROUP, INC.,
TENANT
74 Acres at the South Brooklyn Marine Terminal in
the Borough of Brooklyn, city of New York, state
ofNew York, Block 662, portion ofLots 1 and 155
Dated as of , 2006
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AGREEMENT OF LEASE ("Lease") made as of 2006, by and
between THE CITY OF NEW YORK, a municipal corporation of the State of New York, acting
by and through its COMMISSIONER OF SMALL BUSINESS SERVICES of the CITY OF
NEW YORK DEPARTMENT OF SMALL BUSINESS SERVICES, having an address at 110
William Street, New York, New York 10038, as landlord (the "City"), and AXIS GROUP, INC.,
a corporation organized and validly existing under the laws of the State of Georgia, having its
principal office at 160 Clairemont Avenue, Suite 400, Decatur, Georgia 30030, as tenant
("Tenant").
WHEREAS, the City is the owner of certain land (the "Land"), consisting of 74
acres, including a public berth area at the 39th Street Pier consisting of approximately 5 acres
(the "Public Berth Area"), and the Improvements (hereinafter defined) situated thereon, which
Land and Improvements are located at the South Brooklyn Marine Terminal in the Borough of
Brooklyn, city ofNew York and state ofNew York (the "SBMT"), as more particularly set forth
in Exhibit A hereto (the Land and the Improvements are hereinafter collectively referred to as
the "Premises"); and
WHEREAS, Landlord desires to promote commercial activities at the Premises
so as to produce new employment opportunities and generate new revenues for the City; and
WHEREAS, Tenant desires to undertake commercial activities at the Premises,
as specified hereinafter in this Lease, which further Landlord's purposes for the Premises; and
WHEREAS, Landlord and Tenant desire to enter into this Lease with respect to
the Premises and to cause the Premises to be used in accordance with the provisions hereof; and
WHEREAS, pursuant to that certain Amended and Restated Maritime Contract
dated as of July I, 2005, between the City of New York and the New York City Economic
Development Corporation, a local development corporation organized under Section 1411 of the
New York State Not-for-Profit Corporation Law (together with its successors, "Lease
Administrator"), Lease Administrator will administer this Lease and act for and on behalf of
Landlord with respect to Landlord's proprietary interest, and certain of its rights and obligations
as Landlord, under this Lease; and
WHEREAS, some or all of Lease Administrator's functions hereunder may, in
Lease Administrator's sole discretion, be performed by Apple Industrial Development Corp.
("Apple"), a corporation organized under the Not-for-Profit Corporation Law ofNew York State
that manages certain properties for and on behalf of Lease Administrator.
NOW THEREFORE, it is hereby mutually covenanted and agreed by and
between the parties hereto that this Lease is made upon the terms, covenants, and conditions
hereinafter set forth.
ARTICLE 1
CERTAIN DEFINITIONS
Section 1.01. Definitions. As used herein, the following terms shall have the
following meanings (all terms defined in this Article 1 or in other provisions of this Lease in the
singular to have the same meanings when used in the plural and vice versa):
"Accounting Principles" means the then current generally accepted accounting
principles.
"Affiliate" means an entity which directly, or indirectly through one or more
intermediaries, controls, is controlled by or is under common control with Tenant.
"Alterations" has the meaning provided in Section 16.01(a) hereof.
"Annual Base Rent" has the meaning provided in Section 4.01 hereof.
"Apple" has the meaning provided in the Preamble hereof.
"Approved Plans and Specifications" has the meaning provided in Section 17.02
hereof.
"Architect" means an architect, architectural firm, professional engineer, or
combined practice or association licensed and registered in the State of New York, selected by
Tenant and approved by Lease Administrator, which approval shall not be unreasonably denied,
withheld or delayed.
"Base Index" means the Price Index for the calendar month that includes the
Commencement Date.
"Building" means the Facility, any enclosed space or any other building, as is
commonly defined intended to be used on a regular or long term basis by Tenant constructed
within [building] materials (i.e., not a canvas tent)
"Business Day" means any day other than a Saturday, Sunday, legal holiday, a
day on which Lease Administrator or the City is closed for business, or a day on which banking
institutions in New York City are authorized by law or executive order to close.
"Casualty" has the meaning provided in Section 12.02(a) hereof.
"CEQR" means the City Environmental Quality Review procedure established by
Executive Order 91, as amended, as referred to in Section 2.04.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act, 42 USC 9601 et. seq.
. 2.
"Certified Public Accountant" means an independent certified public accountant
or accounting firm selected by Tenant and approved by Landlord, such approval not to be
unreasonably withheld or delayed; provided that, Landlord's approval shall not be required if any
stock of Tenant is sold through a nationally recognized securities exchange which is regulated by
the S.E.C, or if Tenant is subject to the jurisdiction of the S.E.C. Notwithstanding the foregoing,
Tenant shall give Landlord written notice of any Certified Public Accountant selected by Tenant
prior to commencing any such accountant services which will pertain to this Lease. As of the
date hereof, Landlord acknowledges that KPMG has been selected by Tenant as its accounting
firm.
"Charter" means the New York City Charter.
"City" means The City ofNew York, a municipal corporation of the State ofNew
York.
"Commence Construction of Tenant's Work" or "Commencement of
Construction of Tenant's Work" means Tenant shall have done, or caused to have done all ofthe
following: (A) all required site testing work, if any, shall have been substantially completed; (B)
Construction Work relating to Tenant's Work shall have been commenced, and (C) a binding
contract for any material in an amount in excess of $50,000 to be incorporated into Tenant's
Work for the Project shall have been entered into and a copy of such contract shall have been
delivered to Landlord
"Commencement Date" has the meaning provided in Section 2.02(a) hereof.
"Community Projects Reserve Fund" has the meaning provided in Section 4.03
hereof.
"Comptroller" has the meaning provided in Section 26.02(b) hereof.
"Condemnation Restoration" has the meaning provided in Section 13.01(d)
hereof.
"Construction Contract" has the meaning provided in Section 17.15(b).
"Construction Commencement Date" means, with respect to the Construction
Work to be performed by Tenant pursuant to the Development Plan, the date upon which
Tenant's Work begins for each Phase after Landlord's Work has been completed for both Phases
A and B and Landlord has provided Tenant with thirty (30) days prior written notice of such
completion; provided that Tenant shall, subject to Unavoidable Delays, use commercially
reasonable efforts to commence Construction Work Tenant is required to perform pursuant to the
Development Plan with respect to Phases A and B within sixty (60) Business Days after the date
upon which Tenant has received such notice and after completion of Landlord's Work for both
Phases A and B. With respect to Phases C and D, Tenant will not be required to start any
Construction Work in either phase until sixty (60) Business Days after the date that Landlord has
completed Landlord's Work for such phase and has provided Tenant with thirty (30) days written
notice of such completion.
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"Construction Work" means any construction or construction work performed by
or on behalf of Tenant during the Term, including, without limitation, any Tenant's Work,
Alteration, Restoration, or other capital improvement, or other construction work performed in
connection with the use, maintenance or operation of the Premises, but excluding any work
performed by Landlord.
"Date of Taking" has the meaning provided in Section 13.01(c) hereof.
"Dedicated Automobile-Related Vessels" has the meaning provided in Section
4.02 hereof.
"Default" means any condition or event, or failure of any condition or event to
occur, which constitutes, or after the giving of notice or the lapse of time, or both, would
constitute an Event of Default.
"Development Plan" means Tenant's plan for the development and use of the
Premises, dated March 15, 2006, which is hereby approved by Landlord, describing Tenant's
plans for its Construction Work, the Tenant Work and the operation of the Facility at the
Premises. The Development Plan includes an agreed upon phasing and development schedule.
Tenant has also provided to Landlord a detailed financing plan, which has been deemed
satisfactory by Landlord, demonstrates Tenant's sources and uses of funds, as well as proof of
debtor in possession financing commitments from lending institutions and/or equity
commitments from partners and investors, for the development and operation of the Project, and
has been approved by all legal authorities, including federal bankruptcy court, and pursuant to all
laws applicable to Tenant or its business.
"Director" has the meaning provided in Section 27.01 hereof.
"Division" has the meaning provided in Section 27.01 hereof.
"Division of Labor Services Al!reement" has the meaning provided in Section
27.02(e) hereof.
"Dockage" has the meaning provided in Section 4.02 hereof.
"DWDA Period" and "DWNA Period" shall have the respective meanings given
in Section 4.02 hereof.
"Employment Report" has the meaning provided in Section 27 .02(D hereof.
"Environmental Study" means the study of the environmental conditions at the
Premises conducted by Lease Administrator, on behalf of Landlord, as further described in
Section 2.04 hereof.
"Equioment" means all property (other than Tenant's Trade Fixtures) now or
hereafter incorporated in or attached to and used or usable in the operation of the Premises by
virtue of Tenant's Work, including, but not limited to, all machinery, apparatus, devices, motors,
engines, dynamos, compressors, pumps, boilers and burners, heating, lighting, plumbing,
-4 -
ventilating, air cooling and air conditioning equipment, chutes, ducts, pipes, tanks, fittings,
conduits and wiring, incinerating equipment, hoists, communication equipment, and all additions
or replacements thereof (other than Tenant's Trade Fixtures).
"E.O. 50" has the meaning provided in Section 27.01 hereof.
"Expiration Dates" has the meaning provided in Section 2.02(a) hereof.
"Event of Default" has the meaning provided in Section 29.01 hereof.
"Exempt Materials" means any and all construction materials and all fixtures and
personal property (other than Tenant's Trade Fixtures) which are installed as an integral
component part of any portion of the Premises by Tenant in connection with Tenant's Work.
"Facility" means any building or other improvement, either separately or
collectively created by Tenant, or Landlord, pursuant to Landlord's Work, at the Premises.
"Floatbridge" has the meaning given in Article 7 hereof.
"Floatbridge Fee" has the meaning given in Section 4.02(0) hereof.
"Final Completion' has the meaning provided in Section 17.02 hereof.
"Final Expiration Date" has the meaning provided in Section 2.02(a) hereof.
"GAAP" means "generally accepted auditing standards," as defined in federal
law, or any successor standard thereto.
"Governmental Authority" or "Authorities" means the United States of America,
the State of New York, New York City and any agency, department, legislative body,
commission, board, bureau, instrumentality or political subdivision of any of the foregoing, now
existing or hereafter created, having or claiming jurisdiction over the Premises, or any portion
thereof, or any street, road, avenue, sidewalk or water comprising a part of, or immediately
adjacent to, the Premises, or any vault in or under the Premises.
"Hazardous Materials" means (i) any "hazardous waste" as defined under the
Resource Conservation and Recovery Act, 42 U.S.C. Section 9601 et seq., or (ii) "hazardous
substance" as defined under the Comprehensive Environmental Response, Compensation, and
Liability Act, 42 U.S.C. Section 6901 et seq., or (iii) "hazardous materials" as defined under the
Hazardous Materials Transportation Act, 49 U.S.C. Section 5101 et seq., or (iv) "hazardous
waste" as defined under New York Environmental Conservation Law Section 27-0901 et seq., or
(v) "hazardous substance" as defined under the Clean Water Act, 33 U.S.C. Section 1321 et seq.,
or (vi) "petroleum" within the meaning of Article 12 ofthe New York State Navigation Law.
"High End Commercial Maritime Use" has the meaning provided in Section 4.02
hereof.
"Imposition" or "Impositions" has the meaning provided in Section 5.02 hereof.
5
"Imprest Account" means the account to be established by Tenant and maintained
by Landlord upon the completion of Phases A and B.
"Improvements" means any and all structures, Structural Improvements or other
improvements, including the Facility, and appurtenances of every kind and Buildings, now
existing on the Premises or hereafter erected, constructed or placed upon or under the Premises,
including Improvements in and under water, or any portion of the Premises, and any and all
alterations, replacements and substitutions of the foregoing, including, but not limited to,
Landlord's Work, Tenant's Work, landscaping, and all Equipment incorporated in or attached to
the Premises at any time during the Term. Improvements shall not include Trade Fixtures.
"Indemnitees" has the meaning provided in Section 23.02 hereof.
"Index" means the Dodge Building Cost Index or such other published index of
construction costs which shall be selected from time to time by Landlord or Lease Administrator,
but not more often than once every three years, provided that such Index shall be a widely
recognized measure of construction costs in the insurance industry and appropriate to the type
and location of the improvements to the Premises.
"Initial Term" has the meaning provided in Section 2.02(a) hereof.
"Institutional Lender" means a savings bank, a savings and loan association, a
commercial bank or trust company (whether acting individually or in a fiduciary capacity), an
insurance company organized and existing under the laws of the United States or any state
thereof, a religious, or educational institution, a federal, state or municipal employee's welfare,
benefit, pension or retirement fund, any governmental agency or entity insured by a
governmental agency, or any combination of the preceding; provided, that each of the above
entities shall qualify as an Institutional Lender only if it shall (a) be subject to the jurisdiction of
the courts of the State of New York in any actions pertaining to or arising in connection with this
Lease, (b) have net assets of not less than $300,000,000, or such lower amounts as are deemed
acceptable in Landlord's or Lease Administrator's reasonable discretion, and (c) it is not a
Prohibited Person.
"Land" has the meaning provided in the Preamble hereof.
"Landlord's Work" has the meaning provided in Article 7 hereof.
"Late Charge Rate" means the rate of interest charged at the time in question by
the City for delinquent Taxes
"Lease" means this Agreement of Lease and all exhibits hereto and all
amendments, modifications and supplements thereof.
"Lease Administrator" has the meaning provided in the Preamble hereof.
"Lease Year" means each twelve (12) month period falling within the Term
measured initially from the Commencement Date provided that, if the Commencement Date
occurs on a date other than the first day of a calendar month, the first Lease Year shall include
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the partial calendar month in which the Commencement Date occurs plus the immediately
succeeding twelve (12) calendar months.
"Lien" means any lien (statutory or otherwise), including, but not limited to,
mechanic's, laborer's, materialman's and public improvement liens, security interest, mortgage,
deed of trust, priority, pledge, charge, conditional sale, title retention agreement, financing lease
or other encumbrance or similar right of others with respect to the Premises.
"Non-Automobile Carrying Vessel" has the meaning provided in Section 4.02
hereof.
"Non-High End Commercial Maritime Use" has the meaning provided in Section
4.02 hereof.
"Non-Vessel Throughput Fees" has the meaning provided in Section 4. 02 hereof.
"Orders" has the meaning provided in Section 27.01 hereof.
"Person" means an individual, corporation, partnership, joint venture, estate, trust,
unincorporated association; any federal, state, county or municipal government or any bureau,
department or agency thereof; and any fiduciary acting in such capacity on behalf of any of the
foregoing.
"PHASES A, B, C and D" have the respective meanings provided m the
Development Plan. "Phase" refers to one or all of such phases, as the context indicates.
"PILOT" has the meaning provided in Section 4.05(a) hereof.
"Port Authority" means the Port Authority ofNew York and New Jersey.
"Port Authority Tariff' has the meaning given in Section 4.02 hereof.
"Premises" has the meaning provided in the Preamble hereof.
"Price Index" means the Consumer Price Index for All Urban Consumers
published by the Bureau of Labor Statistics of the United States Department of Labor for the
New York-Northeastern New Jersey Area, all items (1982-1984=100), or any successor index
thereto.
"Prohibited Person" means:
(a) Any Person (1) that is in default or in breach, beyond any applicable grace
period, of its obligations under any material written agreement with the
City or (2) that directly or indirectly controls, is controlled by, or is under
common control with a Person that is in default or in breach, beyond any
applicable grace period, of its obligation under any material written
agreement with the City in each case unless such default or breach has
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been waived in writing by the entity with which such agreement was
made.
(b) Any Person (1) that has been convicted in a criminal proceeding for a
felony or any crime involving moral turpitude or that is an organized
crime figure or is reputed to have substantial business or other affiliations
with an organized crime figure, or (2) that directly or indirectly controls, is
controlled by, or is under common control with a Person that has been
convicted in a criminal proceeding for a felony or any crime involving
moral turpitude or that is an organized crime figure or is reputed to have
substantial business or other affiliations with an organized crime figure.
The determination as to whether any Person is an organized crime figure
or is reputed to have substantial business or other affiliations with an
organized crime figure, or directly or indirectly controls, is controlled by,
or is under common control with a Person that is an organized crime
figure or is reputed to have substantial business or other affiliations with
an organized crime figure shall be within the reasonable discretion of the
City.
(c) Any government, or any Person that is directly or indirectly controlled
(rather than only regulated) by a government, that is finally determined to
be in violation of (including, but not limited to, any participant in an
international boycott in violation of) the Federal Export Administration
Act of 1979, as amended, or any successor statute, or the regulations
issued pursuant thereto, or any government that is, or any Person that,
directly or indirectly, is controlled (rather than only regulated) by a
government that is subject to the regulations or controls thereof. Such
control shall not be deemed to exist in the absence of a determination to
that effect by a Federal court, beyond right of appeal, or by the Federal
government or the appropriate agency thereof.
(d) Any government, or any Person that, directly or indirectly, is controlled
(rather than only regulated) by a government, the effects of the activities
of which are regulated or controlled pursuant to regulations of the United
States Treasury Department or executive orders of the President of the
United States of America issued pursuant to the federal Trading with the
Enemy Act of 1917, as amended.
(e) Any Person that is in default in the payment to the City of any real estate
taxes, sewer rents or water charges totaling more than $10,000 and has
been given written notice of such default (or any Person that directly
controls, is controlled by, or is under common control with a Person in
such default), unless such default is then being contested in good faith in
accordance with the law or an agreed payment plan has been approved by
the office of the Commissioner of Finance.
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,'. ~ ~
(f) Any Person (1) that has owned at any time in the preceding three (3) years
any property which, while in the ownership of such Person, was acquired
by the City by in rem tax foreclosure, other than a property in which the
City has released or is in the process of releasing its interest pursuant to
the Administrative Code of the City, or (2) that, directly or indirectly
controls, is controlled by, or is under common control with a Person that
has owned at any time in the preceding three (3) years any property which,
while in the ownership of such Person, was acquired by the City by in rem
tax foreclosure, other than a property in which the City has released or is
in the process of releasing its interest pursuant to the Administration Code
ofthe City.
"Project " means the development of the Premises by Tenant in accordance with
the provisions of this Lease, including, , but not limited to, the uses and purposes described in
Article 9 ofthis Lease.
"Public Berth Area" as defined in the Preamble.
"Questionnaire" has the meaning provided in Section 26.04 hereof.
"Regulations" has the meaning provided in Section 27.01 hereof.
"Renewal Notice" has the meaning provided in Section 2.02(b) hereof.
"Renewal Term" has the meaning provided in Section 2.02(a) hereof.
"Rental" means all of the amounts payable by Tenant pursuant to this Lease,
including, without limitation, Annual Base Rent, Dockage and Wharfage Fees, Impositions,
PILOT, the amounts, if any, payable pursuant to Article 23 hereof and any other sums, costs,
expenses or deposits which Tenant is obligated to pay and/or deposit with Landlord pursuant to
the terms, covenants and conditions of this Lease.
"Replacement Value" means the full costs of replacing the Premises to the extent
that such costs can be covered by an "All Risk" insurance policy. The Replacement Value ofthe
Premises shall be adjusted on each anniversary of the date of Substantial Completion throughout
the Term by a percentage equal to the percentage change in the Index in effect on such
anniversary date as compared to the Index in effect on the prior anniversary of Substantial
Completion of Landlord's Work.
"Requirements" means: (i) any and all laws, rules, regulations, orders, ordinances,
statutes, codes, executive orders, resolutions and requirements of all Governmental Authorities
applicable (now or at any time during the Term) to the Premises, or any street, road, avenue or
sidewalk comprising a part of the Premises, or in front of or adjacent to the Premises to the
extent the owner of the Premises would have legal responsibility therefore, or any vault in or
under the Premises (including, without limitation, the New York City Noise Control Code
(N.Y.C. Admin. Code Sections 24-201, et seg.), as amended and the regulations of the
Department of Environmental Protection (N.Y.C. Admin. Code Sections 24-230, 24-242), the
Building Code of New York City (Admin. Code Section 27-101 et. seq.) and the laws, rules,
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regulations, orders, ordinances, statutes, codes and requirements of any applicable Fire Rating
Bureau or other body exercising similar functions, as the same may be amended from time to
time); (ii) any and all provisions and requirements of any property, casualty or other insurance
policy required to be carried by Tenant under this Lease; (iii) all final actions taken by the City,
pursuant to Section 1301 of the City Charter with respect to the Premises; and (iv) any
Certificate of Completion issued for the Improvements as then in force.
"Restoration" means either a Casualty Restoration or a Condemnation
Restoration, or both.
"Restoration Costs" has the meaning provided in Section 12.03(b) hereof.
"Restoration Funds" means (a) any moneys that may be received by Lease
Administrator pursuant to the provisions of Sections 11.02(a), 11.02, or 13.03 hereof, as a result
of property loss or condemnation, together with the interest, if any, earned thereon, and (b) the
proceeds of any security deposited with Lease Administrator pursuant to Sections 12.03 and
12.05 hereof, together with the interest, if any, earned thereon.
"Revised Program" has the meaning provided in Section 27.05 hereof.
"Scheduled Completion Date" means, with respect to the Tenant's Work, a date
which is a reasonable time for completion of any such work, subject to Landlord's reasonable
prior consent thereto.
"SEC" means the federal Securities Exchange Commission or any successor in
function thereto.
"South Brooklyn Marine Terminal" or "SBMT" has the meaning provided in the
Preamble hereof.
"State" means the State ofNew York.
"Structural Improvement" means any type of improvement to the foundation or
infrastructure of the Premises.
"Substantially All of the Premises" has the meaning provided in Section 13.01(b)
hereof.
"Substantial Completion" or "Substantially Completed" has the meaning provided
in Section 17.02 hereof.
"Taking" has the meaning provided in Section 13.0l(a) hereof.
"Taxes" means real property taxes assessed and levied against the Premises or any
part thereof (or, if the Premises or any part thereof or the fee owner thereof is exempt from such
real property taxes then the real property taxes which would be so assessed and levied if not for
such exemption) pursuant to the provisions of Chapter 58 of the Charter of the City, and Title 11,
. 10.
Chapter 2 of the Administrative Code of the City, as the same may now or hereafter be amended,
or any statute or ordinance in lieu thereof in whole or in part.
"Tenant" has the meaning provided in the Preamble hereof.
"Tenant's Work" means the Improvements and Trade Fixtures described in the
Development Plan, which Tenant must construct or install at the Premises substantially in
accordance with Approved Plans and Specifications.
"Tenant's Work Cost" has the meaning provided in the Development Plan or as
otherwise stated to Landlord by Tenant.
"Term" has the meaning provided in Section 2.02(a) hereof.
"Throughput" has the meaning provided in Section 4.02 hereof.
"Throughput Amount" has the meaning provided in Section 4.02 hereof.
"Throughput Annual Report" has the meaning provided in Section 4.02 hereof.
"Throughput Excess Amount" has the meaning provided in Section 4.02 hereof.
"Throughput Monthly Report" has the meaning provided in Section 4.02 hereof.
"Title Matters" has the meaning provided in Section 2.01 hereof.
"Trade Fixtures" means the personal and other removable property (including, but
not limited to, furniture, inventory, machinery, equipment, vehicles, vessels and operating
facilities) of or utilized by Tenant in its trade or business on or at the Premises.
"Unavoidable Delays" means delays attributable to any and all causes beyond
Tenant's reasonable control, including, without limitation, delays resulting from actions of
Landlord (provided such are not themselves the result of actions by Tenant), governmental
restrictions, orders of any court of competent jurisdiction, labor disputes (including strikes,
slowdowns and similar labor problems), accidents, mechanical breakdown, shortages or inability
to obtain labor, fuel, steam, water, electricity or materials (for which no substitute is readily
available at a comparable price), acts of God (including inordinately severe weather conditions),
mitigation of Hazardous Substances, enemy action, civil commotion, fire or other casualty, of
which Tenant has given Landlord notice within thirty (30) days after Tenant knows of same.
"Wharfage" has the meaning provided in Section 4.02 hereof.
"Vessel" has the meaning provided in Section 4.02 hereof.
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ARTICLE2
DEMISE OF PREMISES AND TERM
Section 2.01.
(a) Demise of Premises. Landlord does hereby lease to Tenant, and Tenant
does hereby hire and take from Landlord, the Premises together with all easements,
appurtenances and other rights and privileges now or hereafter belonging or appertaining to the
Premises, subject to the encumbrances, exceptions, reservations, conditions of title and other
matters affecting Landlord's interest in the Premises whether or not of record, set forth in Exhibit
B hereto (the "Title Matters"). Tenant shall make use of the Premises solely for the purposes set
forth in Article 9. Subject to the provisions of this Lease, including, but not limited to, the
provisions of Section 25.01 hereof, Landlord shall have the unrestricted right to further
encumber its fee interest in the Premises.
Phasing. The demise of the Premises to Tenant as provided in Section 2.01(a) hereof shall occur
on the Commencement Date (as hereinafter defined). However, various portions, or Phases, of
the Premises shall be available for Tenant's use in accordance with the Development Plan.
Subject to the provisions of Section 4.04, the obligations of Tenant under this Lease including,
without limitation, Annual Base Rent, Additional Rent and Impositions with respect to: (i) any
Phases of the Premises on which Landlord's Work is ongoing; and (ii) certain portions of the
Premises occupied by third parties, shall apply to such portions of the Premises as and when
specifically provided in Section 4.04.
Section 2.02. Initial Term and Renewal Terms.
(a) Term. The initial term of this Lease ("Initial Term") shall commence. at
12:01 a.m., fifteen (15) Business Days following the date first above written (such date is
hereinafter referred to as the "Commencement Date"), at which date Tenant shall take possession
of the Premises; provided that the obligations of Tenant with respect to the Premises shall apply
as set forth in Section 2.01(b). Phase B and Phase C (without Landlord's Work completed
thereon), shall be available for Tenant's use from the Commencement Date. The Initial Term
shall expire at midnight on December 31 following the fifteenth (15th) anniversary of the date
that Landlord has delivered to Tenant Phases B and C (without having completed Landlord's
Work thereon) and Phase A,}. with Landlord's Work completed for Phase A (the "First Expiration
Date"), subject to Landlord's right to sooner terminate this Lease as hereinafter provided.
Tenant shall have the right to extend the Initial Term for one (1) additional period of five (5)
years (the "Renewal Term") (the Initial Term and the Renewal Term are referred to collectively
as the "Term"), upon the same terms and conditions, including the amounts payable for Annual
Rent and Additional Rent, as set forth in Article 4 hereof, as are applicable during the Initial
Term. If Tenant exercises its right to renew the Initial Term, the Renewal Term will commence
immediately upon expiration of the Initial Term and expire at midnight of the day immediately
preceding the fifth (5th) anniversary of the commencement of the Renewal Term (the "Final
Expiration Date") (the First Expiration Date and the Final Expiration Date and any other date on
which Landlord has the right to terminate this Lease as provided herein, are collectively referred
to as the "Expiration Date" or "Expiration Dates").
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....
If this Lease is terminated in accordance with the provisions hereof prior to the Expiration Date,
then the end of the Term shall be the date this Lease is so terminated, and such date shall be the
Expiration Date of this Lease to the same effect as if such date had been the Expiration Date as
set forth herein.
(b) Renewal Notice. If Tenant desires to extend the Initial Term as provided
above, Tenant shall, in each case, give Landlord notice thereof (the "Renewal Notice") not less
than six (6) months prior to the then current Expiration Date. In the event that, for the Renewal
Term, (i) Tenant fails to give Landlord a Renewal Notice within the period specified in this
Section 2.02(b), then Tenant shall have waived or forfeited its right to extend this Lease for the
Renewal Term and this Lease shall expire on the then current Expiration Date. No Renewal
Notice shall be effective if at the time Renewal Notice is given, any default has occurred and is
continuing beyond any applicable grace period under the Lease. Promptly, but no later than
sixty (60) days following receipt of the Renewal Notice (and so long as Tenant has complied
with the requirements of this Section 2.02(b), Landlord shall provide written notice to Tenant
confirming that the term of the Lease has been extended in accordance with the requirements of
this Section 2.02(b)), but Landlord's failure to provide such notice shall not affect the validity of
Tenant's exercise of its renewal right.
(c) Notwithstanding anything in this Lease which may provide or be
construed to the contrary, in addition to any other rights of Landlord to terminate this Lease as
provided herein, Landlord shall have the right, in its sole discretion, to terminate the Lease at the
end of the Initial Term if a container shipping terminal is in construction or operation in Sunset
Park, Brooklyn, New York, on such date; Landlord has determined that market conditions
warrant expansion of a container port; and Landlord has determined that such expansion is
necessary for the economic development of the City and cannot be accomplished adequately
without use of some or all of the Premises.
(d) If Landlord shall exercise its right to terminate this Lease in accordance
with the terms hereof, Tenant shall, immediately upon the occurrence of the date established by
Landlord as the Expiration Date, surrender the Premises to Landlord in the manner set forth in
Article 30 hereof and otherwise comply with the requirements of that Article. In the event that
this Lease is terminated prior to the Expiration Date, the end of the Term shall be on the date this
Lease is so terminated, and such date shall be the expiration date of this Lease to the same effect
as if such date had been the Expiration Date as set forth herein.
Section 2.03. Addition to Premises. Throughout the Term of the Lease, in the
event that any additional land or improvement(s) within the SBMT, not included in the Premises
under this Lease, shall become available for lease by Landlord, provided the Expiration Date has
not then occurred or is not then contemplated to occur within one (1) year from the proposed
commencement date of the leasing of such additional land and/or improvements, Landlord shall
not lease or otherwise enter into any occupancy for such land and/or improvements unless
Landlord shall first offer to Tenant the right to lease such additional property on the same terms
and conditions as pertain to the Premises under this Lease. In the event Tenant becomes lessee
of the additional property, Tenant shall have the right to add such additional property to the
Premises leased to Tenant under all of the terms of this Lease, including the business terms
contained herein, unless modifications with respect thereto are agreed upon by both parties. In
- 13 -
the event Tenant does not become the lessee of any such additional property, then Landlord
shall, in its discretion, proceed with the leasing of such additional land and/or improvements to
any other party.
Section 2.04. Premises "AS IS."
(a) Tenant Takes AS IS. Except as otherwise provided in this Lease
including, without limitation, Article 7, Landlord and Tenant specifically acknowledge that
Landlord has commissioned the Environmental Study and provided a copy of same to Tenant,
and Landlord shall perform the remediation identified as being required pursuant to such study
prior to the Commencement Date. Except as otherwise provided in this Lease including, without
limitation, Article 7, Tenant hereby represents, warrants, acknowledges and agrees that Tenant
(i) has inspected the condition of the Premises to the full extent desired by Tenant; and (ii)
accepts the Premises "AS IS." In the event that it is determined at any time during the Term that
Hazardous Substances are present at the Premises (or any portion thereof) (x) through no fault of
Tenant and which were not introduced by Tenant, its agents, subcontractors, representatives, or
other invitees, or through Tenant's operations at the Premises; or (y) and the presence of such
Hazardous Substance(s) at the Premises predates the Commencement Date, Landlord shall be
obligated to remediate any such condition to the extent required by applicable law.
(b) Pre-existing Conditions. With respect to claims relating to Hazardous
Substances existing at the Premises prior to the Commencement Date, Landlord shall indemnify
and hold Tenant, its Affiliates and their respective directors, officers, employees, agents and
contractors harmless from and against any and all liabilities, suits, obligations, fines, damages,
penalties, claims, costs, charges and expenses, including, without limitation, court costs and
reasonable attorneys' fees and disbursements, that may be imposed upon, or incurred by, or
asserted against Tenant, its Affiliates or their respective directors, officers, employees, agents
and contractors by reason of any such claim, except where caused by the negligence or
intentional tortious acts of Tenant or its directors, officers, employees, agents and contractors.
The provisions of this Section (b) shall not limit Landlord's obligations pursuant to Section
2.04(a).
Section 2.05. Definition. For purposes of this Lease "Environmental Study"
means the following:
(a) Report of Survey Activities for Asbestos Containing Material at Metal
Canopy Structure, South Brooklyn Marine Terminal, Brooklyn, New York; prepared by TRC
Environmental Corp. for NYCEDC; report dated August 25, 2005.
(b) Phase II Soil Gas Survey and Surface Soil Sampling, South Brooklyn
Marine Terminal, Brooklyn, New York; prepared by TRC Environmental Corp. for NYCEDC;
letter dated June 22, 2005.
(c) Supplemental Site Investigation Report, South Brooklyn Marine Terminal,
Brooklyn, New York; prepared by TRC Environmental Corp. for NYCEDC; report dated April
2004.
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~ - ..
(d) Report of Phase II Environmental Site Assessment, South Brooklyn
Marine Terminal, Brooklyn, New York; prepared by TRC Environmental Corp. for NYCEDC;
report dated September 2002.
(e) Report of Asbestos and Lead Paint Assessment, South Brooklyn Marine
Terminal, Brooklyn, New York; prepared by TRC Environmental Corp. for NYCEDC, report
dated August 29, 2002; and the
(f) Phase I Environmental Site Assessment, South Brooklyn Marine
Terminal, Brooklyn, New York; prepared by TRC Environmental Corp. for NYCEDC, report
dated August 2002.
ARTICLE 3
CONDITIONS PRECEDENT
Section 3.01 Conditions Precedent. Notwithstanding anything contained in this
Lease to the contrary, Landlord and Tenant hereby agree that the obligations of Landlord and
Tenant pursuant to this Lease are conditioned upon and subject to:
(a) Governmental Review and Approval. Approval of Tenant in accordance
with the applicable governmental review and approval process including, but not limited to,
approval of Tenant based upon the information provided in the required VENDEX clearance
forms, Business Disclosure Statement, or Business Entity Questionnaire and the Principal
Questionnaire, whichever is applicable. The aforementioned documents shall be completed by
Tenant and submitted to Landlord prior to or upon execution of this Lease. Tenant represents
that the information provided in the required VENDEX clearance forms is true and accurate. In
the event there is a material change in the information provided therein, Tenant shall notify
Lease Administrator within fifteen (15) days of Tenant's acquiring knowledge of such change.
(b) City Council Authorization. The Council of The City of New York shall
have authorized the disposition of a leasehold interest in the Premises to Tenant for the purposes
set forth in this Lease.
(c) Tenant's Authorizations. The board of directors of Tenant shall have
authorized Tenant to enter into this Lease and the court presiding over the Current Bankruptcy
(as defined in Section 29.14) shall have approved the Lease.
ARTICLE4
ANNUAL BASE RENT; ADDITIONAL RENT; ABATEMENT; PILOT; NET LEASE
Section 4.0 1. Annual Base Rent.
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(a) Annual Base Rent. Commencing on the Commencement Date and
thereafter throughout the Term, Tenant shall pay to Landlord annual rent ("Annual Base Rent")
in the amounts and in the manner provided below.
(i) For period beginning on the Commencement Date and ending on
the day inunediately preceding the two (2) year anniversary of the date that Landlord has
delivered the entire Premises to Tenant as required under this Lease and Landlord's Work has
been completed with respect to the entire Premises in accordance with the Development Plan
(the "1st Rental Period"), Tenant shall pay Annual Base Rent in the amount of $1.00 per square
foot for useable vacant Land and for the Land on which the N Shed and J Shed are located and
for any portion of the Premises occupied by sub lessees, permittees or other occupants, except as
otherwise provided in Section 4.04 hereof. No Annual Base Rent shall be payable with respect
to Buildings or Improvements.
(ii) During the remainder of the Term, commencing on the day
immediately following the last day of the 1st Rental Period (the "2nd Rental Period"), Tenant shall
pay Annual Base Rent for all Land and Buildings (and any replacement thereof due to casualty
or otherwise), in the following amounts:
(A) For Vacant Land. $1.00 per square foot for vacant Land
and for any portion of the Land occupied by sub lessees, permittees or other occupants, except as
otherwise provided in Section 4.04 hereof. Such Annual Base Rent shall be subject to an annual
adjustment for inflation in accordance with Section 5.08 hereof. Notwithstanding the foregoing
and the provisions of Section 5.08, the increase in such Annual Base Rent shall not exceed 4% in
any one Lease Year or 10% for any three (3) consecutive Lease Years.
(B) For High End Commercial Maritime Use Improvements.
$4.00 per square foot for Buildings for a High End Commercial Maritime Use. Such Annual
Base Rent shall be subject to an annual adjustment for inflation in accordance with Section 5.08
hereof. Notwithstanding the foregoing and the provisions of Section 5.08, the increase in such
Annual Base Rent shall not exceed 4% in any one Lease Year or 10% for any three (3)
consecutive Lease Years.
(C) $1.00 per square foot for Buildings if no suitable High End
Commercial Maritime Use is available for such Buildings.
(D) In no event, shall Tenant pay Annual Base Rent with
respect to any Building(s) which Tenant does not use, except that Tenant shall pay Annual Base
Rent for theN Shed and the J Shed, which are part of Phase A, whether or not Tenant uses them.
(iii) Payment of Annual Base Rent. The Annual Base Rent payable by
Tenant shall be paid in monthly installments in the manner provided in Section 4.03 below. The
amount of the monthly installments of Annual Base Rent shall be equal to one twelfth (1112) of
the Annual Base Rent then in effect
(iv) Public Berth Area. Notwithstanding anything to the contrary in this
Lease, in no event shall any Annual Base Rent or Additional Rent be payable by Tenant with
respect to the Public Berth Area.
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; .
.
Section 4.02. Additional Rent.
(a) Additional Rent. Commencing on the Commencement Date and thereafter
throughout the Term, Tenant shall pay to Landlord additional rent ("Additional Rent") in the
amounts and in the manner provided below.
(i) Dockage and Wharfage Fees. Commencing on the
Commencement Date and thereafter throughout the Term, Tenant shall pay to Landlord, as
Additional Rent, Dockage and Wharfage Fees in accordance with the terms set forth below. The
amount of such fees shall be calculated as set out in Section 4.02(a)(i) and 4.02(a)(ii) hereof.
(A) Dockage and Wharfage Fees for Dedicated Automobile-
Related Vessels.
( 1) For each Lease Year during the period beginning on
the Commencement Date and ending on the Fifth Anniversary of
the date that Landlord has delivered possession of both portions of
the Premises known as Phases A and C with Landlord's Work with
respect thereto completed and otherwise as required by the terms
of this Lease (the "1st DWDA Period"), Tenant shall have the right
to keep all Dockage and Wharfage Fees which Tenant collects for
all Dedicated Automobile-Related Vessels calling at the Premises
and no Dockage and Wharfage Fees will be payable to Landlord.
(2) Except as otherwise provided in any other provision
of this Lease, commencing on the day immediately following the
last day of the 1st DWDA Period and ending on the Expiration
Date (the "2nd DWDA Period"), Tenant, shall pay to Landlord
Dockage and Wharfage Fees which Tenant collects for all
Dedicated Automobile Related Vessels calling at the Premises.
The amount of such fees payable to Landlord shall be such amount
as is provided in the Port Authority Tariff.
(B) Dockage and Wharfage Fees for Non-Automobile Carrying
Vessels.
(1) For each Lease Year during the period beginning on
the Commencement Date and ending on the Seventh Anniversary
of the date that Landlord has delivered vacant possession of both
portions of the Premises known as Phases A and C with Landlord's
Work with respect thereto completed (the 1st DWNA Period"),
Tenant shall have the right to keep all Dockage and Wharfage Fees
it collects for all Non-Automobile Carrying Vessels calling at the
Premises.
(2) Except as otherwise provided in any other provision
of this Lease, commencing on the day immediately following the
last day of the DWNA Period and ending on the Expiration Date
. 17-
(the "2nd DWNA Period"), Tenant, shall pay to Landlord Fifty
Percent (50%) of all Dockage and Wharfage Fees which Tenant
collects for all Non-Automobile Carrying Vessels calling at the
Premises. The original annual amount of such fees (i.e., before the
50% deduction is applied) payable to Landlord shall be such
amount as is provided in the Port Authority Tariff.
(C) Calculation of Dockage and Wharfage Fees: Port Authority
Tariff. Wherever in this Lease, including, but not limited to this Article 4, the terms "Dockage"
and "Wharfage" or "Dockage and Wharfage Fees" are referred to, such fees shall be in the
amount calculated according to and as provided in the Port Authority Tariff.
(ii) Non-Vessel Throughput Fee. Commencing on the first day
of the 2nd DWDA Period, Tenant shall pay Additional Rent (hereinafter called the "Non-Vessel
Throughput Fee") for each car or vehicle permitted to be on the Premises as a vehicle not
waterborne to the Facility. Tenant shall pay, as the Additional Rent, the Non-Vessel Throughput
Fee for each non-Vessel car or vehicle transported to the Premises on a one-time basis equal to
the product obtained by multiplying each such non-Vessel car or vehicle by eight dollars and
fifty cents ($8.50). Notwithstanding the foregoing, the Non-Vessel Throughput Fee shall not be
incurred with respect to a non-Vessel car or vehicle which departs the Premises not later than the
tenth day from the date the non-Vessel car or vehicle is first transported onto the Premises. Any
increases in such Non-Vessel Throughput Fee during the Term shall be calculated in accordance
with the Port Authority Tariff, as applicable to escalations for non-Vessel cars and vehicles.
Notwithstanding the foregoing and the provisions of Section 5.09, the increase in such Non-
Vessel Throughput Fee shall not exceed 4% in any one Lease Year or 10% for any three (3)
consecutive Lease Years. In no event shall there be any Non-Vessel Throughput Fee with
respect to transporting cars or vehicles from the Premises.
(iii) Certain Definitions .
For purposes of this Section 4.02 and for all other purposes under
this lease, the following terms shall have the respective definitions provided below:
(A) "Dedicated Automobile Related Vessel" shall mean
watercraft primarily used for the transportation of automobiles.
(B) "Dockage and Wharfage" shall be deemed to refer
to mean a Vessel berthing at the Premises, or used for mooring to a
Vessel so berthed.
