LEASE
between
BP 399 PARK AVENUE LLC,
Landlord
and
CITIGROUP INC.,
Tenant
PREMISES:
Entire Mezzanine, 2nd, 3rd, 4th, 7th, 10th, 12th and 14th Floors, a
Portion of the 13th Floor and Portions of the Lobby and the Basement
UNIT TWO
THE 399 PARK AVENUE CONDOMINIUM
399 Park Avenue
New York, New York 10022
Dated: as of September 25, 2002
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TABLE OF CONTENTS
Page
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Article 1 Term and Fixed Rent...................................................1
Article 2 Delivery and Use of Premises..........................................5
Article 3 Escalations..........................................................12
Article 4 Condominium..........................................................33
Article 5 Subordination, Notice to Superior Lessors and Mortgagees.............36
Article 6 Quiet Enjoyment......................................................38
Article 7 Assignment, Subletting and Mortgaging................................38
Article 8 Compliance with Laws.................................................58
Article 9 Insurance............................................................61
Article 10 Rules and Regulations................................................65
Article 11 Alterations..........................................................66
Article 12 Landlord's and Tenant's Property.....................................74
Article 13 Repairs and Maintenance..............................................76
Article 14 Electricity..........................................................79
Article 15 Landlord's Services..................................................85
Article 16 Access and Name of Building.........................................108
Article 17 Notice of Occurrences...............................................114
Article 18 Non-Liability and Indemnification...................................114
Article 19 Damage or Destruction...............................................117
Article 20 Eminent Domain......................................................122
Article 21 Surrender...........................................................124
Article 22 Conditions of Limitation............................................124
Article 23 Reentry by Landlord.................................................128
Article 24 Damages.............................................................129
Article 25 Affirmative Waivers.................................................131
Article 26 No Waivers..........................................................132
Article 27 Curing Tenant's Defaults............................................133
Article 28 Broker..............................................................134
Article 29 Notices.............................................................134
Article 30 Estoppel Certificates...............................................136
Article 31 Memorandum of Lease.................................................137
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TABLE OF CONTENTS
(continued)
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Article 32 No Representations by Landlord......................................137
Article 33 Tenant's Rights of Self-Help and Offset.............................137
Article 34 Holdover............................................................140
Article 35 Miscellaneous Provisions and Definitions............................141
Article 36 Extension Terms.....................................................152
Article 37 Intentionally Omitted...............................................158
Article 38 Intentionally Omitted...............................................158
Article 39 Arbitration.........................................................158
Article 40 Right of Offering...................................................160
Article 41 Unit One First Offer Right..........................................170
Article 42 Intentionally Omitted...............................................177
Article 43 Intentionally Omitted...............................................177
Article 44 Lehman Tenant's Existing Facilities.................................177
Article 45 Lobby Desks and Signage.............................................179
Article 46 Tenant's Antenna....................................................183
Article 47 Back-Up Power System................................................187
Article 48 Right Of First Offer To Purchase....................................191
Article 49 New York City Benefits..............................................197
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TABLE OF EXHIBITS
Exhibit A: Description of Land
Exhibit B: Floor Plans of Office Premises
Exhibit B-1: Floor Plan of Lobby Premises
Exhibit B-2: Floor Plan of Basement Premises
Exhibit C: Tenant Pre-Approved Alterations
Exhibit D: Building Rules and Regulations
Exhibit E: Building Standards for Alterations
Exhibit F: Cleaning Specifications
Exhibit G Calculation of Overtime HVAC Charge and Overtime HVAC Charge Adjustment
Exhibit H: Board SNDA Agreement
Exhibit H-1: Superior Mortgagee SNDA Agreement
Exhibit H-2: Superior Lessor SNDA Agreement
Exhibit I: Intentionally Omitted
Exhibit J: Landlord's Consent to Assignment and Assumption of Lease
Exhibit K: Consent to Sublease
Exhibit L: Qualified Space Non-Disturbance Agreement
Exhibit M: Board of Managers' Waiver
Exhibit N: Form of Landlord's Statement
Exhibit O: Approved Contractors
Exhibit P: Building Passenger Elevator Specifications
Exhibit Q: Tenant Private Elevator Locations and Tenant Lobby Podium Location
Exhibit R: Calculation of Supplemental Chilled Water Charge Adjustment
Exhibit S: Calculation of Supplemental Condenser Water Charge Adjustment
Exhibit T: Building-Wide Security Specifications
Exhibit U: Tenant Riser and Shaft Space Locations
Exhibit V: Tenant Mechanical Space Locations
Exhibit W: Intentionally Omitted
Exhibit X: Tenant Lobby Desk Locations
Exhibit Y: Tenant Existing Rooftop Antenna Locations
Exhibit Z: Tenant Existing Generator Area Locations
Exhibit AA: Tenant Building Lobby Paintings
Exhibit BB: Intentionally Omitted
Exhibit CC-1: Prohibited Penetration Area 1
Exhibit CC-2: Prohibited Penetration Area 2
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LEASE (this "LEASE"), dated as of September 25, 2002 between BP 399
PARK AVENUE LLC, a Delaware limited liability company having an office c/o
Boston Properties, Inc., 599 Lexington Avenue, New York, New York 10022
(herein called "LANDLORD") and CITIGROUP INC., a Delaware corporation having
an office at One Court Square, Long Island City, New York 11120 (herein
called "TENANT").
W I T N E S S E T H
WHEREAS, immediately prior to the date of this lease, a related entity
of Tenant owned fee title interest in and to that certain condominium unit known
as Unit Two (herein called the "UNIT") of the condominium known as The 399 Park
Avenue Condominium (herein called the "CONDOMINIUM") in the building (herein
called the "BUILDING") known as 399 Park Avenue in the City, County and State of
New York located on a portion of the land (herein called the "LAND") described
in EXHIBIT A annexed hereto;
WHEREAS, immediately prior to the execution and delivery of this
lease, a related entity of Tenant conveyed its ownership interest in and to the
Unit and that certain condominium unit known as Unit One (herein called "UNIT
ONE") of the Condominium to the Landlord named herein;
WHEREAS, Landlord currently owns fee title interest in and to the Unit
and Unit One;
WHEREAS, Tenant is and has been in occupancy of the entire Premises,
as such term is defined in Section 1.02 hereof; and
WHEREAS, Tenant desires to lease the Premises from Landlord for a term
commencing on the date of this lease,
NOW, THEREFORE, for the mutual covenants herein contained and other
good and valuable consideration, the receipt and adequacy of which are hereby
conclusively acknowledged, the parties hereto, for themselves, their successors
and permitted assigns, hereby covenant as follows:
ARTICLE 1
TERM AND FIXED RENT
1.01. Landlord hereby leases to Tenant, and Tenant hereby hires from
Landlord, upon and subject to the terms, covenants, provisions and conditions of
this lease, the premises described in Section 1.02 hereof in the Unit.
1.02. The premises (herein called the "PREMISES") leased to Tenant
shall consist of (a) the entire mezzanine (herein called the "MEZZANINE
PREMISES"), second
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(2nd), third (3rd), fourth (4th), seventh (7th), tenth (10th), twelfth (12th)
and fourteenth (14th) floors of the Building and a portion of the thirteenth
(13th) floor of the Building (herein collectively called the "OFFICE PREMISES"),
substantially as shown on the floor plans annexed hereto as EXHIBIT B, (b) a
portion of the lobby of the Building (herein called the "LOBBY PREMISES"),
substantially as shown on the floor plan annexed hereto as EXHIBIT B-1 and (c)
portions of the A, B and C basement levels of the Building, substantially as
shown on the floor plans annexed hereto as EXHIBIT B-2 (the A basement level
portion of the Premises is herein called the "BASEMENT LEVEL A PREMISES"); the B
basement level portion of the Premises is herein called the "BASEMENT LEVEL B
PREMISES"; the C basement level portion of the Premises is herein called the
"BASEMENT LEVEL C PREMISES"; the Basement Level A Premises, the Basement Level B
Premises and the Basement Level C Premises are herein collectively called the
"BASEMENT PREMISES"). Landlord and Tenant hereby covenant and agree that no
square footage number shall be ascribed to the Lobby Premises in connection with
the determination of the aggregate rentable square feet contained within the
Premises and the Premises shall be deemed to contain an aggregate of 657,832
rentable square feet, comprised as follows for each floor or portion of the
Premises:
Mezzanine 26,059
2nd floor 91,132
3rd floor 94,689
4th floor 94,697
7th floor 71,808
10th floor 59,618
12th floor 59,529
13th floor 14,692
14th floor 22,261
Basement Level A Premises 41,157
Basement Level B Premises 40,904
Basement Level C Premises 41,286
Landlord hereby grants to Tenant the non-exclusive right to use, in common with
others, the public and common areas of the Unit and the Common Elements (as such
term is defined in the Declaration) to the extent required for access to the
Premises or use of the Premises for general and executive offices and ancillary
and incidental uses as permitted under Section 2.02 hereof, including, without
limitation, common hallways on the floors on which the Premises are located,
stairways, restrooms on the floors on which the Premises are located (provided
however that restrooms located on full floors demised under this lease shall be
part of the Premises), and the Building lobby, subject to the terms, covenants,
provisions and conditions of this lease.
1.03. The term of this lease shall commence on the date of this lease
(herein called the "COMMENCEMENT DATE") and subject to the rights of Tenant to
elect to extend the term of this lease pursuant to the provisions of Article 36
hereof, the term of
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this lease shall end at 11:59 p.m. on September 30, 2017 (herein called the
"EXPIRATION DATE") or on such earlier date upon which the term of this lease
shall expire or be canceled or terminated pursuant to any of the conditions or
covenants of this lease or pursuant to law.
1.04. The rents shall be and consist of the following amounts with
respect to the Premises:
(a) fixed rent (herein called "FIXED RENT") for the Premises
at the following rates for the following periods:
(i) THIRTY-SEVEN MILLION EIGHT HUNDRED TWENTY-FIVE
THOUSAND TWO HUNDRED AND 00/100 DOLLARS ($37,825,200.00) per annum, in
equal monthly installments of $3,152,100.00 each, for the period (herein
called the "FIRST RENT PERIOD") commencing on the Commencement Date and
ending on September 30, 2007;
(ii) FORTY-ONE MILLION ONE HUNDRED FOURTEEN THOUSAND
THREE HUNDRED SIXTY AND 00/100 DOLLARS ($41,114,360.00) per annum, in equal
monthly installments of $3,426,196.67 each, for the period (herein called
the "SECOND RENT PERIOD") commencing on October 1, 2007 and ending on
September 30, 2012; and
(iii) FORTY-FOUR MILLION FOUR HUNDRED THREE THOUSAND
FIVE HUNDRED TWENTY AND 00/100 DOLLARS ($44,403,520.00) per annum, in equal
monthly installments of $3,700,293.33 each, for the period (herein called
the "THIRD RENT PERIOD") commencing on October 1, 2012 and ending on the
Expiration Date,
which Fixed Rent shall be payable commencing on the applicable date set forth
above, and thereafter in equal monthly installments in advance on the first day
of each and every calendar month during the term of this lease, and
(b) additional rent (herein called "ADDITIONAL CHARGES")
consisting of Tax Payments, Operating Payments, charges for electricity
furnished to Tenant and all other sums of money as shall become due from and
payable by Tenant to Landlord hereunder in accordance with the provisions of
this lease;
all to be paid in lawful money of the United States to Landlord at its office,
or such other place, or to Landlord's agent and at such other place, as Landlord
shall designate by notice to Tenant.