(C) "Dockage and Wharfage Fee(s)" shall mean the fees
assessed under the Dockage and Wharfage provisions set forth in
Section 4.02 of this Lease for cars and vehicles arriving at the
Premises by Vessel, calculated pursuant to the Port Authority
Tariff for Vessels, as if the Premises were located at a Port
Authority Marine Terminal, subject to the credit provided for in
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Section 4.02 (F) captioned "Credits for Transit of Vehicles by
Water".
(D) "Guaranteed Minimum Throughput Amount" shall
mean the Throughput Amount which shall be based on a
Throughput of 60,000 vehicles, regardless of actual Throughput.
(E) "High End Commercial Maritime Use" shall mean
uses that generate significant rates of full-time employment per
unit of cargo either through value-added activities or short dwell
time (less than 90 days) of merchandise, goods, articles, or
whatever is transported or to be transported by watercraft.
(F) "Non Automobile Carrying Vessel" shall mean any
vessels, ships, boats, barges, floating structures or other devices
which are or may be used for the carriage, transportation, or
handling of property on or by water other than automobiles.
(G) ''Non High End Commercial Maritime Use" shall
mean uses that generate mainly part-time employment or result in
extended dwell time (more than 90 days) of merchandise, goods,
articles, or whatever is transported or to be transported by
watercraft.
(H) "Non-Vessel Throughput Fees" shall mean the fees
assessed under Section 4.02 (a)(ii) captioned, "Non-Vessel
Throughput Fee" of this Lease for cars and vehicles arriving at the
Premises by truck, rail, or other means, except Vessel.
(I) "Port Authority Tariff' shall mean the tariff known
as "Tariff FMC Schedule PA-l 0" including any amendments and
supplements thereto as shall be made, from time to time, by the
Port Authority or its successor in function or any other government
authority which issues such a tariff which is intended to supersede
the Port Authority Tariff.
(J) "Throughput" shall mean the number of vehicles
that pass over, onto, under the wharf or between Vessels, when
berthed, as well as the number of vehicles that are brought to the
facility by truck, rail car, or other means.
(K) "Throughput Amount" shall mean the total volume
of vehicles that pass through the facility by Vessel, truck, rail, or
other means.
(L) "Throughput Annual Report" shall mean a
statement rendered by Tenant to Landlord within 120 days
following the end of each Lease Year, certified by an officer of
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Tenant (and prepared as otherwise required pursuant to Section
26.01 hereof), showing the Throughput from the date of the
commencement of the Lease Year for which the Throughput
Annual Report is made through the last day of the last month of
such Lease Year.
(M) "Throughout Excess Amount" shall mean: (i) for
purposes of each Throughput Monthly Report, the amount for each
month by which the actual Throughput Amount for such month
exceeded the Guaranteed Minimum Throughput Amount
installment (i.e., 111ih of the Guaranteed Minimum Throughput
Amount) for such month and; (ii) for purposes of each Throughput
Annual Report, shall mean the amount for the preceding Lease
Year by which the actual aggregate Throughput Amount for such
Lease Year, exceeded the Guaranteed Minimum Throughput
Amount for such Lease Year. The Throughput Excess Amount
shall be certified as required in the Throughput Annual Report.
(N) Intentionally Omitted.
(0) Throughput Monthly Report" shall mean a
statement rendered within ten (10) Business Days of the last
Business Day of each Calendar Month certified by an officer of
Tenant showing the total actual number of Vessels docking, and
the number of cars and vehicles arriving by Vessel, truck, rail or
other means to the Premises during the preceding month and the
cumulative number of cars and vehicles arriving by Vessel, truck,
rail or other means to the Premises from the date of the
commencement of the Lease Year for which the Throughput
Monthly Report is made through the last day of the preceding
month. Each Throughput Monthly Report shall be accompanied
by monthly manifests to substantiate such report, showing the total
number of cars and vehicles arriving by Vessel, truck, rail or other
means to the Premises during the month for which such report is
made. Whenever any actual Throughput Amount exceeds the
Guaranteed Minimum Throughput Amount for such month, the
Throughput Monthly Report shall specifically state, as a separate
line item, the amount by which the car/vehicle Throughput for
such month exceeds the Guaranteed Minimum Throughput
Amount.
(P) "Vessel" shall mean any vessel, other than one
docking for emergency purposes, engaged in the loading or
unloading of cargo and vehicles.
(Q) "Wharfage" means a charge assessed against all
cargo passing or conveyed over, onto, or under the Premises or
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between vessels (to or from barge, lighter or water) when berthed
at the Premises or when moored in slop adjacent to the Premises,
calculated as if the Premises were a Port Authority Marine
Terminal under the Port Authority Tariff.
(B) Commencement of Throughput Payments. Commencing
on the first day of the 2nd DWDA Period, and continuing until the Expiration Date, except as
otherwise provided in this Lease, Tenant shall pay to Landlord, Dockage and Wharfage Fees
with respect to (x) the Throughput Amount for each Lease Year, which shall consist of the
Guaranteed Minimum Throughput, which Guaranteed Minimum Throughput shall be calculated
based upon the Throughput provided for in ( 1) below and as such calculation is further provided
for in Section 4.02(a)(ii)(D)hereof, and (y) the Throughput Excess Amount, which Throughput
Excess Amount shall be calculated based upon the Throughput provided for in (2), (3) and (4)
below, and as such calculation is further provided for Section 4.02(a)(ii)(D)hereof. Such
Throughput Amounts are as follows:
(1) Guaranteed Minimum Throughput Amount
Regardless of the amount of actual Throughput, Tenant shall pay
to Landlord Dockage and Wharfage Fees based on the Guaranteed
Minimum Throughput Amount, which shall be based on a
Throughput of 60,000 cars/vehicles, the sum of which shall be
calculated as provided in Section 4.02(a)(ii)(D)hereof.
(2) Throughput exceeding 60,000 cars/vehicles up to
92,000 cars/vehicles. If Throughput exceeds 60,000 cars/vehicles
but is less than 92,000 cars/vehicles, then Dockage and Wharfage
Fees shall be payable on the Throughput amount for all such
car/vehicles (i.e. the first cars/vehicle up to the number of the
car/vehicle which is over 60,000 but does not exceed the 92,000th
car/vehicle) on a per car/vehicle basis and shall be calculated as
provided in Section 4.02(a)(ii)(D)) hereof.
(3) Throughput Exceeding 92,000 cars/vehicles up to
102,000 cars/vehicles. For Throughput in excess of 92,000, but
less than 102,000, Tenant shall pay to Landlord, for the number of
vehicles in excess of 92,000, but less than 102,000, Dockage and
Wharfage Fees computed in accordance with and based on the
following Throughput Amounts and percentages:
(i) 92,000-92,999 - 100% of Dockage and
Wharfage Fees calculated pursuant to Section
4.02(a)(ii)(D);
(ii) 93,000-93,999 - 90% of Dockage and
4.02( a)(ii)(D);
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(iii) 94,000-94,999 - 80% of Dockage and
4.02(a)(ii)(D);
(iv) 95,000-95,999 - 70% of Dockage and
4.02(a)(ii)(D);
(v) 96,000-96,999 - 60% of Dockage and
4.02(a)(ii)(D);
(vi) 97,000-97,999 - 50% of Dockage and
4.02(a)(ii)(D);
(vii) 98,000-98,999 - 40% of Dockage and
4.02(a)(ii)(D);
(viii) 99,000-99,999 - 30% of Dockage and
4.02(a)(ii)(D);
(ix) 100,000-100,999 - 20% of Dockage and
4.02(a)(ii)(D); and
(x) 101,000-101,999 - 10% of Dockage and
4.02(a)(ii)(D).
(4) Throughput Exceeding 102,000 cars/vehicles.
Notwithstanding anything to the contrary contained herein, no
Dockage and Wharfage Fees shall be payable by Tenant to
Landlord for any Throughput Amounts over or in excess of
102,000 cars/vehicles and Tenant may keep all Dockage and
Wharfage Fees it collects with respect to Throughput Amounts in
excess of 102,000 cars/vehicles.
(C) Pavment of Throughput.
(1) Guaranteed Minimum Throughput Amount. For
each Lease Year during which Dockage and Wharfage Fees are
payable by Tenant to Landlord, Tenant shall pay Landlord
Dockage and Wharfage Fees on the Guaranteed Minimum
Throughput Amount, on a monthly basis, in advance on the first
Business Day of each calendar month, in an amount equal to 1/12
-22-
of the Guaranteed Minimum Throughput Amount. Each monthly
payment to Landlord of such Fee, which payment shall be made in
the manner provided in Section 4.03 hereof, shall be accompanied
by the Throughput Monthly Report.
(2) Throughput Excess Amount. For each Lease Year
during which Dockage and Wharfage Fees are payable by Tenant
to Landlord, Tenant shall pay Landlord the Dockage and Wharfage
Fees collected on the aggregate Throughput Excess Amount which
are payable to Landlord hereunder, in the manner provided in
Section 4.03 hereof, at the end of such Lease Year. Such payment
shall made at the same time as, and shall be accompanied by, the
Throughput Annual Report.
(D) Calculation of Dockage and Wharfage Fees. Whenever in
this Section 4.02, Dockage and Wharfage Fees or payment is referred to, such shall be the
amount calculated for Dockage and Wharfage for each car and vehicle, in the Port Authority
Tariff. The computation of the Dockage and Wharfage Fees payable hereunder for each Lease
Year, or a portion of a Lease Year, shall be individual to such Lease Year, or such portion of a
Lease Year, and without relation to any other Lease Year, or any other portion of any Lease
Year. Subject to Section 26.03(a), such payment may be audited annually by Landlord, in
Landlord's sole discretion.
(E) Minimum Vessel Calls. Commencing on the earlier to
occur of the 1st day of the 2"d DWDA Period or the 3 year anniversary of the date that Landlord
has delivered possession of the entire Premises, as required by the terms of this Lease including,
without limitation, Section 4.04, with Landlord's Work completed and ending on the 4 year
anniversary thereof, minimum annual vessel calls shall be required to be made at the Premises as
follows:
90 vessel calls per year on a two year rolling average
Next four years: 150 vessel calls per year on a two year rolling average
Next four years: 180 vessel calls per year on a two year rolling average
Balance of Term as extended: 220 vessel calls per year on a two year rolling
average
(F) Credits for Transit of Vehicles by Water. As an
inducement to divert truck and automobile traffic from the streets and bridges of Manhattan,
Brooklyn, and Staten Island as well as an incentive to create new maritime activity, Tenant shall
be entitled throughout the Term of this Lease to a rent credit which will be calculated based on
the passenger vehicles transported via barge, imported by ship, or transported by rail, which
credit may be taken by Tenant against aggregate Lease payments made to Landlord, excluding
PILOT (i.e., Annual Rent, Dockage and Wharfage Fees). The credit for vehicles railed, barged
or imported by ship in or out of SBMT will be $30 per vehicle for each railed, barged or
imported vehicle in excess of 50,000 railed, barged and imported vehicles, and $40 for each
railed, barged or imported vehicle in excess of 73,500 railed, barged or imported vehicles.
Beginning in the tenth Lease Year, the vehicle credits will increase annually at the rate of
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inflation in accordance with Section 5.09 hereof, not to exceed 4% in any year nor 10% for any
three consecutive years. Notwithstanding anything herein which may be construed to the
contrary, before Tenant takes any such credit, the amount of the credit to be taken, as calculated
pursuant to this Section, must be confirmed in writing by Landlord, following Tenant's written
notice to Landlord that Tenant believes it is entitled to a credit. Landlord will confirm the
amount of any credit within ninety (90) days of receipt of Tenant's notice. Any such credit shall
be taken annually after Landlord's confirmation against the next installment(s) of Annual Base
Rent due.
(G) Termination of the Lease. Upon any termination of the
Lease (even if stated to have the same effect as expiration), Tenant shall within twenty (20) days
after the effective date of termination render to Landlord a statement certified by an officer of
Tenant setting forth the information and a final calculation of the Throughput Amount required
to be set forth in the Throughput Annual Report, except that (i) the statement shall set forth the
amount of cars/vehicles berthing at the Premises during the month in which the effective date of
termination occurred and the cumulative number of cars/vehicles arriving at the Premises from
the date of the commencement of the Lease Year in which the effective date of termination
occurred through the effective date of termination, and (ii) the final calculation of the
Throughput Amount shall be made for the period from the first day of the Lease Year in which
the effective date of termination shall occur through the effective date of termination. Any
Dockage and Wharfage Fee determined to be owed to Landlord pursuant to such final calculation
shall be paid by Tenant at the time of rendering the statement.
~ H ) Additional Termination Right of Landlord for Throughput.
Commencing on the fourth (4
1
) full Lea e Year following completion of all of Landlord s Work
in accordance with the Development Plan and otherwise in the condition required under this
Lease, for delivery of the entire Premises to Tenant, and continuing through the Expiration Date,
Landlord shall have the right to terminate the Lease if actual annual Throughput with respect to
Lease Years thereafter occurring is less than 60% of Guaranteed Minimum Throughput Amount
for the prior two consecutive Lease Years, or for any three Lease Years out of a five consecutive
Lease Year period during the Term.
(iii) Additional Rent For Sublessees, Permittees and other Occupancies.
(A) Throughout the Term of the Lease, if Tenant enters into any sublease,
permit or other occupancy agreement for any part of the Premises, Tenant shall pay to Landlord
as Additional Rent, five percent (5%) of any gross rent or other payment received by Tenant
under the sublease or other occupancy agreement. The sums payable pursuant to the immediately
preceding sentence shall be paid by Tenant to Landlord monthly as and when paid by the
subtenant or other occupant to Tenant. Notwithstanding the foregoing, the provisions of this
Section 4.02 (H)(iii)(A) shall be null and void and of no force or effect from and after the first
day of the third anniversary of the 2nd DWDA Period and thereafter Tenant shall no longer pay
Landlord any portion of any rent or other payment received by Tenant under any sublease or any
other occupancy agreement.
(B) Notwithstanding the foregoing, if Tenant enters into any sublease, permit
or other occupancy agreement: (1) with a signage company for advertisements by third parties,
or (2) which allows for the shooting of films on the Premises, then in either such case, Tenant
-24 -
shall pay to Landlord as Additional Rent, twenty-five percent (25%) in total, and in lieu of five
percent (5%), of any gross rent or other payment received by Tenant under such sublease or
other occupancy agreement. The sums payable pursuant to the immediately preceding sentence
shall be paid by Tenant to Landlord monthly as and when paid by the subtenant or other
occupant to Tenant.
Section 4.03. Payments ofRenta!.
(a) Annual Base Rent. Beginning on the Commencement Date, Annual Base
Rent shall be payable in advance in equal monthly installments, on the first day of each month.
Any monthly installment of Annual Base Rent that is due for any period of less than a full month
shall be apportioned on the basis of the number of calendar days in such month.
(b) Dockage and Wharfage Fees. Beginning on the ninetieth (90th) day after
the commencement of the 2nd DWDA Period, Dockage and Wharfage Fees shall be payable in
arrears in monthly installments, on the first day of each month. All monthly installments of
Dockage and Wharfage Fees shall be accompanied by copies of the applicable Berth
Application annexed hereto as Exhibit H. Such payment shall be accompanied by the
Throughput Monthly Report. Without limiting any other provision of this Lease, in the event
that the period from the commencement date of the 2nd DWDA Period through the last day of the
Lease Year in which such commencement date occurs is less than a twelve (12) months, then the
Guaranteed Minimum Throughput Amount for such partial Lease Year in which the
commencement date of the 2nd DWDA Period shall occur shall be prorated on a daily basis for
the period from the commencement date of t h i ~ 2"d DWDA Period through the last day of the
year in which such commencement date occurs.
(c) Rental. Except as otherwise provided in this Lease, all Rental (other than
Annual Base Rent, Dockage and Wharfage Fees) payable under this Lease shall be paid in full
by Tenant within thirty (30) days following demand.
(d) Manner and Place of Payment. Commencing on the Commencement Date
and thereafter all payments of Annual Base Rent and other Rental hereunder shall be paid to
Landlord (or, in the case of Impositions, to such other Person as required by the rules and
regulations governing payment thereof) when the same shall become due and payable as
provided herein, without notice or demand (except as otherwise provided herein), by check (or
by certified check where such payment is called for herein) drawn on an account maintained with
a bank that is a subscriber to the New York Clearing House Association (or any successor entity
with similar functions), payable to the order of Apple at its address set forth in Section 32.01(c)
hereof, or to the order of such other entity, or at such other address as Landlord or Lease
Administrator may designate in writing. All payments hereunder by Tenant shall be
denominated in United States Dollars, which shall be the currency of account for all purposes.
Impositions shall be payable in the form and to the location provided by rules and regulations
governing the payment thereof. PILOT shall be paid at the location specified in Section 4.05(a).
(e) Sunset Park Improvement Fund. A portion of the Annual Base Rent,
Additional Rent and any other payments received by Landlord, in Landlord's sole discretion,
shall be set aside and reserved by Landlord in a special fund (the "Community Projects Reserve
Fund") to be maintained by Landlord and applied to the costs of special projects, if and as
- 25 -
determined to be appropriate by Landlord, serving the geographic community in which the
Premises are located. Such projects shall be as determined by Landlord in accordance with
criteria established by Landlord. The amount to be reserved in the Community Projects Reserve
Fund shall be determined by Landlord, in its sole discretion, but, in no event, shall such amount
exceed three percent (3%) of the Annual Base Rent and Additional Rent actually received or
include any amount attributable to PILOT payments required to be made by Tenant under this
Lease. Tenant's obligations, as provided in this Lease, including Tenant's payment obligations
with respect to Annual Base Rent, Additional Rent and other Rental, shall not be changed or
affected by the existence ofthe Community Projects Reserve Fund.
Section 4.04. Rental Abatement of Obligations for Certain Occupancies; Rental
Abatement for Phasing.
(a) Rental Abatement for Certain Occupancies.
Notwithstanding any provision in this Lease which may be construed to the contrary,
unless specifically provided otherwise in this Section 4.04, Tenant shall have no obligations
under this Lease, including without limitation, Annual Base Rent, Additional Rent, maintenance,
repair and insurance obligations, for any part of the Premises which: (i) is not delivered vacant
on the Commencement Date due to the occupancy thereon of a third party, unless Tenant has
stated to Landlord in writing that Tenant does not want such occupant removed, until Landlord
causes such part of the Premises to be vacated, or (ii) is unusable by Tenant (except for any use
under any subleases, permits or other occupancy agreements for which Tenant is collecting
payment to the extent that any such sublessee, permittee or occupant is using such portion
of the Premises during Landlord's Work), due to Landlord's performance of Landlord's
Work, but only until Landlord's Work has been completed as required by the provisions of this
Lease. Notwithstanding anything to the contrary herein, Tenant shall have no obligations under
this Lease, including without limitation, Annual Base Rent, Additional Rent, maintenance, repair
and insurance obligations, for any part of Phase D until Phase D is delivered vacant, and all
Landlord's Work with respect to PhaseD has been completed except for any part of PhaseD that
Tenant occupies or is otherwise using prior to completion of Landlord's Work thereon. All such
obligations of Tenant shall apply to any part of such Premises as soon as Landlord's Work
thereon has been completed and notice given as required by the terms of this Lease.-
(b) Rental Abatement for Phasing.
Notwithstanding any provision in this Lease which may be construed to the contrary (and
in addition to the provisions of Section 4.04 (a), unless specifically provided otherwise in this
Section 4.04, Tenant shall have no obligations under this Lease, including without limitation,
Annual Base Rent, Additional Rent, maintenance, repair and insurance obligations, for any part
of the Premises which is not useable by Tenant because of the performance by Landlord of
Landlord's Work thereon, which is presently intended to be performed in the Phases. All such
obligations of Tenant shall apply to any part of such Premises as soon as Landlord's Work
thereon has been completed and notice given as required by the terms of this Lease.
Notwithstanding anything to the contrary herein, Tenant shall have no obligations under this
Lease, including without limitation, Annual Base Rent, Additional Rent, maintenance, repair and
insurance obligations, for any part of Phase D until Phase D is delivered vacant, and all
-26-
Landlord's Work with respect to PhaseD has been completed except for any part of PhaseD that
Tenant occupies or is otherwise using prior to completion of Landlord's Work thereon.
Section 4.05. Late Payment.
(a) If any installment of the Annual Base Rent shall become overdue for ten
(1 0) days beyond the date on which it is due and payable as provided in this Lease, a late charge
of one percent (1 %) per month (computed on a 30-day month) on the sum so overdue shall
become immediately due and payable to Landlord as liquidated damages for the administrative
costs and expenses incurred by Landlord by reason of Tenant's failure to make prompt payment
and said late charges shall be payable by Tenant without notice or demand.
(b) If (a) any payment of Dockage or Wharfage, or any other payment due
hereunder, is not received by Landlord within ten (1 0) Business Days after the due date therefor,
or (b) Landlord makes a payment required to be made by Tenant under this Lease, then Tenant
shall pay Landlord, in addition to such overdue Rental or other payment, or payment made by
Landlord, immediately, upon demand, a late charge on the amount of such overdue Annual Base
Rent, Rental or other payment, or payment made by Landlord, calculated on the basis of the Late
Charge Rate from the due date of such Rental or payment, or the date Landlord made payment
on behalf of Tenant, as the case may be, to the date on which actual payment of any such amount
by Tenant is received by Landlord. Tenant understands and agrees that any such late charge
imposed on Tenant hereunder shall constitute liquidated damages payable to Landlord for the
administrative costs and expenses incurred by Landlord by reason of Tenant's failure to make
payment of Rental as required hereby on or before such payments are due.
(c) The failure by Landlord to insist upon the performance by Tenant of its
obligations to pay late charges in one or more instances shall not constitute a waiver by Landlord
of its right to enforce the provisions of this Section 4.05 in any other instance thereafter
occurring. The provisions of this Section 4.05 shall not be construed to extend any grace periods
or notice periods regarding any Rental payments required to be made by Tenant under this
Lease. The provisions of this Section 4.05 shall survive the expiration or earlier termination of
this Lease.
Section 4.06. Acceptance of Partial Performance; No Waiver. The acceptance
by Landlord, Lease Administrator, Tenant or Apple of any partial performance of any obligation
hereunder on the part of any party to be performed hereunder, or the failure by Landlord, Lease
Administrator, Tenant or Apple to enforce any provision of this Lease shall not be considered a
waiver of any of said Party's rights either under this Lease, at law or in equity.
Section 4.07. Payment of PILOT.
(a) Obligation to pay PILOT. For each Lease Year or portion thereof during
the Term, commencing as provided in Section 4.07(d)(ii) hereof, Tenant shall pay to Landlord
(or to such other entity or at such other address as Landlord may direct Tenant) without notice or
demand, a payment in lieu of Taxes (each such payment is hereinafter referred to as a "PILOT")
in the amount provided in this Section 4.07) hereof, payable in equal semi-annual installments
during such Lease Year on the first Business Day of each January and July during the Term in
- 27 -
which PILOTS are payable hereunder (or according to such other method or on such other dates
as the City may require during such Lease Year for the payment of Taxes without interest or
penalty). No PILOT payments or real estate taxes whatsoever shall be payable by Tenant to
Landlord or any other party with respect to any period prior to the date that PILOT payments
first become payable by Tenant hereunder.
(b) Proration. Any PILOT due for any period of less than six months shall be
appropriately apportioned on a per diem basis.
(c) Intentionally Omitted.
(d) Amount of PILOT. The amount of the PILOT payable by Tenant shall be
determined as follows:
(i) Payments in Lieu of Taxes (PILOT). PILOT payments shall be
charged at a scheduled percentage of the actual Land tax that would be due and payable on the
Premises (but excluding the docking area) in the absence of ownership thereof by the City
("Actual Land Tax"), subject to the limitation on assessed value as hereinafter provided. Actual
Land Tax for each tax year will be calculated by multiplying (a) the lower of the actual assessed
value with respect to Land of Block 662, Lot 1 and the transitional assessed value with respect to
Land of Block 662, Lot 1, each as determined by the New York City Department of Finance, for
such tax year, subject to the limitation on assessed value as hereinafter provided, by (b) the then-
prevailing tax rate for Class IV property, and (c) the quotient obtained by dividing the rentable
acreage for such tax year by 88.0 (the total acreage of Block 662, Lots 1 and 155).
(ii) Commencement of PILOT Payment. PILOT payments shall
commence in the first tax year following the tax year in which the entire Premises are delivered
to Tenant with Landlord's Work completed in accordance with the Development Plan
(hereinafter referred to as "Acceptance"). For each tax year during the term of the lease during
which PILOT is payable, Tenant will make semiannual PILOT payments equal to the product of
(x) Actual Land Tax, subject to the limitation on assessed value as hereinafter provided,
multiplied by (y) one-half, and the product thereof shall be multiplied by (y) the percentage
multiplier associated with that tax year. The percentage multipliers for each full tax year are as
follows:
First full tax year following Acceptance:
Second full tax year following Acceptance:
Third full tax year following Acceptance:
Fourth full tax year following Acceptance:
Fifth full tax year following Acceptance:
Sixth full tax year following Acceptance:
Seventh full tax year following Acceptance:
Eighth full tax year following Acceptance:
Ninth full tax year following Acceptance:
Tenth full tax year following Acceptance:
Eleventh full tax year following Acceptance:
Twelfth through Twentieth full tax year
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20%
25%
30%
35%
40%
45%
50%
55%
60%
65%
70%
following Acceptance: 75%
(iii) Limitation on assessed value for the Land. Notwithstanding
anything to the contrary contained herein, the assessed value for the Land for any tax year
including Renewal Terms shall not exceed the initial assessed value of $27,036,000.00 for the
first tax year in which PILOT is payable under the Lease, which assessed value shall increase by
an annualized growth rate not to exceed 4 percent ( 4%) applied for the period from the initial tax
year in which PILOT is payable hereunder to such tax year.
(iv) Computation. By way of example in computing PILOT payments
for the Land: In the fifth (5
1
h) full tax year following Acceptance, assume billable assessed value
with respect to Land is $40,000,000 for the entire 88 acres. Assuming total rentable acreage of
69 acres, a tax rate of 11.431%, Actual Land Tax would be the product of (a) $31,628,296.02,
the limit imposed on assessed value for that year by the four (4%) percent maximum cumulative
annualized increase, (b) 11.431%, and (c) 0.784, or 69 divided by 88, which equals
$2,834,497.52, and the resulting PILOT payment would be 35 percent of that, or $992,074.13.
(iv) Buildings/Improvements. Any building constructed by Tenant at
the Premises during the Term shall be subject to additional PILOT commencing when PILOTS
first become payable pursuant to Section 4.07(a) equal to the full real estate taxes on the
Building that would be applicable absent the City's ownership of the Premises, calculation of
such real estate taxes on the Building to take into account the schedule of exemptions from
building tax available under the Commercial Special Area provisions of the City's Industrial and
Commercial Incentive Program (hereinafter referred to as "ICIP").
Section 4.08 Taxes. Provided the City shall be Landlord, Landlord shall pay,
cancel, or otherwise satisfY and discharge of record any and all Taxes on or before the due date
thereof (which may be by bookkeeping entry, interdepartmental direction or other manner or
procedure selected by Landlord). If the City shall cease to be Landlord and if at any time during
the Term, Landlord shall not be exempt from the payment of Taxes and/or if the Premises shall
no longer be exempt from Taxes, then, from and after the date that Taxes shall be payable with
respect to the Premises by Tenant, PILOT shall no longer be payable and the provisions of the
Lease relating to the payment of PILOT shall not be applicable; provided however, that from and
after such date any Taxes required to be paid by Tenant shall not exceed the PILOT payments set
forth in this Lease that would have been payable for such tax year if the PILOT provisions of this
Lease remained in effect.
Section 4.09 Net Lease. It is the intention of Landlord and Tenant that, except
as otherwise provided in this Lease, (a) Rental shall be absolutely net to Landlord without any
abatement, diminution, reduction, deduction, counterclaim, credit, setoff, or offset whatsoever so
that each Lease Year of the Term shall yield, net to Landlord, all Rental, and (b) except as
expressly provided in this Lease, Tenant shall pay all costs, expenses and charges of every kind
relating to the Premises (except Taxes) that may arise or become due or payable during or after
(but attributable to a period falling within) the Term .
. 29 -
ARTICLE 5
IMPOSITIONS AND TAXES; LATE CHARGES AND INFLATION ADJUSTMENT
Section 5.01. Obligation to Pay Impositions. Tenant shall pay, in the manner
provided in Section 5.03(c) hereof, all Impositions that at any time are (or, if the Premises or any
part thereof, or Landlord, were not exempt therefrom would be) assessed, levied, confirmed,
imposed upon, or would become due and payable out of, or with respect to, or would be charged
with respect to, the ownership, leasing, operation, use, occupancy and possession of, during the
Term: (a) the Premises or any part thereof; (b) the sidewalks or streets in front of or adjoining
the Premises or any part thereof; (c) any vault, passageway or space in, over or under such
sidewalk or street; (d) any other appurtenances of the Premises or any part thereof; (e) any
personal property or other facility used in the operation of the Premises; (f) the Rental (or any
portion thereof) or any other amount payable by Tenant hereunder; (g) any documents to which
Tenant is a party creating or transferring an interest or estate in the Premises, or any portion
thereof; (h) the use and occupancy of the Premises; or (i) the transaction contemplated by this
Lease.
Section 5.02. Certain Definitions. For the purposes hereof "Imposition" or
"Impositions" means:
Section 5.03. Real property general and special assessments (including, without
limitation, any special assessments for business improvements or imposed by any special
assessment district) other than Taxes,
(a) personal property taxes,
(b) occupancy and rent taxes,
(c) water, water meter and sewer rents, rates and charges,
(d) exc1ses,
(e) levies,
(f) license and permit fees,
(g) service charges with respect to police and fire protection, street and
highway construction, maintenance and lighting, sanitation and water supply,
(h) any other governmental levies, fees, rents, assessments or taxes and
charges, general and special, ordinary and extraordinary, foreseen and unforeseen, of any kind
whatsoever now or hereafter enacted; and
(i) any fines, penalties and other similar governmental charges applicable to
the foregoing, together with any interest or costs with respect to the foregoing, excluding
therefrom any such fines, penalties or charges which may be imposed solely as a result of
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....
Landlord's acts or omissions in its proprietary capacity only, or acts or omissions of Lease
Administrator or Apple.
Section 5.04. Payments oflmpositions.
(a) Subject to the provisions of Sections 4.01 and 38.02 hereof, Tenant shall
pay each Imposition or installment thereof not later than the last date the same may be paid
without incurring any interest or penalty. However, if by law, at the taxpayer's option, any
Imposition may be paid in installments (whether or not interest shall accrue on the unpaid
balance of such Imposition), Tenant may exercise the option to pay such Imposition in
installments and shall be responsible for the payment of such installments with interest, if any, as
may be required by law.
(b) If Tenant fails to make any payment of an Imposition (or installment
thereof) within the time required in the preceding subsection (a), Tenant shall, at Landlord's
request, and notwithstanding (a) above, pay all Impositions or installments thereof payable by
Tenant during the next twelve (12) months not later than ten (1 0) days before the due date
thereof. Nothing in this paragraph shall be construed to limit any remedies available to Landlord
under this Lease and otherwise upon Tenant's Default to timely pay any Imposition.
(c) Tenant shall pay Impositions in the form, to the entity and at the location
provided by the rules and regulations governing the payment of such Impositions as if Tenant
owned the Premises.
Section 5.05. Evidence of Payment. Tenant shall, upon Landlord's request,
furnish to Landlord, within thirty (30) days after the later of the date when an Imposition is due
and payable and the date upon which such request is made, canceled checks or official receipts
of the appropriate taxing authority or other proof reasonably satisfactory to Landlord, evidencing
the payment thereof.
Section 5.06. Evidence of Non-Payment. Any certificate, advice or bill of the
appropriate official designated by law to make or issue the same or to receive payment of any
Imposition asserting non-payment of such Imposition shall be prima facie evidence that such
Imposition is due and unpaid at the time of the making or issuance of such certificate, advice or
bill, at the time or date stated therein.
Section 5.07. Apportionment oflmpositions. Any Imposition relating to a fiscal
period of the taxing authority, a part of which is included within the Term and a part of which is
included in a period of time either before the Commencement Date or after the Expiration Date
of the Term shall be apportioned pro rata between Landlord and Tenant as of the
Commencement Date or the Expiration Date, as the case may be (unless the Expiration Date has
occurred as a result of an Event Of Default, in which case Tenant shall not be entitled to an
apportionment).
Section 5.08. Taxes. Landlord shall pay, or otherwise arrange for the
cancellation or other satisfaction and discharge of record of, any and all Taxes assessed and
levied against the Premises on or before the due date thereof. If Landlord shall have failed to
pay or discharge the Taxes as required hereunder and Tenant shall not have timely commenced a
- 31 -
proceeding to contest the same as provided in Section 38.01 hereof, or if Tenant shall have
timely commenced such a proceeding to contest the Taxes but failure to pay the Taxes during the
pendency of such proceeding will result in the imminent loss or forfeiture of the Premises and
the termination of Tenant's interest under this Lease or Tenant would by reason thereof be
subject to any civil or criminal penalty or liability, then Tenant may pay such unpaid Taxes
together with any interest or penalties thereon and deduct such payment from the next payment
of Rental due hereunder.
Section 5.09. Inflation Adjustment. Any dollar amount, and only any such dollar
amount, which this Lease provides shall be subject to adjustment for inflation shall be adjusted
by multiplying such amount by a fraction, the numerator of which shall be the Consumer Price
Index prevailing in the full calendar month immediately preceding the date of such adjustment,
and the denominator of which shall be the Consumer Price Index for the calendar month during
which the Commencement Date occurred. The "Consumer Price Index" shall mean the
Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics of
the United States Department of Labor, New York, New York- Northeastern New Jersey Area,
All Items [(1982-84 = 100)] (or any successor index thereto, appropriately adjusted). If the
Consumer Price Index ceases to be published, and there is no successor thereto, Landlord and
Tenant shall reasonably agree upon, as a substitute, an appropriate index published by any
agency of the United States Federal government (with appropriate adjustment).
Section 5.10. Late Charges. In addition to the provisions of Section 4.05 with
respect to the matters referred to in such Section, if (a) any payment of Rental is not received by
Landlord within ten ( 1 0) days after the day on which it first becomes due, or (b) Landlord has
made a payment required to be made by Tenant hereunder, a late charge on the sums so overdue
or paid by Landlord, calculated at the then applicable Late Charge Rate (if the unpaid Rental is
anything other than PILOT) or the rate of interest then being charged by the City for delinquent
Taxes) if the unpaid Rental is PILOT), from the date such Rental first becomes due or the date of
payment by Landlord, as the case may be, to the date on which actual payment of the sums is
received by Landlord, shall become due and payable to Landlord as liquidated damages for the
administrative costs and expenses incurred by Landlord by reason of Tenant's failure to make
prompt payment. Tenant shall pay Landlord, within ten (10) days after demand, which may be
made from time to time, all late charges. No failure by Landlord to insist upon the strict
performance by Tenant of its obligations to pay late charges shall constitute a waiver by
Landlord of its right to enforce the provisions of this Section 5.09 in any instance thereafter
occurring. The provisions of this Section 5.09 shall not be construed in any way to extend any
permitted notice or grace period. Any Imposition payable to Landlord which is not paid when
due shall be subject to late charges as provided by law, rule or regulation generally applicable to
such Imposition.
Section 2l.L Survival. The provisions of Sections 5.01 through 5.06 (inclusive)
of this Article 5 shall survive the expiration or earlier termination of this Lease.
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EXHIBIT A PART 2
ARTICLE6
UTILITIES
Section 6.0 1. Utility Service to Premises. Tenant must obtain and pay all costs
of utilities (including, without limitation, installation thereof, if applicable), including all sewer
charges and charges for all water, gas, heat and electricity, consumed and used in, or with respect
to, the Premises, and Tenant, at its sole cost and expense, shall maintain and repair all meters and
procure all permits, approvals and licenses necessary to secure delivery of such utility services.
Tenant shall pay any utility charges directly to the companies supplying such utility services all
charges therefore, as the same shall become due.
Section 6.02. No Obligation on the Part of Landlord. Landlord shall have no
obligation to provide any utility services to the Premises, or any part thereof, and neither
Landlord, Lease Administrator nor Apple shall have any responsibility or liability to Tenant or
any third party in the event any such utility services are not provided to the Premises, or any part
thereof.
ARTICLE 7
LANDLORD'S WORK
Section 7.01. Capital Improvements to be Made by Landlord at SBMT.
Landlord shall make certain capital improvements to SBMT, including certain areas of the
Premises, to prepare SBMT for the uses by Tenant described in Article 9 of this Lease, generally
described as follows in this Section 7.01 and as further described as Landlord's Work in Exhibit
C hereto (collectively, the "Landlord's Work"):
(a) Construction related to the rail improvements, collectively known as the
"Brooklyn Waterfront Rail Improvement Project" (a.k.a., "Rail Project"), including
modernization and realignment of rail line along First A venue between 65th Street Rail Yard and
SBMT.
(b) Renovation of rail siding to the 39th Street pier shed.
(c) New connection for the South Brooklyn Railway (SBK) at the south end
ofSBMT.
(d) Relocation of SBK rail yard at 38th Street to another site.
(e) Construction of a float bridge at SBMT, depending on available funding.
(f) Demolition of certain structures including the "Tower" building and
former container terminal gate complex, 39th Street Gatehouse.
(g) Paving, utility improvements, drainage, fencing.
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(h) Remediation of Hazardous Materials, as required by applicable laws,
existing at the Commencement Date.
Section 7.02. Phasing Landlord shall perform Landlord's Work in the Phases as
provided in the Development Plan. Landlord shall give Tenant not less than thirty (30) days
written notice prior to the completion of each Phase in accordance with and as required by this
Lease,
Section 7.03. Termination for Non-delivery of Phases A and B. If Landlord has
not delivered both portions of the Premises known as Phase A and Phase B with Landlord's
Work completed in the condition required under this Lease, by the date that is eighteen ( 18)
months following the Commencement Date of this Lease which date shall be extended one (1)
day for each day that failure to complete Landlord's Work by such date is delayed as a result of
Tenant's obstruction of Landlord's Work, then Tenant may terminate this Lease at any time
thereafter by providing Landlord with a notice of termination prior to delivery of Phase A and
Phase B by Landlord as herein required; whereupon this Lease shall automatically terminate as if
said date were the Expiration Date of this Lease.
ARTICLE 8
NO DREDGING; SUNKEN CRAFT
Section 8.01. No Dredging. Tenant shall not dredge in the slips, or water
adjacent to, or included in, the Premises without Landlord's prior written approval which shall
not be unreasonably withheld or delayed.
Section 8.02. Sunken Craft. If during the Term, the half basins, slips, or water
adjacent to the Premises shall become obstructed in whole or in part by the sinking of any
waterborne craft, other than a waterborne craft owned or operated by the City or any agency
thereof, Lease Administrator or Apple, Tenant, at its sole cost and expense, after receiving
notice, shall promptly eliminate such obstruction, or cause the same to be eliminated. If, after
said notice, Tenant fails to eliminate such obstructions, Landlord may, in its discretion,
undertake same, and, in such event, Tenant shall reimburse Landlord for the reasonable expenses
so incurred. If during the Term, the half basins, slips or waters adjacent to the Premises shall
become obstructed in whole or in part by the sinking of any waterborne craft owned or operated
by the City or any City Agency, Lease Administrator or Apple through no fault or negligence of
Tenant, then Landlord shall promptly remove such obstruction, or cause the same to be removed,
without cost or expense to Tenant. If, after notice from Tenant, Landlord fails to remove such
obstructions, Tenant may, in its discretion, undertake the removal thereof, and, in such event,
Landlord shall reimburse Tenant for the reasonable expense so incurred.
-34-
ARTICLE 9
USE OF PREMISES
Section 9.01. Permitted Use. Tenant shall use and occupy the Premises for the
development of a maritime automobile processing facility at SBMT. Specifically, Tenant shall
use the Premises as a port of entry for finished vehicles; and for the operation of a processing
facility for off-lease vehicles and rental program vehicles for wholesale disposition in the United
States or in foreign countries. Tenant's use of the Premises shall be in accordance with the
Development Plan. Tenant shall, in its operations, use a rail barge float system to transport
vehicles between SBMT and facilities in New Jersey. Other uses permitted by Tenant at the
Premises are as follows:
Throughout the term of the Lease, if capacity is available, Tenant may use such
capacity for other maritime uses and Tenant shall make best efforts to solicit such
other maritime uses for the Premises;
Tenant may use the Premises as an interim storage facility for vehicles;
Tenant may enter into a sublease for part of the Premises for vehicle parking,
subject to the approval of Landlord in accordance with the provisions of Article
H hereof;
Tenant may use the Premises as an export facility for domestically manufactured
vehicles.
Tenant shall not use the Premises or permit the Premises to be used for any other purpose except
with the prior written approval of Landlord, to be given at Landlord's sole discretion, which
approval shall not be unreasonably delayed.
Section 9.02. Requirements for Conduct of Business. This Lease does not grant
or excuse Tenant from obtaining any permission, license or authority for the performance or
conduct of any business, operation or use which may require any permit or approval from any
public or private party. Tenant shall obtain and maintain in full force and effect during the Term
at its sole cost and expense any governmental license or permit imposed or mandated by any
Governmental Authority in connection with Tenant's trade or business and the use of the
Premises, and shall comply with any other Requirement for the proper and lawful operation of
the Premises by Tenant for the purposes authorized by this Lease.
Section 9.03. Unlawful Use. Tenant shall not use or occupy the Premises, or
permit or suffer the Premises or any part thereof to be used or occupied, for any unlawful, illegal,
or hazardous business, use or purpose or in any way in violation of any Requirement or this
Lease, or in such manner as may make void or voidable any insurance then in force with respect
to the Premises. Immediately, upon the discovery of any such unlawful, illegal or hazardous
business, use or purpose, Tenant shall take all necessary steps, legal and equitable, to compel the
discontinuance thereof, including if necessary, the removal from the Premises of any subtenant
using any portion of the Premises for any such business, use or purpose. Tenant shall not keep,
- 35 -
or permit to be kept, on the Premises any article, object, item, substance or thing that may cause,
damage to the Premises or any part thereof, or that may constitute a public or private nuisance, or
any other article, object, item, substance or thing, except as now or hereafter permitted by the
Fire Department, Board of Fire Underwriters, Fire Insurance Rating Organization and other
authority having jurisdiction over the Premises.
Section 9.04. No Representations or Warranty by Landlord.
(a) Except as otherwise provided herein, neither Landlord, Lease
Administrator nor Apple has made or makes any representation or warranty as to the condition of
the Premises or its suitability for any particular use or as to any other matter affecting this Lease
or the Premises.
(b) Neither Landlord, Lease Administrator nor Apple has made or makes any
representation as to the legality of the use of the Premises for Tenant's intended purposes; it
being understood, however, that neither Landlord, Lease Administrator nor Apple have any
knowledge or information that the intended or permitted use of the Premises hereunder is
contrary to law. If any use or proposed use is determined to be illegal by a court of competent
jurisdiction, subject to the terms hereof Tenant agrees that (i) neither Landlord, Lease
Administrator nor Apple, nor any of their respective directors, officers, employees or agents shall
be liable for any damages incurred by Tenant or any third party as a result of, or in connection
with such determination, or illegal use or proposed use, and if the permitted use set forth in
Section 9.01 shall be determined to be illegal, then Tenant may terminate this Lease; and (ii)
Tenant shall defend, indemnify and hold harmless each of Landlord, Lease Administrator and
Apple, and their respective directors, officers, employees and agents against any cost, liability or
expense incurred by any of them in connection with such determination, or illegal use or
proposed use in accordance with, Article 23 hereof.
ARTICLE 10
EASEMENTS
Section 1 0.01. Municipal Easement. Landlord hereby reserves for itself and
Lease Administrator, and their respective officers, employees, agents, servants, representatives
and invitees, an easement for ingress and egress to, from and over the Premises for the following
purposes: (i) to maintain, replace and repair existing municipal facilities located within the
Premises, if any; (ii) to maintain its fire communications facilities, sewers, water mains and
street sub-surface below the Premises, if any; and (iii) to access the bulkhead area and the pier
and other facilities adjacent to the Premises.
Section 10.02. Inspection. Landlord, and Lease Administrator and their
respective designees shall have the right at all times to enter upon the Premises with workers,
materials and equipment to construct, reconstruct, lay, relay, maintain, operate and inspect
Landlord's and/or Lease Administrator's facilities in or adjacent to the Premises. The easement
reserved hereby is in addition to any other easement, right-of-way or other right that constitutes a
Title Matter as described in Exhibit B hereto.
-36 -
Section 10.03. No Interference. Neither Landlord's nor Lease Administrator's
entry onto or permitted use of the Premises shall unreasonably interfere with Tenant's use of the
Premises. Landlord shall provide Tenant with reasonable advance notice prior to Landlord's
entry on the Premises as herein permitted.
ARTICLE 11
INSURANCE
Section 11.01. Insurance Requirements. At all times during the Term, Tenant, at
its sole cost and expense, shall carry and maintain in full force and effect, or cause to be carried
and maintained in full force and effect, insurance coverage of the following types or insuring the
described risks and in the minimum limits set forth below:
(a) Liability Insurance.
(I) Commercial General Liability protecting against liability with respect to the
Premises and the operations related thereto subject to policy terms and conditions, whether
conducted on or off the Premises, for bodily injury, death, personal injury and property damage,
in an amount not less than Three Million Dollars ($3,000,000) per occurrence, and designating
Tenant as "named insured," and Landlord, Lease Administrator and Apple as "additional
insureds." Such insurance may be obtained by a combination of primary and excess insurance
policies. If during any ,year, it appears that the amount of liability resulting from insured
occurrences may exceed any annual aggregate applicable to the insurance required by this
subsection, Tenant shall procure and maintain for the remainder of such year insurance against
future-arising claims that satisfY the requirements of this subsection in all respects, including
required amounts. The Commercial General Liability Insurance required hereby shall:
(i) include a broad form property damage liability endorsement,
unless covered in the basic policy, with fire legal liability limit of not less than One Hundred
Thousand Dollars ($1 00,000) subject to adjustment for
(ii) contain blanket contractual liability insurance covering written
contractual liability, and specifically covering Tenant's indemnification obligations under Article
23 hereof;
(iii) contain independent contractors coverage;
(iv)_ contain a thirty (30) day notice of cancellation or non-renewal
clause, specifically requiring notice of cancellation or non-renewal for non-payment of premium,
and for any material reduction in coverage.
(v) contain an unintentional errors and omissions clause;
(vi) contain coverage for suits arising from the use of reasonable force
to protect persons and property;
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(vii) contain no exclusion for Waterfront activities;
(ix) contain no exclusion for Water Damage or Sprinkler Leakage
Legal Liability or any other hazard customarily covered by such insurance.
(x) contain no exclusion which is not part ofiSO form CG 00011093,
or any successor thereto, unless=approved in writing by Landlord or Lease Administrator, which
approval shall not be unreasonably withheld.
(xi) not provide for a retained risk or deductibles in excess of One
Million Dollars ($1 ,000,000.00) unless=approved in writing by Landlord or Lease Administrator .
(2) Watercraft liability insurance (if Axis owns watercraft used at the Premises or
otherwise operates watercraft at the Premises), such as Marine Protection and Indemnity
Insurance incorporating U.K. Rules or the equivalent, for bodily injury and property damage
with a combined single limit of three million dollars ($3,000,000) per occurrence.
(b) Property and Other Insurance. Insurance protecting Tenant and
Landlord against loss of or damage to the Premises by fire and all other risks of physical
loss or damage now or hereafter embraced by ISO Special Form or its equivalent, in the
amount of the full Replacement Value of the Premises (without depreciation or
obsolescence clause). Such insurance shall designate Landlord, Lease Administrator
and Apple as additional insureds, as their interests may appear, and shall include the
following coverages and clauses:
(i) if not otherwise included within the ISO Special Form (or its
equivalent) specified above, coverage against damage by explosion caused by steam pressure-
fired vessels, damage by earthquake and/or, damage by wind and flood;
(ii) contingent liability from operation of building laws;
(iii)de molition cost for undamaged portion coverage;
(iv) increased cost of construction coverage specifying that the
proceeds of such insurance shall be available to pay all costs of demolition, including the costs of
debris removal, grading and fencing and all increased costs of construction in the event that any
insured hazard results in a loss;
(v) an agreed or stipulated amount endorsement negating any co-
insurance requirements
(vi) flood coverage to the maximum extent available under the
National Flood Insurance Act of 1968, as amended, with a sublimit of not less than ten percent
(10%) ofthe value ofthe Improvements;
(vii) If Tenant elects to insure Tenant's Trade Fixtures and other
personal property used in connection with the Premises, the Replacement Value shall be
. 38 .
. '
increased in the amount of such personal property, and payments on Tenant's claims for loss of
personal property shall be paid to Tenant after notice to Lease Administrator.
(c) Business Interruption Insurance. Business Interruption Insurance insuring
Annual Base Rent payable by Tenant under this Lease in an amount at least equal to the
aggregate amount of Annual Base Rent payable for a period of not less than one (1) Lease Year.
(d) Statutory Workers' Compensation and Disability Benefits Insurance.
Statutory Workers' Compensation, Jones Act Insurance (if Applicable to Tenant's operations at
the Premises), U.S. Harbor Worker's Insurance and Long Sharemen's Compensation Insurance
and New York Disability Benefits Insurance, in statutory amounts, as required by applicable law,
and any other insurance required by law covering all persons employed by Tenant, contractors,
subcontractors, or any entity performing work on or for the Premises, including Employers'
Liability coverage in an amount not less than $1,000,000.
(e) Boiler and Machinery Insurance. Boiler and Machinery Insurance,
covering all boilers, unfired pressure vessels, air conditioning equipment, elevators, piping and
wiring, located on any portion of the Premises, whether or not same is a Trade Fixture, all steam,
mechanical and electrical equipment, including, without limitation, in all its applicable forms,
including Broad Form, extra expense and loss of use in an amount not less than the full
replacement cost of such equipment, and which shall designate Landlord, Lease Administrator
and Apple as additional insureds.
(f) Automobile Liability Insurance. Automobile Liability insurance covering
owned and non-owned vehicles with limits as reasonably designated by Landlord from time to
time but in any event with limits of not less than Three Million Dollars ($3,000,000) combined
single limit per occurrence with respect to personal and bodily injury, death and property damage
which shall designate Landlord, Lease Administrator and Apple as additional insureds.
(g) Garage Keeper's Legal Liability Insurance ("GKLL") or
comparable physical damage insurance. GKLL covering damage or loss with respect to
vehicles while they are in Tenant's care, custody or control, in an amount not less than
the actual cash value of all such vehicles, adjusted from time to time, consistent with any
adjustment in value of vehicles in Tenant's care.
(h) Builder's Risk Insurance. Builder's Risk Insurance written on a
completed value (non-reporting) basis, insuring Tenant, Landlord, Lease Administrator,
Apple, the general contractor or construction manager, if any, and all subcontractors
employed by Tenant or the general contractor or construction manager, if any, as their
respective interests may appear. Such insurance policy (1) shall contain a written
acknowledgment by the insurance company that its right of subrogation has been waived
with respect to all of the named insureds and additional insureds in such policy and an
endorsement stating that "permission is granted to complete and occupy", and (2) if any
off-site storage location is used, shall cover, for full insurable value, all materials and
equipment at any off-site storage location intended, or while in transit, for use with
respect to the Premises, and including the following:lunless substantially the same
coverage is required and provided pursuant to another Section of this Article 11):
-39-
Statutory Worker's Compensation, Employer's Liability, New York State
Disability Benefits and other statutory forms of insurance in form and
limits as required by law covering all persons employed by Tenant.
Tenant shall also require any and all of its contractors and subcontractors
to maintain such Worker's Compensation, Employers Liability, New York
State Disability Benefits and other statutory forms of insurance in form
and limits as required by law covering all persons employed by them, as
the case may be; it being understood and agreed that, with respect to
Worker's Compensation, Landlord shall not be named or identified as an
additional insured.
Section 11.02. Treatment of Proceeds.
(a) Proceeds of Insurance in General. Tenant shall direct insurance proceeds
payable with respect to a property loss on account of the Premises to be paid to Lease
Administrator to be held for the purpose of paying for the cost of the Restoration, and such
proceeds shall be applied to the payment of the cost of such Restoration in accordance with
Article 12 hereof. Lease Administrator shall apply any casualty insurance proceeds so received
in accordance with the provisions of this Lease. Lease Administrator shall have no liability with
regard to any proceeds received by it and retained in good faith and in accordance with the
provisions of this Lease. If Tenant believes that Lease Administrator has not applied the
insurance proceeds in accordance with this Lease, Tenant's sole remedy shall be to bring an
action to have the proceeds applied in accordance with this Lease. Insurance proceeds payable
with respect to a property loss on account of Trade Fixtures shall be payable to Tenant.
(b) Cooperation in Collection of Proceeds. Tenant and Landlord shall
cooperate in connection with the collection of any insurance moneys that may be due in the event
of loss, and Tenant and Landlord shall execute and deliver such proofs of loss and other
instruments as may be required of Tenant or Landlord, respectively, for the purpose of obtaining
the recovery of any such insurance moneys.
Section 11.03. General Requirements Applicable to Policies.
(a) Insurance Companies. All of the insurance policies required by this
Article shall be procured from companies licensed or authorized to do business in the
State of New York that have a rating in the latest edition of "Bests Key Rating Guide" of
"A-:VII" or better or another comparable rating reasonably acceptable to Landlord or
Lease Administrator; acceptance not to be unreasonably withheld or delayed.
(b) Term. Tenant shall procure policies for all insurance required by this
Lease for periods of not less than one (1) year and shall keep and maintain such insurance at all
times during the Term. Tenant shall provide Landlord evidence of renewals thereof from time to
time and as soon as is practicable.
(c) Waiver of Subrogation. All policies of insurance required under this
Lease (except for the Statutory Coverages required herein shall include a waiver of the right of
subrogation with respect to all the named insureds and additional insureds.
- 40 -
'I
(d) Required Insurance Policy Clauses. Each policy of insurance required to
be carried pursuant to the provisions of this Article shall contain (i) a provision that no act or
omission of Tenant, including, without limitation, any use or occupation of the Premises
(excluding intentional acts of Tenant) for any purpose or purposes more hazardous than those
permitted by the policy, shall invalidate the policy or affect or limit the obligation of the
insurance company to pay the amount of any loss sustained by Landlord, Lease Administrator or
Apple, (ii) an agreement by the insurer that such policy shall not be cancelled, materially
modified in a manner that would compromise the coverage theretofore provided under the
policy, or denied renewal without at least thirty (30) days' prior written notice to Landlord and
Lease Administrator, provided, however, that the insurance carrier will be required to provide
only a ten (10) day notice with respect to cancellation for non-payment of premium, and (iii) a
provision that notice of accident or claim to the insurer by Tenant shall be deemed notice by all
Persons having rights in said policy, provided that a copy of any such notice by Tenant to the
insurer shall have been delivered to Lease Administrator.
(e) Notices. Notices from the insurer or Tenant to Landlord and Lease
Administrator shall be delivered by hand or sent by registered or certified mail, return receipt
requested, or by Airborne Express, Federal Express, Express Mail or other overnight mail service
that provides a receipt to the sender. All notices and correspondences from the insurer to
Landlord must be delivered to the following addresses or to such other addresses as Landlord or
Lease Administrator may notify the insurer of from time to time:
To Landlord:
Commissioner
New York City Department of Small Business Services
11 0 William Street
with a copy to:
New York City Law Department
1 00 Church Street
Attention: Chief, Economic Development Division
To Lease Administrator,Apple or any City Agency:
New York City Economic Development Corporation
Property Management Department
11 0 William Street
Attention: Senior Vice President for Property Management
(f) Primary Protection. All insurance policies required by this Article 11 shall
be primary protection. Landlord shall not be called upon to contribute to any loss, except to the
extent that losses are caused by the negligence or intentionally tortious acts of Landlord, Apple
or Lease Administrator.
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(g) Adjustments for Claims. Except as otherwise provided in Section 11.02(c)
hereof, (i) all insurance policies required by this Article shall provide that all adjustments for
claims with the insurers shall be made by the Tenant and its agents in coordination with Lease
Administrator, both of which shall act reasonably and (ii) Tenant shall direct loss proceeds to be
paid to Lease Administrator as provided in Section 11.02 hereof based upon the actual amount of
the loss, as such amount shall have been determined by adjustment with the insurer. To give
effect to this provision, Landlord and Tenant hereby irrevocably appoint Lease Administrator as
attorney-in-fact with the power to endorse any instrument respecting loss proceeds to the order of
Lease Administrator for deposit and disposition in accordance with provisions of this Article 11.
Upon demand of the other, Landlord and Tenant shall confirm in writing to each property insurer
that all insurance proceeds shall be delivered to Lease Administrator, as their trustee, but failure
to so confirm shall not vitiate the power-of-attorney granted pursuant to this Section 11.03(g).
Section 11.04. Evidence of Insurance. Prior to Tenant entering into possession of
the Premises, Tenant shall deliver or cause to be delivered to Lease Administrator certificates of
insurance, in form reasonably satisfactory to Landlord, providing for thirty (30) days' prior
written notice to Landlord and Lease Administrator by the insurance company of cancellation or
non-renewal of a policy. At Landlord's or Lease Administrator's request Tenant shall deliver a
copy of each policy's declarations page and list of all endorsements and exclusions that are made
part of the policies.
Section 11.05. Compliance With Policy Requirements. Tenant shall not violate or
permit its licensees or invitees to violate any of the conditions, provisions or requirements of any
insurance policy required by this Article. Tenant shall perform, satisfy and comply with or cause
to be performed, satisfied and complied with all material conditions, provisions and requirements
of all such insurance policies on Tenant's part to be performed, and, as appropriate, shall give
and cause its contractors to give, the insurer, Landlord and Lease Administrator notice of all
claims, accidents and losses promptly, but in any event no later than five (5) business days after
Tenant, or any of its contractors, as the case may be, acquires actual knowledge of the same.
Section 11.06. Separate Insurance. Tenant shall not carry separate liability or
property insurance concurrent in form or contributing in the event of loss with that required by
this Lease to be furnished by Tenant, unless Landlord, Lease Administrator and Apple are
included therein as additional insureds with respect to liability insurance or loss payee with
respect to property insurance. Tenant shall immediately notify Landlord that it carries any such
separate insurance and shall cause the same to be delivered to Landlord.
Section 11.07. Increases in Coverage and Additional Insurance. Landlord shall
have the right, from time to time, but with a minimum thirty days notice to Tenant prior to
annual policy renewals, to reasonably modify, increase or supplement the insurance coverages,
limits, sublimits, minimums and standards required by this Article 11 to conform such
requirements to the insurance coverages, limits, sublimits, minimums and standards that at the
time are commonly carried by owners of premises comparable to the Premises, or are commonly
carried by businesses of the size and nature of the business conducted at the Premises. From
time to time, Landlord may require Tenant to increase or cause to be increased the amount of
coverage provided under the policies of insurance required hereunder, or change the types of
insurance required hereunder, provided that in any such event, Landlord reasonably demonstrates
-42-
the need for such increase of coverage. The amount of any such increased coverage shall not
exceed the amount of similar coverage that are commonly carried by owners of comparable
property or in connection with similar businesses.
Section 11.08. No Representation as to Adequacy of Coverage. The requirements
set forth herein with respect to the nature and amount of insurance coverage to be maintained or
caused to be maintained by Tenant hereunder shall not constitute a representation or warranty by
Landlord that such insurance is in any respect adequate.
Section 11.09. Blanket and/or Master Policies. The insurance required by the
proviSlons of this Article may, at Tenant's option, be effected by blanket and/or umbrella
policies issued to Tenant covering the Premises and other properties owned or leased by Tenant,
provided such policies otherwise comply with the provisions of this Lease and allocate to the
Premises the specified coverage, including, without limitation, the specified coverage for all
insureds required to be named as "named insureds" or "additional insureds" hereunder, without
possibility of reduction or coinsurance by reason of, or because of damage to, any other
properties named therein.
Section 11.1 0. Annual Aggregates. If there is imposed under any liability
insurance policy required hereunder an annual aggregate which is applicable to claims other than
products liability and completed operations, such an annual aggregate shall not be less than Four
Million Dollars ($4,000,000) or two (2) times the per occurrence limit required for such
insurance, whichever is greater.
Other Insurance Not Required Under this Lease. Tenant may
effect for its own account any insurance not required under the provisions of this Lease, provided
same shall not directly or indirectly result in a diminution of the insurance coverage specified in
this Article 11.
Section 11.12. Modification By Insurer. Without limiting any of Tenant's
obligations or Landlord's or Lease Administrator's rights under this Article 11, in the event that
an insurer modifies, in any material respect, any insurance policy that Tenant is required to
maintain in accordance with this Lease, Tenant shall give notice to Landlord and Lease
Administrator of such modification within thirty (30) days after Tenant's receipt of notice
thereof.
Section 11.13. Interpretation. All insurance terms used in this Article 11 shall
have the meanings ascribed by the Insurance Services Offices.
ARTICLE 12
DAMAGE, DESTRUCTION AND RESTORATION
Section 12.01. Notice to Landlord. If the Premises or any part thereof are
destroyed or damaged by fire or casualty of any kind or nature, ordinary or extraordinary,
foreseen or unforeseen, Tenant shall immediately notify Landlord upon obtaining knowledge
thereof.
43 .
Section 12.02. Casualty Restoration.
(a) (i) Tenant's Obligation to Restore. If the Premises shall be partially
or substantially damaged or destroyed by fire or other casualty, ordinary or extraordinary,
foreseen or unforeseen (a "Casualty") Tenant shall, in accordance with the provisions of this
Article, restore the Premises to the extent of, and to the extent reasonably practicable, the
character of the Improvements as they existed prior to the Casualty (a "Casualty Restoration"),
except as otherwise provided herein. Tenant shall so restore the Premises whether or not (i) such
damage or destruction has been insured or was insurable, (ii) Tenant is entitled to receive any
insurance proceeds, or (iii) the insurance proceeds are sufficient to pay in full any cost of the
Construction Work required in connection with the Casualty Restoration.
(ii) Restoration by Landlord. Notwithstanding any provision of this
Section 12.02(a)(i) which may be construed to the contrary, if Tenant has not been able to
maintain insurance for any Structural Improvement at the Premises solely because insurance for
any such Improvement could not be obtained by Tenant at a commercially reasonable rate, then
Tenant shall not be required to perform Casualty Restoration in connection with a Casualty to
any such Improvement and restoration thereof shall be the responsibility of Landlord. Landlord
shall use best efforts to commence and complete the restoration of any such Structural
Improvement diligently, subject to Unavoidable Delays.
(b) Estimate of Construction Work Cost. Before commencing any
Construction Work in connection with a Casualty Restoration and within one hundred eighty
(180) days of the damage or destruction, Tenant shall furnish Lease Administrator with an
estimate, prepared by an Architect (after consultation by the Architect with Lease Administrator,
to the extent practicable), of the cost of such Construction Work. Lease Administrator, at its
election and at its own cost, may engage a licensed professional engineer or registered architect
to prepare its own estimate of the cost of such Construction Work. If Lease Administrator shall
fail to disapprove Tenant's estimate of such cost within thirty (30) days of receipt of such
estimate, Tenant's estimate shall be deemed approved. If Lease Administrator shall dispute the
estimated cost of such Construction Work, the dispute shall be resolved by a licensed
professional engineer, chosen by agreement of Lease Administrator and Tenant (such agreement
not to be unreasonably withheld by either) and paid for in equal parts by Tenant and Landlord.
Said engineer shall resolve the dispute by choosing either Lease Administrator's or Tenant's
estimate, which choice shall be binding on the parties.
(c) Commencement of Construction Work. Subject to Unavoidable Delays,
Tenant shall commence the Construction Work in connection with a Casualty Restoration within
ninety (90) days of agreement or resolution by the licensed professional engineer as provided in
Section 12.02(b) as to the estimate for repair of the damage or destruction. For purposes of this
Section 12.02(c), a delay by Tenant's insurer in adjusting or disbursing the insurance proceeds
shall constitute an Unavoidable Delay in the commencement of such Construction Work if (i) the
Casualty was insured and the insurer has not formally denied or rejected coverage, and (ii) the
amount of the insurance proceeds reasonably estimated to be payable exceeds two (2) times the
applicable deductible amount in the insurance policy covering the loss; provided that during the
period of such Unavoidable Delay Tenant takes all reasonable steps to insure that portions of the
Premises accessible to the public shall be safe and free from conditions hazardous to life and
- 44 -
property, including, if Lease Administrator in its reasonable judgment determines necessary, the
erection of a fence around as much of the Premises as Lease Administrator may direct, and
Tenant fully and diligently pursues Tenant's rights against the insurer.
(d) Tenant's Right to Terminate. Notwithstanding the foregoing, provided
that at the time of a Casualty (a) no Default shall have occurred and be continuing, (b) the
insurance required to be maintained pursuant to Article 11 hereof shall be in full force and effect
and (c) fewer than forty-eight (48) months shall remain in the Term, as it may have been
extended pursuant to Section 2.02(a) hereof, if Tenant reasonably determines that it is not
practicable to restore the Premises, it may advise Landlord not later than one hundred twenty
(120) days from said Casualty that Tenant elects to terminate the Lease on thirty (30) days
written notice, and upon payment of an amount equal to $50,000 per year for each Lease Year
(or a proportional amount for any partial Lease Year) remaining in the Lease, this Lease shall be
terminated, Tenant shall have no obligation to perform a Casualty Restoration and neither party
shall have any further liability to the other, except as specifically provided herein.
Section 12.03. Restoration Funds.
(a) Reimbursement of Expenses. Before paying the Restoration Funds to
Tenant as provided in Section 12.03(b), below, Landlord and Lease Administrator shall first
reimburse themselves and Tenant therefrom to the extent of the necessary and proper expenses
(including, without limitation, court costs and reasonable attorneys' fees and disbursements) paid
or incurred by any of them in the collection of such Restoration Funds.
(b) Disbursement of Restoration Funds.
Application for Disbursement. Subject to the provisiOns of Sections
12.03(a), 12.04 and 12.05 hereof, Restoration Funds shall be paid by Lease Administrator to
Tenant in monthly installments as the Restoration progresses, upon application to be submitted
by Tenant to Lease Administrator showing Restoration Costs including Architect's and
engineer's fees (and other construction-related soft costs), construction labor costs and the cost
of materials, fixtures and equipment that either (i) have been incorporated in the Improvements
since the last previous application and have been paid for by Tenant (or the payments are then
due and owing), or (ii) have not been incorporated in the Improvements, but have been
purchased since the last previous application and paid for by Tenant (or the payments are then
due and owing) and insured by Tenant for one hundred percent (100%) of the cost thereof and
stored at a secure and safe location on the Premises or at such other location as shall be
reasonably satisfactory to Lease Administrator ("Restoration Costs"). Lease Administrator
shall not make any installment payment to Tenant for materials, fixtures and equipment
purchased but not yet incorporated in the Improvements until Tenant shall have delivered to
Lease Administrator evidence satisfactory to Landlord that such materials, fixtures and
equipment are insured for one hundred percent (100%) of the cost thereof, with Tenant,
Landlord, Lease Administrator and Apple insured as their interests may appear.
(c) Disbursement of Remaining Restoration Funds. Any Restoration Funds
remaining after the completion of a Casualty Restoration shall be paid to Tenant.
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Section 12.04. Conditions Precedent to Disbursement of Restoration Funds. The
following are conditions precedent to each payment of Restoration Funds to be made to Tenant
pursuant to Section 12.03(b) hereof:
(a) Payment Certificate. A certificate reasonably satisfactory to Landlord
issued by the Architect shall be submitted to Lease Administrator stating that:
(i) the sum then requested to be withdrawn either has been paid by
Tenant, or is payable, to contractors, subcontractors, material providers, engineers, architects or
other Persons (whose names and addresses shall be stated) who have rendered or furnished
services or materials for the work and giving a brief description of such services and materials
and the principal subdivisions or categories thereof and the several amounts so paid or due to
each of such Persons with respect thereto, and stating, in reasonable detail, the progress of the
Construction Work in connection with the Restoration up to the date of the certificate;
(ii) no part of such expenditures has been or is being made the basis, in
any previous or then pending request, for the withdrawal of Restoration Funds or has been paid
out of any of the Restoration Funds received by Tenant;
(iii)the sum then requested does not exceed the cost of the services and
materials described in the certificate;
(iv) the materials, fixtures and equipment for which payment is being
requested pursuant to Section 12.03(b) hereof, is substantially equal in quality and character to
the materials, fixtures, and equipment being restored or replaced, and to the best of the
Architect's knowledge such materials, fixtures and equipment are substantially in accordance
with any plans and specifications approved by Landlord or Lease Administrator for the
Restoration;
(v) except in the case of the final request for payment by Tenant, the
balance of the Restoration Funds held by Lease Administrator (including any bond, cash or other
security provided by Tenant in accordance with Section 12.05 hereof) shall in the reasonable
judgment of the Architect be sufficient, upon completion of the Construction Work in connection
with the Casualty Restoration, to pay for the Construction Work in full, and estimating, in
reasonable detail, the total and remaining costs to complete such Construction Work; and
(vi) In the case of the final request for payment by Tenant, the
Construction Work in connection with a Casualty Restoration shall have been completed, except
for punch list items.
(b) Certificate of Title Insurance. There shall be furnished to Lease
Administrator a report or a certificate of a title insurance company reasonably satisfactory to
Lease Administrator, or other evidence reasonably satisfactory to Lease Administrator (it being
agreed that Lien waivers shall be deemed satisfactory), showing that there are no (i) vendor's,
mechanic's, laborer's or material provider's statutory or other similar Liens filed against the
Premises or any part thereof, arising out of any work or action by Tenant with respect to the
Premises, or (ii) public improvement Liens created or caused to be created by Tenant affecting
Landlord or the assets of, or any funds appropriated to, Landlord, except, in either case, those as
- 46 -
will be discharged upon payment of the amount then requested to be withdrawn, or the discharge
of which is guaranteed to the reasonable satisfaction of Lease Administrator by a bond, letter of
credit or similar security instrument reasonably satisfactory to Lease Administrator.
(c) Defaults. No Default or Event of Default shall have occurred and be
continuing.
Section 12.05. Effect of Casualty on This Lease. Except as otherwise provided
herein, this Lease shall not terminate, be forfeited nor be affected in any manner, nor shall there
be a reduction or abatement of Rental, by reason of damage to, or total, substantial or partial
destruction of, the Premises or by reason of the untenantability of the Premises or any part
thereof, and Tenant's obligations hereunder, including the payment of Rental, shall continue as
though the Premises had not been damaged or destroyed and shall continue without any
abatement, suspension, diminution or reduction whatsoever.
Section 12.06. Effect of Lease Termination. If Landlord terminates this Lease
pursuant to Section 29.02, Tenant shall be deemed to have assigned to Landlord all of Tenant's
right, title and interest, if any, in and to any Restoration Funds, and Lease Administrator shall
pay any Restoration Funds then held by it in accordance with Landlord's directions. This
provision shall survive the termination of this Lease.
Section 12.07. Effect of Events of Default. Notwithstanding anything to the
contrary contained herein, if an Event of Default shall have occurred and be continuing, Lease
Administrator shall pay any Restoration Funds then held by it in accordance with Landlord's
directions.
Section 12.08. Waiver of Rights Under Statute. The existence of any present or
future law or statute notwithstanding, Tenant waives all rights to quit or surrender the Premises
or any part thereof by reason of any Casualty to the Premises except as provided in Sections
12.02(d) and 12.09. It is the intention of Landlord and Tenant that the provisions of this Article
shall constitute an "express agreement to the contrary" as provided in Section 227 of the Real
Property Law ofthe State ofNew York and shall govern and control in lieu thereof.
Section 12.09. Landlord's Obligation to Restore. Notwithstanding anything to the
contrary contained herein, with respect to a Casualty affecting any portion of the Premises for
which Landlord is obligated to maintain pursuant to Section 15.10 hereof, Landlord shall be
responsible for restoring such portion of the Premises at its sole cost and expense and all Rental
under this Lease shall abate on the basis of the extent and nature of such Casualty which
abatement shall be calculated as the greater of the following: (a) a pro rata sum represented by
the portion of the Premises which is untenantable; or (b) the percentage of Tenant's loss in
revenue from Tenant's operations at the Premises attributable to Tenants inability to use any such
part of he Premises due to such Casualty. Such abatement shall apply to the period from the date
of such Casualty through the date Landlord has completed such restoration. If Landlord does not
restore a Casualty which substantially affects Tenant's operations at the Premises within nine (9)
months following the date of such Casualty, then Tenant shall have the right to terminate this
Lease by notice to Landlord at any time following such nine (9) months period.
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ARTICLE 13
CONDEMNATION
Section 13.01. Certain Definitions. For the purposes hereof the following terms
shall have the following meanings:
(a) "Taking" means a taking ofthe Premises or any part thereof for any public
or quasi-public purpose by any lawful power or authority by the exercise of the right of
condemnation or eminent domain or by agreement among Landlord, Tenant and those authorized
to exercise such right, irrespective of whether the same affects the whole or Substantially All of
the Premises or a lesser portion thereof, but shall not include a taking of the fee interest in the
Premises or any portion thereof if, after such taking, Tenant's rights under this Lease are not
affected.
(b) "Substantially All of the Premises" means such portion of the Premises as
would leave remaining, after a Taking, a balance ofthe Premises, as augmented by the Tenant's
Work, that would not readily accommodate a facility to support the uses described in Section
9.01 hereof on a commercially reasonable basis due either to the area so taken or the location of
the part so taken in relation to the part not so taken in light of economic conditions, zoning laws,
physical constraints, or building regulations then existing or prevailing and after performance
and/or observance by Tenant of all covenants, agreements, terms and conditions contained herein
or by law required to be performed or observed by Tenant. The determination of "commercially
reasonable basis" shall be subject to arbitration in accordance with Section 39.01 hereof.
(c) "Date of Taking" means the date on which title to the whole or
Substantially All of the Premises or a lesser portion thereof, as the case may be, shall have vested
in any lawful power or authority pursuant to the provisions of applicable federal, state, or local
condemnation law or the date on which the right to the temporary use of the same has so vested
in any lawful power or authority as aforesaid.
(d) "Condemnation Restoration" means a restoration of any portion of the
Premises remaining after a Partial Taking and/or a restoration of any portion of the Premises
which have been changed or altered as a result of a Temporary Taking, or as a result of any
governmental action not constituting a Taking, but creating a right to compensation as provided
in Section 13.04 hereof so that such portions shall contain complete structures, in good condition
and repair, consisting of self-contained architectural units, and to the extent practicable, of a size
and condition of, and having a character similar to, the character of the Premises existing
immediately prior to the Date of Taking, or the date of such other governmental action.
Section 13 .02. Permanent Taking.
(a) Taking ofthe whole etc. If during the Term there shall be a Taking of the
whole or Substantially All of the Premises (other than a Temporary Taking), the following
consequences shall result:
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(i) this Lease and the Term shall terminate and expire on the Date of
Taking and the Rental payable by Tenant hereunder shall be apportioned to the Date of Taking,
and all such Rental shall be paid to Landlord on the Date of Taking; and
(i) the award payable in respect of such Taking shall be paid as
follows: first, there shall be paid to Landlord an amount equal to the sum of the value of the
Land and the value of the Improvements as of the Date of Taking considered as unencumbered
by this Lease; second, from the foregoing sums paid to Landlord, Landlord shall remit to Tenant,
so much of the balance of such award as shall equal Tenant's Work Cost multiplied by a fraction,
the numerator of which shall be the number of Lease Years remaining in the Initial Term and the
denominator of which shall be twenty (20), less and the outstanding amounts due and payable
under this Lease to the Date of Taking; and third, Landlord shall receive the balance of the
award, if any. Tenant shall have the right to claim separately its personal property, Trade
Fixtures, and moving and relocation costs for itself and any subtenant and the loss of its
leasehold. Any award on account of Tenant's Trade Fixtures or other personal property shall be
paid to Tenant.
(b) "Partial Taking." If there shall be a Taking of less than Substantially All
of the Premises (other than a Temporary Taking), the following consequences shall result:
(i) this Lease and the Term shall continue without diminution of any
of Tenant's obligations hereunder, except that this Lease shall terminate as to the portion of the
Premises so taken, and from and after the Date of Taking, a pro rata amount of Annual Base Rent
determined by Lease Administrator on the basis of the extent and nature of such Partial Taking
shall abate for the remainder of the Term, taking into account the value of the Tenant's Work
made and paid for by Tenant without reimbursement or funding by any federal, state, municipal,
or other public entity or financing relating to and covered by any mortgages issued in respect
hereof and the Guaranteed Minimum Throughput Amounts and any Threshold amounts shall be
equitably adjusted based upon the diminished capacity of Tenant's operations due to the Taking;
and
(i) Tenant shall at its sole cost and expense proceed with diligence
(subject to Unavoidable Delays) to effect a Condemnation Restoration of the remaining portion
of the Premises not so taken, but not in excess of the condemnation award; provided that
Landlord shall at Landlord's cost effect a Condemnation Restoration with respect to a Taking
affecting such portions of the Premises for which Landlord is responsible to maintain pursuant to
Section 15.10.
Section 13.03. Temporary Taking.
(a) Not extending beyond Term. If during the Term there shall be a Taking of
the temporary use of the whole or Substantially All of the Premises or a lesser portion thereof for
a period not extending beyond the Term (a "Temporary Taking"), the following consequences
shall result:
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(i) this Lease and the Term shall continue but Tenant shall be entitled
to an abatement of Rental and other obligations to the extent and nature of the Premises subject
to and for the period of such Temporary Taking;
(ii) if such Taking results in changes or alterations to the Premises or
any part thereof, Tenant and/or Landlord shall effect a Condemnation Restoration with respect
thereto to the extent oftheir responsibilities as if there were no Taking;
(iii) any award or payment payable with respect to such Taking shall be
paid to and held by the Lease Administrator and shall be disbursed by Lease Administrator as
follows: (A) first, to Landlord on account of the Rental payable by Tenant (subject to abatement,
as provided in Section 13.03(a)(i} as and when the same shall become due and payable
hereunder; (B) then, to Lease Administrator in the amount of the cost of any Condemnation
Restoration and (C) then, the balance to Tenant, subject to the rights of any third parties.
(iv) if Tenant shall be required to effect a Condemnation Restoration,
then the portion of such award or payment, if any, equal to the estimated cost (calculated as
provided in Section 12.02(b) hereof) of such Condemnation Restoration shall be retained by
Lease Administrator for the purpose of paying the cost of said Condemnation Restoration, and
shall be disbursed by Lease Administrator to Tenant in accordance with the terms and conditions
contained in Section 13 .05(a) hereof with any balance remaining thereafter to be paid to
Landlord.
(b) Extending Beyond the Lease Term. If during the Term there shall be a
Taking of the temporary use of the whole or Substantially All of the Premises or a lesser portion
thereof for a period extending beyond the Term, the consequences specified in clauses (i), (ii)
and (iii) of Section 13.03(a) hereof shall result, except that the award or payment payable with
respect to such Taking shall be apportioned between Landlord and Tenant as of the last day of
the Term. The amount of the award or payment attributable to the period up to and including the
last day of the Term shall be paid and applied in accordance with the provisions of Section
13.03(a)(iii) hereof, and the portion of the award attributable to the period after the last day of
the Term shall belong to Landlord; provided however, that the amount of any award or payment
allowed or retained to pay for a Condemnation Restoration which shall not have been previously
applied for that purpose, shall remain the property of, and shall be paid over to Landlord if this
Lease shall terminate for any reason prior to completion of the Condemnation Restoration in
accordance with the provisions of this Article.
Section 13.04. Governmental Action Not Resulting in a Taking. In case of any
governmental action not resulting in a Taking but creating a right to compensation therefor, such
as the changing of the grade of any street upon which the Premises abut, then this Lease shall
continue in full force and effect without reduction or abatement of Rental; provided, however,
that if such governmental action results in changes or alterations of the Premises, then Tenant
shall effect a Condemnation Restoration with respect thereto. Any award payable in the case of
such governmental action shall be paid to and held by Lease Administrator and shall be
disbursed to Tenant for the purpose of paying for the cost of the Condemnation Restoration in
accordance with Section 13 .05(a) hereof, and any balance of the award remaining after
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completion of the Condemnation Restoration shall be disbursed to Tenant and Landlord m
amounts based upon the value of their respective interests in the Premises at that time.
Section 13.05. Condemnation Restoration Procedure.
(a) Disbursement of Award. If Tenant shall be required by the terms hereof to
effect a Condemnation Restoration, Lease Administrator shall, subject to the provisions and
limitations in this Article 13, make available to Tenant in the manner specified in Section
12.03(b) hereof, as much of that portion of the award or payment payable in respect of a Taking
received and held by Lease Administrator, if any (less all necessary and proper expenses,
excluding legal fees, paid or incurred by Lease Administrator and Tenant in connection with the
condemnation proceedings), as may be necessary to pay the cost of such Condemnation
Restoration. Any balance of the award held by Lease Administrator after completion of, and
payment for, the Condemnation Restoration shall be paid in accordance with the requirements of
this Lease.
(b) Performance of Condemnation Restoration. The Construction Work in
connection with a Condemnation Restoration, submission of the estimated cost thereof by Tenant
and approval thereof by Lease Administrator, and disbursement of the condemnation award by
Lease Administrator shall be done, determined, made and governed in accordance with the
provisions of Article 17 and Sections 12.02(b), 12.03, 12.04 and 12.05 hereof. If the portion of
the award paid to Lease Administrator or Tenant is insufficient for the purpose of paying for the
cost of the Construction Work in connection with the Condemnation Restoration, then, subject to
all other applicable provisions of this Lease, Tenant shall nevertheless be required to perform
such Construction Work as required hereby and pay any additional sums required for such
Construction Work. Notwithstanding the foregoing, any construction work relating to
Landlord' s obligations under Section 15.10 hereof for which there are insufficient funds from
any such award, shall be the responsibility of Landlord.
Section 13.06. Collection of Awards. Each ofthe parties shall execute documents
that are reasonably required to facilitate collection of any awards made in connection with any
condemnation referred to in this Article and shall cooperate with each other to permit collection
of the award.
Section 13.07. Landlord's Right To Award on Termination. Notwithstanding
anything to the contrary contained herein, the amount of any award or payment allowed or
retained to effect a Condemnation Restoration which shall not have been previously applied to
that purpose or otherwise in accordance with the Lease shall become the property of and shall be
paid over to Landlord if this Lease shall terminate for any reason prior to completion of said
Condemnation Restoration in accordance with the provisions of this Article 13.
Section 13.08. Allocation of Award. Upon a Taking, the parties shall make every
effort to agree to an allocation of the award or payment as set forth in Section 13.02. If, after a
reasonable time, the parties cannot agree, the dispute shall be resolved in accordance with the
arbitration procedure pursuant to Section 39.01 hereof.
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Section 13.09. Tenant's Appearance at Condemnation Proceedings. Tenant shall
have the right to appear in any condemnation proceedings and to participate in any and all
hearings, trials, and appeals in connection therewith. Tenant shall not file in any Taking any
~ l a i m on account of the leasehold estate created by this Lease or Tenant's leasehold interest in
the Premises. If in connection with a Taking Tenant files any claim on account of Trade
Fixtures, Tenant shall not include in its claim any part of the Premises on which such Trade
Fixtures is installed.
Section 13.10. Waiver of Rights under Statute. The existence of any present or
future law or statute notwithstanding, except as otherwise provided herein, Tenant waives all
rights to quit or surrender the Premises or any part thereof by reason of any Taking of less than
Substantially All of the Premises. It is the intention of Landlord and Tenant that the provisions
of this Article 13 shall constitute an "express agreement to the contrary" as provided in Section
227 of the Real Property Law of the State of New York and shall govern and control in lieu
thereof.