1.05. The components of Fixed Rent are as follows and shall be the
basis for computing Fixed Rent abatements or reductions in Fixed Rent pursuant
to any of the provisions of this lease:
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OFFICE PREMISES:
RENT PERIOD FIXED RENT PER RENTABLE SQUARE FOOT
----------- -----------------------------------
First Rent Period $ 65.00
Second Rent Period $ 70.00
Third Rent Period $ 75.00
BASEMENT PREMISES:
RENT PERIOD FIXED RENT PER RENTABLE SQUARE FOOT
----------- -----------------------------------
First Rent Period $ 25.00
Second Rent Period $ 30.00
Third Rent Period $ 35.00
Landlord and Tenant agree and acknowledge that the Fixed Rent payable
under this lease with respect to the Lobby Premises shall be $10.00 per annum.
1.06. Tenant covenants and agrees to pay Fixed Rent and Additional
Charges promptly when due without notice or demand therefor, except as such
notice or demand may be expressly provided for in this lease, and without any
abatement, deduction or setoff for any reason whatsoever, except as may be
expressly provided in this lease. Fixed Rent and Additional Charges shall be
paid by good and sufficient check (subject to collection) drawn on a New York
City bank which is a member of the New York Clearing House Association or a
successor thereto. Upon Tenant's notice to Landlord, Fixed Rent and Additional
Charges shall be paid by wire transfer of immediately available "Federal Reserve
Funds" to Landlord or its designee pursuant to the instructions delivered by
Landlord. As used herein, the term "FEDERAL RESERVE FUNDS" shall mean the
receipt by a bank or banks in the continental United States designated by
Landlord of U.S. dollars in form that does not require further clearance, and
may be applied at the direction of Landlord by such recipient bank or banks on
the day of receipt of advice that such funds have been wire transferred.
1.07. If the term of this lease with respect to any portion of the
Premises commences on a day other than the first day of a calendar month, or if
the Expiration Date occurs on a day other than the last day of a calendar month,
the Fixed Rent and Additional Charges for the applicable partial calendar month
shall be prorated in the manner provided in Section 1.09 hereof.
1.08. No payment by Tenant or receipt or acceptance by Landlord of a
lesser amount than the correct Fixed Rent or Additional Charges shall be deemed
to be other than a payment on account, nor shall any endorsement or statement on
any check or any letter accompanying any check or payment be deemed an accord
and satisfaction, and
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Landlord may accept such check or payment without prejudice to Landlord's right
to recover the balance or pursue any other remedy in this lease or at law
provided.
1.09. Any apportionments or prorations of Fixed Rent or Additional
Charges to be made under this lease shall be computed on the basis of a 365-day
year (based on the actual number of days in the period in question).
1.10. If any of the Fixed Rent or Additional Charges payable under
the terms and provisions of this lease shall be or become uncollectible, reduced
or required to be refunded because of any act or law enacted by a governmental
authority, Tenant shall enter into such agreement(s) and take such other steps
(without additional expense to Tenant) as Landlord may reasonably request and as
may be legally permissible to permit Landlord to collect the maximum rents which
from time to time during the continuance of such legal rent restriction may be
legally permissible (but not in excess of the amounts reserved therefor under
this lease). Upon the termination of such legal rent restriction, (a) the Fixed
Rent and/or Additional Charges shall become and thereafter be payable in
accordance with the amounts reserved herein for the periods following such
termination, and (b) Tenant shall pay to Landlord promptly upon being billed, to
the maximum extent legally permissible, an amount equal to (i) the Fixed Rent
and/or Additional Charges which would have been paid pursuant to this lease but
for such legal rent restriction less (ii) the rents paid by Tenant during the
period such legal rent restriction was in effect.
1.11. Additional Charges shall be deemed to be rent and Tenant's
failure to pay Additional Charges shall be considered a failure to pay Fixed
Rent hereunder and Landlord shall be entitled to all rights and remedies
provided herein or by law for a default, after the expiration of any applicable
notice and cure period, in the payment of Additional Charges as for a default,
after the expiration of any applicable notice and cure period, in the payment of
Fixed Rent (notwithstanding the fact that Tenant may not then also be in default
in the payment of Fixed Rent).
ARTICLE 2
DELIVERY AND USE OF PREMISES
2.01. (a) Tenant acknowledges that Tenant has inspected the
Premises and is fully familiar with the condition thereof. Tenant has accepted
each floor of the Premises in their "as is" condition, and Landlord shall not be
required to perform any work, install any fixtures or equipment or render any
services to make the Unit, the Building or the Premises ready or suitable for
Tenant's occupancy for the performance of Alterations or for Tenant's occupancy
for the conduct of business (subject, however, to the provisions of Section
2.01(d) hereof and Landlord's obligations during the term of this lease and
pursuant to the provisions of this lease to make certain repairs and provide
certain services to the Premises and the portions of the Building serving the
Premises). The taking of possession of the Premises described in the immediately
preceding sentence shall be deemed to have constituted an acceptance of the
Premises (subject,
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however, to the provisions of Section 2.01(d) hereof and Landlord's obligations
during the term of this lease and pursuant to the provisions of this lease to
make certain repairs to the Premises).
(b) Tenant hereby waives any right to rescind this lease
under the provisions of Section 223(a) of the Real Property Law of the State of
New York, and agrees that the provisions of this Section 2.01(b) are intended to
constitute "an express provision to the contrary" within the meaning of said
Section 223(a).
(c) Intentionally Omitted.
(d) (i) Notwithstanding anything to the contrary
contained in this lease, in the event that any asbestos-containing floor tiles
or lead paint shall be discovered in or about the Premises which shall be
required to be removed or remediated as a consequence of the change or
modification of applicable Legal Requirements which are in effect as of the date
of this lease, unless the existence of such materials in or about the Premises
(I.E., the introduction of such materials into the Premises and the Unit) shall
result from any act or omission (where there is a duty to act) from and after
the date of this lease of Tenant or any of Tenant's subtenants or other
occupants of all or any portion of the Premises claiming by, through or under
Tenant, or any of Tenant's or their respective employees, agents or contractors,
Landlord shall (and Landlord's sole liability shall be to), at Landlord's sole
cost and expense, as promptly as reasonably practicable following notice from
Tenant, remove or remediate any such materials (such removal or remediation
being herein referred to as "LANDLORD'S HAZARDOUS MATERIALS WORK") in accordance
with all applicable Legal Requirements. Tenant shall promptly vacate any floor
or portion thereof (as reasonably determined by the parties) in which Landlord
shall be required to perform Landlord's Hazardous Materials Work in accordance
with this Section 2.01(d)(i) (any such floor or portion thereof being
hereinafter referred to as a "LANDLORD'S HAZARDOUS MATERIALS WORK AREA"). Tenant
hereby acknowledges that the performance of Landlord's Hazardous Materials Work
by Landlord may cause some inconvenience to Tenant and interference with the
conduct of Tenant's business in any portions of the Premises adjacent to any
Landlord's Hazardous Materials Work Area, whether located on the same floor as a
Landlord's Hazardous Materials Work Area or on a contiguous floor (any such
portions of the Premises being hereinafter referred to as an "ADJACENT AREA"),
including, without limitation, the sealing off of the Landlord's Hazardous
Materials Work Area from any Adjacent Area and the performance of such actions
and the imposition of such requirements as may be necessary to (A) comply with
applicable Legal Requirements or insurance requirements, and (B) provide for the
safety of Tenant's employees, contractors and invitees in any Adjacent Area
during the performance of Landlord's Hazardous Materials Work (including without
limitation, if necessary in the parties' reasonable judgment, a requirement that
Tenant vacate the entire floor or a portion of a floor on which Landlord is
required to perform any Landlord's Hazardous Materials Work). Tenant further
acknowledges and agrees that Landlord shall not be liable to Tenant, nor shall
Tenant be entitled to any diminution or abatement of
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rent (except as hereinafter set forth) or other compensation or allowance for
diminution of rental value, nor shall this lease or any of the obligations of
Tenant be affected or reduced, as a result of the performance by Landlord of any
Landlord's Hazardous Materials Work or as a result of the existence in the
Premises of any of the materials described in this Section 2.01(d)(i). Subject
to the foregoing, Landlord shall use commercially reasonable efforts to (1)
minimize the size of any area that is sealed off as a Landlord's Hazardous
Materials Work Area and (2) perform Landlord's Hazardous Materials Work
expeditiously and in a manner that will create the least practicable
inconvenience to Tenant and interference with the conduct of Tenant's business
in the Premises, provided that Landlord shall in no event be obligated to
perform same on an "overtime" basis.
(ii) Notwithstanding anything to the contrary
contained in this lease, except as provided in Section 2.01(d)(i) hereof,
in the event that any asbestos-containing materials or other Hazardous
Materials shall be discovered in or about the Premises during the term of
this lease, including with respect to a discovery and/or disturbance of
Hazardous Materials in connection with any Alterations performed by or on
behalf of Tenant, which shall be required to be removed or remediated as a
consequence of current or future Legal Requirements, Tenant shall, at its
sole cost and expense, as promptly as reasonably practicable, remove or
remediate the same in accordance with all applicable Legal Requirements,
and Tenant acknowledges and agrees that Landlord shall not be liable to
Tenant, nor shall Tenant be entitled to any diminution or abatement of rent
or other compensation or allowance for diminution of rental value, nor
shall this lease or any of the obligations of Tenant be affected or
reduced, as a result of the existence in the Premises of any such asbestos,
asbestos-containing materials or other Hazardous Materials.
(e) If any violation of a Legal Requirement which is noted
of record against the Premises or any other portion of the Unit or the Building
shall delay Tenant in obtaining any permits or signoffs from the New York City
Department of Buildings (or any other applicable agency) in connection with
Tenant's Work in any portion of the Premises so as to actually delay Tenant in
commencing (or re-commencing, in the case of any portion of the Premises which
Tenant shall have vacated after taking initial occupancy thereof for the conduct
of business) the conduct of business in such portion of the Premises then, in
such event, promptly after notice from Tenant of such violation together with
reasonable documentation of same, (i) Landlord shall cause such violation to be
cured or otherwise removed of record, except to the extent that Tenant may be
responsible for curing such violation pursuant to any provision of this lease,
and (ii) the Fixed Rent and Additional Charges with respect to such portion of
the Premises shall be abated for one day for each day that Tenant is actually
delayed in commencing (or re-commencing) the conduct of business in such portion
of the Premises as a result thereof, except to the extent that Tenant may be
responsible for curing such violation pursuant to any provision of this lease.