ARTICLE 14
ASSIGNMENTS, SUBLEASES AND TRANSFERS
Section 14.01. Landlord may transfer or assign its interests in the Premises or its
interest under this Lease to any Person, in whole or in part, at any time, in its sole discretion,
provided that such successor or assignee assumes all of the obligations of Landlord under this
Lease. Tenant shall not undertake any of the following actions or permit any of the following
occurrences without obtaining Landlord's prior written consent, which consent shall not be
unreasonably withheld or delayed: (a) pledge, transfer or assign its interest, in whole or in part,
in and to this Lease or the leasehold estate created hereby; (b) sublease, or grant, license or
permit the use of the Premises, or any portion thereof, nor allow the Premises, or any portion
thereof to be occupied by any Person other than Tenant, whether by assignment, sublease,
license or permit; or (c) merge or consolidate with any Person, or sell, assign, lease or otherwise
dispose (whether in one transaction or in a series of transactions) of all or substantially all of its
assets (whether now-owned or hereafter acquired) to any Person, or acquire all or substantially
all of the assets of any Person. If Landlord consents to any of the foregoing occurrences
Landlord may impose any conditions to its consent that Landlord determines, in its sole
reasonable discretion, may be necessary or appropriate, including, without limitation, requiring
that any Person that is a pledgee, transferee, assignee or subtenant of Tenant hereunder, or that
occupies or makes use of the Premises, or that merges or consolidates with Tenant, or that
acquires all or substantially all of the assets of Tenant, assume, perform and observe each and
every term, covenant and condition on the part of Tenant be performed or observed under this
Lease and make all representations and warranties made by Tenant hereunder.
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. '
EXHIBIT A PART 3
ARTICLE 15
REPAIRS, MAJNTENANCE BY TENANT AND LANDLORD, ETC.
Section 15.0 1. Maintenance of the Premises, Etc. Except as otherwise provided in
Section 15.10 hereof, Tenant shall, at its sole cost and expense, take good care of the Premises,
including, without limitation, the surfaces, roofs, and appurtenances thereto, any alleys,
sidewalks, grounds, plazas, fendering, vaults, sidewalk hoists, railings, gutters and curbs in front
of or adjacent to the Premises, and any water, sewer and gas connections, pipes and mains
appurtenant to the Premises, and shall keep and maintain all of the foregoing in good and safe
order and condition; provided that Tenant shall be required to maintain the Premises, including
structures thereon, in a condition consistent with the condition of the Premises or any part thereof
at the completion of Landlord's Work thereon and, until the completion of Landlord's Work on
any part of the Premises, then in a condition the quality of which is not less than that existing at
any such part of the Premises at the time Landlord delivered the Premises to Tenant. Tenant
shall also be responsible for the paving of the Premises and all maintenance in connection
therewith. Tenant shall neither commit nor suffer, and shall use all commercially reasonable
precaution to prevent, waste, damage or injury to the Premises. All repairs and maintenance
shall be made at no cost or expense to Landlord or Lease Administrator and shall be made in
compliance with the Requirements and all materials therefor shall be at least equal in quality and
class to the original materials, except for any maintenance, repair and replacement due to any
damage caused by Landlord or any City agency, in the event of which, at Landlord's option,
Landlord shall perform any required maintenance, repair or replacement or shall reimburse
Tenant for the costs, subject to prior approval of Landlord, of performing same. As used in this
Section, the term "repairs" shall include all necessary replacements, removals, alterations, and
additions. Nothing contained herein shall relieve Landlord of its obligations pursuant to Article
L.
Section 15.02. Removal of Equipment. Tenant shall not, without the prior consent
of Landlord, which consent shall not be unreasonably withheld or delayed, remove or dispose of
any Equipment (except for Trade Fixtures), unless such Equipment (a) is promptly replaced by
Equipment of at least equal utility and quality (which replacement shall be at Tenant's sole cost
and expense), or (b) is removed for repairs, cleaning or other servicing (which shall be at
Tenant's sole cost), provided Tenant reinstalls such Equipment on the Premises with reasonable
diligence. Notwithstanding the foregoing, Tenant shall not be required to replace any such
Equipment that has become obsolete, or that performed a function that has become obsolete,
unnecessary or undesirable in connection with the operations at the Premises. However, Tenant
shall obtain the consent of Landlord prior to removal of any obsolete Equipment from the
Premises, which consent shall not be unreasonably withheld or delayed.
Section 15.03. Free of Dirt, Snow, Etc. Tenant shall keep clean and free from
dirt, snow, ice, rubbish, obstructions and encumbrances the sidewalks and grounds, and any
parking facilities, common areas, vaults, chutes, sidewalk hoists, railings, gutters, alleys, curbs, if
any, or any other space located on the Premises, and any spaces located in front of, or adjacent
to, the Premises for which Tenant would be responsible by law if it were the fee owner of the
Premises.
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Section 15.04. No Obligation of Landlord to Supply or Repair Utilities. Except
as expressly provided in Section 15.10 hereof, Landlord shall not be required to supply any
facilities, services or utilities whatsoever to the Premises and shall not have any duty or
obligation to make any alteration, change, improvement, replacement, Restoration or repair any
such services or utilities, and, subject to the terms hereof, Tenant assumes the full and sole
responsibility for the condition, operation, alteration, change, improvement, replacement,
Restoration, repair, maintenance and management of the said services and utilities.
Section 15.05. Window Cleaning. Tenant shall neither clean nor require, permit,
suffer or allow any window in the Improvements to be cleaned from the outside in violation of
Section 202 of the New York State Labor Law or of the rules of the New York State Industrial
Board or any other Governmental Authority.
Section 15.06. Landlord to Inspect and Determine Necessity of Repairs.
(a) Landlord may, in its reasonable discretion, determine the necessity or the
adequacy of repairs and maintenance at, to, or of the Premises.
(b) Every two (2) years during the Term ofthis Lease, or at such other time as
Landlord shall reasonably determine, upon notice to Tenant, Landlord, Lease Administrator or
their representatives or designees may, but shall have no obligation to, make a survey and
inspection of the condition of the Premises and make a report thereon, at Landlord's sole cost
and expense. The outgoing condition survey will be made as provided in Section 15.07.
(c) The survey and inspection report shall specify the maintenance required to
keep and maintain the Premises and every part thereof in good working order and condition
under this Article 15 (and subject to the terms hereof). A copy of said survey and inspection
report shall be delivered to Tenant.
(d) Except to the extent disputed by Tenant, Tenant, promptly and with
diligence, shall commence and continuously and diligently perform the maintenance specified in
the survey and inspection report. The commencement of the maintenance specified in the report
shall be deemed to have occurred upon the engagement of an architect, engineer or other design
professional, as appropriate, to perform necessary design work in connection with any repairs
and maintenance. Upon the timely completion of the design professional's design work, Tenant
shall continuously and diligently prosecute the identified repairs and maintenance to completion.
The failure of Landlord or its designees to make the reports shall not limit, or be deemed a
waiver of, Tenant's obligation to perform or observe, or to relieve Tenant of liability for failure
to comply with any, of the terms, conditions and covenants ofthis Article 15.
Section 15.07. Outgoing Condition Survey.
(a) Within three (3) months after the expiration or earlier termination of this
Lease, Tenant shall cause to be presented to Landlord an outgoing condition survey and
inspection report based on a survey made within one ( 1) month after the Expiration Date. The
engineer selected by Tenant to prepare such report shall be reasonably acceptable to Landlord,
and shall be accompanied on the inspection by an engineer or engineers selected and paid for by
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. , .
Landlord. Tenant shall bear the full cost and expense of preparation for the outgoing condition
survey and inspection report.
(b) Based upon the outgoing condition survey and inspection report, Landlord
shall notify Tenant of any repair work reasonably necessary to be performed by Tenant so that
the Premises are in the condition they were required to be maintained by this Lease. Upon
receipt thereof, Tenant shall perform or cause to be performed all work at its sole cost and
expense. Landlord shall reasonably determine the necessity for and the adequacy of any
necessary repairs, provided that, if Tenant disputes Landlord's determination regarding the
necessity and adequacy of a repair, Landlord and Tenant shall submit their dispute to arbitration
in accordance with Section 39.01 hereof.
Section 15.08. Access of Landlord to Premises to Perform Obligations. Landlord,
upon reasonable advance notice to Tenant and provided Landlord shall not unreasonably
interfere with Tenant's use of or access to the Premises, shall have access to, over and through
the Premises for the purpose of performing the obligations of Landlord as set forth in this Article
15 and for inspection as provided in this Article 15, and Tenant shall cooperate therewith.
During such periods of access, Tenant may accompany Landlord.
Section 15.09. Access to Show Premises to Prospective Tenants. Landlord, upon
reasonable advanced notice to Tenant and provided Landlord shall not unreasonably interfere
with Tenant's use of or access to the Premises, shall have the right to enter the Premises during
regular business hours within one (1) year prior to the expiration or earlier termination of this
Lease for the purpose of showing to prospective tenants all or any part of the Premises. During
such periods of access, Tenant may accompany Landlord.
Section 15.10. Landlord's Maintenance Obligations. Notwithstanding anything in
the foregoing provisions of this Article 15 which may provide to the contrary, Landlord shall be
responsible throughout the Term, for: (a) the maintenance, repair and replacement of all
structural work to the underdeck at the Premises and all underground utilities for water and
sewer, except for any such maintenance, repair and replacement due to any damage caused by
Tenant, in the event of which, Tenant shall, as determined by Landlord in Landlord's reasonable
discretion, perform any required maintenance, repair or replacement or shall reimburse Landlord
for the costs of performing same; (b) the maintenance, repair and replacement of all bulkheads at
the Premises; and for (c) periodic dredging of the berth area at the Premises to maintain a depth
of not less than 35 feet, upon not less than thirty (30) Business Days prior notice from Tenant
that such depth is not being reached; provided that Landlord shall have a reasonable time after
receipt of such notice from Tenant to commence and complete such dredging work; (d)
remediation of Hazardous Materials as required by Section 2.04 hereof and (e) all railroad
facilities, including without limitation, tracks and track beds. All maintenance required with
respect to any other property at SBMT, which is not a part of the Premises, shall be the
responsibility of Landlord. If Tenant is deprived of the use of all or any part of the Premises, or
there is an adverse affect on Tenant's use of the Premises, by reason of any requirement for work
to be done by Landlord, or obligation of Landlord under this Lease or any condition relating
thereto, then in each case, Tenant shall provide reasonable evidence, including its accounting
books and records and/or commercial pro-formas or economic models, supporting any monetary
value allocated to such adverse affects and Annual Base Rent and Additional Rent shall abate
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equitably and proportionately during the period of such deprivation or effect and the Minimum
Vessel Calls shall be reduced accordingly. If the parties hereto cannot agree upon the amount of
the abatement, then such amount may be determined by Arbitration.
ARTICLE 16
CHANGES AND ALTERATIONS
Section 16.01. No Alterations Without Landlord's Consent. Except for Tenant's
Work required by Article 18 hereof, Tenant shall make no changes, alterations, improvements,
installations, additions or perform any Construction Work (collectively "Alterations") in or to
the Premises, of any nature, without Landlord's prior written consent, which consent shall not be
unreasonably denied, withheld or delayed. For purposes hereof, the term "Alteration" does not
include ordinary maintenance and repair, decorations, Trade Fixtures and installation of
equipment (other than any Equipment (other than Trade Fixtures), which upon installation or
annexation to the Premises would constitute fixtures).
Section 16.02. Conditions Applicable to Alterations.
(a) Conditions to Alterations. Subject to the prior written consent of
Landlord, which consent will not be unreasonably withheld or delayed, and to the provisions of
this Article, Tenant, at its sole cost and expense, may make Alterations to the Premises, provided
that: (i) Tenant shall employ for such purposes contractors or mechanics approved by Landlord,
who shall not unreasonably withhold or delay its approval thereof; (ii) Tenant shall have
observed and performed all of the covenants of this Lease on Tenant's part to be observed and
performed and no Default or Event of Default shall have occurred and be continuing; (iii) Tenant
shall have furnished Landlord with detailed plans and specifications for the proposed Alterations,
and such plan and specifications shall be reasonably satisfactory to Landlord; and (iv) Tenant
and its contractors shall have furnished Landlord with evidence of the insurance required by
Section 11.01(g).
(b) Compliance with Requirements Governing Alterations. Tenant shall, at its
sole cost and expense, comply with all Requirements applicable to any Alteration undertaken by
it, including, without limitation, obtaining, prior to commencement of any such Alteration,
permits and licenses that may be required in connection with such Alteration, and, upon
completion thereof, obtaining any requisite certificates, including, without limitation, certificates
of completion or certificates of occupancy. Landlord shall not be required to pay for or
contribute to the costs of any such Alteration. Tenant will reimburse Landlord for any costs and
expenses incurred by Landlord in connection therewith, including fees of architects and
engineers engaged by Landlord (but who are not employees of Landlord) to review Tenant's
plans and specifications, and verifying conformance therewith during, or following the
completion of any such Alterations, and expenses incurred on account of any failure of Tenant to
comply with any requirements or of this Lease pertaining to the making of such Alterations.
Landlord may not seek reimbursement from Tenant under this Article 16 for costs related only to
the costs of Landlord's employees. Landlord's approval of Tenant's plans and specifications for
any such proposed Alterations, or any revisions thereto, or Landlord's inspection of such
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..
Alterations to verify conformance with Tenant's plans and specifications therefor, shall not
constitute an opinion or agreement by Landlord that the same are adequate or sufficient or that
the same are in compliance with applicable Requirements nor shall such approval or inspection
impose any liability on Landlord, waive any of Landlord's rights or release Tenant from any of
its obligations hereunder.
(c) Landlord's Right to Inspect Alterations. At all times during the progress
of such Alterations and until final certificates of approval therefor shall have been delivered to
Landlord, Landlord shall have the right to have its representatives inspect the work being
performed in the Premises and to verify compliance with the plans and specifications therefor
approved by Landlord, provided, that, except in the case of an emergency, Landlord shall give
Tenant reasonable notice of Landlord's intention to inspect the Premises, and employees of
Tenant are present at the Premises. Landlord shall take reasonable steps to minimize
interference with Tenant's operations when conducting such inspections.
Section 16.03. No Allowances. In no event shall Tenant be entitled to any
abatement, allowance, reduction or suspension of the Rent or any other charge, cost or expense
payable by Tenant under this Lease, nor shall Tenant be released of or from any other obligations
imposed upon Tenant under this Lease because of the construction of any Alteration.
Section 16.04. Title in Landlord. Title to any and all Improvements shall vest in
Landlord immediately upon their annexation to the Premises.
Section 16.05. Removal of Trade Fixtures and Equipment. Nothing in this Article
shall be construed to give Landlord title to or to prevent Tenant's removal of Tenant's property,
including Trade Fixtures, moveable office furniture and equipment, but upon removal of any
such property from the Premises, Tenant shall immediately and at its expense, repair any damage
to the Premises or the Improvements due to such removal. All property permitted or required to
be removed by Tenant at the end of the Term remaining in the Premises after Tenant's removal
shall be deemed abandoned and may, at the election of Landlord, either be retained as Landlord's
property or removed from the Premises by Landlord, at Tenant's expense.
Section 16.06. Sprinklers. Anything elsewhere in this Lease to the contrary
notwithstanding, if the New York Board of Fire Underwriters or the New York Fire Insurance
Exchange or any bureau, department or official of the federal, state or city government require
the installation of a sprinkler system or that any changes, modifications, alterations, or additional
sprinkler heads or other equipment be made or supplied in an existing sprinkler system by reason
of Tenant's business, or the location of partitions, Trade Fixtures, or other contents of the
Premises, or for any other reason, or if any such sprinkler system installations, modifications,
alterations, additional sprinkler heads or other such equipment, become necessary to prevent the
imposition of a penalty or charge against the full allowance for a sprinkler system in the fire
insurance rate set by either the New York Board of Fire Underwriters or the New York Fire
Insurance Exchange or by any fire insurance company, Tenant shall, at Tenant's expense,
promptly make such sprinkler system installations, changes, modifications, alterations, and
supply additional sprinkler heads or other equipment as required whether the work involved shall
be structural or non-structural in nature and in accordance with this Article 16.
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Section 16.07. Except for the provisions in Sections 16.0L(Q116.02 (c), 16.04
and 16.06, any dispute under this Article may be resolved by Arbitration.
ARTICLE 17
CONSTRUCTION WORK
Section 17.01. Construction Work. Tenant shall undertake all Construction Work,
including, without limitation, the Construction Work required in connection with the
construction of the Tenant's Work, as provided for in Article 18 hereof, in accordance with the
requirements ofthis Article.
Section 17.02. Definitions. As used in this Lease, the following terms shall have
the meanings set forth below:
"Approved Plans and Specifications" means plans and specifications prepared by
an Architect in connection with any Construction Work and approved by Lease Administrator in
accordance with the provisions of Section 17.03 hereof.
"Final Completion" means, with respect to all Improvements constructed by
Tenant in accordance with this Lease, including, without limitation, the Tenant's Work, that
Lease Administrator has determined that the following conditions have been satisfied: (a) all
work, including all punch list items, remaining after Substantial Completion, have been
completed in accordance with the Approved Plans and Specifications and have been accepted by
Lease Administrator; and (b) all Governmental Authorities having jurisdiction have authorized
occupancy and use of any structures included in Tenant's Work (as evidenced by issuance of a
permanent certificate of occupancy or certificate of completion and any other permits or licenses
required for occupancy and the intended use and purpose). Tenant shall provide written notice to
Lease Administrator that, in its opinion, the above-listed conditions have been satisfied together
with supporting documentation therefor. Lease Administrator shall endeavor to advise Tenant
whether or not, in Lease Administrator's reasonable discretion, such conditions have been
satisfied, or whether Tenant has failed to submit adequate and sufficient evidence to permit
Lease Administrator to issue its determination within fifteen (15) Business Days from Lease
Administrator's receipt of Tenant's notice. If in the reasonable discretion of Lease Administrator
the conditions for Final Completion have not been satisfied, Lease Administrator shall also
endeavor to advise Tenant of the reasons for Lease Administrator's determination within such
fifteen (15) Business Day period.
"Substantial Completion" or "Substantially Complete(d)" means, with respect to
all Improvements constructed by Tenant in accordance with this Lease, including, without
limitation, the Tenant's Work, that Lease Administrator has determined that the following
conditions have been satisfied: (a) the Governmental Authority having jurisdiction over the
Premises has issued a temporary certificate (or certificates) of occupancy or completion, or
chairman's certificate with respect to waterfront zoning as the case may be, for the Premises; (b)
all utilities are connected; (c) Tenant may use and occupy the Premises for the use and purpose
authorized by this Lease, (d) all work has been completed in accordance with the Approved
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Plans and Specifications, all systems of the Premises are operating and such work and systems
have been accepted by Tenant (as evidenced by controlled inspection reports to be submitted by
Tenant to Lease Administrator, if such type of work is customarily subjected to testing under
controlled conditions), except for minor repairs, corrections, and adjustments of a "punch list"
nature which can be completed promptly and with minimal interference to the occupancy and use
of the Premises by Tenant; and (e) the Architect, Tenant, the Contractor and Lease Administrator
have approved in writing a final punch list of such minor repairs, corrections and adjustments.
Tenant shall provide written notice to Lease Administrator that, in its opinion, the above-listed
conditions have been satisfied together with supporting documentation therefor. Lease
Administrator shall endeavor to advise Tenant whether or not, in Lease Administrator's sole
reasonable discretion, such conditions have been satisfied, or whether Tenant has failed to
submit adequate and sufficient evidence to permit Lease Administrator to issue its determination
within fifteen (15) Business Days from Lease Administrator's receipt of Tenant's notice. If in
the sole reasonable discretion of Lease Administrator the conditions for Substantial Completion
have not been satisfied, Lease Administrator shall also endeavor to advise Tenant of the reasons
for Lease Administrator's determination within such fifteen (15) Business Day period.
Section 17.03. Plans and Specifications.
(a) Satisfactory to Landlord and Lease Administrator. Plans and
specifications for all Construction Work, including, without limitation, the Construction Work
required for the Tenant's Work shall be satisfactory to Landlord and Lease Administrator, in
their sole reasonable discretion.
(b) Submission of Preliminary Plans and Specifications. Promptly, upon
determining the need for any Construction Work, Tenant shall submit to Lease Administrator,
for Landlord's and Lease Administrator's prior review and approval, preliminary plans and
specifications for the proposed Construction Work ("Preliminary Plans and Specifications").
The submission of Preliminary Plans and Specifications for the Tenant's Work shall be made in
accordance with Section 18.02 hereof.
(c) Review and Approval of Preliminary Plans and Specifications. Lease
Administrator on behalf of Landlord, shall notify Tenant of Lease Administrator's approval or
disapproval of the Preliminary Plans and Specifications within twenty-one (21) days after receipt
thereof. Upon approval by Lease Administrator, the Preliminary Plans and Specifications shall
constitute Approved Plans and Specifications. However, if directed by Lease Administrator,
Tenant shall revise or cause the Architect to revise the Preliminary Plans and Specifications in
accordance with the directions of Lease Administrator, and until Lease Administrator issues its
approval thereof, Tenant shall submit revised Preliminary Plans and Specifications to Lease
Administrator for its review, in each case, within fifteen (15) days after receipt by Tenant of
directions to that effect from Lease Administrator. In the case of each submission of Preliminary
Plans and Specifications to Lease Administrator for its review and approval, if Lease
Administrator fails to direct Tenant to revise the Preliminary Plans and Specifications within said
twenty -one (21) day period, and not less than five ( 5) days, and not more than ten ( 1 0) days prior
to the expiration of such twenty-one (21) day period, Tenant asks Lease Administrator to issue
its determination regarding the Preliminary Plans and Specifications, Lease Administrator shall
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be deemed to have given its approval thereto, and the Preliminary Plans and Specifications shall
constitute Approved Plans and Specifications.
(d) Modification of Approved Plans and Specifications. If Tenant desires to
materially modify the Approved Plans and Specifications, Tenant shall submit the proposed
modifications to Lease Administrator for its prior review and approval. Lease Administrator
shall review the proposed changes as if such were an original submission of Preliminary Plans
and Specifications proposed under Section 17.03(b) and .() hereof, and the provisions thereof
governing such a submission shall apply.
(e) No Representations or Warranties. Tenant understands and agrees that
neither Landlord nor Lease Administrator shall incur any liability to any Person for any act or
omission in connection with their respective reviews and approvals of the Approved Plans and
Specifications or any other document, or failure to review or approve the foregoing in
accordance with the provisions of this Lease, and neither Landlord's nor Lease Administrator's
approval of the Approved Plans and Specifications or any other document shall be, or shall be
construed or interpreted, or otherwise relied upon, by any Person as: (1) a representation,
warranty or determination by either Landlord or Lease Administrator that the Approved Plans
and Specifications comply with applicable Requirements, or are structurally or architecturally
sound or safe, or technically correct, (2) an opinion by either Landlord or Lease Administrator
that the Tenant's Work constructed pursuant to the Approved Plans and Specifications are
adequate or sufficient for any purpose or use, (3) a waiver of any of Landlord's or Lease
Administrator's rights, or (4) a release of Tenant from any of its obligations under this Lease.
Notwithstanding anything in the above to the contrary, nothing herein shall relieve the Landlord
of its obligations promptly to review and approve or disapprove the plans and specifications of
the Tenant pursuant to Section 17.03(c).
Section 17.04. Conditions Precedent to Tenant's Commencement of All
Construction Work. Prior to the commencement of any Construction Work, including, without
limitation, the construction of the Tenant's Work Tenant shall comply with the following terms,
covenants and conditions:
(a) Permits and Approvals. Tenant shall deliver to Lease Administrator (i)
copies of all permits, consents, certificates and approvals of all Governmental Authorities
required for the performance of the Construction Work, certified by Tenant or the Architect, and
(ii) the bonds required by subsection (f) of this Section 17.04. At the request of Tenant,
Landlord (acting in its proprietary capacity) and/or Lease Administrator shall cooperate with
Tenant in obtaining the permits, consents, certificates and approvals required by this Section
17.04 and any necessary utility easements, and shall not unreasonably withhold its consent to any
application required to obtain such permits, consents, certificates, approvals and easements made
by Tenant. Tenant shall reimburse Landlord and/or Lease Administrator within ten (1 0) days
after demand therefor, the amount of any out-of-pocket costs or expenses incurred by Landlord
(acting in its proprietary capacity) and/or Lease Administrator in cooperating with Tenant to
obtain the permits, consents, certificates and approvals required by this Section 17.04 and any
necessary utility easements and such amounts shall constitute Rental hereunder.
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(b) Insurance. Tenant shall deliver to Lease Administrator copies of the
policies of insurance required in connection with the performance of Construction Work
pursuant to the provisions of Section 11.01 (g) hereof.
(c) Construction Contract. Tenant shall deliver to Lease Administrator a
stipulated sum or cost-plus contract, with a guaranteed maximum price, or construction
management contract, or other form of contract reasonably approved by Lease Administrator (it
being agreed that an AlA form of contract is approved by Landlord), in form assignable to
Landlord and/or Lease Administrator, made with a reputable and responsible contractor or
construction manager who is not, to the best knowledge of Tenant, after due inquiry, a Prohibited
Person and is otherwise satisfactory to Lease Administrator ("Contractor") providing for the
completion of the Construction Work in accordance with the Approved Plans and Specifications,
applicable Requirements and this Lease.
(d) Assignment of Construction Contract. Tenant shall deliver to Lease
Administrator an assignment of the Construction Contract ("Assignment of Construction
Contract") to Landlord (or in Landlord's discretion to Lease Administrator) duly executed and
acknowledged by Tenant (and consented to by the Contractor) effective by its terms upon any
termination of this Lease, or upon Landlord's re-entry upon the Premises following an Event of
Default before the complete performance of the Construction Contract required in connection
with the Construction Work in question. The Assignment of Construction Contract shall also
include the benefit of all payments made on account of the Construction Contract, including
payments made before the effective date of the Assignment of Construction Contract. The
Assignment of Construction Contract may include a provision that in order for it to become
effective the assignee must assume Tenant's remaining obligations (other than accrued
obligations) under the assigned Construction Contract.
(e) Sufficient Funds. Tenant shall deliver to Lease Administrator evidence,
reasonably satisfactory to Lease Administrator that Tenant has sufficient funds available to it to
complete the Construction Work in accordance with the Approved Plans and Specifications,
applicable Requirements and this Lease.
(f) Bonds. If customarily obtained in accordance with standard industry
practices for the type of Construction Work being performed by Tenant, Tenant shall obtain and
deliver to Lease Administrator (i) a performance or completion bond naming Landlord as obligee
in an amount equal to one hundred percent (100%) of the aggregate costs and expenses of the
Construction Work in question to secure the faithful performance and completion of such
Construction Work; and (ii) a payment bond in an amount equal to one hundred per cent (100%)
of the aggregate costs and expenses of such Construction Work guaranteeing prompt payment of
monies due to all Persons furnishing labor or materials for such Construction Work. Each bond
shall be satisfactory to Landlord and Lease Administrator in form and substance and shall be
issued by a surety company licensed or authorized to do business in New York State and is
approved by the Comptroller. In the alternative, Tenant may deliver to Lease Administrator in
lieu of any bond a cash deposit or letter of credit in the face amount of one hundred percent
(100%) of the estimated costs and expenses of the Construction Work.
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Section 17.05. Performance of Construction Work. All Construction Work shall
be performed diligently and, subject to Unavoidable Delays, shall be completed on or before the
Scheduled Completion Date in good and workmanlike manner and in accordance with the
Approved Plans and Specifications, all applicable Requirements and this Lease. All materials
and equipment utilized or furnished in connection with any and all Construction Work shall be
new (unless otherwise specified in the Approved Plans and Specifications) and in good
condition, fully operational, without patent or latent defects, suitable for its intended purpose and
shall comply with the requirements of the Approved Plans and Specifications. At all times
during the performance of any Construction Work, Tenant shall maintain the Premises in a neat
and orderly condition and shall protect the Premises against deterioration, loss, damage and theft.
Section 17.06. Supervision of Architect. All Construction Work shall be
supervised by an Architect, construction engineer or other licensed professional qualified to
perform such supervision, and all material changes to the Approved Plans and Specifications,
shall be undertaken by an Architect.
Section 1 7. 07. Rights of Inspection.
(a) Landlord, Lease Administrator and their representatives shall have the
right, at any time and from time to time, to visit the Premises (or in Landlord's sole discretion, to
maintain their field personnel at the Premises) to observe the performance of Construction Work
by Tenant (including, without limitation, the means, methods, procedures and techniques
utilized by Tenant) solely for the purpose of ensuring that the Construction Work is undertaken
in accordance with the Approved Plans and Specifications, all Requirements and this Lease.
Tenant shall invite Landlord and Lease Administrator to attend Tenant's job and/or safety
meetings, if any and shall provide Landlord and Lease Administrator with reasonable prior
notice thereof. Nothing herein shall impose any responsibility upon Landlord or Lease
Administrator for any failure by Tenant to comply with any Requirements or observe any safety
practices in connection with such construction, or constitute an acceptance of any work that does
not comply in all respects with the Approved Plans and Specifications, applicable Requirements
or the provisions of this Lease. The use of field personnel by Landlord and Lease Administrator
shall be at their sole cost and expense, unless the necessity therefor results from Tenant's
negligence or willful misconduct.
(b) Tenant shall keep Lease Administrator fully informed of Tenant's
progress in undertaking any Construction Work, including, without limitation, the construction
of the Tenant's Work. In furtherance of the foregoing, promptly, upon Lease Administrator's
request, Tenant shall provide Lease Administrator with copies of all documentation reasonably
necessary to evidencing Tenant's ability to complete any Construction Work.
Section 17.08. Completion of Construction Work.
(a) Substantial Completion. Upon Substantial Completion of any
Construction Work, including, without limitation, the Tenant's Work, Tenant shall deliver the
following to Lease Administrator: (i) a certification of the Architect (certified to Landlord and
Lease Administrator) that the Construction Work in question has been Substantially Completed
in accordance with the Approved Plans and Specifications therefore and that the Improvements
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constructed pursuant to such Construction Work comply with the Building Code of New York
City and all other Requirements, and (ii) a copy of the temporary Certificate of Completion or
Certificate of Occupancy for the entire Premises (or the relevant portion thereof) if required by
applicable law.
(b) Final Completion. Upon Final Completion of any Construction Work,
including, without limitation, the Tenant's Work, Tenant shall deliver the following to Lease
Administrator: (i) within thirty (30) days after a permanent Certificate of Occupancy or
Certificate of Completion is issued, or as soon as prepared by the Architect, whichever is earlier,
a complete set of "as built" plans for the Improvements constructed pursuant to such
Construction Work; and (ii) as soon as available, a copy of the permanent Certificate of
Occupancy or Certificate of Completion for the entire Premises (or relevant portion thereof).
Landlord and Lease Administrator shall have an unrestricted, non-exclusive, irrevocable license
to use such "as built" plans and survey for any purpose related to Landlord's interest in the
Premises without paying any additional cost or compensation therefor. Landlord and Lease
Administrator shall, at all times during the Term, maintain the plans, specifications, and surveys
at any time furnished by Tenant to Lease Administrator in strict confidence, subject, however, to
any requirement of applicable law to disclose or make information available to the public.
Section 17.09. Compliance with Requirements. Tenant assumes sole
responsibility for compliance with all applicable Requirements in the performance of
Construction Work. Accordingly, Tenant shall ensure that the Approved Plans and
Specifications and any Construction Work undertaken at the Premises during the Term complies
with all applicable Requirements.
Section 17.1 0. Risks of Loss. Tenant hereby assumes all risks of demolition,
removal, and construction of the Improvements, excluding those Improvements which Landlord
is obligated to maintain and repair under this Lease.
Section 17 .11. Costs and Expenses. Tenant understands and agrees that the all
Improvements constructed or required to be constructed by Tenant, including, without limitation,
the Tenant's Work, will be designed, constructed, maintained, secured and insured entirely at
Tenant's sole cost and expense without reimbursement or contribution by Landlord or Lease
Administrator, or any credit or offset of any kind for any costs or expenses incurred by Tenant
(except as otherwise expressly provided in this Lease). Tenant further covenants and agrees to
pay and discharge all Impositions, and all municipal fees, charges, assessments and impositions
assessed, charged or imposed in connection with the construction of all such Improvements.
Section 17.12. itle to the Improvements and Materials. Tenant understands and
agrees that Landlord has all right, title and interest to the Premises and that title to all
Improvements constructed by Tenant, including, without limitation, the Tenant's Work shall be
and vested in Landlord, immediately, upon commencement of construction thereof and at all
times thereafter. Tenant further understands and agrees that all materials to be incorporated into
the Premises shall, immediately upon their purchase and at all times thereafter, constitute the
property of Landlord, and upon construction of the Tenant's Work (or part thereof) or any other
Improvement, or the incorporation of such materials therein, title thereto shall be and continue in
Landlord. Notwithstanding the foregoing, Tenant further understands and agrees that (a)
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Landlord shall not be liable in any manner for payment to, or for damage or risk of loss or
otherwise by any contractor, subcontractor, laborer or supplier of materials in connection with
the purchase or installation of any such materials, and (b) except as provided in Section 12.03,
and Section 13.02(a)(ii), and Section 13.03(a)(iii), Landlord shall have no obligation to pay any
compensation to Tenant by reason of its acquisition of title to the materials. The term
"materials" as used in this Section shall include Equipment, but shall not include Trade
Fixtures.
Section 17.13. Names of Contractors, Materialmen. etc.; Approval ofConsultants,
(a) Tenant shall furnish Landlord with a list of all Persons entering into
contracts or otherwise engaged to perform any labor or supply any materials in connection with
any Construction Work. The list shall state the name and address of each such Person and the
capacity in which such Person is under contract performing work at the Premises. All persons
employed by Tenant with respect to any Construction Work shall be paid, without subsequent
deduction or rebate unless expressly authorized by law, not less than the prevailing minimum
hourly rate required by law.
(b) All architects, engmeers, and consultants retained by Tenant shall be
subject to the prior written approval of Lease Administrator, which approval shall not be
unreasonably withheld or delayed. Tenant shall notify Lease Administrator three (3) business
days in advance of, and permit Lease Administrator to participate in, meetings with the Architect
and such other architects, engineers, and consultants.
(c) Tenant shall furnish Lease Administrator with the name of each proposed
consultant, engineer, contractor and subcontractor in connection with any work to be performed
on the Premises, and the names of the principals of each of the foregoing. If required by
applicable law or policy binding on Landlord, Tenant shall cause each such proposed consultant,
engineer, contractor and subcontractor and principals thereof to complete and submit to Lease
Administrator all forms included in the City's "VENDEX" background investigation (or
successor system serving the same function) prior to the proposed commencement date of any
work to be performed by any of the foregoing. Tenant shall not contract with any such proposed
consultant, engineer, contractor and subcontractor, or permit any such proposed Contractor to
perform any work, unless and until Lease Administrator shall have advised Tenant that no such
proposed consultant, engineer, contractor and subcontractor nor any of its principals violates any
of the City's requirements under VENDEX.
(d) Lease Administrator shall make good faith efforts to give prompt notice to
Tenant of any noncompliance by Tenant's vendors or contractors.
Section 17 .14. Construction Agreements.
(a) Required Clauses. All Construction Contracts shall include the following
provisions:
(i) "[Contractor"]/["Subcontractor"]/"Materialman"] hereby agrees
that immediately upon the purchase from ["contractor"]/["subcontractor"]/["materialman"] of
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...
any building materials to be incorporated in the Project [or other Improvements] (as such terms
are defined in the lease pursuant to which the contract purchase hereunder acquired a leasehold
interest in the property (the "Lease")), such materials shall become the sole property of Landlord
(as defined in the Lease), notwithstanding that such materials have not been incorporated in, or
made a part of, such Project [or other Improvements] at the time of such purchase; provided,
however, that Landlord shall not be liable in any manner for payment or otherwise
to ]/["subcontractor"]/["materialman"] in connection with the purchase of any such materials and
neither Landlord nor Lease Administrator shall have any obligation to pay any compensation to
["contractor"]/["subcontractor"]/["materialman"] by reason of such materials becoming the sole
property ofLandlord."
(i) "[Contractor"]/["Subcontractor"]/["Material-man"] hereby agrees
that notwithstanding that ["contractor"]/["sub-contractor"]/["materialman"] performed work at
or furnished any materials for the Premises (as such term is defined in the Lease) or any part
thereof, neither Landlord nor Lease Administrator shall be liable in any manner for payment or
otherwise to ["contractor"]/ ["subcontractor"]/["materialman"] in connection with the work
performed at or materials furnished for the Premises.
(ii) "[Contractor"]/["Subcontractor"]/["Material-man"] hereby agrees
to make available for inspection by ["contractor's"]! [Landlord and Lease Administrator, during
reasonable business hours, ["subcontractor's"]/["materialman's"] books and records relating to
Construction Work (as defined in the Lease) being performed or the acquisition of any material
or Equipment (as such term is defined in the Lease) furnished for the Premises.
(iii)"A ll covenants, representations, guarantees and warranties of
["contractor"]/["subcontractor"]/["materialman"] hereunder shall if this contract is taken over by
the [Landlord or Lease Administrator] (as defined in the Lease) be deemed to be made for the
benefit of said Landlord under the Lease and shall be enforceable against
["contractor"]/["subcontractor"]/["material-man"] by said Landlord or Lease Administrator."
(iv) "Landlord is not a party to any Construction Agreement and will
not in any way be responsible to any party for any claims of any nature whatsoever arising or
which may arise from such ["agreement"] unless Landlord shall take over such ["agreement"]
and then only as to claims arising after this ["agreement"] is so taken over."
(b) Definition. "Construction Contracts" means a written contract to do any
Construction Work.
Section 17.15. Publicity. Within sixty (60) days after the Commencement Date,
Tenant shall furnish and install a project sign, the wording, design and location of which shall be
reasonably satisfactory to Landlord and Lease Administrator. Tenant shall invite Landlord,
Lease Administrator and their designee(s) to participate in groundbreaking and opening
ceremonies to be held at such time and in such manner as Landlord or Lease Administrator shall
reasonably approve not inconsistent with Tenant's construction schedule. In addition, Tenant
shall use its best efforts to consult with Landlord and Lease Administrator concerning any
publicity announcements to any news media prior to or upon Substantial Completion .
. 65.
ARTICLE 18
TENANT S WORK; PROJECT FUNDING; fMPREST ACCOUNT
Section 18.01. Tenant's Work. Tenant shall undertake the Construction Work
required for the construction of the Tenant's Work in accordance with the requirements of this
Lease. All such Construction Work shall comply with the requirements of Article 17 hereof and
this Article 18.
Section 18.02. Plans and Specifications. As soon as practicable, but not later than
thirty (30) days after the Commencement Date, Tenant shall submit to Lease Administrator for
Landlord's and Lease Administrator's prior review and approval Preliminary Plans and
Specifications for the Tenant's Work. The review and approval of the Preliminary Plans and
Specifications for the Tenant's Work shall be conducted by Lease Administrator in accordance
with Section 17.03(c).
Section 18.03. Construction of the Tenant's Work. Tenant shall prepare and
distribute to contractors of Tenant's selection a request for proposal (an "RFP"), subject to the
provisions hereof, for Tenant's Work and, at Tenant's option, any other Construction Work to be
undertaken by Tenant concurrently therewith. Subject to the terms and conditions of this Lease,
Tenant shall evaluate such submissions and bids and, based thereon, Tenant shall deliver to
Lease Administrator a stipulated sum or cost-plus contract, with a guaranteed maximum price, or
construction management contract, or other form of contract and a statement of proposed
Construction Costs. Tenant shall commence the Construction Work necessary for construction
ofthe Tenant's Work on the Construction Commencement Date (subject to Unavoidable Delays
not to exceed, in the aggregate ninety (90) Business Days, and shall prosecute such Construction
Work with diligence and continuity, and shall Substantially Complete the Tenant's Work on or
before the Scheduled Completion Date (subject to Unavoidable Delays) in accordance with the
Approved Plans and Specifications and the other requirements of this Lease.
Section 18.04. Project Funding. As a condition to Landlord's entering into this
Lease with Tenant, Tenant has provided evidence, in the Development Plan, satisfactory to
Landlord, in its good faith discretion, that Tenant has, and shall maintain, sufficient funds to
develop the Premises in accordance with the Development Plan and to operate the Premises and
the Facility thereafter, for the uses and purposes set forth in this Lease and in accordance with
the other provisions of this Lease.
Section 18.05. Imprest Account. Within thirty (30) days following delivery of
Phase C by Landlord to Tenant with Landlord's Work completed and in the condition required
under this Lease, Tenant shall deposit into an escrow account, cash or an equivalent letter of
credit (either, the "Imp rest Account") to be held by Landlord, in an amount equal to 10 percent
of the total development costs over the first five years of the Project according to Tenant's
project budget for the Tenant Work. The lmprest Account funds shall be dedicated to Tenant's
Project costs, and shall be disbursed to Tenant for reimbursement of its Project expenditures,
including Tenant's Work, within twenty (20) days following the issuance of a TCO, if required
by applicable law, or its functional equivalent, and demand therefore by Tenant, which demand
shall include an invoice for payment of a particular expenditure or Architect's certificate of
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payment to a contractor for certain Tenant's Work. In the event that Tenant shall default on its
development of the Project, then the City shall be entitled to retain any remaining Imprest
Account funds as damages.
ARTICLE 19

Section 19.0 1. Obligation to Comply with Requirements.
(a) By Tenant. Tenant shall comply with all Requirements applicable to
the maintenance, management, use and operation of the Premises and Tenant's performance of
its obligations hereunder, including, without limitation, any Construction Work, without regard
to the nature of the work required to be done, whether extraordinary or ordinary, and whether
requiring the removal of any encroachment, or affecting the maintenance, use or occupancy of
the Premises, or involving or requiring any structural changes or additions in or to the Premises,
and regardless of whether such changes or additions are required by reason of any particular use
that may be made of the Premises, or any part thereof, except that Landlord shall, at Landlord's
expense, comply with all Requirements as above provided with respect to those portions of the
Premises and/or items for which Landlord is responsible pursuant to Section 15.10 hereof Article
1 hereof, and/or as provided in Section 2.04 and/or with respect to any violations of
Requirements with respect to the Premises existing prior to the date that such portion of the
Premises has been delivered to Tenant as required under this lease.
ARTICLE20
DISCHARGE OF LIENS; BONDS
Section 20.0 1. No Liens Are Permitted. Except as otherwise specifically provided
in this Lease, Tenant shall not create, cause to be created, nor suffer or permit to remain, any
Lien, upon (a) this Lease, the leasehold estate created hereby, the income therefrom, the
Premises, or any part of the Premises, (b) any assets of, or funds appropriated to, Landlord,
Lease Administrator or Apple, or (c) any other matter or thing whereby the estate, rights or
interest of Landlord in and to the Premises, or any part thereof, might be impaired, except those
resulting from Tenant's recording of the Lease (which Landlord acknowledges Tenant may do)
or relating to the Trade Fixtures.
Section 20.02. Discharge of Liens.
(a) Without limiting the generality of the foregoing, if any mechanic's,
laborer's, vendor's, material provider's or similar statutory Lien is filed against the Premises, or
any part thereof, or this Lease or leasehold estate, or the income therefrom, or if any public
improvement Lien created, or caused or suffered to be created, by Tenant shall be filed against
any assets of, or funds appropriated to, Landlord, Lease Administrator or Apple, Tenant shall,
within thirty (30) days after receiving notice of the filing of such mechanic's, laborer's, vendor's,
material provider's or similar statutory Lien or public improvement Lien, cause it to be vacated
67 -
or discharged of record by payment, deposit, bond, order of a court of competent jurisdiction or
otherwise.
(b) Notwithstanding the requirements of Section 20.02(a) hereof, Tenant shall
not be required to discharge a Lien if Tenant shall have (i) furnished Landlord or Lease
Administrator with a cash deposit, bond or other security reasonably satisfactory to Landlord or
Lease Administrator in an amount sufficient to pay the Lien with interest and penalties, and (ii)
brought an appropriate proceeding to discharge such Lien and prosecutes such proceeding with
diligence and continuity; except that, if despite Tenant's efforts to seek discharge of the Lien,
Landlord or Lease Administrator, reasonably believes such Lien is about to be foreclosed and so
notifies Tenant, or if the Premises or any part thereof is in imminent danger of being forfeited or
if Landlord is in danger of being subjected to criminal liability or penalty, or civil liability in
excess of the amount for which Tenant shall have furnished security as hereinabove provided, by
reason of failure to vacate or discharge such Lien, Tenant shall immediately cause such Lien to
be discharged of record, or Landlord or Lease Administrator may use the security furnished by
Tenant to it in order to so discharge the Lien for which such security was given.
Section 20.03. No Authority to Contract in Name of Landlord. Nothing contained
in this Lease shall be deemed or construed to constitute the consent or request of Landlord or
Lease Administrator, express or implied, by implication or otherwise, to any contractor,
subcontractor, laborer or material provider for the performance of any labor, or the furnishing of
any materials for any specific improvement of, alteration to, or repair of, the Premises, or any
part thereof, nor as giving Tenant any right, power or authority to contract for, or permit the
rendering of, any services or the furnishing of materials that would give rise to the filing of any
Lien against the Premises, this Lease, the leasehold estate created hereby or any part of any of
the foregoing, or any income therefrom, or against assets of, or funds appropriated to, Landlord,
Lease Administrator or Apple.
ARTICLE 21
CERTAIN REPRESENTATIONS AND WARRANTIES OF TENANT
Subject to the provisions of Section 29.14, Tenant hereby represents and warrants
to Landlord as follows:
Section 21.01. Incorporation, Good Standing and Due Qualification. Tenant is a
corporation duly organized, validly existing and in good standing under the laws of the State of
Georgia, has the power and authority to own its assets and to transact the business in which it is
now engaged or proposed to be engaged, and is duly qualified as a foreign corporation and in
good standing under the laws of each other jurisdiction in which such qualification is required,
except where such failure to be so qualified would not reasonably be expected to have a material
adverse effect on Landlord or Tenant's performance of its obligations under this Lease.
Section 21.02. Corporate Power and Authority; No Conflicts. Subject to Section
3.01(c), the execution, delivery and performance by Tenant of this Lease have been duly
authorized by all necessary corporate action and do not and will not: (a) require any consent or
approval of its stockholders; (b) contravene its charter or by-laws; (c) violate any provision of,
. 68 .
or, except as required by applicable law, require any filing, registration, consent or approval
under, any law, rule, regulation, order, writ, judgment, injunction, decree, determination or
award presently in effect having applicability to Tenant, except the required court approval with
respect to the Current Bankruptcy, (d) result in a breach of, or constitute a default or require any
consent under any indenture or loan or credit agreement or any other agreement, lease or
instrument to which Tenant is a party or by which it or its properties may be bound or affected
other than pre-petition agreements the enforcement of which are stayed under the Current
Bankruptcy; (e) result in, or require, the creation or imposition of any Lien, upon or with respect
to any of the properties now owned or hereafter acquired by Tenant; or (f) cause Tenant to be in
default under any law, rule, regulation, order, writ, judgment, injunction, decree, determination
or award or any such indenture, agreement, lease or instrument other than pre-petition agreement
the enforcement of which are stayed under the Current Bankruptcy.
Section 21.03. Legally Enforceable Agreements. This Lease is a legal, valid and
binding obligation of Tenant enforceable against Tenant in accordance with its terms, except to
the extent that such enforcement may be limited by bankruptcy, insolvency and other similar
laws affecting creditors' rights generally.
Section 21.04. Litigation. Except for the Current Bankruptcy, there are no
actions, suits or proceedings pending or, to the knowledge of Tenant, threatened against, or
affecting Tenant before any court, Governmental Authority or arbitrator, which may, in any one
case or in the aggregate, materially adversely affect the financial condition, operations,
properties or business of Tenant, or the ability of Tenant to perform its obligations under this
Lease.
Section 21.05. Taxes. Except for (i) assessments, taxes, charges, claims, penalties
and interest, the payment of which is subject to federal bankruptcy law or the bankruptcy court
presiding over the Current Bankruptcy or (ii) taxes being contested in good faith, Tenant has
filed all tax (federal, state and local) returns required to be filed and has paid all taxes,
assessments and governmental charges and levies thereon to be due, including interest and
penalties.
Section 21.06. Operation of Business; Compliance with Laws. Tenant possesses
all applicable or necessary licenses, permits, franchises, patents, copyrights, trademarks and trade
names, or rights thereto, to conduct its business substantially as now conducted and as presently
proposed to be conducted, and Tenant is not in violation of any valid rights of others with respect
to any of the foregoing.
Section 21.07. No Brokers. Tenant has not dealt with any broker, finder or like
entity in connection with this Lease or the transactions contemplated hereby. This representation
shall survive the expiration or earlier termination of this Lease.
Section 21.08. No Prohibited Persons. As of the date hereof, none of the
shareholders, partners or officers of Tenant (or of any entity having an ownership interest in
Tenant or in such other entity, except Tenant makes no representation as to minority
shareholders of any corporation which is listed on any securities exchange regulated by the SEC)
is a Prohibited Person.
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Section 21.09. No Undue Influence. No officer, agent, employee or
representative of Tenant has made any payment or given other consideration to any officer,
agent, employee or representative of Landlord, Lease Administrator or Apple, and no officer,
agent, employee or representative of Landlord, Lease Administrator or Apple has any interest,
direct or indirect in Tenant, this Lease, or the proceeds thereof, to the best knowledge of Tenant
without inquiry. Tenant acknowledges that Landlord is relying on the warranty and
representation contained in this Section and that Landlord would not enter into this Agreement of
Lease absent the same. It is specifically agreed that, in the event the facts hereby warranted and
represented prove to be incorrect, Landlord shall have the right to terminate this Lease upon
twenty-four (24) hours' notice to Tenant and to rescind this transaction in all respects.
Section 21.1 0. No Other Representations. Tenant or its authorized representatives
have visited the Premises and are fully familiar with the Premises, their physical condition, and
Requirements applicable thereto. Tenant further warrants and represents that, except as
otherwise provided in this Lease: (a) no representations, statements, or warranties, express or
implied, have been made by, or on behalf of, Landlord or Lease Administrator with respect to the
Premises, the transactions contemplated by this Lease, the status of title to the Premises, the
physical condition thereof, the Requirements applicable thereto, the use that may be made of the
Premises, or the absence of "Hazardous Materials" on or under the Premises, and (b) Tenant has
relied on no such representations, statements or warranties in its determination to enter into this
Lease.
ARTICLE 22
LIMITATION ON LIABILITY
Section 22.01. Landlord not Liable for Injury or Damage, Etc. Except as
expressly provided in the Lease, including, without limitation in Section 2.03(b) and 4.01
thereof:
(a) From and after the Commencement Date neither Landlord, Lease
Administrator nor Apple shall be liable for any injury or damage to Tenant or to any Person
happening on, in or about the Premises or its appurtenances, nor for any injury or damage to the
Premises, or to any property belonging to Tenant or to any other Person, that may be caused by
fire, by breakage, or by the use, misuse or abuse of any portion of the Premises, or that may arise
from any other cause whatsoever, unless, and only to the extent that, such injury or damage is
determined to be caused by Landlord, Lease Administrator or Apple, or their respective agents',
employees' or contractors' breach of this Lease, or their respective violations of law or tortious
acts or omissions;
(b) From and after the Commencement Date neither Landlord, Lease
Administrator nor Apple shall be liable to Tenant for any failure of water supply, gas or electric
current, nor for any injury or damage to any property of Tenant caused by or resulting from
gasoline, oil, steam, gas, electricity, or hurricane, tornado, flood, wind or similar storm or
disturbance after the Commencement Date, or by or from water, rain or snow which may leak or
flow from the street, sewer, gas mains or subsurface area or from any part of the Premises, or
body of water under or adjacent to the Premises, or by or from leakage of gasoline or oil from
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..
pipes, appliances, sewer or plumbing works therein, or from any other place, nor for interference
with light or other incorporeal hereditaments by any Person, or caused by any public or quasi-
public work, unless, and only to the extent that such failure, injury or damage is caused by
Landlord, Lease Administrator or Apple, or their respective agents', employees' or contractors'
negligence, or intentional tortious acts, or its or their material breach of this Lease.
(c) Neither Landlord, Lease Administrator nor Apple shall be liable for any
latent or patent defect in the Premises except as set forth in Section 2.03(b).
Section 22.02. Landlord Exculpation. The liability of Landlord, Lease
Administrator or Apple, for damages or otherwise, shall be limited to Landlord's interest in the
Premises and the proceeds, payable to Landlord, of any insurance policies covering or relating to
the Premises, and any awards payable to Landlord in connection with any condemnation of part
or all of the Premises. In no event, however, shall Landlord's interest in the Premises include:
(i) any rights, claims, or interests of Landlord that at any time may arise from or be a result of
Landlord's governmental powers or rights or Landlord's actions in its governmental capacity; (ii)
except as otherwise provided above, any rents, issues, or proceeds from or in connection with the
Premises, or that would otherwise be within Landlord's interest in the Premises, from and after
such time as such items have been received by Landlord; or (iii) any proceeds resulting from a
levy under execution or attachment against Landlord's fee interest in the Premises (it being
understood and agreed that Tenant shall not seek to effect such a levy under execution or
attachment). None of the elected officials, directors, officers, partners, joint venturers,
principals, shareholders, employees, agents or servants of Landlord, Lease Administrator or
Apple shall have any liability (personal or otherwise) hereunder or be subject to levy, execution
or other enforcement procedure for the satisfaction of any remedies of Tenant available
hereunder.
Section 22.03. Governs Lease. The provisions of this Article 22 shall govern
every other provision of this Lease. The absence of explicit reference to this Article 22 in any
particular provision of this Lease shall not be construed to diminish the application of this Article
22 to such provision. This Article 22 shall survive the expiration or earlier termination of this
Lease.
Section 22.04. Other Remedies. Nothing in this Article 22 is intended to limit the
remedies available to any party under this Lease other than by limiting the enforcement of those
remedies to a party's interest in the Premises, in the manner and to the extent provided in this
Article 22. Nothing in this Article 22 is intended to prevent or preclude any person from
obtaining injunctive or declaratory relief with respect to any claim arising under this Lease or in
connection with the Premises.
ARTICLE 23
IND MNIFICATION
Section 23.01. Obligation to Preserve Landlord, Lease Administrator and Apple
against Liability. Tenant is solely responsible for the security of the Premises and Tenant's
operations on, above or about the Premises so as to avoid bodily injury and/or property damage .
71
Tenant shall not perform any act, or do anything, or permit that any act be performed or thing
done at the Premises, or any portion thereof, except as contemplated or required hereby that
subjects Landlord, Lease Administrator or Apple to any liability for injury to any Person or
damage to property for any reason whatsoever, including, without limitation, by reason of any
violation of any Requirement, and Tenant shall exercise such control over the Premises so as to
fully defend, preserve and protect Landlord, Lease Administrator and Apple against any such
liability.
Section 23.02. Obligation to Indemnify, Tenant shall defend, indemnify and save
Landlord, Lease Administrator and Apple, and their respective directors, officers, employees,
agents and servants (collectively, the "Indemnitees") harmless from and against any and all
liabilities, suits, obligations, fines, damages, penalties, claims, costs, charges and expenses,
including, without limitation, court costs and reasonable attorneys' fees and disbursements, that
may be imposed upon, or incurred by, or asserted against, any of the Indemnitees by reason of
Tenant's breach of Lease, its failure to perform the obligations hereunder on its part to be
performed or Tenant's negligent or tortious acts or omissions; except that no Indemnitee shall be
so indemnified and saved harmless (or pursuant to the later provisions of this Section) to the
extent that such liabilities, suits, obligations, fines, damages, penalties, claims, costs, charges and
expenses are caused by the negligence or intentionally tortious acts of such Indemnitee, or by
reason of any of the following:
(a) Construction Work. Any Construction Work or act done in, on, or about
the Premises or any part thereof by or on behalf of Tenant;
(b) Control. The control or use, non-use, possession, occupation, alteration,
condition, operation, maintenance or management of the Premises, or any part thereof, or of any
street, plaza, sidewalk, curb, vault, body of water, or space comprising a part thereof or adjacent
thereto, including, without limitation, any violations imposed by any Governmental Authorities
in respect of any of the foregoing, but excluding portions of the Premises which Landlord
controls or which Landlord is responsible to maintain, repair and/or replace, unless any liability
with respect to such areas arises from the negligent acts or omissions of Tenant;
(c) Acts or Failure to Act of Tenant. Any act or failure to act on the part of
Tenant or any of its respective partners, joint venturers, officers, shareholders, directors, agents,
contractors, servants, employees, licensees or invitees;
(d) Accidents. Injury to Person or Property. Any accident, injury (including
death at any time resulting therefrom) or damage to any Person or property occurring in, on, or
about the Premises, or any part thereof, or in, any sidewalk, comprising a part thereof or
immediately adjacent thereto;
(e) Lease Obligations. Tenant's failure to make any payment or to perform or
comply with any of the other covenants, agreements, terms or conditions contained in this Lease
on Tenant's part to be kept, observed, performed or complied with and/or the exercise by
Landlord or its designee of any remedy provided in this Lease with respect to such failure;
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''
(f) Lien, Encumbrance or Claim Against Premises or Funds. Any Lien,
encumbrance or claim that may be alleged to have been imposed or arisen against or on the
Premises caused by Tenant, including by any work of Tenant, or any Lien, encumbrance or claim
created or permitted to be created by Tenant or any of its partners, joint venturers, officers,
shareholders, directors, agents, contractors, servants, employees, licensees or invitees against any
assets of, or funds appropriated to, Landlord, or any liability that may be asserted against
Landlord with respect thereto;
(g) Default of Tenant. Any failure on the part of Tenant to keep, observe and
perform any of the terms, covenants, agreements, provisions, conditions or limitations contained
in, any other contracts and agreements affecting the Premises, on Tenant's part to be kept,
observed or performed;
(h) Execution, Deliverv and Recording Fees. Any recording fees or transfer
tax, if any, attributable to the execution, delivery or recording of this Lease or a memorandum
hereof;
(i) Contest and Proceedings. With respect to Landlord in its proprietary
capacity, any contest or proceeding brought by Tenant, or permitted to be brought by Tenant
pursuant to Article 3 8 hereof;
(j) Brokerage. Any claim for brokerage comm1ss1ons, fees or other
compensation by any Person who alleges to have acted for Tenant in connection with this Lease
or the transactions contemplated by this Lease; or
(k) Hazardous Materials. Except as provided in Section 2.04(b) hereof, any
claim arising out of, or in any way related to the presence, storage, transportation, disposal,
release or threatened release of any Hazardous Materials over, under, in, on, from or affecting
the Premises that have been introduced to the Premises by Tenant or resulting from the
negligence or intentional tortious acts of Tenant or its directors, officers, employees, agents,
contractors or other invitees.
Section 23.03. Contractual Liabilitv. The obligations of Tenant under this Article
23 shall not be affected in any way by the absence of insurance coverage, or by the failure or
refusal of any insurance carrier to perform an obligation on its part to be performed under
insurance policies affecting the Premises.
Section 23.04. Defense of Claim, Etc. If any claim, action or proceeding is made
or brought against any of the lndemnitees in connection with any event referred to in Section
23.02 hereof, then upon demand of Landlord, Tenant shall either resist, defend or satisfy such
claim, action or proceeding in such Indemnitee's name, by the attorneys for, or approved by,
Tenant's insurance carrier (if such claim, action or proceeding is covered by insurance), or by
such other attorneys as Landlord shall reasonably approve. The foregoing notwithstanding, any
such Indemnitee may engage its own attorneys to defend such Indemnitee, or to assist such
Indemnitee in such Indemnitee's defense of such claim, action or proceeding, as the case may be,
at such Indemnitee's sole cost and expense.
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Section 23.05. Notification and Payment. Promptly, upon having actual
knowledge thereof, an Indemnitee shall notify Tenant of any cost, liability or expense incurred
by, asserted against, or imposed on, such Indemnitee, as to which cost, liability or expense
Tenant has agreed to indemnify such Indemnitee pursuant to this Section 23.05. Tenant agrees
to pay such Indemnitee all amounts due under this Section 23.05 within fifteen (15) business
days after Landlord's request therefor, if Tenant is obligated to make such payment pursuant to
the terms of this Lease, and any non-payment thereof by Tenant shall constitute a Default for
which Landlord may declare an Event of Default in accordance with the provisions of Article 29
hereof.
Section 23.06. Survival Clause. The provisions of this Article 23 shall survive the
expiration or earlier termination of this Lease.
ARTICLE 24
LANDLORD'S RIGHT TO PERFORM TENANT' S COVENANTS
Section 24.01. Landlord's Right to Perform. If at any time Tenant shall fail to pay
for or maintain any of the insurance policies required to be provided by Tenant pursuant to
Article 11 hereof, or to make any other payment or perform any other act on its part to be made
or performed hereunder, including, without limitation, the obligation to cause the discharge of
Liens pursuant to Article 20, then, upon not less than fifteen (15) days' prior notice to Tenant (or,
in case of any emergency or any other circumstances that may materially adversely affect
Landlord, or Landlord's interest in the Premises, on such notice as may be reasonable under the
circumstances), and without either releasing Tenant from any obligation of Tenant hereunder, or
waiving Landlord's right to terminate this Lease upon an Event of Default in accordance with the
provisions hereof, or any other right or remedy available to Landlord hereunder, at law or at
equity, Landlord may (but shall not be required to):
(a) pay for and maintain any of the insurance policies required to be furnished
by Tenant pursuant to Article 11 hereof, or
(b) make any other payment or perform any other act on Tenant's part to be
made or performed in accordance with this Lease (except for (i) any maintenance or repair
obligation imposed on Tenant pursuant to Article 15 hereof, or (ii) any act that would require
Landlord, its agents, employees, contractors, or any other Person acting on Landlord's behalf to
enter upon the Premises, or any portion thereof, for any such purpose), and may take all such
action as may be necessary therefor. Notwithstanding the foregoing, neither Landlord nor any
agent, employee, contractor or any other person acting on Landlord's behalf may enter upon the
Premises or any portion thereof for any such purpose.
Section 24.02. Amounts Paid by Landlord are Rental. All reasonable sums so
paid by Landlord and all reasonable costs and expenses incurred by Landlord in connection with
the performance of any such act shall bear interest thereon at the Late Charge Rate from the
respective dates of Landlord's making of each such payment, or incurring each such cost and
expense. All such sums and interest thereon shall be paid by Tenant or caused to be paid by
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Tenant to Landlord, upon demand, but in no event not later than the first day of the month
following the giving of any notice related thereto.
Section 24.03. Proof of Damages. Landlord shall not be limited in the proof of
any damages that it may claim against Tenant arising out of, or by reason of, Tenant's failure to
provide and keep insurance in force in accordance with the provisions of this Lease to the
amount of the insurance premium or premiums not paid. Landlord shall be entitled to seek, and
if successful, to recover, as damages for such Default or Event of Default, the uninsured amount
of any loss and damage sustained or incurred by it and the reasonable costs and expenses of any
suit in connection therewith, including, without limitation, reasonable attorneys' fees and
disbursements.
Section 24.04. Right to Use Deposited Funds. Upon Landlord's election to
commence or complete any Construction Work pursuant to Section 24.01 above, (a) Tenant
shall, as provided in Article 11, pay immediately, or cause to be paid immediately, to Landlord,
all insurance proceeds that have been received by Tenant in connection with a Casualty (or
proceeds of a condemnation award received in connection with a condemnation affecting part or
all of the Premises as provided in Article 13), reduced by (i) the costs reasonably incurred by
Tenant in the collection of such proceeds and (ii) those reasonable amounts that Tenant has
applied to the Construction Work, and if such sums are insufficient to complete the Construction
Work, Tenant on Landlord's demand shall pay the deficiency to Lease Administrator, and (b)
Lease Administrator shall pay all undisbursed moneys held by it to Landlord.
Section 24.05. Discharge of Liens. If Tenant shall fail to cause any mechanic's,
laborer's, vendor's, material provider's or similar statutory Lien or any public improvement Lien
to be discharged in accordance with the provisions of Article 20 hereof, Landlord may, but shall
not be obligated to, discharge such Lien of record either by paying the amount claimed to be due
or by procuring the discharge of such Lien by deposit or by bonding proceedings. Landlord may
also compel the prosecution of an action for the foreclosure of such Lien by the lienor and the
payment of the amount of the judgment in favor of the lienor with interest, costs and allowances.
Any liability, cost or expense (including, without limitation, court costs and reasonable
attorney's fees and disbursements) incurred by Landlord, Lease Administrator or Apple in
connection with the discharge of any such Lien shall constitute Rental and shall be payable by
Tenant upon demand therefor by either Landlord or Lease Administrator.
Section 24.06. Waiver, Release and Assumption of Obligations. Landlord's
payment or performance pursuant to the provisions of this Article shall not constitute, nor be
deemed to constitute (a) a waiver or release of the Default or Event of Default with respect
thereto (or any past or future Default or Event of Default) or of Landlord's right to terminate this
Lease and/or to take such other action as may be permissible under law or hereunder, or (b)
Landlord's assumption of Tenant's obligations to pay or perform any of Tenant's past, present or
future obligations hereunder.
Section 24.07. Intentionally Omitted.
Section 24.08. In addition to any other right or remedy of Tenant under this Lease
or otherwise, if Landlord shall be in default hereunder, which shall continue for thirty (30) days
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after written notice thereof from Tenant, then Tenant shall have the right, but not the obligation,
to cure such default, in which event Landlord shall pay to Tenant, upon demand, the reasonable
cost thereof plus interest at the Late Charge Rate. If same shall not be so paid, Tenant shall have
the right to deduct the same from an installment or installments of Rental, or other charges due or
becoming due under this Lease, except that if such default is not susceptible of being cured
within a period of thirty (30) days then as long as Landlord shall commence the curing thereof
within such time and shall proceed with reasonable diligence to cure the same, Tenant shall not
have the aforesaid right, provided, however, that if in Tenant's reasonable judgment an
emergency shall exist, the aforesaid thirty (30) day notice shall be shortened to such reduced
period, following notice, as shall be reasonable in the circumstances prior to Tenant curing such
default.
ARTICLE 25
NO SUBORDINATION; RECOGNIZED MORTGAGEES
Section 25.01. No Subordination. Tenant's interest in the Premises and in this
Lease, as the same may be modified, amended or renewed, shall not be subject or subordinate to
(a) any mortgage now or hereafter existing, (b) any other Liens or encumbrances hereafter
affecting Tenant's interest in this Lease and the leasehold estate created hereby, or (c) any
sublease, Liens or encumbrances now or hereafter placed on any subtenant's interest in the
Premises. This Lease and the leasehold estate of Tenant created hereby and all rights of Tenant
hereunder are and shall be subject only to the Title Matters.
Subject to the provisions of Section 25.01, Landlord shall have the unrestricted
right to further encumber its fee interest in the Premises. In the event that Landlord shall transfer
any or all of its interest in the Premises, and provided that there is no default by Tenant then
existing under the Lease, Landlord shall use best efforts to assure that no such further
encumbrance shall materially adversely affect Tenant's leasehold interest in and to the Premises.
In the event that Landlord shall so encumber its interest, Landlord shall, upon the request of
Tenant, cause its transferee to execute and deliver to Tenant or to any Recognized Mortgagee, a
non-disturbance and attornment agreement, in form and substance reasonably satisfactory to
Tenant, providing for Tenant's undisturbed possession and use of the Premises in accordance
with the terms of the Lease. In the event that any subtenant, assignee or licensee of Tenant is
then in possession at the Premises, as permitted by the terms of Article 14 hereof, Landlord, if
requested by Tenant, shall execute and deliver, and shall cause its transferee, to execute and
deliver, to any such subtenant, assignee or licensee, a non-disturbance and attornment agreement,
for continued occupancy by such subtenant, assignee or licensee, subject to the provisions of
Article 14 hereof.
Section 25.02. Effect of Mortgages by Tenant. Tenant shall have the right, at
any time and from time to time during the Term, to mortgage the leasehold estate created hereby,
provided that any such mortgage is subject and subordinate to this Lease. No Mortgage shall
extend to, affect, or be a lien or encumbrance upon, the estate and interest of Landlord in the
Premises or any part thereof.
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(a) "Mortgage" means any mortgage or deed of trust that constitutes a lien on
Tenant's interest in this Lease and the leasehold estate created hereby, given by a Recognized
Mortgagee.
Section 25.03. Mortgagee's Rights Not Greater than Tenant's.
(a) With the exception of the rights granted to Recognized Mortgagees
pursuant to the provisions of Sections 25.03, 25.04, 25.05 25.07, 25.09 and 25.26 hereof, the
execution and delivery of a Mortgage or a Recognized Mortgage shall not give nor shall be
deemed to give a Mortgagee or a Recognized Mortgagee any greater rights against Landlord than
those granted to Tenant hereunder.
(b) "Recognized Mortgage" means a Mortgage (i) the holder of which is not
an Affiliate of Tenant, (ii) that is held by a Person which is an Institutional Lender that is not a
Prohibited Person, (iii) which is subordinate to Landlord's fee simple interest in the Premises and
this Lease and complies in all respects with the provisions of this Article, a photostatic copy of
which has been delivered to Landlord (with photostatic copies of all related loan documents,
modifications, extensions, etc.), together with a certification by Tenant and the Mortgagee
confirming that said photostatic copies are true copies of the Mortgage and related documents
and giving the name and post office address of the holder thereof, (iv) copies of all modifications
and extensions of which have been similarly delivered to Landlord, and (v) which has been
recorded in the Office ofthe City Register, Kings County.
Section 25.04. Notice and Right to Cure Tenant's Defaults.
(a) Notice to Recognized Mortgagee. Landlord shall give to each Recognized
Mortgagee, at the address of the Recognized Mortgagee stated in the certification referred to in
Section 25.02(b)(iii) hereof, or in any subsequent notice given by the Recognized Mortgagee to
Landlord, and otherwise in the manner pursuant to the provisions of Article 25 hereof, a copy of
each notice of Default or Lease termination at the same time as it gives such notice of Default or
Lease termination to Tenant, and no such notice of Default or Lease termination shall be deemed
effective unless and until a copy thereof shall have been so given to each Recognized Mortgagee.
In no event will notices be delivered to more than two addresses per Recognized Mortgagee.
(b) Right and Time to Cure. Subject to the provisions of Section 25.05
hereof, each Recognized Mortgagee shall have a period of (i) thirty (30) days more, in the case
of a Default in the payment of Rental, and (ii) sixty ( 60) days more, in the case of any other
Default (each such period to commence running upon delivery to the Recognized Mortgagee of
the notice of Default), than is given Tenant under the provisions of this Lease to remedy the
Default, cause it to be remedied, or cause action to remedy a Default to be commenced, provided
that such Recognized Mortgagee delivers to Landlord, within twenty (20) days after the
expiration of the time given to Tenant pursuant to the provisions of this Lease to remedy the
event or condition which would otherwise constitute an Event of Default hereunder, its written
agreement to take the action described in clauses (A) or (B) of Subsection (d) below.
(c) Acceptance of Recognized Mortgagee's Performance. Subject to the
provlSlons of Section 25.05 hereof, Landlord shall accept performance by a Recognized
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Mortgagee or its nominee or designee, of any covenant, condition or agreement on Tenant's part
to be performed hereunder with the same force and effect as though performed by Tenant.
(d) Commencement of Performance by Recognized Mortgagee for Non-
Rental Defaults. No Event of Default shall be deemed to have occurred so long as (i) all Rental
is paid as required in Section 25.03(b) of this Lease, (ii) a Recognized Mortgagee has delivered
the agreement required by Section 25.03(b) above within the period required thereby, and (iii)
the Recognized Mortgagee that delivered such agreement:
(1) in the case of a Default that is curable without possession of the
Premises by the Recognized Mortgagee, has commenced in good faith, within the period
required in Section 25.03(b) (ii) above, to cure the Default and is prosecuting such cure to
completion with diligence and continuity, or
(2) in the case of a Default where possession of the Premises is
required in order to cure the Default, or which is a Default that is otherwise not susceptible of
being cured by a Recognized Mortgagee, no such Event of Default shall be deemed to have
occurred if a Recognized Mortgagee has instituted foreclosure proceedings within sixty ( 60) days
of the day on which a Default would otherwise become an Event of Default under Article 29
hereof (it being agreed, however, that if by reason of the application of any bankruptcy,
insolvency or other laws or by reason of any injunction, restraining order, stay or other legal
proceeding, a Recognized Mortgagee is unable to institute foreclosure proceedings within the
sixty (60) day period herein above mentioned, said sixty (60) day period shall be extended until
the thirtieth (30th) day following the day on which such condition shall cease to exist, provided
that the Recognized Mortgagee shall have given Landlord notice of its inability to institute
foreclosure proceedings for such reason and of its intention to institute such foreclosure
proceedings when such condition ceases to exist), and is continuously prosecuting the
foreclosure proceedings with diligence and continuity to obtain possession of the Premises and,
upon obtaining possession of the Premises, promptly commences to cure the Default (other than
a Default which is not susceptible of being cured by a Recognized Mortgagee, which Default
shall be deemed cured upon the Recognized Mortgagee's obtaining possession of the Premises)
and prosecutes such cure to completion with diligence and continuity provided that such
Recognized Mortgagee shall have delivered to Landlord, in writing, its agreement to take the
actions described in this subsection 25.03(d)(iii)(B) and further provided that during the period in
which such action is being taken and/or any foreclosure proceedings are pending, no Event of
Default shall exist under Sections 29.01(a) hereof. At any time after the delivery of the
aforementioned agreement, such Recognized Mortgagee may notify Landlord, in writing, that it
has re.linquished possession of the Premises or that it will not institute foreclosure proceedings
or, if such proceedings shall have been commenced, that it has discontinued such proceedings
(such notice from a Recognized Mortgagee to Landlord shall be referred to hereinafter as a
"Cure Termination Notice"), and, in such event, such Recognized Mortgagee shall have no
further liability under such agreement from and after the date on which it delivers such notice to
the Landlord. Upon the delivery of a Cure Termination Notice, Landlord shall have the
unrestricted right to terminate this Lease and to take any other action it deems appropriate by
reason of any Event of Default by Tenant, unless Tenant shall have cured the Event of Default
prior to Landlord's delivery to Tenant of notice of the termination of the Term, and upon any
such termination, the provisions of Section 25.04 hereof shall apply. Notwithstanding the
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preceding however, Landlord shall not terminate this Lease after receiving a Cure Termination
Notice until it has allowed an aggregate total of two Recognized Mortgagees who have provided
the written agreement described in@ above an opportunity to commence to cure the Default,
pursuant to subsection (b) above and this subsection (d) (iii). No Mortgagee shall be liable under
Lease unless and until and then for only so long as it remains the owner of the leasehold estate.
Section 25.05. Execution ofNew Lease.
(a) Notice of Termination. If this Lease is terminated by reason of an Event
of Default, Landlord shall give prompt notice thereof to each Recognized Mortgagee.
(b) Request for and Execution ofNew Lease. If, within thirty (30) days of the
giving of the notice referred to in Section25.04(a) hereof, a Recognized Mortgagee shall request
a new lease, then subject to the provisions of Sections 25.04(c) and 25.05 hereof, within thirty
(30) days after Landlord shall have received such request, Landlord shall execute and deliver a
new lease of the Premises for the remainder of the Term to the Recognized Mortgagee, or a
designee or nominee of the Recognized Mortgagee approved by landlord. Said Recognized
Mortgagee (or permitted designee or nominee thereof) shall simultaneously execute such new
lease, as tenant thereunder. The new lease shall contain all of the covenants, conditions,
limitations and agreements contained in this Lease, provided, however, Landlord shall not be
deemed to have represented or covenanted that such new lease shall be superior to claims of
Tenant, Tenant's other creditors or a judicially appointed receiver or trustee for Tenant.
(c) Conditions Precedent to Landlord's Execution of New Lease. The
provisions of Section 25.05(b) hereof notwithstanding, Landlord shall not be obligated to enter
into a new lease with a Recognized Mortgagee unless the Recognized Mortgagee (i) shall pay to
Landlord, concurrently with the execution and delivery of the new lease, all Rental due under
this Lease (as though the Lease had not been terminated) up to and including the date of the
commencement of the term of the new lease and all reasonable expenses, including, without
limitation, reasonable attorneys' fees and disbursements and court costs, incurred in connection
with the Default or Event of Default, the termination of this Lease and the preparation of such
new lease, (ii) agrees that it shall promptly after execution ofthe new lease cure or commence to
cure all Defaults (other than those described in Sections 29.0l(f) through (j) hereof) then existing
under this Lease (as though the Term had not been terminated) which are susceptible of being
cured by a Recognized Mortgage, and (iii) shall deliver to Landlord a statement, in writing,
acknowledging that Landlord, by entering into such new lease with such Recognized Mortgagee,
shall not have or be deemed to have waived any Defaults or Events of Default then existing
under this Lease (other than those mentioned in Sections 29.01 (f) through (j)) notwithstanding
that any such Defaults or Events of Default existed prior to the execution of such new lease and
that the breached obligations which gave rise to the Defaults or Events of Default are also
obligations under such new lease.
(d) No Waiver of Default. The execution of a new lease shall not constitute a
waiver of any Default existing immediately before termination of this Lease and, except for a
Default which is not susceptible of being cured by a Recognized Mortgagee, the tenant under the
new lease shall cure or commence to cure, within the applicable periods set forth in Section
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29.01 hereof (commencing on the date the new lease is executed and delivered), all Defaults
existing under this Lease immediately before its termination.
(e) Assignment of Depositary Proceeds. Concurrently with the execution and
delivery of a new lease pursuant to the provisions of Section 25.05(b) hereof, and provided any
Defaults (notice of which shall have been given to Tenant) curable by payment of money have
been cured, Landlord shall assign to the tenant named therein all of its right, title in and interest
to moneys (including insurance proceeds and condemnation awards), if any, then held by, or
payable to, Landlord or Depositary that Tenant would have been entitled to receive but for the
termination of this Lease. If and to the extent there shall be any uncured Defaults of the nature
described in the immediately preceding sentence, Landlord may, pending the cure of such
Default(s), retain such portion of the monies as are reasonably necessary to effectuate the cure
thereof. Upon the curing of the Defaults, Landlord shall return to the new tenant, any portion of
the money retained by Landlord which was not used by Landlord to effectuate such cure. Any
sums then held by, or payable to, Depositary, shall be deemed to be held by, or payable to,
Depositary as depositary under the new lease.
(f) Assignment of Subleases. Upon the execution and delivery of a new lease
pursuant to the provisions of Section 25.05(b) hereof, all Subleases that have been assigned to
Landlord or entered into directly with Landlord, subject to the rights of Recognized Mortgagees,
shall be assigned and transferred, without recourse, by Landlord to the tenant named in the new
lease. Landlord shall also assign to the tenant named in the new lease all sums of money, if any,
held by Landlord as security for payment of any Subtenant's Sublease obligations. Between the
date of termination of this Lease and the date of the execution and delivery of the new lease
Landlord shall not enter into any direct lease of space at the Premises or cancel or modify any
Sublease or accept any cancellation, termination or surrender thereof (unless such termination is
effected as a matter of law upon the termination of this Lease or terminated by the terms of the
Sublease) without the consent of the Recognized Mortgagee entitled to request a new lease as
provided in Section 25.05 hereof, unless within the time provided in Section 26.04(b) hereof
such Recognized Mortgagee, or its permitted designee or nominee, has not requested a new lease
as provided in Section 25.05(b) hereof.
Section 25.06. Recognition by Landlord of Recognized Mortgagee Most Senior in
Lien. If more than one Recognized Mortgagee has exercised any of the rights afforded by
Sections 25.03 or 25.04 hereof, then only that Recognized Mortgagee, to the exclusion of all
other Recognized Mortgagees, whose Recognized Mortgage is most senior in lien as evidenced
by a priority in recording or a specific written agreement among Recognized Mortgagees
providing for the relative priorities of liens, shall be recognized by Landlord as having exercised
such right, for so long as such Recognized Mortgagee shall be diligently exercising its rights
under this Lease with respect thereto, and thereafter only the Recognized Mortgagee whose
Recognized Mortgage is next most senior in lien shall be recognized by Landlord, unless such
Recognized Mortgagee has designated a Recognized Mortgagee whose Mortgage is junior in lien
to exercise such right. If the relevant parties shall not agree on which Recognized Mortgage is
prior in lien, such dispute shall be determined, at no expense to Landlord, by a then current
certificate of title issued by a title insurance company licensed in New York State and chosen by
Landlord, and such determination shall bind the parties .
. 80 .
EXHIBIT A PART 4
Section 25.07. Application of Proceeds from Insurance or Condemnation Awards.
To the extent that this Lease requires that insurance proceeds paid in connection with any
damage or destruction to the Improvements or the proceeds of an award paid in connection with
a taking referred to in Article 13 hereof, be applied to restore any portion of the Improvements,
no Mortgagee shall have the right to apply the proceeds of insurance or awards toward the
payment of the sum secured by its Mortgage so long as this Lease shall remain in full force and
effect and no material default by Landlord hereunder shall have occurred and be continuing.
Section 25.08. Appearance at Condemnation Proceedings. A Recognized
Mortgagee shall have the right to appear in any condemnation proceedings and to participate in
any and all hearings, trials and appeals in connection therewith.
Section 25.09. Rights Limited to Recognized Mortgagees. The rights granted to a
Recognized Mortgagee under the provisions of this Lease shall not apply in the case of any
Mortgagee that is not a Recognized Mortgagee.
Section 25.1 0. Non-Disturbance and Recognition Agreement. At the request of a
Recognized Mortgagee, Landlord will enter into a non-disturbance and recognition agreement
agreeing to the matters set forth in this Article. So long as the AFL-CIO Building Investment
Trust is the Recognized Mortgagee, such non-disturbance and recognition agreement shall also
contain an agreement by Landlord to update the representations and warranties provided by
Landlord in Section 25.1 0 to the date of such Non-Disturbance and Recognition Agreement.
Section 25.11. No Merger. So long as any Recognized Mortgage is in existence,
unless all holders of Recognized Mortgages shall otherwise express their consent in writing, the
fee title to the Premises and the leasehold estate created by this Lease shall not merge, shall
remain separate and distinct, notwithstanding the acquisition of both fee title to the Premises and
the leasehold estate by Landlord, or by Tenant, or by any Recognized Mortgagee, or any other
party.
Section 25.12 .. No Amendment. Landlord and Tenant hereby agree that they will
not enter into any material amendment of this Article 25 without the prior written consent of
each Recognized Mortgagee.