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2.02. (a) The Premises may be used for administrative, executive
and general offices, including, without limitation, use as trading floors, which
are consistent in nature and scope with the operation of Comparable Buildings
and for the other uses expressly set forth in this Section 2.02. Notwithstanding
anything to the contrary contained in Sections 2.04 and 2.05 hereof, and without
in any way limiting the uses permitted under this Section 2.02, the Premises may
be used for all lawful purposes reasonably ancillary and incidental to the
primary use of the Premises, which ancillary and incidental uses are permitted
by the Certificate of Occupancy for the Building (as the same may be amended in
accordance with the terms hereof) and are consistent in nature and scope with
the operations of Comparable Buildings. Such ancillary and incidental uses may
include, without limitation, and portions of the Premises in size in reasonable
proportion to the entire Premises may be used for a use that is ancillary and
incidental (as opposed to primary):
(i) the occupancy and use of portions of the
Premises by Service and Business Relationship Entities in accordance with
the provisions of Article 7 hereof;
(ii) kitchens, dining facilities, pantries and/or
vending machines for the sale of snack foods, non-alcoholic beverages, and
other convenience items (which may be supplied by any party selected by
Tenant) for Permitted Users upon the condition that (A) no food is prepared
or cooked therein (exclusive of microwave reheating), except with respect
to any kitchen or dining facility located in the Premises as of the date of
this lease and any kitchen or dining facility that may be installed in
accordance with the provisions of Section 15.09 hereof, (B) no food or
beverages kept therein or anything else done therein shall cause odors to
be emitted therefrom so as to be detectable outside of the Premises, (C)
the portions of the Premises so used shall, at the sole cost and expense of
Tenant, be at all times maintained in a clean and sanitary condition and
free of vermin and refuse and (D) Tenant shall contract directly for the
removal from the Building of wet rubbish with the carting company servicing
the Building subject to the applicable provisions of this lease;
(iii) board rooms, conference rooms, meeting rooms and
conference centers and facilities for use only by Permitted Users;
(iv) a data center for computer and other electric
data processing and business machine operations in connection with the
business operations of Permitted Users;
(v) training facilities and classrooms in connection
with the business operations of Permitted Users;
(vi) duplicating, photographic reproduction and/or
offset printing facilities in connection with the business operations of
Permitted Users;
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(vii) mailroom facilities in connection with the
business operations of Permitted Users;
(viii) storage of equipment, records, files and other
items in connection with the business operations of Permitted Users;
(ix) medical or health facilities exclusively serving
Permitted Users (subject to Tenant's obligation to procure all required
licenses and permits in connection therewith);
(x) travel services or agencies exclusively serving
Permitted Users;
(xi) day care facilities exclusively serving
Permitted Users (other than occupants not within the Premises and guests
and subject to Tenant's obligation to procure all required licenses and
permits in connection therewith and to locate same in a manner that
complies with applicable Legal Requirements);
(xii) an auditorium for use only by Permitted Users;
(xiii) an exercise facility for the use only by
Permitted Users; and
(xiv) a messenger center for use only by Permitted
Users.
Notwithstanding the foregoing, Landlord makes no warranty or representation as
to the suitability of all or any portion of the Premises for a place of public
assembly requiring a public assembly permit or a change in the Certificate of
Occupancy for the Building or as to whether there will be adequate means of
ingress and/or egress or adequate rest room facilities in the event that Tenant
requires such a public assembly permit or such a change, and Landlord shall have
no liability to Tenant in connection therewith (PROVIDED, HOWEVER, that Landlord
shall reasonably cooperate with Tenant's application for any such public
assembly permit or change in the Certificate of Occupancy, subject to Tenant's
obligation to reimburse Landlord for its out-of-pocket expenses, as more
particularly set forth below), nor shall Landlord have any obligation to perform
any alterations in or to the Building or the Premises or to grant its consent to
the performance of any proposed Alterations by Tenant in order to render any
floor suitable for the issuance of a public assembly permit or for a change in
the Certificate of Occupancy, except as set forth in Article 11 hereof. Tenant
agrees that Tenant shall not use all or any portion of the Premises as a Day
Trading Parlor. As used herein, the term "DAY TRADING PARLOR" shall mean an area
in which, for a daily fee, individual traders (not institutions, funds or
companies) are given desk space and the use of computer facilities for the
purpose of day trading for their own account and the term "PERMITTED USERS"
shall mean Tenant, Tenant's Affiliates, Tenant's Service and Business
Relationship Entities, the occupants of
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the Premises, the Lehman Tenant (with respect to clauses (ii), (iii) and (xii)
of this Section 2.02(a) only) and their respective officers, employees and
guests.
(b) Landlord agrees that throughout the term of this lease,
Landlord shall not change the Certificate of Occupancy for the Building or the
public assembly permit with respect to the auditorium located on the 14th floor
of the Building in a manner which shall affect Tenant's use of the Premises for
general, administrative and executive offices or any of the specific uses
expressly permitted pursuant to this Section 2.02, including, without
limitation, the ancillary and incidental uses described in Section 2.02(a)
hereof, or Tenant's ability to obtain a valid construction permit for any
Alterations in the Premises, unless required by Legal Requirements. At Tenant's
request, Landlord agrees to cooperate with Tenant, at Tenant's sole cost and
expense, in connection with any reasonable changes to the Certificate of
Occupancy for the Building required by Tenant for any reasonable use of the
Premises by Tenant, provided such use is permitted pursuant to the terms of this
lease.
2.03. If any governmental license or permit (other than a Certificate
of Occupancy for the entire Building) shall be required for the proper and
lawful conduct of Tenant's business in the Premises or any part thereof, Tenant,
at its expense, shall duly procure and thereafter maintain such license or
permit and submit the same to Landlord for inspection within thirty (30) days
after Landlord's request therefor. Tenant shall at all times comply in all
material respects with the terms and conditions of each such license or permit.
Additionally, should Alterations or Tenant's use of the Premises for other than
executive and general offices require any modification or amendment of any
Certificate of Occupancy for the Building, Tenant shall, at its expense, take
all commercially reasonable actions necessary to procure any such modification
or amendment and shall reimburse Landlord (as Additional Charges) for all
reasonable out-of-pocket costs and expenses Landlord incurs in effecting said
modifications or amendments within thirty (30) days after demand therefor
accompanied by reasonably satisfactory documentation of such costs and expenses.
Landlord shall cooperate with Tenant in connection with Tenant's obtaining of
any such governmental license or permit (including any permit required in
connection with Tenant's Alterations, including without limitation any
Alterations affecting any asbestos-containing materials that may be located in
the Premises) or any application by Tenant for any amendment or modification to
the Building's Certificate of Occupancy, and shall reasonably promptly execute
and deliver any applications, reports or related documents as may be requested
by Tenant in connection therewith, provided that Tenant shall reimburse Landlord
(as Additional Charges) for the reasonable out-of-pocket costs and expenses
incurred by Landlord in connection with such cooperation within thirty (30) days
after demand therefor, accompanied by reasonably satisfactory documentation of
such costs and expenses, and further provided that Tenant shall indemnify and
hold harmless Landlord from and against any claims arising in connection with
such cooperation, other than any such claims arising from any incorrect
information provided by Landlord in connection therewith or any conditions at or
in the Unit which are Landlord's responsibility
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hereunder. The foregoing provisions are not intended to be deemed Landlord's
consent to any Alterations or to a use of the Premises not otherwise permitted
hereunder nor to require Landlord to effect such modifications or amendments of
any Certificate of Occupancy.
2.04. Tenant shall not at any time use or occupy the Premises, the
Unit or the Building, or suffer or permit anyone to use or occupy the Premises,
or do anything in the Premises, the Unit or the Building, or suffer or permit
anything to be done in, brought into or kept on the Premises, which shall (a)
violate the Certificate of Occupancy for the Premises, the Unit or the Building;
(b) cause injury to the Premises, the Unit or the Building or any equipment,
facilities or systems therein; (c) constitute a violation of the laws and
requirements of any public authorities; (d) adversely affect the reputation or
appearance of the Building as a first-class office building; (e) impair the
proper maintenance, operation and repair of the Unit or the Building and/or
their equipment, facilities or systems except to an immaterial extent (unless,
in the case of a use which merely increases the costs of such maintenance,
repair and operation on a temporary basis which will cease to exist upon the
cessation of such use, Tenant agrees to reimburse Landlord for such incremental
costs and provided Landlord substantiates such increase with reasonably
satisfactory evidence delivered to Tenant); (f) interfere with other tenants or
occupants of the Building in their use and enjoyment of their premises except to
an immaterial extent; (g) constitute a nuisance, public or private; (h) make
unobtainable from reputable insurance companies authorized to do business in New
York State all-risk property insurance, or liability, elevator, boiler or other
insurance at standard rates required to be furnished by Landlord under the terms
of any mortgages covering the Premises; or (i) discharge objectionable fumes,
vapors or odors into the Building's flues or vents or otherwise (provided that
Tenant shall not be deemed to have violated clause (h) of this Section 2.04 by
virtue of its mere use of the Premises for administrative, executive and general
office uses, as distinguished from its particular manner of use of the Premises
and provided that the uses being conducted in the Premises as of the date of
this lease shall not be deemed to violate the provisions of this Section 2.04).
2.05. Tenant shall not use, or suffer or permit anyone to use, the
Premises or any part thereof, for
(a) intentionally omitted,
(b) a restaurant and/or bar and/or the sale of confectionery
and/or soda and/or beverages and/or sandwiches and/or
ice cream and/or baked goods (except as permitted
pursuant to Section 2.02 hereof or other applicable
provisions of this lease),
(c) the business of photographic reproductions and/or offset
printing (except as permitted pursuant to Section 2.02
hereof or other applicable provisions of this lease),
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(d) an employment agency or, except as permitted pursuant to
Section 2.02 hereof or other applicable provisions of
this lease, a travel agency,
(e) a school or classroom (except as permitted pursuant to
Section 2.02 hereof or other applicable provisions of
this lease),
(f) medical or psychiatric offices (except as permitted
pursuant to Section 2.02 hereof or other applicable
provisions of this lease),
(g) conduct of any auction (except for electronic and
telephonic auctions of securities and commodities
provided that no such auctions are conducted on a
face-to-face basis at the Premises and that the
commodities being auctioned are not displayed, stored or
maintained in the Premises),
(h) intentionally omitted,
(i) a Day Trading Parlor,
(j) gambling activities, or
(k) the conduct of obscene, pornographic or similar
disreputable activities.
Further, the Premises may not be used by (i) an agency, department or bureau of
the United States Government, any state or municipality within the United States
or any foreign government, or any political subdivision of any of them, (ii) any
charitable, religious, union or other not-for-profit organization (except for
not-for-profit or charitable Tenant's Affiliates), or (iii) any tax exempt
entity within the meaning of Section 168(j)(4)(A) of the Internal Revenue Code
of 1986, as amended, or any successor or substitute statute, or rule or
regulation applicable thereto (as same may be amended); PROVIDED, HOWEVER, that
the provisions of clauses (ii) and (iii) of this sentence shall not apply with
respect to up to ten (10%) percent of the rentable area of the Premises, subject
to the provisions of Section 7.11 hereof.