ARTICLE 26
REPORTS, BOOKS AND RECORDS, INSPECTION AND AUDIT
Section 26.0 1. Financial Statements of the Operations of the Premises. Effective
upon Substantial Completion, Tenant shall furnish to Landlord the following:
(a) as soon as practicable after the end of each of the first three (3) quarterly
periods in each Lease Year, and, in any event, within thirty (30) days thereafter, a financial
statement of the operations of the Premises (including, without limitation, balance sheets, income
statements and funds statements showing changes in financial position) for the period
commencing with the first day of the current Lease Year and ending on the last day of such
quarterly period, setting forth, in accordance with Accounting Principles, in each case, in
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comparative form, the figures for the corresponding period of the previous Lease Year, all in
reasonable detail and certified as complete and correct in all material respects in accordance with
Accounting Principles, (subject to changes resulting from year-end audit adjustments), by the
chief operating officer or managing general partner of Tenant or the designee of such chief
operating officer or managing general partner;
(b) as soon as practicable after the end of each Lease Year, and, in any event,
within one hundred twenty (120) days thereafter, financial information relating to the operations
at the Premises, including, without limitation, income statements and funds statements showing
changes in financial position, the information required to be provided annually pursuant to the
provisions of Article 4 hereof, and other information which=may be reasonably requested by
Landlord, all certified in accordance with GAAP if such information is of the type customarily
certified in accordance with GAAP, in detail reasonably satisfactory to Landlord, to ascertain
and verifyJhe amount and components of; the payments required to be made by Tenant pursuant
to Article i of this Lease, and setting forth, in accordance with Accounting Principles, in each
case, in comparative form, the corresponding figures for the previous Lease Year, all in
reasonable detail and examined and reported upon by a Certified Public Accountant in
accordance with generally accepted auditing standards who shall render a written report thereon
to Landlord; and
(c) for as long as the City is Landlord and to the extent that the Administrative
Code of the City of New York Section 11-208.1 (or successor thereto) is then in force and effect,
income and expense statements of the type required by such code section (or successor thereto)
as if Tenant were the "owner" of the Premises as such term is used in said Section 11-208.1, such
statements to be submitted within the time periods and to the address Provided for in said Section
11-208.1 and shall be submitted notwithstanding that the city holds fee title to the Premises, that
the Premises may therefore not be "income-producing property" as that concept is used in
Section 11-208.1, or that PILOT rather than real estate taxes are being paid with respect to the
Premises.
(d) for so long as Tenant remains a public company which is regulated by the
S.E.C. and the financial accounting and financial reporting of Tenant are governed by the rules
and regulations of the S.E.C., then Tenant shall not be required to provide to Landlord any
information, the provision of which would cause Tenant to violate any rule or regulation of the
S.E.C.
Section 26.02. Maintenance of Books and Records. Tenant shall keep and
maintain complete and accurate books and records of accounts of the operations of the Premises
from which Landlord may determine for each Lease Year the accuracy of all Rental payments
made or required under this Lease and the items to be shown or set forth on the statements to be
delivered to Landlord pursuant to Section 26.01 hereof, and shall preserve, for a period of at least
six ( 6) years after the end of each applicable period of time, the records of its operations of the
Premises. However, if, at the expiration of such six (6) year period, Landlord is seeking to
contest or is contesting any matter relating to such records or any matter to which such records
may be relevant, Tenant shall preserve such records until one (1) year after the final adjudication,
settlement or other disposition of any such contest Tenant shall also promptly furnish to
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Landlord copies of all operating statements and financial reports from time to time furnished to
each Recognized Mortgagee.
Section 26.03. Books and Records.
(a) Inspection and Audits of Books and Records. Landlord, ( acting for itself,
or by its agents or representatives, and the Comptroller of the City of New York (the
"Comptroller") shall have the right from time to time during regular business hours, upon five
(5) Business Days' notice, to inspect, audit and, at its option, duplicate, at Landlord's expense,
all of Tenant's books and records and all other papers and files of Tenant relating in any manner
to the Premises or to this Lease for the period for which Tenant is required to maintain its records
as provided in Section 26.02, all of which shall be made available by Tenant at the Premises, or
electronically or elsewhere in New York City as determined by Landlord (provided, however,
that nothing herein shall be construed to prohibit Tenant from maintaining such books and
records at its corporate offices in Georgia rather than at the Premises). If the Comptroller
establishes a policy allowing the City to provide in future leases similar to this Lease for a right
to audit that extends less than the six (6) year period provided in Section 26.02 hereof, then such
shorter period shall be applicable hereunder, but in no event shall such period be less than one
(1) year. Tenant shall produce such books, records, papers and files upon request of Landlord,
the Comptroller and/or Landlord's agents or representatives. Subject to applicable law, Landlord
and the Comptroller shall hold in confidence and not disclose to any party, and shall cause
Landlord's agents and representatives to hold in confidence and not disclose to any party, any
and all information obtained from Tenant's books, records, papers and files, except as may be
necessary for the enforcement of Landlord's rights under this Lease.
(b) Notice to Tenant of Article 4 Underpayment. As soon as practicable after
receipt of financial statements of Tenant pursuant to Section 26.01(b) hereof, Landlord shall
respond by notifying Tenant whether it (i) accepts the contents therein or (ii) contests the
contents therein. If Landlord fails to provide the Tenant with the such response within one
hundred-twenty (120) days from receipt of Tenant's financial statements, Tenant may request
such response by notice to Landlord. Upon receipt of such request, Landlord shall respond in
writing within thirty (30) days. Landlord's failure to respond within said thirty (30) day period
shall be deemed approval of the financial statements in question subject, however, to further
audit by the Comptroller. Provided that Landlord has timely notified Tenant as provided above,
should audit of Tenant's 's financial statements performed by Landlord and/or Landlord's agents
or representatives disclose that any payment required pursuant to Article i_hereof, was
understated or that Tenant otherwise provided information that, in any of the foregoing cases, led
to an underpayment of (or on account of) any such payment, such underpayment shall be paid to
Landlord within ten (1 0) days after Tenant has received notice of such underpayment from
Landlord, together with interest thereon at the Late Charge Rate.
(c) Tenant's Payment of Audit Costs. If an audit of Tenant's financial
statements reveals that any payment required pursuant to Article ._was understated by more than
five percent (5%) of the amount originally claimed by Tenant with respect to such payment,
Tenant shall pay, within then (1 0) days after demand, the reasonable cost of such audit.
" 83 -
(d) Limitation of Damages. Landlord's right to collect damages for the
underpayment of any of the foregoing payments shall be limited to the amounts provided in this
Section 26.3; provided, that the foregoing shall not limit Landlord's rights with respect to an
Event of Default.
Section 26.04. Survival Clause. The obligations of Tenant under this Article shall
survive the Expiration ofthe Term.
Section 26.05. Local Law 69 Report. Upon execution of this Lease, Lessee, if it
has not already done so, shall complete and return to Lease Administrator (a) a questionnaire (the
"Questionnaire") in the form annexed hereto and made a part hereof as Exhibit describing, in
substance, how many and what types of jobs Lessee in good faith estimates that it will create and
retain with regard to its activities in the Premises or with respect to this Lease and its projected
timetable for the creation and retention of jobs for the first seven (7) years after the
Commencement Date, and (b) the attachments required by the Questionnaire. Lessee agrees that
thereafter it will receive and in good faith consider such proposals as the City and City-related
entities may make with regard thereto and shall provide the City and such entities with the
opportunity (x) to refer candidates who are City residents having the requisite experience for the
positions in question, and/or (y) to create a program to train City residents for those jobs. If the
information filled in on the Questionnaire changes between the date of its submittal to Lease
Administrator and the Commencement Date, Lessee shall promptly submit an amended
Questionnaire to Lease Administrator. The above provisions shall survive the expiration or
termination of this Lease.
ARTICLE 27
NON- DISCRIMINATION AND AFFIRMATIVE ACTION
Section 27.01. Non-Discrimination and Affirmative Action. So long as the City
or its designee shall be Landlord, Tenant shall be subject to the requirements of Executive Order
No. 50 (April 25, 1980) as amended ("E.O. 50"), or any successor thereto, as long as E.O. 50 or
any successor thereto, in whatever form and whenever enacted, is in force, in whole or in part,
and the regulations promulgated thereunder ("Regulations") and orders ("Orders") of the
Director ("Director") of the Division of Labor Services ("Division") (subject to any applicable
future amendments to E.O. 50, the Regulations, and/or Orders), and Tenant shall be bound for
such period or periods by the following requirements, which will be deemed amended by such
applicable future amendments.
Section 27.02. Non-Discrimination and Affirmative Action
(a) Tenant will hot engage in any unlawful discrimination against any
employee or job applicant because of actual or perceived race, creed, color, national origin,
gender, age, disability, marital status, sexual orientation, alienage or citizenship status with
respect to all employment decisions including, but not limited to, recruitment, advertising, hiring,
compensation, fringe benefits, leaves, promotion, upgrading, demotion, downgrading, transfer,
training and apprenticeship, lay-off and termination and all other terms and conditions of
employment;
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(b) Tenant will not engage in any unlawful discrimination in the selection of
contractors on the basis of the owner's, partner's or shareholder's actual or perceived race, creed,
color, national origin, gender, age, disability, marital status, sexual orientation, alienage or
citizenship;
(c) Tenant will state in all solicitations or advertisements for employees
placed by or on behalf of Tenant (i) that all qualified job applicants will receive consideration for
employment without unlawful discrimination based on actual or perceived race, creed, color,
national origin, gender, age, disability, marital status, sexual orientation, alienage or citizenship,
or (ii) that Tenant is an equal opportunity employer;
(d) Tenant will inform its employees in writing that it "treats all employees
and job applicants without unlawful discrimination as to actual or perceived race, creed, color,
national origin, gender, age, disability, marital status, sexual orientation, alienage or citizenship
in all employment decisions, including but not limited to recruitment, hiring, compensation,
training and apprenticeship, transfer, lay-off and termination and all other terms and conditions
of employment," and that "[i]fyou feel that you have been unlawfully discriminated against, you
may call or write the Division of Labor Services, General Counsel's Office, 11 0 William Street
3d Floor, New York, New York 10038, (212) 513-6323";
(e) Tenant will send to each labor organization or representative of workers
with which it has a collective bargaining agreement or other employment contract, memorandum
of agreement of understanding, written notification of its equal employment opportunity
commitments under E.O. 50, the Regulations, Orders and all employment programs and other
agreements between Tenant and the Division (collectively, "Division of Labor Services
Agreements");
(f) Tenant will, before any contract for Construction Work in the amount of
$1,000,000 or more is awarded, furnish or cause its contractor to furnish an Employment Report
to the Division in the form annexed hereto as Exhibit E("Employment Report"), as it may be
amended from time to time by the Division, and obtain from the Division written approval of the
proposed contractor(s). After Construction Work commences, Tenant will submit all
information and reports required by E.O. 50, the Regulations and Orders, including but not
limited to certified payrolls covering Tenant's construction work force and additional
information required pursuant to a Conditional Certificate of Compliance, employment program
or other Agreement, in such frequency and format as the Division may require;
(g) Tenant will permit the Division to have access to all relevant books,
records, accounts and work sites, to investigate compliance with this Lease and E.O. 50, the
Regulations, Orders, and all other Division of Labor Services Agreements subject to the
confidentiality and non-disclosure requirements of Section 26.03 (a);
(h) Tenant will refrain from entering into any contract, other written or oral
agreement or contract modification subject to E.O. 50 submission requirements with a contractor
who has not been approved by the Division;
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(i) Tenant, as "Owner"(as such term is used in AlA Form 201), will include,
or cause to be included, the following provisions and such additional language as the Division
may in writing require in every Construction Agreement of $1,000,000 or more or subcontract
for Construction Work of $750,000 or more in such a manner that the provision will be binding
upon all contractors and subcontractors, and will cause each contractor and subcontractor to
provide access to books, records and the work site(s) and to submit the information required by
the Division and/or Landlord, and will cause each contractor or subcontractor engaged in
Construction Work to comply with the following provisions. Landlord reserves the right to
inspect all contracts and subcontracts prior to execution to ensure that the required language is
included:
"This contract is subject to the requirements of Executive Order No. 50
(April 25, 1980), as amended ("E.O. 50") and the regulations promulgated
thereunder ("Regulations"), and orders ("Orders") of the Director
("Director") of the Division of Labor Services ("Division") (collectively,
"E.O. 50 Requirements"). The Division may examine this contract to
ensure that these provisions are included. By signing this contract,
contractor agrees:
(A) that it
(1) will not engage in any unlawful discrimination against any
employee or job applicant because of actual or perceived race,
creed, color, national origin, gender, age, disability, marital status,
sexual orientation, alienage or citizenship with respect to all
employment decisions, including, but not limited to, recruitment,
hiring, compensation, fringe benefits, leaves, promotion,
upgrading, demotion, downgrading, transfer, training and
apprenticeship, layoff and termination and all other terms and
conditions of employment;
(2) will not engage in any unlawful discrimination in the
selection of contractors on the basis of the owner's, partner's or
shareholder's actual or perceived race, creed, color, national origin,
gender, age, disability, marital status, sexual orientation, alienage
or citizenship;
(3) will state in all solicitations or advertisements for
employees placed by or on behalf of contractor (i) that all qualified
job applicants will receive consideration for employment without
unlawful discrimination based on actual or perceived race, creed,
color, national origin, gender, age, disability, marital status, sexual
orientation, alienage or citizenship, or (ii) that contractor is an
equal opportunity employer;
( 4) will inform its employees in writing that it "treats all
employees and job applicants without unlawful discrimination as
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to actual or perceived race, creed, color, national origin, gender,
age, disability, marital status, sexual orientation, alienage or
citizenship in all employment decisions, including but not limited
to recruitment, hiring, compensation, training and apprenticeship,
transfer, lay-off and termination and all other terms and conditions
of employment," and that "if you feel that you have been
unlawfully discriminated against, you may call or write the
Division of Labor Services, General Counsel's Office, 11 0
William Street, 3d Floor, New York, New York 10038, (212) 513-
6323."
(5) will send to each labor organization or representative of
workers with which it has a collective bargaining agreement or
other employment contract, memorandum of agreement or
understanding, written notification of its equal employment
opportunity commitments under E.O. 50 Requirements, and all
employment programs and other agreements between the
contractor and the Division (collectively, "Division of Labor
Services Agreements");
( 6) will furnish before any Construction Work commences an
Employment Report, copies of which are available upon request
from Owner. After Construction Work commences, contractor
will submit all information and reports required by E.O. 50
Requirements, including but not limited to certified payrolls
covering contractor's construction work force and additional
information required pursuant to a Conditional Certificate of
Compliance, employment program or other Agreement, in such
frequency and format as the Division may require;
(7) will permit the Division to have access to all relevant
books, records, accounts and work sites, to investigate compliance
with this contract and E.O. 50 Requirements and Division of Labor
Services Agreements.
(B) Contractor's failure to file timely, complete and accurate
Employment Reports or other information required by E.O. 50
Requirements and any other Agreement (or other document(s) required by
a federal or state agency providing assistance to the Construction Work) or
contractor's violation of the nondiscrimination clauses (A)(l) through (7)
of this Contract, contractor's failure to comply with an employment
program or other Agreement and/or contractor's failure to cause
compliance on the part of a subcontractor as provided below shall
constitute a material breach of this contract. Neither the provisions of any
collective bargaining agreement or other contract or understanding with a
union, nor the union's refusal to comply with E.O. 50 Requirements, shall
excuse contractor's obligations to abide by E.O. 50 Requirements. If the
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Division's staff, as a result either of the Division's review of or a
complaint by a job applicant, employee or former employee, finds that
contractor may not be in compliance, the Division's staff and the
contractor will meet to negotiate an employment program of corrective
actions to achieve contractor's full compliance with this contract and E.O.
50 Requirements. If contractor fails or refuses either to meet, to agree to
take necessary corrective measures, or to implement agreed corrective
measures, this contract or any portion hereof may be disapproved,
cancelled, terminated or suspended, or liquidated damages may be
assessed by Owner (or the general contractor, construction manager, prime
contractor or their subcontractors, as the case may be) or payments thereon
may be withheld and such other sanctions may be imposed and remedies
invoked in accordance with law. Liquidated damages for contractor's
failure to comply with the equal opportunity requirements hereunder will
be the amount of wages and fringe benefits that would have been paid to
the parties that should have been employed, as determined by the Division
or Owner. Nothing hereinbefore stated in these requirements shall limit
the Owner or the Division from pursuing any other remedy available by
law to enforce the E.O. 50 Requirements or Division of Labor Services
Agreements as the Director may order.
(C) Contractor agrees to include the provlSlons of the foregoing
paragraphs (A) and (B) in every subcontract of $750,000 or more to which
it becomes a party. Contractor agrees, and will state in every subcontract,
that contractor will take such action with respect to the subcontract as
Owner or the Director may direct, including canceling, suspending or
terminating the subcontract and/or stopping payments under the
subcontract, to enforce the E.O. 50 Requirements and Division of Labor
Services Agreements.
(D) Contractor further agrees that it will refrain from entering into any
subcontract, written or oral agreement or contract modification subject to
E.O. 50 submission requirements with a subcontractor who has not been
approved by the Division."
Section 27.03. Intentionally Omitted.
Section 27.04. Default. Tenant's failure (a) to file or cause the timely filing of
complete and accurate Employment Reports or other information required by E.O. 50, the
Regulations, Orders, or other Division of Labor Services Agreements (or other document(s)
required by a federal or state agency providing assistance to Construction Work) or (b) to
comply with nondiscrimination clauses (a) through (h) of Section 27.02 or (c) to comply with the
nondiscrimination and trainee provisions of Section 27.02(i), or to enforce the requirements
imposed on contractors or subcontractors by such clauses at the direction of the Division, shall
constitute a material breach of this Lease. Neither the provisions of any collective bargaining
agreement or other contract or understanding with a union, nor the union's refusal to comply
with E.O. 50 shall excuse Tenant's obligations to abide by E.O. 50 and the Regulations or its
. 88 .
obligations to include and enforce the contractor clauses of Section 27.02 hereof. If Landlord,
acting through the Division, as a result either of the Division's review or the complaint by a job
applicant, employee or former employee, finds that Tenant or a contractor or subcontractor may
not be in compliance, Landlord, acting through the Division, may notify Tenant (and the
contractor or subcontractor, as the case may be) describing the extent of non-compliance. If the
non-compliance is not remedied within thirty (30) days of Tenant's receipt of notice, the
Division shall request a meeting with Tenant (and with the contractor or subcontractor, as
appropriate) to negotiate an employment program of corrective actions to achieve Tenant's full
compliance with these clauses, E.O. 50, the Regulations and Orders. If Tenant fails or refuses
either to meet, to agree to take necessary corrective measures, to implement agreed corrective
measures, or to enforce contractors' obligations pursuant to the contract provisions set forth in
Section 27.02(i) and to cause contractors to enforce subcontractors' obligations thereunder,
Landlord, acting through the Director may (i) require Tenant to take corrective measures
pursuant to an employment program, (ii) assess Tenant as liquidated damages an amount equal to
the wages and fringe benefits that would have been paid to the parties that should have been
employed pursuant to the non-discrimination clauses of this Lease or the trainee provisions or
(iii) impose such other sanctions as may be imposed and remedies invoked in accordance with
law. Nothing hereinbefore stated in these requirements shall limit Landlord from pursuing any
other remedy available by law to enforce the E.O. 50 Requirements and Division of Labor
Services Agreements or from seeking additional damages.
Section 27.05. Compliance with Revised Program. In the event that a "Pre-
apprenticeship" or similar program is developed after the date of this Lease by the Division in
consultation with New York State and City agencies and construction industry representatives, to
provide opportunities for and recruitment of economically disadvantages persons, women and
minorities in the construction trades (a "Revised Program"), Tenant shall also implement and
comply with the requirements of such Revised Program if, as and when such requirements are
incorporated into the provisions of Executive Order No. 50 and/or the regulations in connection
therewith.
ARTICLE28
INVESTIGATIONS; REFUSAL TO TESTIFY
Section 28.01. Cooperation. Tenant shall cooperate fully with any investigation,
audit, or inquiry conducted by a New York State or City Governmental Authority or authority
that is empowered directly or by designation to compel the attendance of witnesses and to
examine witnesses under oath, or conducted by the Inspector General of a Governmental
Authority that is a party in interest to the transaction, submitted bid, submitted proposal, contract,
permit, lease or license that is the subject of the investigation, audit or inquiry.
Section 28.02. Hearings.
(a) If any person has been advised that his or her statement, and any
information from such statement, will not be used against him or her in any subsequent criminal
proceeding and still refuses to testify before a grand jury or other Governmental Authority or
authority empowered directly or by designation to compel the attendance of witnesses and to
EXAMINE witnesses under oath concerning the award of or performance under any transaction,
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agreement, lease, permit, contract or license entered into with Landlord, the State or any political
subdivision or public authority thereof, or the Port Authority of New York and New Jersey, EDC
or any local development organization, or any public benefit corporation organized under the
laws of the State; or
(b) If any person refuses to testify for a reason other than the assertion of his
or her privilege against self incrimination in an investigation, audit or inquiry conducted by a
Governmental Authority empowered directly or by designation to compel the attendance of
witnesses and to take testimony under oath, or by the Inspector General of the Governmental
Authority that is a party in interest in, and is seeking testimony concerning the award of, or the
performance under, any transaction, agreement, lease, permit, contract or license entered into
with the City, the State, or any political subdivision thereof, EDC or any local development
corporation;
Then, the Commissioner of the Department of Small Business Services
("Commissioner"), or the agency head whose agency is a party in interest to the transaction,
submitted bid, submitted proposal, contract, lease, permit or license may convene a hearing,
upon not less than five (5) days' written notice to the parties involved to determine if any
penalties should attach for the failure of a person to testify.
Section 28.03. Adjournments of Hearing, Etc. If any non-governmental party to
the hearing requests an adjournment, the Commissioner or the agency head who convened the
hearing may, upon granting the adjournment, suspend any contract, lease, permit or license
pending the final determination pursuant to Section 28.05 below without Landlord incurring any
penalty or damages for delay or otherwise.
Section 28.04. Penalties. The penalties that may attach after the final
determination by the Commissioner or agency head may include, but shall not exceed:
(a) The disqualification for a period not to exceed five (5) years from the date
of any adverse determination for any person or any entity of which such person was a member,
shareholder, officer, director, employee or agent at the time the testimony was sought, from
submitting bids for, or transacting business with, or entering into or obtaining any contract, lease,
permit or license with or from Landlord; and/or
(b) The cancellation or termination of any and all existing City or EDC
contracts, leases, permits or licenses that the refusal to testify concerns and that have not been
assigned as permitted under this Lease, nor the proceeds of which pledged to an unaffiliated and
unrelated institutional lender for fair value prior to the issuance of the notice scheduling the
hearing, without the City or EDC incurring any penalty or damages on account of such
cancellation or termination.
Section 28.05. Criteria for Determination. The Commissioner or agency head
shall consider or address in reaching his or her other determination and in assessing an
appropriate penalty the factors in paragraphs (a) and (b) below. He or she may also consider, if
relevant and appropriate, the criteria established in paragraphs (c) and (d) below, in addition to
any other information which may be relevant and appropriate .
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(a) The party's good faith endeavors or lack thereof to cooperate fully and
faithfully with any governmental investigation or audit including, but not limited to the
discipline, discharge, or disassociation of any person failing to testify, the production of accurate
and complete books and records, and the forthcoming testimony of all other members, agents,
assignees or fiduciaries whose testimony is sought.
(b) The relationship of the person who refused to testify to any entity that is a
party to the hearing, including, but not limited to, whether the person whose testimony is sought
has an ownership interest in the entity and/or the degree of authority and responsibility the
person has within the entity.
(c) The nexus of the testimony sought to the subject entity and its contracts,
leases, permits or licenses with the City.
(d) The effect a penalty may have on an unaffiliated and unrelated party or
entity that has a significant interest in a party or entity subject to penalties under Section 28.04
above, provided that the party or entity has given actual notice to the Commissioner or agency
head upon the acquisition of the interest, or at the hearing called for in Section 28.02 above gives
notice and proves that such interest was previously acquired. Under either circumstance the
party or entity must present evidence at the hearing demonstrating the adverse impact such a
penalty would have on such person or entity.
Section 28.06. Definitions. For the purposes of this Article 28, the following
terms will have the meanings set forth below. Capitalized terms utilized, but not otherwise
defined below, will have the meanings assigned to such terms elsewhere in this Lease.
(a) The term "license" or "permit" as used herein shall be defined as a license,
permit, franchise or concession not granted as a matter of right.
(b) The term "person" as used herein shall be defined as any natural person
doing business alone or associated with another person or entity as a partner, director, officer,
principal or employee.
(c) The term "entity" as used herein shall be defined as any firm, partnership,
corporation, association or person that receives monies, benefits, licenses, leases or permits from
or through the City or otherwise transacts business with the City.
(d) The term "mem her" as used herein shall be defined as any person
associated with any other person or entity as a partner, director, officer, principal or employee.
Section 28.07. Failure to Report Solicitations. In addition to, and notwithstanding
any other provision of this Lease, the Commissioner or the agency head may, at his or her
discretion, terminate this Lease upon twenty-four (24) hours' written notice in the event Tenant
fails to promptly report in writing to the Commissioner oflnvestigation ofthe City ofNew York
any solicitation of money, goods, requests for future employment or other benefit or thing of
value, by or on behalf of any employee of the City, Lease Administrator, Apple or other person,
firm, corporation or entity for any purpose which may be related to the procurement or obtaining
ofthis Lease by Tenant, or affecting the performance of this Lease.
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ARTICLE 29
EVENTS OF DEFAULT, REMEDIES, ETC.
Section 29.01. Events of Default. Subject to Section 29.14, each ofthe following
events shall be an "Event of Default" hereunder:
(a) if Tenant shall fail to make any payment (or any part thereof) of Rental
(including, without limitation, any payment of Annual Base Rent, PILOT, Dockage, Wharfage
or Impositions) when due hereunder and such failure shall continue for a period of ten (10)
Business Days after notice thereof from Landlord;
(b) if Tenant shall fail to maintain the Premises as provided in Article 15
hereof and such failure shall continue for a period of thirty (30) Business Days after notice
(unless such failure requires work to be performed, acts to be done or conditions to be removed
which cannot, by their nature, reasonably be performed, done or removed within such thirty (30)
Business Day period, in which case no Event of Default shall exist as long as Tenant shall
commence to undertake the requisite maintenance of the Premises in accordance with those
Sections within such thirty (30) Business Day period and shall diligently and continuously
prosecute the same to completion within a reasonable period);
(c) if Tenant shall fail to commence construction of the Tenant's Work in
accordance with the terms, covenants and conditions of Article 18 hereof, and such failure shall
continue for a period of thirty (30) Business Days after notice (subject to Unavoidable Delays),
or if Tenant shall fail to diligently prosecute the construction of the Tenant's Work in accordance
with the terms, covenants and conditions of said Article 18 and such failure shall continue for
five (5) Business Days after notice;
(d) if Tenant shall fail to Substantially Complete the construction of the
Tenant's Work by the Scheduled Completion Date in accordance with the terms, covenants and
conditions of Article 18 (subject to Unavoidable Delays), and such failure shall continue for a
period of thirty (30) Business Days after notice;
(e) if Tenant shall fail to observe or perform one or more of the other terms,
conditions, covenants or agreements of this Lease on Tenant's part to be performed or observed
and such failure shall continue for a period of thirty (30) Business Days after notice thereof
specifying such failure (unless such failure requires work to be performed, acts to be done, or
conditions to be removed which cannot, by their nature, reasonably be performed, done or
removed within such thirty (30) Business Day period, in which case no Event of Default shall be
deemed to exist as long as Tenant shall commence the requisite performance or observance
within such thirty (30) Business Day period and shall diligently and continuously prosecute the
same to completion within a reasonable period);
(f) to the extent permitted by law, if Tenant shall admit, in writing, that it is
unable to pay its debts as such debts become due;
(g) to the extent permitted by law, if Tenant shall make an assignment for the
benefit of creditors;
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(h) to the extent permitted by law, if Tenant shall file a voluntary petition
under the present or any future Federal Bankruptcy Act or any other present or future Federal,
state or other bankruptcy or insolvency statute or law or if such petition shall be filed against
Tenant and an order for relief shall be entered, or if Tenant shall file a petition or an answer
seeking, consenting to or acquiescing in, any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under the present or any future Federal
Bankruptcy Act or any other present or future federal, state or other bankruptcy or insolvency
statute or law, or shall seek, or consent to, or acquiesce in, or suffer the appointment of, any
trustee, receiver, custodian, assignee, sequestrator, liquidator or other similar official of Tenant,
or of all or any substantial part of its properties, or of the Premises or any interest of Tenant
therein, or if Tenant shall take any partnership or corporate action in furtherance of any action
described in Sections 29.01([) or 29.01Cg) hereof or this Section 29.01(h);
(i) to the extent permitted by law, if within sixty (60) days after the
commencement of a proceeding against Tenant seeking any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under the present or any
future Federal Bankruptcy Code or any other present or future applicable federal, state or other
bankruptcy or insolvency statute or law, such proceeding shall not be dismissed, or if, within one
hundred twenty ( 120) days after the appointment, without the consent or acquiescence of Tenant,
of any trustee, receiver, custodian, assignee, sequestrator, liquidator or other similar official of
Tenant, or of all or any substantial part of its properties, or of the Premises or any interest of
Tenant therein, such appointment shall not be vacated or stayed on appeal or otherwise, or if,
within one hundred twenty (120) days after the expiration of any such stay, such appointment
shall not be vacated;
U) if any of the representations or warranties made by Tenant in Article 21
hereof or elsewhere in this Lease shall, to the best knowledge of Tenant, be false or incorrect in
any material respect as of the time when made;
(k) if, unless necessitated by a Casualty or taking by eminent domain, Tenant
shall vacate or abandon the Premises, or any portion thereof (the fact that any of Tenant's
property remains in the Premises shall not be evidence that Tenant has not abandoned the
Premises) for a period exceeding thirty (30) consecutive Business Days, or such shorter period
as would cause the property or liability insurance coverage required to be maintained pursuant to
Article 11 hereof to be subject to, or in jeopardy of, cancellation or unenforceability of coverage
for breach of or default in the terms of such insurance coverage;
(1) if a levy under execution or attachment shall be made against the Premises
or any part thereof, the income therefrom, this Lease or the leasehold estate created hereby on
account of work, labor and services performed by Tenant or on its behalf and such execution or
attachment shall not be vacated or removed by court order, bonding or otherwise within a period
ofthirty (30) Business Days; or
(m) if prior to Final Completion of any Construction Work and payment of all
costs and expenses thereof either of the bonds required by Section 17.04(f) shall expire, or be
cancelled or otherwise shall cease to be in full force and effect, or the rights of Landlord as
obligee under either of the bonds shall be impaired in any way whatsoever.
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Section 29.02. Remedies.
(a) Enforcement of Performance. Subject to the provisions of Section 29.14,
if an Event of Default occurs, Landlord may elect to proceed by appropriate judicial proceedings,
either at law or in equity, to enforce performance or observance by Tenant of the applicable
provisions of this Lease and/or to recover damages for breach thereof.
(b) Expiration and Termination of Lease. If an Event of Default occurs and
Landlord, at any time thereafter, gives Tenant notice stating that this Lease and the Term shall
terminate on the date specified in such notice, which date shall not be less than twenty (20)
Business Days after the giving of the notice, then this Lease and the Term and all rights of
Tenant under this Lease to use and occupancy of the Premises shall expire and terminate as if the
date specified in the notice were the Expiration Date, and Tenant shall quit and peacefully
surrender the Premises to Landlord forthwith. If such termination is stayed by order of any court
having jurisdiction over any case described in Sections 29.01(h) or ill. hereof, or by federal or
state statute, then following the expiration of any such stay, or if the trustee appointed in any
such case, Tenant or Tenant as debtor-in-possession fails to assume Tenant's obligations under
this Lease within the period prescribed therefor by law, or within thirty (30) days after entry of
the order for relief or as may be allowed by the court, or if the trustee, Tenant or Tenant as
debtor-in-possession fails to provide adequate protection of Landlord's right, title and interest in
and to the Premises and adequate assurance of the complete and continuous future performance
of Tenant's obligations under this Lease as provided in Section 29.09 hereof, Landlord, to the
extent permitted by law or by leave of the court having jurisdiction over such case, shall have the
right, at its election, to terminate this Lease on ten (10) days' notice to Tenant, Tenant as debtor-
in-possession or the trustee. Upon the expiration of the ten (10) day period this Lease shall cease
and Tenant, Tenant as debtor-in-possession and the trustee immediately shall quit and surrender
the Premises.
(c) Certain Consequences ofTermination of Lease. lfthis Lease is terminated
as provided in Section 29.02(b) hereof:
(i) Landlord may, without notice, reenter and repossess the Premises
and may dispossess Tenant and all other persons or property by summary proceedings or other
lawful proceedings.
(ii) Tenant shall pay to Landlord all Rental payable under this Lease to
the date on which the Term expired and come to an end and shall remain liable for and shall pay
to Landlord all items of Rental falling due thereafter on the respective dates when such items of
Rental would have been payable but for the termination of this Lease.
(iii)L andlord may complete any Construction Work required to be
performed by Tenant hereunder and may repair and alter any portion(s) of the Premises in such
manner as Landlord may deem necessary or advisable without relieving Tenant of any liability
under this Lease or otherwise affecting any such liability, and/or let or relet the Premises or any
portion thereof for the whole or any part of the remainder of the Term or for a longer period, in
Tenant's name, and Landlord shall pay and dispose of any rent and other sums collected or
received as a result of such reletting as follows:
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Document Page 1 03 of 146
(1) first, Landlord shall pay to itself the cost and expense of
terminating what would otherwise have constituted the unexpired portion of the Term, re-
entering, retaking, repossessing, repairing, altering and/or completing construction of any
portion(s) of the Premises and the cost and expense of removing all persons and property
therefrom, including in such costs brokerage commissions, legal expenses and court costs and
reasonable attorneys' fees and disbursements;
(2) second, Landlord shall pay to itself the cost and expense
sustained in securing any new tenants and other occupants, including in such costs, brokerage
commissions, legal expenses and reasonable attorneys' fees and disbursements and other
expenses of preparing any portion(s) of the Premises, and to the extent that Landlord shall
maintain and operate any portion(s) of the Premises, the cost and expense of operating and
maintaining same;
(3) third, Landlord shall pay to itself any balance remaining on
account ofthe liability of Tenant to Landlord, under this Lease; and
(4) fourth, Tenant shall retain any balance.
Notwithstanding the foregoing, Tenant shall remain liable to pay for the cost and expense of
completing any Construction Work (other than Tenant's Work) required to be performed by
Tenant hereunder that is completed by Landlord or its designee, which liability shall not be paid
out of any rent or other sums collected or received as a result of a reletting by Landlord.
Landlord shall not in any way be responsible or liable for any failure to relet any portion(s) of the
Premises or for any failure to collect any rent due on any such reletting, and no such failure to
relet or to collect rent shall operate to relieve Tenant of any liability under this Lease or to
otherwise affect any such liability.
Section 29.03. Waiver of Rights of Tenant. Except with respect to the negligent
acts or omissions of Landlord, the obligation of Landlord to mitigate any damages it may sustain
and for which Landlord claims Tenant is responsible, or any right conferred on Tenant pursuant
hereto, to the extent not prohibited by law, Tenant hereby waives and releases all rights,
conferred by statute otherwise, the purpose or effect of which is to limit or modify any provision
of this Article.
Section 29.04. Receipt of Moneys after Notice or Termination. No receipt of
moneys by Landlord from Tenant after the termination of this Lease, or after the giving of any
notice of the termination of this Lease, shall reinstate, continue or extend the Term or affect any
notice theretofore given to Tenant, or operate as a waiver of the right of Landlord to enforce the
payment of Rental payable by Tenant hereunder, or operate as a waiver of the right of Landlord
to recover possession of the Premises by proper remedy. After the service of notice to terminate
this Lease or the commencement of any suit or summary proceedings or after a final order or
judgment for the possession of the Premises, Landlord may demand, receive and collect any
moneys due or thereafter falling due without in any manner affecting the notice, proceeding,
order, suit or judgment, all such moneys collected being deemed payments on account of the use
and occupation of the Premises, or at the election of Landlord, on account of Tenant's liability
hereunder.
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Section 29.05. Certain Waivers. Tenant hereby expressly waives the service of
any notice of intention to re-enter provided for in any statute or of the institution of legal
proceedings in connection therewith, and Tenant for and on behalf of itself and all Persons
claiming through or under Tenant, also waives any and all rights (a) of redemption provided by
any law or statute now in force or hereafter enacted or otherwise, or (b) of re-entry, or (c) of
repossession or (d) to restore the operation of this Lease, if Tenant is dispossessed by a judgment
or by warrant of a court of competent jurisdiction or in case of re-entry or repossession by
Landlord, or in case of any expiration or termination of this Lease. The terms "enter", "n:.:
enter", "!:.!!.!.!:.Y." or "re-entry," as used in this Lease, are not restricted to their technical legal
meanmgs.
Section 29.06. Strict Performance. No failure by Landlord or Tenant to insist
upon Tenant's or Landlord's strict performance of any covenant, agreement, term or condition of
this Lease or to exercise any right or remedy available to Landlord or Tenant by reason of the
occurrence of a Default or Event of Default by the other, and no payment or acceptance of full or
partial Rental during the continuance of any Default or Event of Default, shall constitute a
waiver of any such Default or Event of Default or of the right to strict performance of such
covenant, agreement, term or condition. No covenant, agreement, term or condition of this
Lease to be performed or complied with by either party, and no Default or Event of Default by
Tenant, shall be waived, altered or modified except by a written instrument executed by the other
party. No waiver of any Default or Event of Default shall affect or alter this Lease, but each and
every covenant, agreement, term and condition of this Lease shall continue in full force and
effect with respect to any other then existing or subsequent Default or Event of Default.
Section 29.07. Right to njoin Defaults or Threatened Defaults; Remedies
Cumulative. In the event of Tenant's or Landlord's Default or threatened Default, Landlord or
Tenant shall be entitled to initiate proceedings to enjoin the Default or threatened Default by
appropriate legal proceedings and shall have the right to invoke any rights and remedies allowed
at law or in equity, or by statute, or otherwise, other remedies that may be available to Landlord
or Tenant notwithstanding. Each right and remedy of Landlord or Tenant provided for in this
Lease shall be cumulative and shall be in addition to every other right or remedy provided for in
this Lease, or other documents executed between the parties prior hereto, simultaneously
herewith or hereafter, or now or hereafter existing at law or in equity or by statute or otherwise,
and the existence or the exercise or beginning of the exercise by Landlord or Tenant, of any one
or more of the rights or remedies provided for in this Lease, or any other such documents or now
or hereafter existing at law or in equity, or by statute, or otherwise shall not preclude the exercise
by Landlord or Tenant of any or all other rights or remedies provided for in this Lease or other .
such documents or now or hereafter existing at law or in equity or by statute or otherwise.
Section 29.08. Payment of All Costs and Expenses. Tenant shall pay Landlord,
Lease Administrator and Apple all actual costs and expenses, including, without limitation, court
costs and reasonable attorneys' fees and disbursements, incurred by Landlord, Lease
Administrator or Apple in connection with any action or proceeding to which Landlord, Lease
Administrator or Apple may be made a party because or in connection with the occurrence of
any Default or Event of Default, but only if Landlord, Lease Administrator and/or Apple shall
prevail in such action or proceeding. If Tenant incurs costs or expenses including, without
limitation, reasonable attorney's fees and disbursements, by reason of any default of Landlord
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(acting in its proprietary interest as landlord hereunder) in violation of this Lease as determined
by a judicial decision beyond any right of appeal, Tenant may take a credit for such actual costs
or expenses against the Annual Base Rent next due. Tenant shall also pay Landlord, Lease
Administrator or Apple (or, in the case of similar expenses incurred by Tenant, Tenant may take
a credit against Annual Base Rent for), all its or their actual costs and expenses, including,
without limitation, court costs and reasonable attorneys' fees and disbursements, incurred by
Landlord, Lease Administrator or Apple in enforcing any of the terms, covenants or conditions
of this Lease (provided that it is ultimately determined or agreed that Tenant or Landlord, as the
case may be, was in fact not conforming with a covenant or provision hereof). All of the sums
actually paid or obligations actually incurred by Landlord, Lease Administrator or Apple, and by
Tenant, shall bear interest, at the Late Charge Rate, and, shall be paid by Tenant to Landlord,
Lease Administrator or Apple, or to Tenant, as the case may be, within ten (1 0) days after
demand. Lease Administrator and Apple are Third Party beneficiaries of this Section, which
Section shall survive the expiration or earlier termination of this Lease.
Section 29.09. Remedies Under Bankruptcy and Insolvency Codes. Excluding
the Current Bankruptcy, if an order for relief is entered or if any stay of proceeding or other act
becomes effective against Tenant or Tenant's interest in this Lease in any proceeding which is
commenced by or against Tenant under the present or any future Federal Bankruptcy Act or in a
proceeding which is commenced by or against Tenant seeking a reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under any other present or
future applicable federal, state or other bankruptcy or insolvency statute or law, Landlord shall
be entitled to invoke any and all rights and remedies available to it under such bankruptcy or
insolvency code, statute or law or this Lease, including, without limitation, such rights and
remedies as may be necessary to adequately protect Landlord's right, title and interest in and to
the Premises, or any part thereof, and adequately assure the complete and continuous future
performance of Tenant's obligations under this Lease. Adequate protection of Landlord's right,
title and interest in and to the Premises, and adequate assurance of the complete and continuous
future performance of Tenant's obligations under this Lease, shall include, but shall not be
limited to, each and every one of the following requirements:
(a) that Tenant shall comply with all of its obligations under this Lease;
(b) that Tenant shall pay Landlord, on the first day of each month occurring
after the entry of such order, or on the effective date of such stay, a sum equal to the amount by
which the Premises diminished in value during the immediately preceding monthly period, but,
in no event an amount which is less than the aggregate Rental payable for such monthly period;
(c) that Tenant shall continue to use the Premises in the manner required by
this Lease;
(d) that Landlord shall be permitted to supervise the performance of Tenant's
obligations under this Lease;
(e) that Tenant shall hire such security personnel as may be necessary to
insure the adequate protection and security of the Premises;
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(f) that Tenant shall pay Landlord, within thirty (30) days after entry of such
order or the effective date of such stay, as partial adequate protection against future diminution in
value ofthe Premises and adequate assurance of the complete and continuous future performance
of Tenant's obligations under this Lease, a security deposit in an amount acceptable to Landlord,
but in no event less than the Annual Base Rent payable hereunder, for the then current Lease
Year;
(g) that Tenant shall have and will continue to have unencumbered assets after
the payment of all secured obligations and administrative expenses to assure Landlord that
sufficient funds will be available to fulfill the obligations of Tenant under this Lease;
(h) Intentionally omitted;
(i) that if Tenant's trustee, Tenant or Tenant as debtor-in-possession shall
assume this Lease and propose to assign it (pursuant to Title 11 U.S.C. 365, as it may be
amended) to any Person who shall have made a bona fide offer therefor, the notice of such
proposed assignment, giving (i) the name and address of such Person, (ii) all of the terms and
conditions of such offer, and (iii) the adequate assurance to be provided Landlord to assure such
Person's future performance under this Lease, including, without limitation, the assurances
referred to in Title 11 U.S.C. 365(b), as it may be amended, shall be given to Landlord by the
trustee, Tenant or Tenant as debtor-in-possession no later than twenty (20) days after receipt by
the trustee, Tenant or Tenant as debtor-in-possession of such offer, but in any event no later than
ten (1 0) days before the date that the trustee, Tenant or Tenant as debtor-in-possession shall
make application to a court of competent jurisdiction for authority and approval to enter into
such assignment, and Landlord shall thereupon have the prior right and option, to be exercised
by notice to the trustee, Tenant or Tenant as debtor-in-possession, given at any time before the
effective date of such proposed assignment, to accept an assignment of this Lease upon the same
terms and conditions and for the same consideration, if any, as the bona fide offer made by such
Person, less any brokerage commissions which may be payable by Tenant out of the
consideration to be paid by such Person for the assignment of this Lease; and
(j) that as long as Tenant is in the Tenant's Current Bankruptcy, as defined in
Section 29.14 hereof, this Lease or any interest of Tenant in this Lease, shall not be assignable by
Tenant or anyone acting for Tenant or pursuant to any legal authority, and any assumption or
assignment of the Lease pursuant to Title 11 U.S.C. sec 365, as it may be amended, shall be
inapplicable.