ARTICLE 3
ESCALATIONS
3.01. The terms defined below shall for the purposes of this lease
have the meanings herein specified:
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(a) "BASE OPERATING AMOUNT" shall mean the Operating
Expenses for the Base Operating Year.
(b) "BASE OPERATING YEAR" shall mean the calendar year
commencing on January 1, 2003.
(c) "BASE TAX AMOUNT" shall mean the sum of seventy-five
percent (75%) of the Taxes for the Tax Year commencing on July 1, 2002 and
twenty-five percent (25%) of the Taxes for the Tax Year commencing on July 1,
2003.
(d) "LANDLORD'S STATEMENT" shall mean an instrument or
instruments setting forth the Operating Payment payable by Tenant for a
specified Operating Year pursuant to this Article 3, which Landlord's Statement
shall contain, subject to revision from time to time, the categories of expenses
indicated on the form of Landlord's Statement attached hereto as EXHIBIT N (and,
in the event, that any Landlord's Statement delivered to Tenant during the term
hereof shall contain any additional categories of expenses that are not included
on the form of Landlord's Statement attached hereto as EXHIBIT N, or delete
categories of expenses from such form of Landlord's Statement, such Landlord's
Statement shall be accompanied by a notice informing Tenant of such new
categories or deleted categories, in accordance with the provisions of this
lease, and providing an explanation of the reason for including or deleting
same).
(e) "OPERATING EXPENSES" shall mean (subject to the specific
exclusions from Operating Expenses hereinafter set forth) the aggregate of all
commercially reasonable expenses incurred by Landlord and Affiliates of Landlord
("LANDLORD'S AFFILIATES") and/or on their behalf in respect of the management,
repair, replacement, maintenance, operation and/or security of the Unit (or if
such costs are not separately calculated for the Unit itself, of the Building
but appropriately allocated to the Unit), and the Common Elements to the extent
such costs are appropriately allocable to Landlord and not otherwise excluded by
the provisions of this Section 3.01(e), including, without limitation, the
following items:
(i) salaries, wages, medical, surgical, insurance
(including, without limitation, group life and disability insurance) of
employees of Landlord or Landlord's Affiliates at the grade of building
manager and below who provide on-site services at the Building (I.E.,
excluding back-office or home-office employees or personnel), union and
general welfare benefits, pension benefits, severance and sick day
payments, and other fringe benefits of employees of Landlord and Landlord's
Affiliates and their respective contractors engaged in such management,
repair, replacement, maintenance, operation and/or security at the grade of
building manager and below who provide on-site services at the Building
(I.E., excluding back-office or home-office employees or personnel);
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(ii) payroll taxes, worker's compensation, uniforms
and related expenses (whether direct or indirect) for such employees,
subject to the proviso in clause (i) of this Section 3.01(e);
(iii) the cost of fuel, gas, steam, electricity,
water, sewer and other utilities and heat, ventilation and air-conditioning
(excluding any such utilities or heat, ventilation or air-conditioning
furnished to any leaseable space or to any improvements or equipment in the
Unit or the Building installed by or for any tenant or occupant in portions
of the Unit or the Building other than leaseable space, except to the
extent that the same are required by this lease to be furnished to Tenant
without separate additional charge [E.G., air conditioning during Regular
Building Service Hours, hot and cold water throughout the Building for
cleaning, drinking and sprinkler purposes, etc.]), together with any taxes
and surcharges on, and fees paid to third party persons or entities that
are not affiliated with Landlord (which shall be deemed to include the
managing agent(s) of the Unit and/or the Building) in connection with the
calculation and billing of such utilities, except to the extent otherwise
specifically chargeable to or reimbursable by tenants of the Unit or the
Building, including Tenant (which charge or reimbursement is not pursuant
to a provision in the nature of, or intended to serve the same purpose as,
this Article 3, including, without limitation, charges to tenants for
electric rent inclusion);
(iv) the cost of painting and/or other similar
non-capital cosmetic decorating of all areas of the Unit and the Common
Elements, excluding, however, any space contained therein which is demised
or to be demised to tenant(s), and the cost of holiday decorations and
temporary exhibitions for the lobby and other public portions of the Unit
and the Common Elements in a manner commensurate with other first-class
office buildings in Midtown Manhattan comparable to the Building (herein
called "COMPARABLE BUILDINGS");
(v) the cost of casualty, boiler, sprinkler, plate
glass, liability, fidelity, rent, terrorism (provided, however, that the
cost of terrorism insurance in the Base Operating Year shall not be
included in the Base Operating Amount) and all other insurance generally
carried by owners of Comparable Buildings regarding the Unit and the Common
Elements and/or any property on, below or above the Unit and the Common
Elements, and the repair, replacement, maintenance, operation and/or
security of the foregoing items set forth in this clause (v);
(vi) the cost of all supplies, tools, materials and
equipment, whether by purchase or rental, used in the repair, replacement,
maintenance, operation and/or security of the Unit and the Common Elements,
and any sales and other taxes thereon; PROVIDED, HOWEVER, that if and to
the extent
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that any of the foregoing are used at or with respect to more than one
property of Landlord, then the foregoing amounts shall only be included
Operating Expenses in the same proportion that such use at or with respect
to the Unit and the Common Elements bears to the aggregate use of the
foregoing at all properties;
(vii) the rental value of the Landlord's Building
office located in the Building and utilized by the personnel of either
Landlord or Landlord's Affiliates, in connection with the repair,
replacement, maintenance, operation and/or security thereof (to the extent
that such rental value shall be based on an office the size of which shall
not exceed the size of Building offices in Comparable Buildings comparable
in size to the Building and that such rental value shall have been included
in the Base Operating Amount), and all customary Building office expenses,
such as telephone, utility, stationery and similar expenses incurred in
connection therewith;
(viii) the cost of cleaning, janitorial and security
services, including, without limitation, glass cleaning, snow and ice
removal and garbage and waste collection and/or disposal;
(ix) the cost of (A) all interior and exterior
landscaping and (B) all temporary exhibitions located at or within the Unit
and the Common Elements in a manner and at a cost commensurate with other
Comparable Buildings;
(x) costs for alterations, improvements, repairs and
replacements made or installed after the expiration of the Base Operating
Year by reason of Legal Requirements enacted, adopted, promulgated, amended
or modified after the date of this lease, or any reinterpretation by a
court of law or governmental authority of any Legal Requirement issued
after the date of this lease; and to the extent such costs should be
capitalized in accordance with generally accepted accounting principles,
consistently applied ("GAAP"), such costs shall be amortized over a period
of time which shall be the shorter of: (A) the useful life of the item in
question, as reasonably determined by Landlord, or (B) fifteen (15) years,
with an interest factor equal to the Base Rate in effect as of December 31
of the year in which such cost is incurred;
(xi) the cost of improvements, alterations, repairs,
replacements, equipment or machinery made or installed after the expiration
of the Base Operating Year for the purpose of reducing energy consumption
or reducing other Operating Expenses, including, without limitation, the
cost of installing a film on the inside of the windows of the Building in
accordance with Section 16.01 hereof; PROVIDED, HOWEVER, that if and to the
extent such costs should be capitalized in accordance with GAAP, commencing
upon the completion of the item in question and continuing until such cost
(together with interest at the Base Rate in effect as of December 31 of the
year in which such
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cost is incurred) shall have been fully included, there shall be included
in Operating Expenses for any period only an amount equal to the actual
amount by which expenses which would otherwise have been included in
Operating Expenses are reduced for such period as the result of such
improvements, alterations, repairs, replacements, equipment or machinery;
(xii) intentionally omitted;
(xiii) intentionally omitted;
(xiv) management fees; PROVIDED, HOWEVER, that if
Landlord or a Landlord's Affiliate is the managing agent of the Unit or the
Building, then the annual management fee shall be equal to the
then-prevailing market rate for owner-managed Comparable Buildings;
(xv) all reasonable costs and expenses of legal,
bookkeeping, accounting and other professional services incurred in
connection with the operation, and management of the Unit and the Common
Elements (which services shall be reasonably apportioned based on the
relative usage thereof if such services relate to more than one property of
Landlord) except as hereinafter excluded; and
(xvi) fees, dues and other contributions paid by or on
behalf of Landlord or Landlord's Affiliates to civic or other real estate
organizations (not to exceed the current number of organizations) provided
same do not exceed the level customarily paid by owners of Comparable
Buildings and further provided that if and to the extent that any of such
fees, dues or contributions are properly allocable to more than one
property of Landlord, then the foregoing amounts shall only be included
Operating Expenses in the same proportion that their proper allocation to
the Unit and the Common Elements bears to all properties (including the
Unit and the Common Elements) based on the relative rentable areas of the
Unit and the rentable areas of all such properties.