Section 29.1 0. Funds Held by Lease Administrator. If this Lease shall terminate
as a result of an Event of Default, any funds held by Lease Administrator shall be paid to
Landlord as liquidated damages free of any claim by Tenant, or any Person claiming through
Tenant.
Section 29 .11. Funds held by Tenant. From and after the date, if any, on which
Tenant receives notice from Landlord that a Default or an Event of Default shall have occurred
hereunder, Tenant shall not pay, disburse or distribute any rents, issues or profits of the Premises,
or portion thereof, the proceeds received by Tenant of any insurance policies covering or relating
to the Premises, or any portion thereof, or any awards payable in connection with the
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condemnation of the Premises or any portion thereof received by Tenant (except to the extent
such insurance proceeds or condemnation awards are required in connection with any
Restoration to be performed pursuant to Articles 12 or 13 hereof), any undistributed cash,
certificates of deposit, United States Treasury bills or similar cash equivalents arising out of or in
any way connected with the Premises or this Lease or any portion thereof or any other sums or
receivables appurtenant to the Premises or this Lease or any portion thereof except to Lease
Administrator in payment of amounts due or payable under this Lease.
Section 29.12. Proof of Damages. Landlord may look to any of the assets of
Tenant for satisfaction of any obligation of Tenant under this Lease or for any damages for the
breach hereof. Landlord, Lease Administrator and Apple shall not be limited in the proof of any
damages that may be claimed against Tenant arising out of, or by reason of, Tenant's failure to
provide and keep insurance in force in accordance with the provisions of this Lease to the
amount of the insurance premium or premiums not paid. Landlord, Lease Administrator and
Apple shall be entitled to recover as damages for such Default or Event of Default, the uninsured
amount of any loss and damage sustained or incurred by it and the costs and expenses of any suit
in connection therewith, including, without limitation, reasonable attorneys' fees and
disbursements.
Section 29.13. Survival. The rights and remedies of Landlord and the other
provisions of this Article 29 shall survive the expiration or earlier termination of this Lease.
Section 29.14. Tenant's Current Bankruptcy. Notwithstanding anything to the
contrary found within this Lease, Tenant's current chapter 11 bankruptcy, as filed in the United
States Bankruptcy Court for the Northern District of Georgia, Case Nos. 05-12515 through 05-
12537 (the "Current Bankruptcy"), shall not, in any way, render the Tenant in default under the
terms of Article 29 or any other provisions of this Lease, including, without limitation, with
respect to any representations made under any provisions of this Lease. Any provisions in
Article 29 or any other provisions of this Lease that reference the Tenant's insolvency,
restructuring, bankruptcy, payment of debts as they become due, liquidation or otherwise shall be
rendered inapplicable to Tenant's Current Bankruptcy.
Section 29.15. Landlord's Rights and Remedies. Notwithstanding anything to the
contrary found within this Lease, Tenant's Current Bankruptcy shall not affect Landlord's rights
and remedies as provided in Article 29 in the event of default under Sections 29.01 (a), .(hl,J1,
@, .cru_, (j) other than any representations and warranties that are affected by the Current
Bankruptcy, (k), (I) and (m). During the Current Bankruptcy, in addition to the notice required
by Article 32, any notices with respect to default shall also be sent to Tenant's bankruptcy
counsel and counsel for the Unsecured Creditors Committee in the Current Bankruptcy. If so
noticed defaults are not cured as provided herein, then Landlord has the right to present for
signature, upon twenty (20) days notice to Tenant's bankruptcy counsel and counsel for the
Unsecured Creditors Committee, to the bankruptcy judge presiding over the Current Bankruptcy
an order terminating this Lease, provided, however, that nothing contained herein shall (i)
constitute a waiver of the Debtors' and or Unsecured Creditors Committee right to challenge the
occurrence or existence of an event of default, (ii) prohibit the Debtors and/or Unsecured
Creditors Committee from contesting, disputing or challenging within twenty (20) days of the
Landlord's presentment of the order the occurrence or existence of an event of default, or (iii)
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prohibit the Debtors and/or Unsecured Creditors Committee from seeking to re-1mpose or
continue the automatic stay.
Section 29.16. Notices. As provided in Article 32, any notices with respect to
default shall be sent to Tenant, Tenant's bankruptcy counsel and counsel for the Unsecured
Creditors Committee in the Current Bankruptcy.
ARTICLE 30
TERMINATJON AND SURRENDER
Section 30.01. Surrender of Premises. Upon expiration of this Lease or upon are-
entry by Landlord upon the Premises pursuant to Article 29 hereof, Tenant, without any payment
or allowance whatsoever by Landlord, shall surrender the Premises to Landlord in good order,
condition and repair, but in no event shall Tenant be obligated to surrender the Premises in a
condition better than the condition of the Premises when delivered to Tenant, reasonable wear
and tear excepted, free and clear of all Liens and encumbrances other than easements and other
rights that Landlord has agreed may survive the expiration or earlier termination of this Lease.
Tenant hereby waives any notice now or hereafter required by law with respect to vacating the
Premises on the expiration or earlier termination of this Lease.
Section 30.02. Delivery of Contracts, etc. Upon expiration or upon a re-entry by
Landlord upon the Premises pursuant to Article 29 hereof, Tenant shall deliver to Landlord
Tenant's executed counterparts of any service and maintenance contracts then affecting the
Premises, true and complete maintenance records for the Premises for the three (3) immediately
preceding years, all original licenses and permits then pertaining to the Premises, Certificates of
Occupancy then in effect for the Improvements, and all warranties and guarantees then in effect
which Tenant has received in connection with any work or services performed or Equipment
installed at the Premises, together with a duly executed assignment of the above to Landlord
(which assignment of contracts, licenses and permits shall become effective with regard to any of
the same upon Landlord's acceptance of same), and, pursuant to Article 26 hereof, copies of all
financial reports, books and records required by Article 26 hereof, and any and all other
documents of every kind and nature whatsoever relating to the operation of the Premises and the
condition of the Improvements.
Section 30.03. Personal Prooertv. Tenant may remove Trade Fixtures, but upon
removal of any such Trade Fixtures from the Premises, Tenant shall immediately and at its sole
expense repair any damage to the Premises due to such removal. Any Trade Fixtures or other
personal property of Tenant which shall remain on the Premises after expiration of this Lease (or
upon a re-entry by Landlord upon the Premises pursuant to Article 29 hereof) and after the
removal of Tenant from the Premises, may, at the option of Landlord, be deemed to have been
abandoned by Tenant, and either may be retained by Landlord as its property or be disposed of at
Tenant's expense, in such manner as Landlord may see fit. Landlord shall not be responsible for
any loss or damage occurring to any such property owned by Tenant.
Section 30.04. Survival Clause. The provisions of this Article shall survive the
expiration or earlier termination of this Lease.
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Exhibit A Part 5
ARTICLE 31
CLAIMS. JURISDICTION. IMMUNITIES, PROCESS
Section 31.0 1. Waiver of Trial by Jury. Landlord and Tenant hereby waive trial
by jury in any action, proceeding or counterclaim brought by any of the foregoing against the
other on any matters 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 Premises, and/or any
claim for injury or damages. In the event that Landlord commences any proceeding for
nonpayment of any rent or any other sums required to be paid by Tenant or caused to be paid by
Tenant under the terms of this Lease, Tenant will not interpose any counterclaim of any nature
whatever or description in any such proceedings, except for statutory or mandatory
counterclaims.
Section 31.02. Jurisdiction. Any and all claims asserted by or against Landlord
arising under this Lease or related thereto shall be heard and determined either in the courts of
the United States located in New York City ("Federal Courts") or in the courts of the State of
New York ("New York State Courts") located in the City and County of New York. To this
effect Tenant agrees as follows:
(a) With respect to any possessory proceeding between Landlord and Tenant
in New York State Court, Tenant hereby expressly waives and relinquishes any rights it might
otherwise have (i) to move to dismiss on grounds of forum non conveniens, (ii) to remove such
action to Federal Court; and (iii) to move for a change of venue to a New York State Court
outside New York County.
(b) With respect to any action between Landlord and Tenant in Federal Court
located in New York City, Tenant expressly waives and relinquishes any right it might otherwise
have to move to transfer the action to a Federal Court outside the City ofNew York.
(c) Tenant agrees that a final judgment in any such action or proceeding shall
be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. However, Tenant does not waive its right to appeal or to obtain a stay.
(d) If Tenant commences any action against Landlord in a court located other
than in the City, County and State of New York, upon request of Landlord, Tenant shall either
consent to a transfer of the action to a court of competent jurisdiction located in the City, County
and State of New York, or if the court where the action is initially brought will not or cannot
transfer the action, Tenant shall consent to dismiss such action without prejudice and may
thereafter reinstitute the action in a court of competent jurisdiction in the City, County and State
ofNew York.
(e) Intentionally Omitted.
Section 31.03. Process. Tenant irrevocably consents to the service of any and all
process in any action or proceeding instituted against Tenant by the mailing of copies of such
process to Tenant to its address, and in the manner, set forth in Article 32 hereof. Landlord,
Lease Administrator and Apple irrevocably consent to the service of any and all process in any
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action or proceeding instituted against any of them by the mailing of copies of such process to
Landlord to its address, and in the manner, set forth in Article 32 hereof. Nothing in this Section
shall affect the right of Landlord to serve legal process in any other manner permitted by law.
ARTICLE 32
NOTICES
Section 32.01. All notices and communication to the parties hereunder will be
delivered by hand or sent by registered or certified mail, return receipt requested, or by Airborne
Express, Federal Express, Express Mail or other overnight mail service that provides a receipt to
the sender. Receipt of a notice by the party to whom the notice is transmitted will be deemed to
have occurred: (a) upon receipt, if hand delivered; (b) five days from the date of mailing, if
mailed; or (c) the next business day after transmittal by Airborne Express, Express Mail or other
overnight delivery service that provides a receipt to the sender.
(a) All notices and correspondence to Landlord must be delivered to the
following addresses and addressees or to such other addresses or addressees of which Landlord
or Lease Administrator may notify Tenant from time to time:
Title:
Address:
Title:
Address:
and
Title:
Address:
Executive Vice President for Property Management
110 William Street
General Counsel
11 0 William Street
Chief, Economic Development Division
1 00 Church Street
(b) All notices and correspondence to Lease Administrator will be delivered
to the following address(es) and addressee(s) or to such other address(es) or addressee(s) of
which Lease Administrator may notify Tenant from time to time:
Title:
Address:
with copies to:
11 0 William Street, 6th Floor
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Title:
Address:
and
Title:
Address:
General Counsel
110 William Street, 6th Floor
1 00 Church Street
(c) All notices and correspondence to Apple will be delivered to the following
address(es) and addressee(s) or to such other address(es) or addressee(s) of which Apple may
notify Tenant of from time to time:
Title:
Address:
with copies to:
Title:
Address:
and
Title:
Address:
and
Title:
Address:
Controller
Apple Industrial Development Corp.
P.O. Box 029188
Brooklyn, New York 11202
11 0 William Street
General Counsel
11 0 William Street
1 00 Church Street
(d) All notices and correspondence to Tenant will be delivered to the
following address(es) and addressee(s) or to such other address(es) or addressee(s) of which
Tenant may notify Lease Administrator from time to time:
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Name:
Title:
Axis Group, Inc
160 Clairemont A venue, Suite 400
Decatur, Georgia 30030
Attention: President, Axis Group
with copies to:
Name:
Title:
and:
Name:
Address:
and:
Title:
Address:
Title:
Address:
Axis Group, Inc
160 Clairemont A venue, Suite 400
Decatur, Georgia 30030
Attention: General Counsel
Jonathan Bright, Esq.
Siller, Wilk LLP
675 Third Avenue
Debtor's Counsel
Troutman Sanders LLP
600 Peachtree Street, Suite 5200
Atlanta, Georgia 30308
Attn: Jeff Kelley
Unsecured Creditors' Committee Counsel
Bingham McCutchen LLP
One State Street
Hartford, CT 061 03
Attn: William F. Govier
Section 32.02. Tenant understands and agrees that all notices, demands and
consents that may be given by Landlord may be given by Lease Administrator in the name and
stead of Landlord, and such notices, demands and consents shall have the same force and effect
as if given by Landlord.
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ARTICLE 33
STREET WIDENING
Section 33.01. Proceedings for Widening Street. If any proceedings are instituted
or orders made for the widening or other enlargement of any street contiguous to the Premises
requiring removal of any projection or encroachment on, under or above any such street, or any
changes or alterations upon the Premises, or in the appurtenant sidewalks, grounds, parking
facilities, plazas, areas, vaults, gutters, alleys, curbs or other appurtenances, Tenant shall comply
promptly with such requirements, the cost and expense of which to be borne equally by the
parties, and if Tenant shall fail to comply with such requirements within thirty (30) days after
notice thereof by Landlord to Tenant specifying such failure (or if compliance with such
requirements requires work to be performed, acts to be done or conditions to be removed which
cannot, by their nature, reasonably be performed, done or removed, as the case may be, within
such thirty (30) day period, if, within such thirty (30) day period, Tenant shall fail to commence
to remedy such failure or Tenant shall fail to diligently and continuously, subject to Unavoidable
Delays, prosecute the same to completion), then Landlord, upon notice to Tenant may comply
with the same, and the reasonable amount expended therefor, together with any interest, fines,
penalties, reasonable architects' and attorneys' fees and disbursements or other costs and
expenses incurred by Landlord in effecting such compliance or as a result of Tenant's failure to
so comply, shall constitute Rental hereunder and shall be payable by Tenant to Landlord on
demand.
Section 33.02. Contest of Proceedings. Tenant shall be permitted to contest in
good faith any proceedings or orders for street widening or any changes or alterations resulting
therefrom or necessitated thereby, provided that such contest shall be brought in accordance with
the provisions of Section 38.03 hereof as though Tenant were contesting a Requirement
thereunder.
Section 33.03. Distribution of Award. Any award made in connection with such
proceedings shall be deemed to be an award made in connection with a taking of less than all or
Substantially All of the Premises and shall be paid, distributed and applied in accordance with
provisions of Section 13.02 hereof.
ARTICLE 34
EXCAVATIONS AND SHORING
In accordance with Section 26-229 of the Administrative Code of the City, if any
excavation is contemplated for construction or other purposes upon property adjacent to the
Premises, Tenant, at its option, shall either:
(a) afford to Landlord, or, at Landlord's option, to the Person or Persons
causing or authorized to cause such excavation, the right to enter upon the Premises in a
reasonable manner upon reasonable notice for the purpose of doing such work, at Landlord's or
such other Person's expense, as may be necessary to preserve any of the walls of the
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Improvements from injury or damage and to support them by proper foundations. If so requested
by Tenant, such entry and work shall be done in the presence of a representative of Tenant,
provided that such representative is available when the entry and work are scheduled to be done,
and in all events such work shall be performed with reasonable diligence, subject to Unavoidable
Delays, in accordance with, and subject to, any applicable Requirements, and to the extent
possible, with minimum interference with the on-going operations of Tenant and Subtenants; or
(b) perform or cause to be performed, at Tenant's expense, unless otherwise
agreed in writing, all such work as may be necessary to preserve any of the walls of the
Improvements from injury or damage and to support them by proper foundations.
Tenant shall not, by reason of such excavation or work, have any claim against
Landlord for damages or for indemnity or for suspension, diminution, abatement or reduction of
the Rental payable by Tenant hereunder. However, Tenant does not waive any rights against
such adjacent land owner(s) notwithstanding that such adjacent land owner(s) may be the City
of New York or any of its subdivisions.
ARTICLE 35
CERTIFICATES BY LANDLORD AND TENANT
Section 35.01. Certificate of Tenant. Tenant shall, within twenty (20) days after
request by Landlord, execute, acknowledge and deliver to Landlord, or any other Person
specified by Landlord, a written statement (which may be relied upon by such Person) (a)
certifying (i) that this Lease is unmodified and in full force and effect (or if there are
modifications, that this Lease, as modified, is in full force and effect and stating such
modifications and providing a copy thereof if requested), and (ii) the date to which each item of
Rental payable by Tenant hereunder has been paid, and (b) stating (i) whether Tenant has given
Landlord notice of any event that, with the giving of notice or the passage of time, or both,
would constitute a default by Landlord in the performance of any covenant, agreement,
obligation or condition contained in this Lease, and (ii) whether, to the best knowledge of
Tenant, Landlord is in default in performance of any covenant, agreement, obligation or
condition contained in this Lease, and, if so, specifying in detail each such default.
Section 35.02. Certificate of Landlord. Landlord shall, within twenty (20) days
after request by Tenant, execute, acknowledge and deliver to Tenant, or any other Person
specified by Tenant, a written statement (which may be relied upon by such Person) (a)
certifying (i) that this Lease is unmodified and in full force and effect (or if there are
modifications, that this Lease, as modified, is in full force and effect and stating such
modifications and providing a copy thereof if requested), and (ii) the date to which each item of
Rental payable by Tenant hereunder has been paid, and (b) stating (i) whether an Event of
Default has occurred or whether Landlord has given Tenant notice of any event that, with the
giving of notice or the passage of time, or both, would constitute an Event of Default, and (ii)
whether, to the best knowledge of Landlord, Tenant is in default in the performance of any
covenant, agreement, obligation or condition contained in this Lease, and, if so, specifying, in
detail, each such default or Event of Default.
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Section 35.03. Failure to Deliver Certificate. Tenant's failure to deliver the
certificate required by Section 35.01 hereof within such thirty (30) day period shall be conclusive
upon Tenant that (a) this Lease is in full force and effect, without modification except as may be
represented by Landlord, (b) there are no uncured defaults on the part of Landlord, (c) not more
than two (2) months' rent has been paid in advance, and (d) no notice has been sent to Landlord
of any default by Landlord which has not been cured. Landlord's failure to deliver the certificate
required by Section 35.02 hereof within such thirty (30) day period shall be conclusive upon
Landlord that (a) this Lease is in full force and effect, without modification except as may be
represented by Tenant, (b) there are no uncured Defaults on the part of Tenant hereunder, (c)
Rental has been paid to date, and (d) no notice has been sent to Tenant of any Default by Tenant
which has not been cured.
ARTICLE 36
QUIET ENJOYMENT
Landlord covenants that, as long as Tenant faithfully shall perform the
agreements, terms, covenants and conditions hereof, Tenant shall and may (subject to the
exceptions, reservations, terms and conditions of this Lease) peaceably and quietly have, hold
and enjoy the Premises for the Term without molestation or disturbance by or from Landlord or
any Person claiming through Landlord. This covenant shall run with the land and shall bind
Landlord, its successors and assigns, and shall inure to the benefit of Tenant, its successors and
assigns.
ARTICLE 37
RECORDING OF LEASE
Landlord and Tenant shall execute a memorandum of this Lease and Tenant shall
cause such memorandum and any amendments thereto to be recorded in the Office of the
Register of the City of New York (Kings County) promptly after the execution and delivery of
this Lease or any such amendments and shall pay and discharge all costs, fees and taxes in
connection therewith.
ARTICLE 38
ADMlNJSTRATIVE AND JUDICIAL PRO
Section 38.01. Tax Contest Proceedings. Throughout the term of this Lease,
Tenant shall have the exclusive right, at its sole cost and expense, to seek reductions in the
valuation of the Premises assessed for real property tax (and PILOT) purposes and to prosecute
any action or proceeding in connection therewith by appropriate proceedings diligently
conducted in good faith in accordance with the Charter and Administrative Code of New York
City, and if reduced then PILOT payments shall be reduced accordingly. Landlord shall
reasonably cooperate with Tenant in connection with all such proceedings.
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Section 38.02. Imposition Contest Proceedings. Tenant shall have the right to
contest, at its sole cost and expense, the amount or validity, in whole or in part, of any Imposition
by appropriate proceedings diligently conducted in good faith, in which event, notwithstanding
the provisions of Section 5.03 hereof, payment of such Imposition may be postponed or deferred
if, and only as long as:
(a) by reason of such postponement or deferment of such Imposition, in
Landlord's sole reasonable discretion, neither the Premises nor any part thereof, could be in
danger of being forfeited, and Landlord is not in danger ofbeing subjected to criminal liability or
penalty or civil liability or penalty in excess of the amount for which Tenant has furnished
security as provided in Section 38.02(b); and
(b) (i) Tenant shall have delivered to Landlord collateral security
satisfactory to Landlord, in Landlord's sole reasonable discretion, to secure Tenant's obligation
to pay any such postponed or deferred Imposition. Without limiting the generality of the
foregoing, the value of any such collateral security shall be at least equal to the aggregate
deferred or postponed amount of any and all Impositions contested by Tenant, together with all
interest and penalties in connection therewith and all charges relating thereto that may, in
Landlord's sole discretion, be assessed against, or become a charge on, the Premises or any part
thereof in or during the pendency of such proceedings. If upon the termination of such
proceedings, Tenant is required to pay the deferred or postponed amount of such contested
Imposition, Tenant shall promptly pay the amount of such Imposition as determined in such
proceedings, together with any interest, penalties, costs, fees (including, without limitation,
reasonable attorneys' fees and disbursements) and other liabilities in connection therewith, and,
upon such payment, Landlord shall return the collateral security to Tenant. If Tenant fails to pay
the amount of such Impositions, then Landlord shall be entitled to apply the proceeds of the
collateral security delivered to it by Tenant to the payment of such Imposition. Tenant shall
remain liable for any unpaid balance of such Imposition remaining after payment by Landlord as
aforesaid, and Tenant shall pay said balance to Landlord or the Person entitled to receive it
within ten (10) days after Landlord's demand;
(ii) If at any time during the continuance of such proceedings
Landlord, in its sole reasonable discretion, shall deem insufficient the amount or nature of any
collateral security delivered by Tenant as security for Tenant's obligation to pay any such
postponed or deferred Imposition, Tenant shall deliver to Landlord such additional collateral
security, satisfactory to Landlord, in Landlord's sole reasonable discretion, as Landlord may
request. If Tenant shall fail to deliver to Landlord such additional collateral security within ten
(10) days after Landlord's demand therefor, Landlord may apply the proceeds of the collateral
security held by Landlord to the payment, removal and discharge of any such deferred or
postponed Imposition and the interest and penalties in connection therewith and any costs, fees
(including, without limitation, court costs and reasonable attorney's fees and disbursements) or
other liability accruing in any such proceedings and the balance, if any, remaining after
application by Landlord as aforesaid, together with the interest, if any, earned thereon, shall be
returned to Tenant or to the Person entitled to receive it. Tenant shall remain liable for any
unpaid balance of such Imposition remaining after payment by Landlord as aforesaid, and Tenant
shall pay said balance to Landlord or the Person entitled to receive it, within ten ( 1 0) days after
Landlord's demand.
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Section 38.03. Requirement Contest. Tenant shall have the right to contest the
validity of any Requirement or the application thereof. During such contest, compliance with
any such contested Requirement may be deferred by Tenant on the condition that before
instituting any such proceeding, Tenant shall deliver to Landlord collateral security, satisfactory
to Landlord in Landlord's sole reasonable discretion, securing compliance with the contested
Requirement and payment of all interest, penalties, fines, civil liabilities, fees and expenses in
connection therewith. Any such proceeding instituted by Tenant shall be commenced as soon as
it is possible after the issuance of any such contested Requirement and shall be prosecuted with
diligence to final adjudication, settlement, compliance or other mutually acceptable disposition
of the Requirement so contested. Notwithstanding the delivery of any such collateral security,
Tenant shall comply with any such Requirement in accordance with the provisions of Article 19
hereof, if by reason of noncompliance therewith, in Landlord's sole reasonable discretion, the
Premises, or any part thereof, could be in danger of being forfeited or if Landlord is in danger of
being subjected to criminal liability or penalty, or civil liability in excess of the amount for
which Tenant shall have furnished collateral security as required hereby, or if failure to comply
is hazardous to persons or property or would violate any insurance policy provisions.
Section 38.04. Landlord's Participation in Contest Proceedings. Landlord shall
not be required to join in any action or proceeding brought by Tenant referred to in this Article or
permit the action to be brought by Tenant in Landlord's name unless the provisions of any law,
rule or regulation at the time in effect require that such action or proceeding be brought by and/or
in the name of Landlord. If so required, Landlord shall join and cooperate in such proceedings
or permit them to be brought by Tenant in Landlord's name, in which case Tenant shall pay all
reasonable out-of-pocket costs and expenses (including, without limitation, reasonable attorneys'
fees and disbursements) incurred by Landlord in connection therewith.
ARTICLE 39
ARBITRATION
Section 39.01. Procedure for Arbitration. In cases where this Lease expressly
provides for the settlement of a dispute or question by arbitration, and only in such cases, the
Arbitration shall be conducted in accordance with the following. In such cases where this Lease
expressly provides for the settlement of a dispute or question by arbitration, and only in such
cases, the party desiring arbitration shall appoint a disinterested person as arbitrator on its behalf
and give notice thereof to the other party who shall, within fifteen (15) days thereafter, appoint a
second disinterested person as arbitrator on its behalf and give notice thereof to the first party.
The two (2) arbitrators thus appointed shall together appoint a third disinterested person within
fifteen (15) days after the appointment of the second arbitrator, and said three (3) arbitrators
shall, as promptly as possible, determine the matter which is the subject of the arbitration and the
decision of the majority of them shall be conclusive and binding on all parties and judgment
upon the award may be entered in any court having jurisdiction. If a party who shall have the
right pursuant to the foregoing to appoint an arbitrator fails or neglects to do so, then and in such
event, the other party (or if the two (2) arbitrators appointed by the parties shall fail to appoint a
third arbitrator when required hereunder, then either party) may apply to the American
Arbitration Association (or any organization successor thereto), or in its absence, refusal, failure
or inability to act, may apply for a court appointment of such arbitrator. The arbitration shall be
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conducted in the City and County of New York and, to the extent applicable and consistent with
this Article 39, shall be in accordance with the commercial Arbitration Rules then obtaining of
the American Arbitration Association or any successor body of similar function. Each party
shall have the right to present evidence in the arbitration. The expenses of arbitration shall be
shared equally by Landlord and Tenant but each party shall be responsible for the fees and
disbursements of its own attorneys and the expenses of its own proof. Landlord and Tenant shall
sign all documents and to do all other things necessary to submit any such matter to arbitration
and further shall, and hereby do, waive any and all rights they or either of them may at any time
have to revoke their agreement hereunder to submit to arbitration and to abide by the decision
rendered thereunder. The arbitrators shall have no power to vary or modify any of the provisions
of this Lease and their jurisdiction is limited accordingly. If the arbitration takes place pursuant
to Articles 7 or 17 hereof or concerns any Capital Improvement or Restoration, then each of the
arbitrators shall be a licensed professional engineer or registered architect having at least ten ( 1 0)
years, experience in the design of industrial or commercial properties, and, to the extent
applicable and consistent with this Article 39, such arbitration shall be conducted in accordance
with the Construction Arbitration Rules then obtaining of the American Arbitration Association
or any successor body of similar function.
ARTICLE 40
INTENTIONALLY OMITTED
ARTICLE41
MISCELLANEOUS
Section 41.01. Headings, Captions and Table of Contents. The descriptive
headings and captions used in this Lease are for the purposes of convenience only and do not
constitute a part of this Lease. The Table of Contents hereof is for the purpose of convenience of
reference only, and is not to be deemed or construed in any way as part of this Lease.
Section 41.02. Governing Law. This Lease and its performance shall be governed
by and construed in accordance with the laws of the State of New York, excluding New York's
rules regarding conflict of laws and any rule requiring construction against the party drafting this
Lease.
Section 41.03. Amendments; Waiver. This Lease may not be amended except by
an instrument in writing signed by both parties. The failure by either party to exercise in any
respect any right provided for herein will not be deemed a waiver of any rights hereunder.
Section 41.04. Entire Agreement. This Lease, including the Exhibits hereto,
contains all of the promises, agreements, conditions, inducements and understandings between
Landlord and Tenant concerning the Premises and there are no promises, agreements, conditions,
understandings, inducements, warranties or representations, oral or written, expressed or implied,
between them concerning the Premises other than as expressly set forth herein or as may be
expressly contained in any enforceable written agreements or instruments executed
simultaneously herewith or hereafter by the parties hereto .
. 110.
Section 41.05. Invalidity of Certain Provisions. The provisions of this Lease are
intended to be severable. If any term or provision of this Lease or the application thereof to any
Person or circumstances shall, to any extent, be invalid and unenforceable, the remainder of this
Lease, and the application of such term or provision to Persons or circumstances other than those
as to which it is held invalid and unenforceable, shall not be affected thereby and each term and
provision of this Lease shall be valid and enforceable to the fullest extent permitted by law.
Section 41.06. No Partnership or Joint Venture. Nothing herein contained shall
be construed in any manner to create any relationship between Landlord and Tenant other than
the relationship between landlord and tenant, and Landlord and Tenant will not be considered
partners or co-venturers for any purpose.
Section 41.07. Consents and Approvals.
(a) Effect of Granting or Failure to Grant Approvals or Consents. All
consents and approvals which may be given under this Lease shall, as a condition of their
effectiveness, be in writing. The granting of any consent or approval by a party to perform any
act requiring consent or approval under the terms of this Lease, or the failure on the part of a
party to object to any such action taken without the required consent or approval, shall not,
except where expressly stated otherwise, be deemed a waiver by the party whose consent was
required of its right to require such consent or approval for any further similar act. The
foregoing shall not limit the effect of any provision of this Lease by which consent is deemed
granted, if objection is not made within a specified period.
(b) Remedy for Refusal to Grant Consent or Approval. If, pursuant to the
terms of this Lease, any consent or approval by Landlord or Tenant is not to be unreasonably
withheld or delayed or is subject to a specified standard, then in the event there shall be a final
determination that the consent or approval was unreasonably withheld or that such specified
standard has been met so that the consent or approval should have been granted, the consent or
approval shall be deemed granted and such granting of the consent or approval shall be the only
remedy to the party requesting or requiring the consent or approval.
(c) No Unreasonable Delay; Reasonable Satisfaction; Discretion. Wherever
this Lease provides that Landlord's or Tenant's consent or approval is not to be unreasonably
withheld, such consent or approval also shall not be unreasonably delayed. Any matter required
to be done satisfactorily or to the satisfaction of a party need only be done reasonably
satisfactorily or to the reasonable satisfaction of that party. Unless specifically stated otherwise,
all consents of Landlord required under this Lease shall be granted in Landlord's sole discretion,
and granted, may be subject to such conditions as Landlord may impose in its sole reasonable
discretion.
(d) No Fees, Etc. Except as specifically provided herein, no fees or charges of
any kind or amount shall be required by either party hereto as a condition of the grant of any
consent or approval which may be required under this Lease (but this provision shall limit
Landlord only in its proprietary capacity as owner of the Premises and landlord under this Lease;
it shall not affect Landlord in its governrnental capacity).
- Ill -
Section 11.08. "Including". "Including" as used in this Lease, shall be deemed to
mean "including, without limitation."
Section 41.09. Remedies Not Exclusive. No right or remedy conferred upon
Landlord in this Lease is intended to be exclusive of any other right or remedy contained in this
Lease. Every such right or remedy shall be cumulative and shall be in addition to each other
right and remedy contained in this Lease or now or hereafter available to Landlord at law, in
equity, by statute or otherwise.
Section 41.1 0. Required Provisions of Law Controlling. It is the intention and
understanding of the parties hereto that each and every provision of law required to be inserted in
this Lease should be and is inserted herein. Furthermore, it is hereby stipulated that every such
provision is deemed to be inserted and if, through mistake or otherwise, any such provision is not
inserted herein or is not inserted in correct form, then this Lease shall forthwith, upon the
application of either party, be amended by such insertion so as to comply strictly with the law
and without prejudice to the rights of either party.
Section 41.11. Successors and Assigns. The agreements, terms, covenants and
conditions herein shall be binding upon, and inure to the benefit of, Landlord and Tenant and,
except as otherwise provided herein, their respective successors and assigns.
Section 41.12. No Warranty by Landlord. It is understood and agreed that any
approval by Landlord, Lease Administrator or Apple of any plans and specifications, or any
inspection by Landlord, Lease Administrator or Apple of any construction on the Premises shall
not be construed as a warranty by any of the foregoing of the design of any such drawings and
specifications, or workmanship or materials contained in such construction.
Section 41.13. Construction of Terms and Words. All terms and words used in
this Lease regardless of the number and gender in which they are used shall be deemed and
construed to include any other gender, masculine, feminine or neuter, as the context or sense may
require, with the same effect as if such numbers and words had been fully and properly written in
the required number and gender.
Section 41.14. Tenant's Commitment to Reduce Environmental Impact of
Operation. During the term of the Lease, Axis will make reasonable efforts to integrate
environmentally beneficial programs into its operation. Tenant will include this commitment of
Section 41.14 in contractual arrangements with any and all subcontractors and I or subtenants.
Tenant's commitment may include but is not limited to: use of alternative fuel vehicles and
equipment; efficient design of operations to minimize gasoline or diesel fuel vehicle idling; paint
booths with zero or nominal emissions, car washes which recycle water, filter or separate run off;
and, energy efficient or saving lights and equipment.
Section 41.15. Tenant's Commitment to Hire Locally. Tenant will make
reasonable efforts to recruit local residents for employment at the facility. Tenant will include
this commitment of Section 41.15 in contractual arrangements with any and all labor
organizations, subcontractors, and I or subtenants. Tenant's commitment may include but is not
limited to working with the Brooklyn Borough President's Task Force Initiative; the Southwest
. 112 .
Brooklyn Industrial Development Corporation; the City ofNew York's Office of Small Business
Services, or the then current agency(ies ), promoting the identification, training, and hiring of
residents of Brooklyn living in the vicinity of the Premises.
Section 41.16. Counterparts. This Lease may be executed in one or more
counterparts which, when taken together, shall constitute one and the same. This agreement shall
not be binding unless and until fully executed counterparts have been executed and delivered by
Landlord and Tenant.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of
the day and year first above written.
Approved as to Form:
Acting Corporation Counsel
THE CITY OF NEW YORK acting by and through its
DEPARTMENT OF SMALL BUSINESS SERVICES
By: ______________________ ___
Name:
Title: Commissioner
AXIS GROUP, INC.
By: ______________________ ___
Name:
Title:
- 113 -
STATE OF NEW YORK
COUNTY OF NEW YORK
)
: SS.:
)
On this __ day of 2006, before me personally came Robert
Walsh, to me know and known to me to be the Commissioner of The City of New York
Department of Small Business Services and the same person who executed the foregoing
document, and he acknowledged that he executed the foregoing document on behalf of the City
of New York and pursuant to the authority vested in him.
STATE OF NEW YORK
COUNTY OF NEW YORK
)
: SS.:
)
Notary Public
On this day of 2006, before me personally came
______ , to me known, who, being by me duly sworn, did depose and say that he
resides at ; that he is the President of Axis Group, Inc., the
corporation described in and which executed the foregoing instrument; that he knows the seal of
said corporation; that the seal affixed to said instrument is such corporation seal; that it was so
affixed by order of the board of directors of said corporation, and that he signed his name thereto
by like order.
Notary Public
- 114-
EXHIBIT A
PREMISES
(SEPARATE ATTACHMENT)
EXHIBIT B
TITLE MATTERS
The Premises are leased subject to the following:
Any state of facts that an accurate survey may show;
Building restrictions and regulations now or hereafter in force and present and
future zoning laws, ordinances, resolutions and regulations of all boards, bureaus, commissions
and bodies of any municipal, county, state or federal sovereigns now having or hereafter
acquiring jurisdiction of the Premises and the use and improvement thereof;
Rights, easements, licenses or privileges of record to use vaults, areas, tunnels,
ramps or structures under highways, roads, streets, avenues or sidewalks on which the Premises
abut, and consents or grants prior to the date of this Lease for the erection of any structures on,
under or above said highways, roads, streets, avenues or sidewalks and any grants, easements,
licenses or consents with respect to present or future sewers, public utility lines, pipes, conduits
and equipment;
Violations of law, ordinances, regulations, orders or requirements, if any, whether
or not of record and whether or not the same might be disclosed by an examination and
inspection or search of the Premises, noted or issued by any federal, state, municipal or other
governmental department or authority having jurisdiction, as the same may exist on the
Commencement Date of this Lease;
The condition and state of repair of the Premises on the Commencement Date of
this Lease.
Dedications, restrictions, covenants, consents, easements and agreements, if any,
made or given by any prior owner of the Premises.
Any encroachments existing on the Commencement Date of this Lease;
An easement reserved for Landlord, its tenants and designees to repair, maintain
or perform work on any utility lines on the Premises, including, without limitation, electrical
lines; and
An easement for the City, its agents and representatives, to construct, install or
repair any sewer, water line or any other public utility or improvement existing at the Premises
on the date ofthis Lease.
EXHIBIT C
LANDLORD'S WORK
To accommodate the automobile and general marine terminal, Landlord will provide
infrastructure improvements to the Premises. The general scope of improvements provided by
Landlord is set-forth as follows:
1.Re moval of the South Brooklyn Railway 38th Street ra:il yard and accessory tracks at
the south end of the Premises.
2.Const ruction of new rail track along south end of the Premises to reestablish
connection for South Brooklyn Railway to its network east of Second A venue.
3. The demolition and removal of the former container terminal gate complex canopy at
the 33rd Street/Second Avenue entrance.
4.De molition of the "Tower" building near the NYPD area, subject to relocation of
NYPD and available funding.
5.De molition of the outshore end of the J Shed warehouse on 39th St. Pier.
6.Const ruction of new end walls along the west side ofthe remaining portions of the J
Shed.
7 .Re moval of concrete pads and concrete pavement throughout the premises, as needed.
8.Re moval of fencing, as needed.
9.Reha bilitation and upgrade of pavements throughout the terminal. The existing
pavement on the 39
1
St. Pier will be replaced with a heavy duty pavement section to
accommodate stevedoring and yard operations. The remainder of the terminal will
receive pavement repair and pavement overlay to establish the proposed operating
areas.
10. Localized pavement wedging to establish positive drainage to the stormwater
structures. It is Landlord's intent to utilize existing storm water drainage facilities
with repairs and new structures or piping as required.
11. Upgrade of yard lighting system to incorporate underground wiring, high mast light
towers, and building-attached lights where appropriate.
12. Installation of fire suppression systems on exterior portions of the Premises as
required for fire protection of the Premises.
13. Installation of new perimeter fence for the Axis property where the existing perimeter
fence is not adequate.
14. Extension and upgrade ofthe site electrical system to accommodate proposed
operations and service to buildings. Extensions of utilities, including potable water,
sanitary sewer and storm sewers will be reconnected to the existing portions of the J
Shed and N Shed. Electrical will be terminated in a service disconnect switch within
the remaining portions of the J-Shed and at theN-Shed.
15. Construction of new rail track to the 39
1
h Street rail siding through a new access point
at the end of First A venue.
Below is a detailed description of certain of Landlord's responsibilities under the Lease:
Drainage System
Approximately 80 drainage structures are currently located throughout the site. A majority of
these structures will require cleaning of the connecting pipe systems and/or grating to function
properly. The majority of these systems are small diameter pipes. Some of the pipes are shallow
and will have minimal cover from the top of the pipe to the bottom of the pavement subgrade.
Some inlets have been completely paved over and some have broken or bent gratings requiring
repair. The site is currently broken into multiple drainage basins, making the treatment of
effluent difficult due to numerous drainage systems. The sizes of the inlets are relatively small
and easily blocked by debris as noted in the Site-Blauvelt ("SBE") Site Condition Survey. This
makes maintenance an issue and localized flooding due to blockage could be a concern if
operators have to walk through standing water to move cars from the storage lot to the
processing station.
Since the intent is to develop the site for an auto processing and general maritime cargo
operation, the site will benefit from some grading to meet the currently proposed layout supplied
by a prospective tenant, but grading is not required for the site to function as a marine cargo
facility. Site grading will primarily include raising localized low points and improving existing
grade breaks to improve the site drainage as much as possible. The grade for the site should be
uniform and easily traversed without excessive grade changes throughout the site. Shallow pipes
under trucking areas shall be protected or replaced.
Water/Fire Systems
The proposed building facilities will have to meet current code requirements for fire protection,
which will be provided by Tenant. Fire hydrants will be installed at approximately 400-foot
centers throughout the Premises.
Potable water shall be supplied to the east end of the N Shed, car wash and the trucker support
building. Any recycling systems required for auto washing are assumed to be a part of the
operation and part of the building cost, and hence borne by Tenant.