The term "OPERATING EXPENSES", as used and defined under this Section
3.01(e), shall exclude and not include the following items:
(1) depreciation and amortization (except as provided above in this
subsection);
(2) interest on and amortization of debts (and costs and charges
incurred in connection with such financings);
(3) the cost of any alterations, additions, changes, replacements
and improvements that are made solely in order to prepare space
for occupancy by a new tenant (including Tenant) and any
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contribution or concession by Landlord to such tenant in
connection therewith;
(4) the costs of capital improvements, other than those which in
accordance with GAAP are deemed expenses or deferred expenses or
which are permitted to be included in Operating Expenses in
accordance with the provisions of Sections 3.01(e)(x) and
3.01(e)(xi) above;
(5) financing and refinancing costs (including, without limitation,
mortgage recording taxes), and payments of mortgage interest and
principal;
(6) the cost of heating, air-conditioning and ventilation during
overtime periods for any other tenants or occupants of the Unit
or the Building, as well as the cost of any work or services
performed for any tenant(s) or occupants of the Unit or the
Building (including Tenant), whether at the expense of Landlord
or Landlord's Affiliates or such tenant(s) or occupants, to the
extent that such work or services are in excess of the work or
services generally provided to tenants or occupants of the Unit
or the Building with no additional expense;
(7) the cost of electricity furnished to the Premises or any other
space in the Unit or the Building that is leased or leaseable to
tenants or occupants;
(8) Taxes;
(9) salaries, wages and fringe benefits for officers, employees and
executives of Landlord and any Landlord Affiliates above the
grade of building manager and fire safety manager;
(10) amounts received by Landlord or the Board of Managers through
the proceeds of insurance or condemnation or from a tenant or
occupant (other than pursuant to an escalation provision similar
to this Article 3) or otherwise to the extent such amounts are
compensation for sums previously included in Operating Expenses
for such Operating Year or any prior Operating Year;
(11) costs of repairs or replacements incurred by reason of fire or
other casualty or condemnation except that in connection
therewith any amount equal to the deductibles under Landlord's
(or the Board of Managers') insurance policies (which
deductibles shall be equal to the amount(s) of deductibles
customarily carried by landlords of
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Comparable Buildings) may be included within Operating Expenses;
(12) advertising and promotional expenditures;
(13) leasing or brokerage commissions, or fees, attorneys' fees,
appraisal fees or accountants' fees to the extent incurred by
Landlord or the Board of Managers with respect to the Unit or
the Condominium in connection with the negotiation and
preparation of new or renewal leases in the Unit or the Building
or in enforcing Landlord's rights under leases (except to the
extent that the enforcement of such rights benefits one or more
tenants or occupants of the Unit or the Building generally and
Landlord does not recover such fees from the offending tenant or
occupant), or legal or accounting fees in connection with tax
returns, tax reporting or accounting;
(14) any expenditure paid to any corporation or entity related to or
affiliated with Landlord or the principals of Landlord to the
extent such expenditure exceeds the amount which would
customarily be paid to a similar entity not affiliated with
Landlord for similar services;
(15) the cost of any service furnished to tenants of the Unit or the
Building (including Tenant) to the extent that such cost is
separately reimbursed to Landlord (other than through the
Operating Payments or comparable payments pursuant to
escalation-type provisions similar to the provisions of this
Article 3);
(16) costs of acquiring, leasing, insuring, restoring, removing or
replacing sculptures and paintings that are deemed to be "fine
art" (rather than decorative art work customarily found in
Comparable Buildings), except for the cost of routine
maintenance of all such objects in the public areas in the Unit
or the Building;
(17) ground rent or any other payments paid under ground leases or
Superior Leases (other than payments which, independent of the
ground lease or Superior Lease, would constitute an Operating
Expense hereunder);
(18) any costs incurred for the purpose of effecting a sale of the
Unit or the Building or the Land or any other real property
interest therein (including, without limitation, New York State
and New York City transfer taxes);
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(19) payments of any amounts to any person (including Tenant) seeking
recovery for negligence or other torts committed by Landlord or
the Board of Managers;
(20) costs relating to withdrawal liability or unfunded pension
liability under the Multi-Employer Pension Plan Act or similar
Legal Requirement;
(21) the cost of installing, operating and maintaining any specialty
facility, such as an observatory, lodging, broadcasting
facilities, luncheon club, athletic or recreational club, child
care facility, auditorium, cafeteria or dining facility,
conference center or similar facilities (but nothing contained
herein shall be deemed to limit Landlord's right to collect any
charges from Tenant in respect of the use of any such facility
or the operating and maintenance costs thereof in the event that
Tenant shall have the right to use any such facility pursuant to
a separate agreement between Landlord and Tenant);
(22) any interest, fine, penalty or other late charges payable by
Landlord, incurred as a result of late payments of any nature,
including interest owed or credited to Tenant after the
resolution of a dispute, except to the extent such interest,
fine, penalty or other late charge was incurred with respect to
a payment, part or all of which was the responsibility of Tenant
hereunder, and which Tenant did not make in a timely fashion or
at all;
(23) expenses incurred by Landlord or the Board of Managers, if and
to the extent such expenses are incurred for the benefit of any
retail tenants in the Building;
(24) any compensation paid to clerks, attendants or other persons in
commercial concessions or any parking facility located in the
Unit or the Building operated by Landlord or the Board of
Managers;
(25) costs incurred by Landlord or the Board of Managers which result
from Landlord's or any tenant's breach of a lease (including
this lease) or Landlord's or the Board of Managers' tortious or
negligent conduct;
(26) the cost of operating the entity that constitutes Landlord or
the Board of Managers (in contradistinction to the costs of
operating and maintaining the Unit and the Common Elements),
including accounting fees, legal fees and any costs incurred by
Landlord or the Board of Managers in disputes with (a) the
Building
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employees, or (b) third parties employed by Landlord or the
Board of Managers that are not engaged in Building operations,
or (c) any Superior Mortgagee (except to the extent that actions
of any tenant may be in issue);
(27) costs of Landlord's charitable and political contributions;
(28) costs to comply with any existing violation of Legal
Requirements or insurance requirements in effect on the date
hereof, or to correct any condition that would constitute a
Landlord misrepresentation under this lease;
(29) amounts received by Landlord under any warranties to the extent
such amounts are reimbursement for expenses which were
previously included in Operating Expenses hereunder;
(30) lease takeover costs incurred by Landlord in connection with
leases in the Unit or the Building;
(31) the cost of any expansions of the Unit or the Building and any
Operating Expenses attributable to any such expansion of the
Unit or the Building (provided that the parties agree that there
shall not be any adjustment of Tenant's Share to take into
account any such expansion);
(32) damages and attorneys' fees and disbursements and any other
costs in connection with any proceeding, judgment, settlement or
arbitration award resulting from any liability of Landlord and
fines or penalties [except for fines or penalties relating to
minor, common infractions (such as sidewalk violations) to the
extent that an appropriate amount was included in the Base
Operating Amount for fines or penalties relating to minor,
common infractions (such as sidewalk violations)] to the extent
any of the same are due to, or arise from, Landlord's or the
Board of Managers' gross negligence (but for purposes of fines
and penalties, negligence) or willful misconduct, including
deductibles under any insurance policies covering such
liabilities;
(33) insurance premiums, but only if and to the extent that Landlord
is specifically entitled to be reimbursed therefor by Tenant
pursuant to this lease (other than pursuant to this Article 3)
or by any other tenant or other occupant of the Unit or the
Building pursuant to its lease (other than pursuant to an
operating expenses escalation clause contained therein);
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(34) costs and expenses incurred by Landlord in connection with any
obligation of Landlord to indemnify any tenant or occupant of
the Unit or the Building (including Tenant) pursuant to its
lease or otherwise;
(35) costs incurred with respect to removal or encapsulation or other
treatment of Hazardous Materials (unless such Hazardous
Materials were introduced to the Building by Tenant or anyone
claiming by through or under Tenant), but excepting costs of
normal and customary testing and monitoring;
(36) any rent loss or reserves for bad debts or rent loss;
(37) the rental cost of items which (if purchased) would be
capitalized and excluded from Operating Expenses pursuant to the
terms of this lease;
(38) common expenses of the Condominium, if and to the extent that
such common expenses duplicate or are in excess of amounts
otherwise properly includable in Operating Expenses in
accordance with the terms and conditions of this lease (I.E.,
the determination of whether and to what extent an item of
expense is includable as an Operating Expense in accordance with
the terms and conditions of this lease shall be made without
regard to whether the amount of such item is payable by Landlord
as part of common charges or directly to a third party);
(39) costs expressly excluded from Operating Expenses by any other
provision of this lease;
(40) costs, if any, of providing services to The Citigroup Center
Condominium (which condominium is comprised of those buildings
and/or units known as Citigroup Center, located at 153 East 53rd
Street, New York, New York); and
(41) all costs in connection with that certain Grant of Easement by
and between the Board of Managers of the 399 Park Avenue
Condominium, as grantor, and BP/CGCenter I LLC and BP/CGCenter
II LLC, collectively, as grantee, dated as of April 25, 2001 and
recorded at Reel 3279, Page 1969, in the Office of the Register
of the City of New York, New York County.
No item of expense shall be counted more than once either as an inclusion in or
an exclusion from Operating Expenses (including without limitation by reason of
any potential duplication of functions, if any, performed both by employees of
Landlord and
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by employees of the Condominium), and any expense which should be allocated, in
accordance with GAAP between the Unit and the Common Elements, on the one hand,
and any other property owned by Landlord or a Landlord's Affiliate, on the other
hand, shall be properly allocated in accordance therewith.
(f) "OPERATING YEAR" shall mean each calendar year in which
occurs any part of the term of this lease following the end of the Base
Operating Year.
(g) "REAL PROPERTY" shall mean, collectively, the Building
(together with all personal property of Landlord, the Board of Managers or any
other owner of any condominium unit in the Building, located therein and used in
connection with the operation, repair and maintenance of the Real Property
(excluding fine art) and all fixtures, facilities, machinery and equipment used
in the operation thereof, including, but not limited to, all cables, fans,
pumps, boilers, heating and cooling equipment, wiring and electrical fixtures
and metering, control and distribution equipment, component parts of the HVAC,
electrical, plumbing, elevator and any life or property protection systems
(including, without limitation, sprinkler systems), window washing equipment and
snow removal equipment), the Land, any property beneath the Land, the curbs,
sidewalks and plazas on and/or immediately adjoining the Land, and all
easements, air rights, development rights and other appurtenances benefiting the
Building or the Land or both the Land and the Building, PROVIDED, HOWEVER, that
the foregoing shall not be construed to prevent Landlord from including in
Operating Expenses in accordance with the applicable provisions of this Article
3 any costs incurred by or on behalf of Landlord with respect to actions taken
or items installed, maintained, repaired or operated under the Land (such as
pipes and conduits) in connection with the operation, repair or maintenance of
the Real Property.
(h) "TAXES" shall mean (i) the real estate taxes, vault
taxes, assessments and special assessments, and business improvement district or
similar charges levied, assessed or imposed upon or with respect to the Unit, by
any federal, state, municipal or other governments or governmental bodies or
authorities, (ii) all taxes assessed or imposed with respect to the rentals
payable hereunder other than general income and gross receipts taxes and (iii)
Landlord's share of any items of the nature of those described in clauses (i)
and (ii) above which are imposed separately upon the Common Elements or the
Condominium. If at any time during the term of this lease the methods of
taxation prevailing on the date hereof shall be altered so that in lieu of, or
as an addition to or as a substitute for, the whole or any part of such real
estate taxes, assessments and special assessments now imposed on real estate,
there shall be levied, assessed or imposed (A) a tax, assessment, levy,
imposition, license fee or charge wholly or partially as a capital levy or
otherwise on the rents received therefrom, or (B) any other such additional or
substitute tax, assessment, levy, imposition, fee or charge, then all such
taxes, assessments, levies, impositions, fees or charges or the part thereof so
measured or based shall be deemed to be included within the term "Taxes" for the
purposes hereof; PROVIDED, HOWEVER, that any such taxes, assessments, levies,
fees, impositions, fees or
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charges which are "in addition to" (as opposed to "in lieu of" or "as a
substitute for") taxes otherwise includable in this definition of Taxes shall
only be deemed Taxes if such amounts, from and after the time of their
imposition, shall generally be treated as Taxes in other leases entered into by
Landlord and by landlords of Comparable Buildings with tenants leasing in excess
of 100,000 rentable square feet. Any dispute between Landlord and Tenant as to
whether any taxes, assessments, levies, fees, impositions or charges should be
included in Taxes as amounts which are includable on the basis that they are "in
addition to" Taxes in accordance with the proviso at the end of the immediately
preceding sentence shall be determined by expedited arbitration in accordance
with the provisions of Article 39 below. Notwithstanding anything to the
contrary contained herein, the term "Taxes" shall exclude any taxes imposed in
connection with a transfer of the Unit or any refinancing thereof, and shall
further exclude any net income, franchise or "value added" tax, inheritance tax
or estate tax imposed or constituting a lien upon Landlord or all or any part of
the Unit or the Land, except to the extent that any of the foregoing are
hereafter assessed against owners or lessors of real property in their capacity
as such (as opposed to any such taxes which are of general applicability) in
lieu of, or as an addition to (subject to the provisions of the second sentence
of this Section 3.01(h)) or as a substitute for, the whole or any part of such
real estate taxes, assessments and special assessments now imposed on real
estate. Notwithstanding anything to the contrary contained in this lease, if an
assessed valuation of the Unit shall include an assessed valuation amount
allocable to an addition of new space in the Unit (in which case, the parties
agree that there shall not be an adjustment of Tenant's Share to take into
account such additional area of the Unit), or to an addition of an amenity in
the Unit which is not available for the use or benefit of Tenant, in either case
made after the date of this lease, then the computation of Taxes shall not
include any amount which would otherwise constitute Taxes payable by reason of
the addition of such new space or amenity, as the case may be.