Sanitary Sewer System
Sanitary sewer extensions will be made to the east end of the N Shed, J Shed offices, the car
wash and trucker facilities.
N Shed connect to exisitng
J Shed: connect to existing
Carwash within 10 feet of envelop axis to connect
Lighting I Electrical System
Proposed lighting shall consist of a combination of pole-mounted and building mounted light
fixtures with downward-directed, cut-off style fixtures. Foundation heights should be
approximately 3-feet above pavement grade. Recommend painted foundations and pole bases
(caution yellow) with pole mounted, dry-type fire extinguishers. Additional lighting should be
added as necessary to avoid dark areas due to building shadows and at entrances. Two, extra 3-
u:\cbuttonelaxis lease 3-21-06 #1425792
inch conduits duct banks will be run conduits will be installed to address future utility needs.
PVC encased in concrete. Will run parallel to lighting and electrical conduits. Will run to guard
house and trucking facility.
The terminal is being treated as a parking facility, with "high", "medium" and "low" levels of
activity. The terminal is considered "medium" activity during regular operating hours, with
average 1 foot-candle (fc) illumination and a uniformity ratio of 3:1. During off-hours, the
terminal highmast lighting can be selectively or automatically set to "low" level of activity,
resulting in 0.5 fc average with 4:1 uniformity ratio. The main entrance, end of 39th St. pier and
float bridge will be considered "high" activity and illuminated to 3 - 5 fc.
Pavements
Install approximately 16 acres of heavy duty pavement on the 39th Street Pier portion of the
Premises under Phase A. At the proposed truck area in the southeast corner of the terminal,
install a HS-20 pavement section suitable for haulaway trucks of approximate area 660'x 200' .
This pavement shall extend to the First A venue entrance. Pavement grades and drainage
structures or other pavement penetrations will be adjusted to accommodate the close ground
clearances associated with haulaway trucks. Adjust pavement grades and drainage to
accommodate the proposed buildings.
Install new medium duty pavement section in the former rail yard area.
The remainder of the terminal will receive a 2" pavement overlay, with wedging as necessary to
provide positive drainage. The site will not be regraded.
Dredging
NYCEDC, on behalf of Landlord, will dredge the outshore end of the 39
1
h St. Pier to 35 feet
below mean low water ( -33 ft ML W plus 2 feet allowable overdredge ).
Float Bridge
Based on available funds, NYCEDC, on behalf of Landlord will relocate one of the rail transfer
spans at 65th Street Rail Yard to SBMT for Axis' use. Axis will use the transfer span to load and
offload autos from rail cars. EDC will provide new foundations for the transfer span, and will
encase the mechanical lifting/lowering mechanisms.
Rail Improvements
As part of the Brooklyn Waterfront Rail Improvement Project, Landlord will construct new rail
access to the Premises along First A venue to access the existing rail siding that runs along the
north face of the southern portion of the J Shed. Rail improvement will provide access to First
A venue Yard, 65th Street Yard and float bridge, and the Bay Ridge Line.
u:\cbuttonelaxis lease 3-21-06 #1425792
Warranties
Landlord will assign all warranties to Tenant with respect to such portions of Landlord's Work
which Landlord is not thereafter obligated to maintain or repair.
u:\cbuttone\axis lease 3-21-06 # 1425792
Exhibit A Part 6
EXHIBIT D
TENANT'S WORK
In conjunction with Landlord's site improvements, the scope of improvements to be provided by
Tenant is as follows:
!.Construe t and install guardhouses and appurtenant access control equipment.
2.Construc t and install carwash and building systems.
3.Constru ct and install a trucker's support building.
4.Reha bilitate portions ofthe existing office complex within J Shed
5.Constru ct and install administration facilities within N Shed
6.Purcha se and install vehicle processing equipment facilities within N Shed .
Guardhouse
Tenant will construct and install two security guardhouses and associated access control
equipment at 1
51
Avenue and at the west end of39
1
h Street, similar to those indicated on the plan.
Tenant will connect to electrical conduit and communication conduit provided by the Landlord at
a location within 1 0 feet of the proposed building envelopes.
Tenant will connect to electrical, natural gas, potable water and sanitary sewer provided by
Landlord to a location to within 10 feet of the building envelope.
Carwash
Tenant will construct and install a carwash building and systems, of the approximate dimensions
indicated on the plan. The building may include equipment and facilities for either automatic or
manual washing of vehicles. It is intended that all effluents from the car wash will be discharged
to the sanitary sewer system. Any required pretreatment facilities will be incorporated per the
appropriate local jurisdictional requirements. Tenant will connect to electrical, natural gas,
potable water and sanitary sewer provided by Landlord to a location to within 1 0 feet of the
building envelope.
Trucker Support Building
Tenant will construct and install a trucker support building ofthe approximate dimensions
indicated on the plan. It is intended that the building incorporate modular construction
incorporating restrooms, breakrooms, and office areas. Tenant will connect to electrical, potable
water and sanitary sewer provided by Landlord to a location to within 1 0 feet of the building
envelope.
Office/ Administration - J Shed
Tenant may occupy portions of the existing office complex within J Shed, and construct and
install the necessary tenant improvements. Tenant does not intend to rehabilitate the entire
complex, nor does the tenant intend to invest more than would be needed to construct alternative
offices elsewhere on the facility.
Office/ Administration - N Shed
Tenant will construct and install office and administration areas within N Shed. It is intended
that the improvements incorporate modular construction incorporating offices, meeting areas,
restrooms, locker rooms and other support areas Tenant will connect to electrical, potable water
and sanitary sewer provided by Landlord within the building envelope.
Vehicle Processing - N Shed
Tenant proposes to use portions ofN Shed as a vehicle processing facility. Tenant intends to
make repairs and/or other accommodations within the shed. These accommodations may
include construction of separation walls and ceilings, and modular units. Tenant does not intend
to make any upgrades or repairs to those portions of the building not needed for vehicle
processing, other than maintaining the integrity of the building envelope. Vehicle processing
improvements may include task lighting, hoists, electrical drops, compressed air systems, chassis
frames, parts storage, paint booths, and body and prep areas. Tenant will connect to electrical,
natural gas, and potable water provided by Landlord within the building envelope.
EXHIBIT E
CONSTRUCTION SCHEDULE
It is intended that construction of the Landlord site improvements be implemented in the
following phases:
Phase A- July 2006 to January 2007
Phase A is in the area of N & J Sheds, and incorporates approximately 16-acres. A portion of the
existing Plaza Auto Mall tenant area will be relocated prior to this phase. Phase A incorporates
demolition and removal within J Shed. Tenant will initiate work on the vehicle processing
improvements within Shed N during this phase. A construction entrance will be established at
the foot of 39th Street.
On or before 50% of the completion of the land area in Phase A, the existing tenant within the
Phase B portion of the Premises will be relocated to the Phase A portion of the Premises. This
relocation is intended to assist the site contractor in maximizing manpower and equipment.
Upon completion ofthe Phase A work, temporary striping will be installed.
Berth dredging along the outshore end of the 39th Street Pier will also occur during this phase.
Phase B - December 2006 to April 2007
Phase B includes construction of the 33rd Street pier area, and incorporates approximately 13-
acres. If necessary, the existing tenant will be fully relocated to the completed Phase A area
prior to commencement of the work. The construction entrance will be located on First A venue,
with a haul road between the entrance and Phase B. It may also be possible to access this phase
off of Second A venue.
Phase C - April 2007 to September 2007
Phase C includes construction in the Southeast portion of the site and the south Brooklyn rail
yard, and incorporates approximately 18-acres. The existing tenant will be relocated to the
completed Phase A area. The Industry City parkin,r within the Phase C property will be
relocated to the completed permanent lot along 39t street prior to this phase. The same
construction entrance used in Phase B can de reused during this phase. The permanent striping
will be installed at the completion of this phase.
Phase D - September 2007 to December 2007
Phase D includes construction in the current NYPD compound, and incorporates approximately
13-acres. The current tenant will be relocated prior to construction. The tenants previously
relocated onto Phase A and B will remain within the completed portion of the terminal.
Construction Phasing Transitions
Landlord will provide Tenant with written notice a minimum of 45 calendar days prior to the
estimated completion of each phase. Said notice will not be provided until such time as at least
50% of the paved area in any given phase is completed and ready to be accepted by the Tenant.
At time of notice Landlord will provide specific details on the new space to be occupied by the
Tenant. Notice by Landlord is required to allow for relocation of stored or operating assets of
the tenant, placement of utility services including but not limited to voice and data transmission
lines, creation of signage and/or pavement markings, and testing of radio frequency equipment.
At the end of the 45 calendar day notice or when tenant accepts the work of the phase as
complete, whichever is later, Tenant will commence the relocation of operations from the
subsequent phase to the completed area. At the end of the 45 calendar-day notice period or
acceptance date, whichever is later, Tenant will commence relocation to an area equal in size to
the area to be vacated. Tenant will then have a further 45 calendar days to complete relocating
from the original area to the area of the completed and accepted phase.
Landlord will endeavor to provide no less space than Tenant is actively occupying in a regular
shaped, contiguous area. Landlord cannot relocate Tenant to an area with less space or otherwise
not commercially viable for reasons of access to public roads, security of stored or operating
assets, or inadequate protection from environmental conditions. At Tenant's discretion, Tenant
may accept relocation to a smaller area than previously occupied.
. -
EXHIBIT F
LOCAL LAW 69 QUESTIONNAIRE
EXHIBIT G
ENWLOYMENTREPORT
EXHIBITH
BERTH APPLICATION WORKSHEET
The undersigned hereby applies for permission to berth the vessel:
Berth Applicant:
Address:
Gross Reg. Tonnage:
Draft:
Pier/Berth No.
For the Period from:
Amount of Cargo
To be Discharged:
Description of Cargo:
Offshore
Remarks:
Contact:
Owned/Operated By
Agent:
Overall Length: Beam:
Located At:
To:
Loaded:
To be worked: ( ) Inshore ( )
Stevedore:
Wharfage: ____________ Dockage:
u:\cbuttone\axis lease 3-21-06 #1425792
EXHIBIT I
(Intentionally Omitted)
ARTICLE 1
Section 1.01.
ARTICLE2
Section 2.01.
Section 2.02.
Section 2.03.
Section 2.04.
Section 2.05.
ARTICLE 3
TABLE OF CONTENTS
PAGE No.
CERTAIN DEFINITIONS .. ... .. ... .. .... .... .. ... .... ... ..................... .. .... ... ......... 2
Definitions .................... ...... ... ..... ... ... ..... ... ..... .... .. .. ... .... ........ .. ... .. .. ... .. .. .. .. . 2
DEMISE OF PREMISES AND TERM .................................................. 12
.. " .... " ......... "."" ... """ ..... "."" .......... " ... .... " .. " ..... .. ....... .. ... " .. " ..... " .. " 12
Initial Term And Renewal Terms ... .. .. .................... .... ...... .. .................... 12
Addition To Premises ............................................................................. 13
Premises "As Is." .................................................................................... 14
Definition ................ ... .. ....................................... .................... ........ ........ 14
CONDITIONS PRECEDENT ............ .... ........ .. .. .. .... .. .. ... ...... .. .... .. ..... .... 15
Section 3.01 Conditions Precedent. ........................................ ..... ... .... .... ........ ..... ...... .... .. ..... .. 15
ARTICLE4
Section 4.01.
Section 4.02.
Section 4.03.
Section 4.04.
Section 4.05.
Section 4.06.
Section 4.07.
Section 4.08
Section 4.09
ARTICLES
Section 5.01.
Section 5.02.
Section 5.03.
Section 5.04.
Section 5.05.
Section 5.06.
Section 5.07.
Section 5.08.
Section 5.09.
Section 5.1 0.
Section 5.11.
ARTICLE 6
Section 6.01.
Section 6.02.
ARTICLE 7
Section 7.01.
ANNUAL BASE RENT; ADDITIONAL RENT; ABATEMENT;
PILOT; NET LEASE .............................................................................. 15
Annual Base Rent. .................................................................................. 15
Additional Rent. .. .... .. ... ...... ... .. .... .. .. ........ .... .... ..... .... .. .... ..... .. ... ... .. .... .... .. 17
Payments Of Rental. ............................ .. ......... .. ..... .. ............................... 25
Rental Abatement Of Obligations For Certain Occupancies; Rental
Abatement For Phasing ..... .. ......... ......... .... ....... ...... .. .. .... ... ... .. ... ..... .... .. ... 26
Late Payment. ...................................................... ................................... 2 7
Acceptance Of Partial Performance; No Waiver .................................... 27
Payment Of Pilot. ........ .. .......................................... ................................ 27
Taxes ............................................................ ..... .. ..... .. .. .. .... ..... ..... ... .. ... ... 29
Net Lease . ..... ........ ...................................... ...... ..... .. .............................. . 29
IMPOSITIONS AND TAXES; LATE CHARGES AND
INFLATION ADJUSTMENT .. .. ...... ... ....... ... ....... ........... ... .. ..... ............ . 30
Obligation To Pay Impositions .. .. ... ... ........ ... .. .. ... .. .. .... ................... ........ 30
Certain Definitions . ... ... ..... .. .............. ..... ....... ..... .. .. .. .... .... ..... .. .. .. ....... .. ... 30
. .. ....... ... ..... .. .. ....... ... ..... ........ ..... .. ..... ....... ... .. ... ... .. .... ..... ... .. ... ... .... .. .. ... 30
Payments Of Impositions ... ... ......... ......... ..... .. .... ... ... ..... ..... ....... .... .... .... .. 31
Evidence Of Payment. .. .. ...... ... ... .... .. ..... ....... ... .. .. .. .. .. .. ..... ... ... .. .. ... .. .. .. ... 31
Evidence OfNon-Payment. ................... .. ... ... ....... ... .. ... ..... .. ..... .. .... .. ..... . 31
Apportionment Of Impositions ............... .. .. .............. .. ........................... . 31
Taxes .... ...... ........ ........... .... .............. ... ... ... .... .. ..... ... .... .. .. ........ ......... ... .. ... 31
Inflation Adjustment. ......... ... .. ............ .. ..... ... .... .... ..... ....... ..... .. ... .... .. ... ... 32
Late Charges .. .. ... ... ... .... ...... .. .... .. .................. ... .... .. ... ... ... ... .. ............ .... ... 32
Survival. .. .... ... .. ..... ..... ...... ........ .... ...... ... ... ........ .. .. .. ..... .. ... ... .. .. .. .... .. ........ 32
UTILITIES ............................................................ ................................ .. 33
Utility Service To Premises .................................................................... 33
No Obligation On The Part Of Landlord ................................................ 33
LANDLORD'S WORK .. ...... ... .......... ............. .. ..... .......... ............... ........ 33
Capital Improvements To Be Made By Landlord At Sbmt. ................... 33
Section 7.02.
Section 7.03.
ARTICLE 8
Section 8.01.
Section 8.02.
ARTICLE 9
Section 9.01.
Section 9.02.
Section 9.03.
Section 9.04.
TABLE OF CONTENTS
PAGE No.
Phasing Landlord Shall Perform Landlord's Work In The Phases As
Provided In The Development Plan ........................................................ 34
Termination For Non-Delivery Of Phases A And B. ............................. 34
NO DREDGING; SUNKEN CRAFT .............. ..................... .. .. .... ........ .. 34
No Dredging ..................................................... ......... ...... ... ... ... ... .. .... .. .. .. 34
Sunken Craft. ................................................... ............ ... .... .. ... ... .... ...... .. 34
USE OF PREMISES ............................................................................... 35
Permitted Use .......................................................................................... 35
Requirements For Conduct OfBusiness ................................................. 35
Unlawful Use .......................................................................................... 35
No Representations Or Warranty By Landlord ...................................... 36
ARTICLE 10 EASEMENTS ..... ... ... ... ......... .. ....... ... .. .. .... ... .. .... ... .. ... .. .. ... .... ...... .... ...... .. ...... ... .... ... 36
Section 1 0. 0 1.
Section 1 0.02.
Section 10.03.
ARTICLE 11
Section 11.01.
Section 11.02.
Section 11.03.
Section 11.04.
Section 11.05.
Section 11.06.
Section 11.07.
Section 11.08.
Section 11.09.
Section 11.10.
Section 11.11.
Section 11.12.
Section 11.13.
ARTICLE 12
Section 12.01.
Section 12.02.
Section 12.03.
Section 12.04.
Section 12.05.
Section 12.06.
Section 12.07.
Section 12.08.
Section 12.09.
ARTICLE 13
Section 13.0 1.
Municipal Easement. .. ... .. ..... .. ..... .. ... .. ... ... ..... ... ...... ..... .. ..... .... .. ......... ...... 36
Inspection ......... ....................................................................................... 3 6
No Interference . ...................................................................................... 37
INSURANCE ................ .... .... .. ....... ...... ...... .. ....... ... .. .... ..... ........ ........ ... ... 37
Insurance Requirements .. .. .. .. ..... ....... .... .. ... .. .. .. .. ... ..... .... ... ... ...... ... .. .. ...... 37
Treatment Of Proceeds . ..... ........ ....... .. ...... .. ...... ....... ............ .... ......... .... .. 40
General Requirements Applicable To Policies ..... ................... ..... .. ...... .. 40
Evidence Of Insurance .......................... ... .... .... ... ... ... .. ... .. ........... .... .... .... 42
Compliance With Policy Requirements .... ... .. ... ... ... ..... .. ... ...... ... ... ....... .. .42
Separate Insurance ............................... .... ........ ....... ........... ...................... 42
Increases In Coverage And Additional Insurance .... ..... ... ..... .. .. ... .. ... .... .42
No Representation As To Adequacy Of Coverage . ...... ..... ... ...... .. .. ... .... .43
Blanket And/Or Master Policies ............................. ....... ... ... .... ....... ... ... . .43
Annual Aggregates ................................................. .. ... .. ...... ... ... ... .. .. .... ... 43
Other Insurance Not Required Under This Lease .. .............. ...... ... .. ....... .43
Modification By Insurer. ......................................................................... 43
Interpretation ........................................................................................... 43
DAMAGE, DESTRUCTION AND RESTORATION ........................... 43
Notice To Landlord ......... ..... .. .. ... ......... ... ...... ..... ... ..... .... .... ... .. .. ... .. ... ...... 43
Casualty Restoration ....... ..... ... .... .. ....... .... ...... .... .. ...... .. ..... .... .... ... .. .. .. .... . 44
Restoration Funds . .... ... .. .. .. .... .. ........ ... ... .. ... .. ......... .. .. .... .. ............. ....... .. . 45
Conditions Precedent To Disbursement Of Restoration Funds ...... ........ 46
Effect Of Casualty On This Lease .................................................... ..... .4 7
Effect Of Lease Termination . ......... .. .. .. ... ... ..... ... ... ...... ....... ... .......... ...... .4 7
Effect Of Events Of Default. ...... ... .. ... .. .. .......... .. .. .. .... .. .. .............. .... ...... 47
Waiver Of Rights Under Statute ..... .... ........ ... ..... .... ... .. ..... .... ... .. .. .... ... ... .47
Landlord's Obligation To Restore .. ........... ... .... .......... .. .... ....... .... .. ..... ..... 4 7
CONDEMNATION .. .. .. ... .. ..... .. .... .... ......... ... ...... .. ........ .... ...... .. .... .. .. ...... 48
Certain Definitions .. .... ... ... .. .. .... .. .. ... .. ..... .. ... ........ ... .... ... ... ... ... ... .... ... ...... 48
Section 13.02.
Section 13.03.
Section 13.04.
Section 13.05.
Section 13 .06.
Section 13.07.
Section 13.08.
Section 13.09.
Section 13.10.
ARTICLE 14
SECTION 14.01 .
ARTICLE 15
Section 15.01.
Section 15.02.
Section 15.03.
Section 15.04.
Section 15.05.
Section 15.06.
Section 15.07.
Section 15.08.
Section 15.09.
Section 15.10.
ARTICLE 16
Section 16.01.
Section 16.02.
Section 16.03.
Section 16.04.
Section 16.05.
Section 16.06.
Section 16.07.
ARTICLE 17
Section 17.01.
Section 17.02.
Section 17.03.
Section 17.04.
Section 17.05.
Section 17.06.
Section 17.07.
Section 17.08.
Section 17.09.
Section 17.1 0.
Section 17.11.
TABLE OF CONTENTS
PAGE No.
Permanent Taking .... ... ... ..... ..... .. ... .. ............ .. ... ..... ....... ... .. .. ... .. ... .. .. .. ... ... 48
Temporary Taking .................................................................................. 49
Governmental Action Not Resulting In A Taking .................................. 50
Condemnation Restoration Procedure .................................................... 51
Collection Of Awards . ..... .. ........ ... ... .... .. ... ....... ..... ... ..... ....... ... .. .. ............ 51
Landlord's Right To Award On Termination ......................................... 51
Allocation Of Award .................................................... .. ......................... 51
Tenant's Appearance At Condemnation Proceedings . ............ .. ...... .. .. .. . 52
Waiver Of Rights Under Statute .... .. .... .. ...... .. ...... .. ... .. .... ...... ... ... ....... .. .. . 52
ASSIGNMENTS, SUBLEASES AND TRANSFERS ........................... 52
.. ..... ..... .. .. ... .... ... .. .... .... ..... ..... .. .... ... ..... .. ... ..... ... .. ... . , .. ....... .. .. .. .. ... .... .... 52
REPAIRS, MAINTENANCE BY TENANT AND LANDLORD, ETC.53
Maintenance Of The Premises, Etc .... .... ..... .... ..... ....... ... .... .. ... ................ 53
Removal Of Equipment. .......... , ........... ........ ... .... .. ... .. .. .... ..... .... .............. 53
Free Of Dirt, Snow, Etc . ........... ... .... ........ .. .. .. ..... ......... ... ...... .. .... .... .... .. .. 53
No Obligation Of Landlord To Supply Or Repair Utilities ..... .. ..... .. ..... 54
Window Cleaning ................................................... ... ............ ....... .... .. ... . 54
Landlord To Inspect And Determine Necessity Of Repairs .... ..... .. ....... . 54
Outgoing Condition Survey ......... ..... .. ....... , ...... ... ........... .... .... ... ... ... ... .. .. 54
Access Of Landlord To Premises To Perform Obligations .................... 55
Access To Show Premises To Prospective Tenants ............................... 55
Landlord's Maintenance Obligations ...................................................... 55
CHANGES AND ALTERATIONS ......... ...... ...... ........ .. ..... .. .. ..... ....... .. . 56
No Alterations Without Landlord's Consent. ........................ ..... .. .......... 56
Conditions Applicable To Alterations .................................................... 56
No Allowances ............. .......................................................................... ,57
Title In Landlord ......................................................... , ........................... 57
Removal Of Trade Fixtures And Equipment. ......................................... 57
Sprinklers ........................................................................................ , ....... 57
. .. ... .... .. .... ..... .. .... .... ........ ... .. .... ... ....... .. ... ... .. ... ....... ........ .... ... ... , .... .... ... 58
CONSTRUCTION WORK .. .. ... ..... ............... .. ........ .. ... .... ....... .. ...... .... .. . 58
Construction Work ...... ........ , .. .. ....... .. .......... ...... ... ........ ..... .... .. ..... .... ....... 58
Definitions ................................................. ......... ..... ......... ................. ...... 58
Plans And Specifications .. .................................................. .... ..... .. ..... .... 59
Conditions Precedent To Tenant's Commencement Of All
Construction Work .............................................................. ... .... .. ... .... ... . 60
Performance Of Construction Work ............................................. .. ....... . 62
Supervision Of Architect . ............ .. .. ... ....... .. .. .... .. .. ...... .. ... ... ... .... .. ... .. .. ... 62
Rights Of Inspection ........................................... .. .. ..... .. .. .. ...... .... ..... .. .... 62
Completion Of Construction Work ................. .... ... .. .. ... ... ... ......... .. ....... .. 62
Compliance With Requirements ... ..... .. .. ... ..... .. ..... ........ .. .... ... .............. ... 63
Risks Of Loss .......................................................................................... 63
Costs And Expenses .. ........................................... .. ................................. 63
Section 17.12.
Section 1 7.13.
Section 17.14.
Section 1 7.15.
ARTICLE 18
Section 18.01.
Section 18.02.
Section 18.03.
Section 18.04.
Section 18.05.
ARTICLE 19
Section 19.01.
TABLE OF CONTENTS
PAGE No.
Title To The Improvements And Materials ............................................ 63
Names Of Contractors, Materialmen, Etc.; Approval Of
Consultants, Etc ...................................................................................... 64
Construction Agreements ........................................................................ 64
Publicity .................................................................................................. 65
TENANT'S WORK; PROJECT FUNDING; IMPREST ACCOUNT .. 66
Tenant's Work . ... ............................... ..... .. .. .... ........... .... ....... ........ ........ .. . 66
Plans And Specifications ................... ....... .. ............ .. .. ............................ 66
Construction Of The Tenant's Work. .. ... .......... .......... .. ..... .... ......... ........ 66
Project Funding ....................................................................................... 66
lmprest Account. ..................................................................................... 66
REQUIREMENTS OF GOVERNMENTAL AUTHORITIES .............. 67
Obligation To Comply With Requirements ............................................ 67
ARTICLE 20 DISCHARGE OF LIENS; BONDS ........................................................................ 67
Section 20.01. No Liens Are Permitted ......................................... ................................. 67
Section 20.02. Discharge Of Liens .............................................. .... ..... .. .... ..... .... ...... .... . 67
Section 20.03. No Authority To Contract In Name Of Landlord ... ... ..... ............ ............ 68
ARTICLE 21
Section 21.01.
Section 21.02.
Section 21.03.
Section 21.04.
Section 21.05.
Section 21.06.
Section 21.07.
Section 21.08.
Section 21.09.
Section 21.1 0.
ARTICLE 22
Section 22.0 1.
Section 22.02.
Section 22.03.
Section 22.04.
CERTAIN REPRESENTATIONS AND WARRANTIES
OF TENANT ... .. ......... ....... .... ................................................................. 68
Incorporation, Good Standing And Due Qualification ........................... 68
Corporate Power And Authority; No Conflicts ...................................... 68
Legally Enforceable Agreements ........................................................... . 69
Litigation ..... .. ......... ..... .......... ...... .. .... .......... ... ... .. ..... ... ... ......................... 69
Taxes . ... ... .... .. ....... .. ....... .... ..... ...... ................ ..... .. ..... ............... ..... ... ........ 69
Operation Of Business; Compliance With Laws ...... ............. ........ ......... 69
No Brokers . ...... ..... ... .. .................. ......... .... ............. .................................. 69
No Prohibited Persons ............................................ .. .... ..... ... ................... 69
No Undue Influence ........... ....... ..... ... .. ...... .. ............ .. .. .. ... .. .......... .... ... .... 70
No Other Representations ... .............. ..... .... .. .. ....... .. .............. .... .. ..... .. .... . 70
LIMITATION ON LIABILITY .......................... ......... .......................... 70
Landlord Not Liable For Injury Or Damage, Etc ..... ... ........................... 70
Landlord Exculpation. 71
Governs Lease ...................... ......... .. ..... .. ... ... ... ... .. ....... ... ..... ..... .. .. ... ... ..... 71
Other Remedies ...................... .... ....................... .. ........ .... .......... .... .......... 71
ARTICLE 23 INDEMNIFICATION ............................. ........... .... ............................................. ... . 71
Section 23.01.
Section 23.02.
Section 23.03.
Section 23 .04.
Section 23.05.
Obligation To Preserve Landlord, Lease Administrator
And Apple Against Liability ................................................................... 71
Obligation To Indemnify ........................................................................ 72
Contractual Liability ........... ............................................ ........................ 73
Defense Of Claim, Etc ...... ............ ... .. .... ..... ............ ... ............ ...... ... .. .. ... . 73
Notification And Payment. .... ................ ............................ .......... .. .. ....... 74
Section 23.06.
ARTICLE 24
Section 24.01.
Section 24.02.
Section 24.03.
Section 24.04.
Section 24.05.
Section 24.06.
Section 24.07.
Section 24.08.
ARTICLE 25
Section 25.01.
Section 25.02.
Section 25.03.
Section 25.04.
Section 25.05.
Section 25.06.
Section 25.07.
Section 25.08.
Section 25.09.
Section 25.10.
Section 25 .11.
Section 25.12.
ARTICLE 26
Section 26.01.
Section 26.02.
Section 26.03.
Section 26.04.
Section 26.05.
ARTICLE 27
Section 27.01.
Section 27.02.
Section 27.03.
Section 27.04.
Section 27.05.
TABLE OF CONTENTS
PAGE No.
Survival Clause ....................................................................................... 74
LANDLORD'S RIGHT TO PERFORM TENANT'S COVENANTS .. 74
Landlord's Right To Perform .................................................................. 74
Amounts Paid By Landlord Are Rental. ................ .... ... .. .. ..... ... ...... .. ... ... 74
Proof Of Damages ................................................................................... 7 5
Right To Use Deposited Funds ............................................................... 75
Discharge Of Liens .. ... ...... .. ................. .. ........... ... .......... .. .. .. ....... ... .... .. ... 7 5
Waiver, Release And Assumption Of Obligations ................................. 75
Intentionally Omitted ................................... .............. ..... ..... .. ........... ...... 75
. ........................................................................................................... 75
NO SUBORDINATION; RECOGNIZED MORTGAGEES ................. 76
No Subordination . ............. .... ............ .. .......... .... .... ...................... ......... ... 76
Effect Of Mortgages By Tenant. ... .. .... .. ............ ........................ .. ............ 76
Mortgagee's Rights Not Greater Than Tenant's ..................................... 77
Notice And Right To Cure Tenant's Defaults ......................... .......... ..... 77
Execution Of New Lease ........................................................................ 79
Recognition By Landlord Of Recognized Mortgagee Most
Senior In Lien ...... ..... ...... ...... ..... .. ..... ..... ............ .............. .. ..... ................ 80
Application Of Proceeds From Insurance Or Condemnation Awards .... 81
Appearance At Condemnation Proceedings . ....... ..... ... .. ..... ................ ... . 81
Rights Limited To Recognized Mortgagees .................. .. .................. .. ... 81
Non-Disturbance And Recognition Agreement. .. ........ ........ .... ............... 81
No Merger. ........................................ ...... .... ....... .. ..... .. ... .. .. .... .... ...... ... .. .. 81
.No Amendment. ................................ ..................................................... 81
REPORTS, BOOKS AND RECORDS, INSPECTION AND AUDIT .. 81
Financial Statements Of The Operations Of The Premises .................... 81
Maintenance Of Books And Records ..... ............................. ........ .... ....... 82
Books And Records ... ... ........ .. .......................... .... .......... ........................ 83
Survival Clause ............. .......... ....... ...................... ............. ...................... 84
Local Law 69 Report .............................................................................. 84
NON- DISCRIMINATION AND AFFIRMATIVE ACTION .............. 84
Non-Discrimination And Affirmative Action ......................................... 84
Non-Discrimination And Affirmative Action ...... ... ................................ 84
Intentionally Omitted .............................................................................. 8 8
Default .. .. ... ........... .... .... ..... .. .. .. .... ........ .. ......... ... ... ... .... ......... .. .. .. ... .. .. .. .... 88
Compliance With Revised Program .. .. ........................ .............. .............. 89
ARTICLE 28 INVESTIGATIONS; REFUSAL TO TESTIFY .................................................. .. 89
Section 28.01. Cooperation ........................................................................................... .. 89
Section 28.02. Hearings ............................................ ... .. .. .... ......... .. ............................. .. . 89
Section 28.03. Adjournments Of Hearing, Etc ............. .... ....... ... .............................. ...... 90
Section 28.04. Penalties .... ................. .... ..................................... .................................... 90
Section 28.05. Criteria For Determination ........................ ...... ............................... ... ...... 90
Section 28.06.
Section 28.07.
ARTICLE 29
Section 29.01.
Section 29.02.
Section 29.03.
Section 29.04.
Section 29.05.
Section 29.06.
Section 29.07.
Section 29.08.
Section 29.09.
Section 29.10.
Section 29 .11.
Section 29.12.
Section 29.13.
Section 29.14.
Section 29.15.
Section 29.16.
ARTICLE 30
Section 30.01.
Section 30.02.
Section 30.03.
Section 30.04.
ARTICLE 31
Section 3 1. 0 1.
Section 31.02.
Section 31.03.
ARTICLE 32
SECTION 32.01.
SECTION 32.02.
TABLE OF CONTENTS
PAGE No.
Definitions ................................. ...... ..... ... .. ...... .. ..... .. .. ......... .. ............. ..... 91
Failure To Report Solicitations .............................................................. . 91
EVENTS OF DEFAULT, REMEDIES, ETC ........................................ 92
Events Of Default. ................................................................................. 92
Remedies ................................................................................................. 94
Waiver Of Rights OfTenant. .................................................................. 95
Receipt Of Moneys After Notice Or Termination .................................. 95
Certain Waivers ...................................................................................... 96
Strict Performance .................................................................................. 96
Right To Enjoin Defaults Or Threatened Defaults;
Remedies Cumulative ............................................................................. 96
Payment Of All Costs And Expenses ..................................................... 96
Remedies Under Bankruptcy And Insolvency Codes ............................. 97
Funds Held By Lease Administrator. ...................................................... 98
Funds Held By Tenant. ............................... .. ...... .................................... 98
Proof Of Damages ............................................................ ........ ............... 99
Survival ............................................................................ .. : .................... 99
Tenant's Current Bankruptcy. Be Rendered Inapplicable
To Tenant's Current Bankruptcy ............................................................ 99
Landlord's Rights And Remedies ........................................................... 99
Notices .................................................................................................. 1 00
TERMINATION AND SURRENDER ....... ......... ............ ............ .. .. .... 100
Surrender Of Premises ..... .. .. ... ...... .... .. .. .. .. ..... ....... ... ....... .. ....... .. .. ....... .. 1 00
Delivery Of Contracts, Etc .................................................................... 1 00
Personal Property .................................................................................. 1 00
Survival Clause ..................................................................................... 1 00
CLAIMS, JURISDICTION, IMMUNITIES, PROCESS ... ... ..... ....... .. .101
Waiver Of Trial By Jury ........ .. ..... ......................... .. ............ .. ............... 101
Jurisdiction ............................................................................................ 1 01
Process ................... .......... .... .. .. ......... ............... .......... .. ...................... ... 1 01
NOTICES .............................................................................................. 102
........ .... .............................................................................................. 102
. ........... .............................................................................................. 104
ARTICLE 33 STREET WIDENING ........................................................................................... 105
Section 33.01.
Section 33.02.
Section 33.03.
ARTICLE 34
ARTICLE 35
Section 35.01.
Proceedings For Widening Street. ........................................................ 1 05
Contest Of Proceedings ......................................................................... 1 05
Distribution Of Award .......................................................................... 1 05
EXCAVATIONS AND SHORING ...................................................... 105
CERTIFICATES BY LANDLORD AND TENANT ........................... 106
Certificate Of Tenant. ............... ..... ... ....... .... ....... ... .......... .................. ... 1 06
Section 35.02.
Section 35.03.
ARTICLE 36
ARTICLE 37
ARTICLE 38
Section 38.01.
Section 38.02.
Section 38.03.
Section 38.04.
ARTICLE 39
Section 39.01.
ARTICLE 40
ARTICLE 41
Section 41.0 1.
Section 41.02.
Section 41.03.
Section 41.04.
Section 41.05.
Section 41.06.
Section 41.07.
Section 41.08.
Section 41 .09.
Section 41.1 0.
Section 41.11.
Section 41.12.
Section 41.13.
Section 41.14.
Section 41.15.
Section 41.16.
EXHIBIT A
EXHIBIT B
EXHIBIT C
EXHIBIT D
EXHIBIT E
EXHIBIT F
EXHIBIT G
EXHIBIT H
EXHIBIT I
TABLE OF CONTENTS
PAGE No.
Certificate Of Landlord ................ .. .... .... ...... ... .... ... ...... ... .. .. ... ..... .... .... .. 1 06
Failure To Deliver Certificate ......... .. .... .. ...... .... ...... ... .... .. .. .. .. .. .... .. .... ... 1 07
QUIET ENJOYMENT ................. ... ......................... .. .... ........ .. ... .... ... ... 107
RECORDING OF LEASE .. ... ..... .. ..... ... ........ ........ .. .... .. .. .. .. .... .. .... ... .. .. . l07
ADMINISTRATIVE AND JUDICIAL PROCEEDINGS,
CONTESTS, ETC .. ... ... ... .... .. .. ..... .. .. ..... .... ... .......... .... ....... ... ...... ..... ...... 107
Tax Contest Proceedings ............................................. ............. .. .. .. ... .. .. I 07
Imposition Contest Proceedings ..... ................. ... .... ... .. ... .. .. .... .. .. .. ... .. ... I 08
Requirement Contest. ... .. .... ...... .... ............ .............. ...... .. .. .. ... ...... .. ........ 1 09
Landlord's Participation In Contest Proceedings ....... ........... .. .............. 1 09
ARBITRATION ....................... ... ........... .. .... ...... .... ....... ... .. ......... .. .. .... . 109
Procedure For Arbitration .................. ........... .... .. ........... .. ....... ...... .. ... ... 1 09
INTENTIONALLY OMITTED ......... .... ....... .... .......... ...... ..... .. ... .. .... ... 110
MISCELLANEOUS .. .. .. ......... .... .... ... ..... .. ..................... ... .. .... ... .. .. ... .. .. 11 0
Headings, Captions And Table Of Contents ... ... .. .. ........ ....... .. .. ... ...... ... 110
Governing Law ............... .... .. ... .. ... ... .............. .... ....... .. ... .. .................. ... 11 0
Amendments; Waiver. ......... .. ..... ...... .. ... ... .. .. .. ..... ..... .... ......... ... ....... ..... 11 0
Entire Agreement .. ..... .. ........ ... ..... .......... .. .. ..... ... .. .. ... .... ... ............ .. ..... .. 11 0
Invalidity Of Certain Provisions ............ .. .... .. ............ .. ............. ..... ....... 111
No Partnership Or Joint Venture ............... .. .... .. .. ... ... ....... .. ... .... .. .. ...... .. ll1
Consents And Approvals ....................... .... .... ........... ... ... .... ... .. .. .. ...... ... 111
"Including" .. ....... .... .... ... .... ... .. ..... .. .... ... ... .. .. ... ....... ... ....... .. ... ........... ...... 112
Remedies Not Exclusive ............................................... .. ................ ...... 112
Required Provisions Of Law Controlling .................. ... .. ......... ..... ........ 112
Successors And Assigns . ... ...... .. ......... .......... ...... ...... .. ....... .......... ... .... .. 112
No Warranty By Landlord .............................................. ... ... ................ 112
Construction Of Terms And Words .................................. ... .... .. .. .. ....... 112
Tenant's Commitment To Reduce Environmental Impact
Of Operation ...... .. ........... .. .. .. .. .. ..... ...... .. ........ .. ... .... ............ ............ ... ... 112
Tenant's Commitment To Hire Locally ....................................... ... ... ... l12
Counterparts . .. .. ... .. ... ........ .. ..... .. .... .. ....... .. ... .. ............ ... .. .. ... .. ..... ....... .... 113
PREMISES
TITLE MATTERS
LANDLORD'S WORK
TENANT'S WORK
CONSTRUCTION SCHEDULE
LOCAL LAW 69 QUESTIONNAIRE
EMPLOYMENT REPORT
BERTH APPLICATION WORKSHEET
INTENTIONALLY OMITTED
In re:
ATLANTA DIVISION
Chapter 11
ALLIED HOLDINGS, INC., et aL Case Nos. 05-12515 through 05-12526
and 05-12528 through 05-12537
Judge Mullins
ORDER AUTHORIZING AXIS GROUP, INC. TO ENTER INTO
NON-RESIDENTIAL REAL PROPERTY LEASE
WITH THE CITY OF NEW YORK
This matter is before the Court on the motion of Axis Group, Inc., as debtor and debtor-
in-possession ("Axis"), for an order authorizing it to enter into a non-residential real property
lease (the "Lease") with the City ofNew York (the "Motion").
The Court has considered the Motion and the matters reflected in the record of the
hearing held on the Motion. It appears that the Court has jurisdiction over this proceeding; that
this is a core proceeding; that notice of this Motion has been provided to those entities on the
Master Service List (as such term is defined in the Order Establishing Notice Procedures entered
on August 2, 2005 in these jointly administered cases) and upon the City of New York by U.S.
mail; that no further notice is necessary; that the relief sought in the Motion is in the best
interests of Axis, its estates, and its creditors; and good and sufficient cause exists for such relief.
Accordingly, it is hereby ORDERED as follows:
1. The Motion is GRANTED. All capitalized terms not otherwise defined have the
meanings ascribed to them in the Motion.
1690479 _2.DOC
2. Axis is authorized to enter the Lease with the City of New York in accordance
with Section 363 of the Bankruptcy Code. The Lease is in the best interests of Axis' estate and
represents an exercise of Axis' sound business judgment.
3. Axis is authorized to execute all documentation necessary to enter the Lease.
4. This order shall be effective and enforceable immediately upon its entry and the
stay imposed by Bankruptcy Rule 6004(g) is hereby waived.
5. The Court shall retain jurisdiction to hear and determine all matters arising from
the implementation of this Order.
6. Axis shall, within three (3) days of the entry of this order, cause a copy of this
order to be served upon each of the parties listed on the Master Service List (as such term is
defined in the Order Establishing Notice Procedures entered on August 2, 2005 in these jointly
administered cases) and upon the City of New York by U.S. mail. Axis shall also file a
certificate of service with the Court showing that service in accordance with this order has been
properly effectuated.
SO ORDERED this ___ day of _ _______ 2006.
C. Ray Mullins
UNITED STATES BANKRUPTCY JUDGE
[signature of counsel preparing and presenting order appears on next page]
- 2-
Prepared and presented by:
Is/ Harris B. Winsberg
TROUTMAN SANDERS LLP
600 Peachtree Street, N.E. - Suite 5200
Telephone No.: (404) 885-3000
Facsimile No.: (404) 885-3900
ATTORNEYS FOR AXIS GROUP, INC.
1690479v.2
- 3-

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