(i) "TAX YEAR" shall mean each period of twelve (12) months,
commencing on the first day of July of each such period, in which occurs any
part of the term of this lease, or such other period of twelve (12) months
occurring during the term of this lease as hereafter may be duly adopted as the
fiscal year for real estate tax purposes of the City of New York.
(j) "TENANT'S SHARE" shall mean the fraction, expressed as a
percentage, the numerator of which shall be the number of rentable square feet
included within the Premises and the denominator of which shall be 1,147,606.
For so long as the Premises shall be deemed to contain 657,832 rentable square
feet, Tenant's Share shall mean 57.32%, comprised as follows:
2nd floor 7.94%
3rd floor 8.25%
4th floor 8.25%
7th floor 6.26%
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10th floor 5.19%
12th floor 5.19%
13th floor 1.28%
14th floor 1.94%
Mezzanine 2.27%
Basement Level A Premises 3.58%
Basement Level B Premises 3.56%
Basement Level C Premises 3.60%
3.02. (a) If Taxes payable for any Tax Year, any part of which
shall occur during the term of this lease, shall exceed the Base Tax Amount,
Tenant shall pay to Landlord as Additional Charges for such Tax Year an amount
(herein called the "TAX PAYMENT") equal to Tenant's Share of the amount by which
the Taxes for such Tax Year are greater than the Base Tax Amount; provided,
however, that Tenant shall not be obligated to make any Tax Payments for any
period prior to October 1, 2003. The Tax Payment for each Tax Year shall be due
and payable in installments in the same manner that Taxes for such Tax Year are
due and payable by Landlord to the City of New York. Tenant shall pay Tenant's
Share of each such installment within thirty (30) days after the rendering of a
statement therefor by Landlord to Tenant, which statement shall be rendered by
Landlord so as to require Tenant's Share of Taxes to be paid by Tenant ten (10)
days prior to the date such Taxes first become due to the taxing authority. The
statement to be rendered by Landlord shall set forth in reasonable detail the
computation of Tenant's Share of the particular installment(s) being billed and
shall include a copy of the tax bill from the taxing authorities relevant to the
computation of Tenant's Tax Payment. If there shall be any increase in the Taxes
for any Tax Year, whether during or after such Tax Year, or if there shall be
any decrease in the Taxes for any Tax Year, the Tax Payment for such Tax Year
shall be appropriately adjusted and paid or refunded, as the case may be, in
accordance herewith. If during the term of this lease, Taxes are required to be
paid to the appropriate taxing authorities in full or in monthly, quarterly, or
other installments, on any other date or dates than as presently required, then
at Landlord's option, Tenant's Tax Payments shall be correspondingly accelerated
or revised so that said Tenant's Tax Payments are due at least ten (10) days
prior to the date payments are due to the taxing authorities.
(b) If Landlord shall receive a refund of Taxes for any Tax
Year, Landlord shall, at Tenant's option, either pay to Tenant, or credit
against subsequent Fixed Rent and Additional Charges under this lease, Tenant's
Share of the net refund (after deducting from such total refund the reasonable
and out-of-pocket costs and expenses, including, but not limited to, appraisal,
accounting and legal fees of obtaining the same, or Landlord's share of such
reasonable and out-of-pocket costs and expenses incurred by the Board of
Managers, as the case may be, to the extent that such costs and expenses were
not theretofore collected from Tenant for such Tax Year) and Landlord shall
promptly notify Tenant of the amount of Tenant's Share of such net refund
inclusive of Tenant's Share of any interest thereon received by Landlord and
shall promptly credit
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or refund such amount within thirty (30) days to Tenant (as Tenant shall elect);
PROVIDED, HOWEVER, such payment or credit to Tenant shall in no event exceed
Tenant's Tax Payment plus any such interest allocable to such Tenant's Tax
Payment paid for such Tax Year to which such refund applies.
(c) Landlord shall, with respect to each Tax Year, initiate
and pursue in good faith an application and proceeding seeking a reduction in
Taxes or the assessed valuation of the Unit (a "CERTIORARI APPLICATION") to the
extent that doing so would be reasonable and customary for landlords of
Comparable Buildings for the Tax Year in question; PROVIDED, HOWEVER, that if
Landlord shall elect not to initiate and pursue a Certiorari Application for any
Tax Year, not later than thirty (30) days prior to the last day on which
Landlord would be entitled to initiate a Certiorari Application, Landlord shall
give notice of such election (a "CERTIORARI WAIVER NOTICE") to Tenant, which
notice shall contain a statement in bold type and capital letters stating "THIS
IS A CERTIORARI WAIVER NOTICE" as a condition to the effectiveness thereof.
Tenant shall have the right within fifteen (15) days (time being of the essence)
after the giving of such Certiorari Waiver Notice to give a notice to Landlord
directing Landlord to initiate and pursue a Certiorari Application (a
"CERTIORARI DIRECTION NOTICE"). In the event that Tenant shall give a Certiorari
Direction Notice to Landlord in accordance with the provisions of the preceding
sentence, Landlord shall initiate a Certiorari Application prior to the last day
on which it is entitled to initiate same and shall pursue same in good faith,
provided that if, as a direct result of such Certiorari Application, the
assessed valuation of the Unit for such Tax Year shall increase beyond the
assessed valuation initially set by the New York City Department of Finance,
Tenant will pay to Landlord, as Additional Charges hereunder, the incremental
additional Taxes resulting from such increase in the assessed valuation of the
Unit, together with the third-party out-of-pocket costs, if any, incurred by
Landlord in connection therewith, which obligation shall survive the expiration
of the term of the lease. Any dispute between the parties as to whether the
filing of the Certiorari Application caused any increase in the assessed
valuation of the Unit, or as to the amount of additional Taxes resulting
therefrom, or as to whether any increase in Taxes continues as a result of such
increase in the assessed valuation of the Unit, will be resolved by arbitration
in accordance with the provisions of Article 39 hereof. In connection with any
Certiorari Application relating to any Tax Year occurring during the term of
this lease, Tenant shall have the right to retain, at Tenant's sole cost and
expense, its own certiorari counsel (hereinafter called "TENANT'S CERTIORARI
COUNSEL"), who shall have the right to consult with the counsel retained by
Landlord in connection with such Certiorari Application ("LANDLORD'S CERTIORARI
COUNSEL") with respect to such Certiorari Application and any proceedings in
connection therewith, provided that Tenant's Certiorari Counsel shall have first
executed and delivered to Landlord a confidentiality agreement in form
reasonably acceptable to Landlord wherein Tenant's Certiorari Counsel shall
agree to maintain in strict confidence and not to reveal to any third parties,
including without limitation Tenant, any information obtained pursuant to this
Section 3.02(c) that may be designated by Landlord as proprietary except as may
be required by applicable Legal Requirements or by a court of competent
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jurisdiction or in connection with any action or proceeding before a court of
competent jurisdiction. Subject to the provisions of the preceding sentence,
Landlord shall cause Landlord's Certiorari Counsel to meet with Tenant's
Certiorari Counsel, to keep Tenant's Certiorari Counsel advised as to the status
of the Certiorari Application(s) in question and the strategies employed or to
be employed by Landlord and Landlord's Certiorari Counsel in connection
therewith, and Landlord and Landlord's Certiorari Counsel shall consider any
recommendations of Tenant's Certiorari Counsel with respect to such Certiorari
Application(s), but in no event shall Landlord or Landlord's Certiorari Counsel
be obligated to follow any such recommendations. Tenant's Certiorari Counsel
shall have the right to attend meetings, but shall not participate in meetings,
between Landlord and/or Landlord's Certiorari Counsel and the New York City
Department of Finance Assessor's Office with respect to any such Certiorari
Applications. Notwithstanding anything to the contrary set forth in this Section
3.02(c), Landlord shall have the right to settle any and all certiorari
proceedings with respect to the Unit, provided that Tenant shall not have
incurred any increased liability or costs occasioned by the giving of the
Certiorari Direction Notice, in which aforesaid event, Landlord shall only have
the right to settle with the consent of Tenant, which consent shall not be
unreasonably withheld, conditioned, or delayed, and Tenant, for itself and its
immediate and remote subtenants and successors in interest hereunder, hereby
waives, to the extent permitted by law, any right Tenant may now or in the
future have to protest or contest any Taxes or to bring any application or
proceeding seeking a reduction in Taxes or assessed valuation or otherwise
challenging the determination thereof; PROVIDED, HOWEVER, that in connection
with any Certiorari Application filed by Landlord as the result of the giving by
Tenant of a Certiorari Direction Notice with respect to which Tenant withholds
its consent to a settlement in accordance with the foregoing provisions of this
sentence, Tenant shall have the right, upon written notice given to Landlord not
less than thirty (30) days prior to the last date for filing same, to require
Landlord to file a judicial proceeding for judicial review of the applicable
Certiorari Application (herein called a "TENANT REQUIRED JUDICIAL PROCEEDING").
In the event that Tenant requires Landlord to file a Tenant Required Judicial
Proceeding: (i) such Tenant Required Judicial Proceeding shall be prosecuted by
Landlord's Certiorari Counsel and (ii) if, as a result of such Tenant Required
Judicial Proceeding, the assessed valuation of the Unit for such Tax Year shall
increase beyond the assessed valuation initially set by the New York City
Department of Finance, Tenant shall pay to Landlord, as Additional Charges
hereunder, the incremental additional Taxes resulting from such increase in the
assessed valuation of the Unit and (iii) Tenant shall pay to Landlord the
third-party out-of-pocket costs, if any, incurred by Landlord in connection with
such Tenant Required Judicial Proceeding, which obligations shall survive the
expiration of the term of the lease.
(d) The benefit of any discount for the early payment or
prepayment of Taxes shall accrue solely to the benefit of Landlord and such
discount shall not be subtracted from Taxes.
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(e) In respect of any Tax Year which begins prior to the
Commencement Date or terminates after the Expiration Date, the Tax Payment in
respect of such Tax Year or tax refund pursuant to Section 3.02(b) above
therefor shall be prorated to correspond to that portion of such Tax Year
occurring after the Commencement Date and prior to the Expiration Date.
(f) If the Taxes for the Tax Years commencing July 1, 2002
and/or July 1, 2003 are reduced as a result of an appropriate proceeding or
otherwise, the Base Tax Amount shall, nonetheless, not be reduced and shall be
and remain throughout the term of this lease the sum of seventy-five percent
(75%) of the Taxes initially determined by the taxing authority for the Tax Year
commencing on July 1, 2002 and twenty-five percent (25%) of the Taxes initially
determined by the taxing authority for the Tax Year commencing on July 1, 2003.
(g) Tenant shall pay to Landlord within thirty (30) days
after Landlord submits a bill therefor, together with reasonable documentation
thereof, Tenant's Share of any reasonable out-of-pocket expenses incurred by
Landlord in contesting any items comprising Taxes and/or the assessed value of
the Unit, except to the extent, if any, that such expenses shall have already
been deducted by Landlord from a tax refund pursuant to Section 3.02(b) above or
included in Operating Expenses pursuant to Section 3.01(e) hereof.
3.03. (a) For each Operating Year, subsequent to the Base
Operating Year, any part of which shall occur during the term of this lease,
Tenant shall pay an amount (herein called the "OPERATING PAYMENT") equal to the
sum of Tenant's Share of the amount by which the Operating Expenses for such
Operating Year exceed the Operating Expenses for the Base Operating Year;
PROVIDED, HOWEVER, that Tenant shall not be obligated to make any Operating
Payments for any period prior to January 1, 2004.
(b) If during the Base Operating Year or any Operating Year
(i) any rentable space in the Unit shall be vacant or unoccupied, and/or (ii)
the tenant or occupant of any space in the Unit or the Building (as applicable,
and consistently applied) undertook to perform work or services therein in lieu
of having Landlord (or Landlord's Affiliates) or the Board of Managers perform
the same and the cost thereof would have been included in Operating Expenses,
then, in any such event(s), the Operating Expenses for such period which would
vary with the percentages of occupancy of the Unit or the percentages of tenants
or occupants for which work or services are performed by Landlord (or Landlord's
Affiliates) or the Board of Managers shall be reasonably adjusted to reflect as
closely as possible the variable Operating Expenses that actually would have
been incurred if such space had been occupied or if Landlord (or Landlord's
Affiliates) or the Board of Managers had performed such work or services, as the
case may be. By way of example, if during an Operating Year fifty (50%) percent
of the rentable space in the Unit were vacant and as a result thereof Landlord's
actual cost of providing base building cleaning to rentable space in the Unit
were reduced by forty
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(40%) rather than fifty (50%) percent due to economies of scale or for any other
reason, then the line item for base building cleaning provided to rentable space
in the Unit for such Operating Year would be increased by the same forty (40%)
percent, rather than fifty (50%) percent, to reflect as closely as possible the
variable Operating Expenses that actually would have been incurred if such space
had been occupied.
(c) Landlord may furnish to Tenant, prior to the
commencement of each Operating Year a written statement setting forth in
reasonable line-item detail Landlord's reasonable estimate of the Operating
Payment for such Operating Year. In the event that such estimate of the
Operating Payment reflects an increase in total Operating Expenses for the Unit
and the Common Elements of more than three (3%) percent in excess of the total
Operating Expenses for the previous calendar year, such estimate shall be
accompanied by a reasonably detailed explanation of such increase. In the event
that Tenant disputes an estimate of the Operating Payment which reflects an
increase in total Operating Expenses for the Unit or the Common Elements of more
than three (3%) percent in excess of the total Operating Expenses for the
previous calendar year, Tenant shall have the right to challenge such estimate
substantially in the manner set forth in Section 3.03(e) below. Tenant shall pay
to Landlord on the first day of each month during the Operating Year in which
the Operating Payment will be due, an amount equal to one-twelfth (1/12th) of
such estimate of the Operating Payment for such Operating Year. If, however,
Landlord shall not furnish any such estimate for an Operating Year or if
Landlord shall furnish any such estimate for an Operating Year subsequent to the
commencement thereof, then (i) until the first day of the month following the
month in which such estimate is furnished to Tenant, Tenant shall pay to
Landlord on the first day of each month an amount equal to the monthly sum
payable by Tenant to Landlord under this Article 3 in respect of the last month
of the preceding Operating Year; (ii) after such estimate is furnished to
Tenant, Landlord shall give notice to Tenant stating whether the installments of
the Operating Payment previously made for such Operating Year were greater or
less than the installments of the Operating Payment to be made for the Operating
Year in which the Operating Payment will be due in accordance with such
estimate, and (A) if there shall be a deficiency, Tenant shall pay the amount
thereof within thirty (30) days after demand therefor, or (B) if there shall
have been an overpayment, Landlord shall within thirty (30) days of such notice
refund to Tenant the amount thereof, failing which any unpaid amount shall bear
interest at the Interest Rate from the thirty-first (31st) day after such notice
until such amount is paid to Tenant; and (iii) on the first day of the month
following the month in which such estimate is furnished to Tenant and monthly
thereafter throughout the remainder of such Operating Year Tenant shall pay to
Landlord an amount equal to one-twelfth (1/12th) of the Operating Payment shown
on such estimate. Landlord may, during each Operating Year, furnish to Tenant a
revised statement of Landlord's reasonable estimate of the Operating Payment for
such Operating Year, and in such case, the Operating Payment for such Operating
Year shall be adjusted and paid or refunded or credited as the case may be,
substantially in the same manner as provided in the preceding sentence (with
Tenant
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having the right to dispute any increase of more than three (3%) percent as
provided above).
(d) Landlord shall furnish to Tenant a Landlord's Statement
for each Operating Year (and shall use reasonable efforts to do so within ninety
(90) days after the end of each Operating Year). Such statement shall be in the
form attached to this lease as EXHIBIT N and shall set forth in reasonable
line-item detail the Operating Expenses for such Operating Year. If the
Landlord's Statement shall show that the sums paid by Tenant, if any, under
Section 3.03(c) hereof exceeded the Operating Payment to be paid by Tenant for
the Operating Year for which such Landlord's Statement is furnished, Landlord
shall refund to Tenant the amount of such excess within thirty (30) days; and if
the Landlord's Statement for such Operating Year shall show that the sums so
paid by Tenant were less than the Operating Payment to be paid by Tenant for
such Operating Year, Tenant shall pay the amount of such deficiency within
thirty (30) days after demand therefor, failing which any unpaid amount shall
bear interest at the Interest Rate from the thirty-first (31st) day after such
demand until such amount is paid to Tenant.
(e) (i) Tenant, upon reasonable notice given within one
hundred fifty (150) days of the receipt of such Landlord's Statement, may elect
to have Tenant's designated (in such notice) Audit Representative examine such
of Landlord's books and records (collectively "RECORDS") as are directly
relevant to the Landlord's Statement in question, together with reasonable
supporting data therefor. Landlord hereby agrees to maintain and preserve
Landlord's Records with respect to each Operating Year for a period of at least
five (5) years following the delivery of the Landlord's Statement with respect
thereto. In making such examination, Tenant agrees, and shall cause its Audit
Representative to agree, to keep confidential (A) any and all information
contained in such Records and (B) the circumstances and details pertaining to
such examination and any dispute or settlement between Landlord and Tenant
arising out of such examination, except as may be required (1) by applicable
Legal Requirements or (2) by a court of competent jurisdiction or arbitrator or
in connection with any action or proceeding before a court of competent
jurisdiction or arbitrator, or (3) to Tenant's attorneys, accountants and other
professionals in connection with any dispute between Landlord and Tenant; and
Tenant will confirm and cause its Audit Representative to confirm such agreement
in a separate written agreement, if requested by Landlord. If Tenant shall not
give such notice within such one hundred fifty (150) day period, then the
Landlord's Statement as furnished by Landlord shall be conclusive and binding
upon Tenant. Tenant shall, at Tenant's expense, have the right to obtain copies
and/or make abstracts of the Records as it may request in connection with its
verification of any such Landlord's Statement, subject to the foregoing
confidentiality provisions. For purposes hereof, the term "AUDIT REPRESENTATIVE"
shall mean either (x) a firm of Certified Public Accountants licensed to do
business in the State of New York and having not less than ten (10) partners,
principals or members, (y) an employee of Tenant or (z) a locally-recognized
professional having not less than ten (10) years of expertise in reviewing
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and/or auditing operating expense statements of first-class office buildings in
midtown Manhattan. Notwithstanding anything to the contrary contained herein, if
and only if any examination pursuant to this Section 3.03(e) results in a
finding of a Significant Discrepancy with respect to any Particular Item of
Operating Expenses, Tenant, upon reasonable prior notice given within thirty
(30) days after such finding, may elect (or cause its representative) to examine
or re-examine such Records as are directly relevant to such Particular Item as
included in the Operating Statements for the prior five (5) years during the
term of this lease, as required pursuant to this Section 3.03(e). If Tenant
shall not give timely notice under this Section 3.03(e) with respect to any
finding of a Significant Discrepancy it shall be deemed to have waived its right
of examination under this Section 3.03(e) with respect thereto. For purposes
hereof:
(aa) A finding of a "SIGNIFICANT DISCREPANCY" shall be deemed
to have been made with respect to a Particular Item only if it is
determined pursuant to an arbitration conducted in accordance with the
provisions of Article 39 hereof, that the Particular Item in question was
fraudulently included by Landlord in Operating Expenses.
(bb) The term "PARTICULAR ITEM" shall mean a discrete item or
sub-item of an Operating Expense and shall be construed narrowly. Thus, for
example, if it is determined pursuant to an arbitration conducted in
accordance with the provisions of Article 39 hereof, that in computing the
amount of labor savings from the installation of an automatic elevator
Landlord has fraudulently included an excessive amount in respect of
vacation pay, the Particular Item for purposes hereof shall be deemed to be
the fraudulent inclusion of such excessive amount of vacation pay in the
computation of cost savings resulting from the installation of such
automatic elevator, and not any broader item, such as the entire
calculation of cost savings resulting from the installation of such
automatic elevator.
(ii) In the event that Tenant, after having
reasonable opportunity to examine the Records (but in no event more than
ninety (90) days from the date on which the Records are made available to
Tenant unless Tenant is delayed by Landlord in commencing or prosecuting
such examination, in which case such ninety (90) day period shall be
extended by one (1) day for each day of such delay caused by Landlord),
shall disagree with the Landlord's Statement, then Tenant may send a
written notice ("TENANT'S STATEMENT") to Landlord of such disagreement,
specifying the basis for Tenant's disagreement. Landlord and Tenant shall
attempt to adjust such disagreement. If they are unable to do so within
thirty (30) days, Landlord and Tenant shall designate a Certified Public
Accountant (the "ARBITER") whose determination made in accordance with this
Section 3.03(e)(ii) shall be binding upon the parties including, without
limitation, if the Arbiter determines that the Operating Payment should be
lower than the amount determined by Tenant or higher than the amount
determined by Landlord. If the Arbiter shall determine that the amount
charged by Landlord as the
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Operating Payment does not exceed the actual Operating Payment by more than
five (5%) percent, then Tenant shall pay the cost of the Arbiter;
otherwise, Landlord shall pay the cost of the Arbiter. If the Arbiter shall
determine that the amount charged by Landlord as the Operating Payment
exceeds the actual Operating Payment by more than five (5%) percent, then
Landlord shall pay the cost of Tenant's Audit Representative (unless
Tenant's Audit Representative is an employee of Tenant) in connection with
such examination of the Records and arbitration proceeding, not to exceed
an amount equal to twenty-five (25%) percent of any refund determined to be
due to Tenant by the Arbiter. The Arbiter shall be a member of an
independent certified public accounting firm having at least ten (10)
accounting professionals and having at least ten (10) years of experience
in commercial real estate accounting and, in particular, office building
operating expense statements. In the event that Landlord and Tenant shall
be unable to agree upon the designation of the Arbiter within thirty (30)
days after receipt of notice from the other party requesting agreement as
to the designation of the Arbiter, which notice shall contain the names and
addresses of two or more Certified Public Accountants meeting the same
qualifications set forth in the preceding sentence with respect to the
Arbiter who are acceptable to the party sending such notice (any one of
whom, if acceptable to the party receiving such notice as shall be
evidenced by notice given by the receiving party to the other party within
such thirty (30) day period, shall be the agreed upon Arbiter), then either
party shall have the right to request the American Arbitration Association
(herein called the "AAA") (or any organization which is the successor
thereto) to designate as the Arbiter a Certified Public Accountant meeting
such qualifications and whose determination made in accordance with this
Section 3.03(e)(ii) shall be conclusive and binding upon the parties, and
the cost charged by the AAA (or any organization which is the successor
thereto) for designating such Arbiter shall be borne by the party that is
responsible for the cost of the Arbiter in accordance with the preceding
provisions of this Section 3.03(e)(ii). In rendering such determination
such Arbiter shall not add to, subtract from or otherwise modify the
provisions of this lease. Notwithstanding the foregoing provisions of this
section, Tenant, pending the resolution of any contest pursuant to the
terms hereof, shall continue to pay all sums as determined to be due in the
first instance by such Landlord's Statement and upon the resolution of such
contest, suitable adjustment shall be made in accordance therewith with
appropriate payment to be made to Landlord by Tenant or refund to be made
by Landlord to Tenant (or credit allowed Tenant against Fixed Rent and
Additional Charges becoming due) if required thereby, including, in either
case, interest at an annual rate equal to the Interest Rate.
3.04. (a) In any case provided in this Article 3 in which Tenant
is entitled to a refund, Landlord may, in lieu of allowing such refund, credit
against the next due installments of Fixed Rent and Additional Charges any
amounts to which Tenant shall be entitled. Nothing in this Article 3 shall be
construed so as to result in a decrease
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in the Fixed Rent hereunder. If this lease shall expire before any such credit
shall have been fully applied, then (provided Tenant is not in default hereunder
beyond any applicable notice and grace periods) Landlord shall refund to Tenant
the unapplied balance of such credit within thirty (30) days of the expiration
or termination date.
(b) Subject to the last sentence of Section 3.05 hereof, the
expiration or termination of this lease during any Tax Year or Operating Year
(for any part or all of which there is a Tax Payment or Operating Payment under
this Article 3) shall not affect the rights or obligations of the parties hereto
respecting such payment and any Landlord's Statement or tax bill, as the case
may be, relating to such payment may be sent to Tenant subsequent to, and all
such rights and obligations shall survive, any such expiration or termination.
Any payments due under such Landlord's Statement or tax bill, as the case may
be, shall be payable within thirty (30) days after such statement or bill is
sent to Tenant.
3.05. Subject to the further provisions of this Section 3.05,
Landlord's failure to render or delay in rendering a Landlord's Statement with
respect to any Operating Year or any component of the Operating Payment shall
not prejudice Landlord's right to thereafter render a Landlord's Statement with
respect to any such Operating Year or any such component, nor shall the
rendering of a Landlord's Statement for any Operating Year prejudice Landlord's
right to thereafter render a corrected Landlord's Statement for such Operating
Year. Subject to the further provisions of this Section 3.05, Landlord's failure
to render or delay in rendering a bill with respect to any installment of Taxes
shall not prejudice Landlord's right to thereafter render such a bill for such
installment, nor shall the rendering of a bill for any installment prejudice
Landlord's right to thereafter render a corrected bill for such installment.
Notwithstanding anything to the contrary contained in this lease, in the event
Landlord fails to give a Landlord's Statement for Operating Expenses (or a
corrected Landlord's Statement) or a bill for Taxes (or a corrected bill) to
Tenant for any Tax Year or Operating Year, as the case may be, on or before the
date which is two (2) years after the last day of the Tax Year to which such
bill for Taxes applies or the Operating Year to which such Landlord's Statement
applies, as applicable, then Landlord shall be deemed to have waived the payment
of any then unpaid Additional Charges which would have been due pursuant to said
Landlord's Statement or bill for Taxes, as the case may be.
3.06. In respect of any Operating Year which begins prior to the
Commencement Date or terminates after the Expiration Date, the Operating Payment
in respect of such Operating Year shall be prorated accordingly.
ARTICLE 4
CONDOMINIUM
4.01. As used in this lease, the following terms shall have the
following meanings:
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(a) "CONDOMINIUM DOCUMENTS" shall mean the Declaration, the
By-Laws, the Building Rules and Regulations and the Building Standards, as each
of the same may be amended, restated, supplemented or otherwise modified from
time to time;
(b) "DECLARATION" shall mean that certain Second Amended and
Restated Declaration of Condominium dated as of January 1, 1995 and recorded in
the Office of the Register of The City of New York on October 2, 1997 in Reel
2502 at Page 0334, as the same may be further amended, restated, supplemented or
otherwise modified from time to time;
(c) "BY-LAWS" shall mean the By-Laws of the Condominium, as
the same may be amended, restated, supplemented or otherwise modified from time
to time; PROVIDED, HOWEVER, that Tenant shall not be subject, subordinate or
bound by any provision of the By-Laws in effect as of the date hereof, or any
provision of any future amendment, restatement, supplement or modification of or
to the By-Laws, in either case which would increase Tenant's obligations or
liabilities or decrease or otherwise adversely affect Tenant's rights under this
lease or under any amendment or modification of this lease entered into at a
time when Landlord owns all of the units of the Condominium;
(d) "BUILDING STANDARDS" shall mean the building standards
for the Building annexed hereto as EXHIBIT E, and as the same may be amended
from time to time as set forth in Section 11.04 hereof provided that no such
amendment shall impose additional obligations or liabilities upon Tenant or
decrease Tenant's rights under this lease unless landlords of Comparable
Buildings have adopted comparable procedures or standards or decrease the
obligations of Landlord under this lease; and
(e) "BOARD OF MANAGERS" shall have the meaning set forth in
the Condominium Documents.
4.02. Subject to the provisions of the Board SNDA Agreement (herein
called the "BOARD SNDA AGREEMENT") annexed hereto as EXHIBIT H, this lease, and
all rights of Tenant hereunder, are and shall be subject and subordinate to the
Condominium Documents and all amendments and modifications thereof, provided
that except as set forth in Article 10 ("RULES AND REGULATIONS") hereof, no such
amendment or modification shall decrease or otherwise affect Tenant's rights
under this lease (other than to a DE MINIMIS degree) or increase Tenant's
obligations or liabilities under this lease or under any amendment, modification
or renewal of this lease or decrease Landlord's obligations or liabilities under
this lease. As more particularly set forth in the Board SNDA Agreement, in the
event of any inconsistency between the provisions of (i) this lease or any
amendment, modification or renewal of this lease and (ii) the provisions of the
Condominium Documents in effect as of the date hereof, or any provision of any
future amendment, restatement, supplement or modification of the Condominium
Documents, the provisions of this lease or any such amendment, modification or
renewal
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of this lease shall govern. The provisions of this Section 4.02 shall be
conditioned upon the execution and delivery by and between Tenant and the Board
of Managers of the Board SNDA Agreement.
4.03. Subject to the foregoing provisions of Section 4.02 hereof,
Tenant acknowledges that wherever any provision of this lease grants certain
rights to Landlord, the Board of Managers may be entitled to certain
corresponding rights pursuant to the Condominium Documents, and that, although
the parties have endeavored to include all necessary references to the rights of
the Board of Managers throughout this lease, with respect to any provisions that
do not expressly reflect such rights, such rights shall be inferred as the
context requires, provided that the effect of such inference shall not be to
decrease or otherwise adversely affect Tenant's rights under this lease or
increase Tenant's obligations or liabilities under this lease, it being the
agreement of the parties that Tenant's rights and obligations under this lease
shall not be affected in any way by reason of the condominiumization of the
Building pursuant to the Condominium Documents. In the event that Tenant shall
dispute the existence of any rights on behalf of the Condominium pursuant to the
Condominium Documents, such dispute shall be resolved by expedited arbitration
pursuant to Article 39 hereof.
4.04. If, at any time during the term of this lease, the Building
shall no longer be owned in a condominium form of ownership, this lease shall
remain in full force and effect, Tenant shall continue to pay rents, Landlord
and Tenant shall perform their respective obligations hereunder, and for
purposes of calculating Tenant's Tax Payments and Operating Payments payable
hereunder, the following provisions shall apply, it being the intent and
agreement of the parties hereto that the cessation of the condominium form of
ownership shall not result in any increase in Tenant's Tax Payments or Operating
Payments:
(a) "TENANT'S SHARE," as set forth in Section 3.01(j)
hereof, shall NOT be revised (I.E., Tenant's Share shall continue to be computed
using as the denominator the number of rentable square feet contained in the
Unit as of the date of this lease);
(b) The "BASE OPERATING AMOUNT," as defined in Section
3.01(a) hereof, shall not be recalculated;
(c) The "BASE TAX AMOUNT," as defined in Section 3.01(c)
hereof, shall not be recalculated;
(d) The term "OPERATING EXPENSES" set forth in Section
3.01(e) hereof shall be deemed to refer only to the Operating Expenses incurred
by Landlord which are properly attributable to the portion of the Building which
constitutes the Unit as of the date of this lease, notwithstanding the fact that
Landlord will be incurring Operating Expenses with respect to the Building as a
whole, and any dispute between Landlord and Tenant in connection with such
proper attribution and the resulting
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amount of Tenant's Operating Payment to be paid by Tenant to Landlord shall be
resolved by arbitration in the manner set forth in Section 3.03(e)(ii) hereof;
and
(e) The definition of "TAXES" set forth in Section 3.01(h)
hereof shall be deemed to refer only to the portion of Taxes incurred by
Landlord with respect to the Real Property as a whole which are properly
attributable to the portion of the Building which constitutes the Unit as of the
date of this lease, notwithstanding the fact that Landlord will be incurring
Taxes with respect to the Real Property as a whole, and any dispute between
Landlord and Tenant in connection with such proper attribution and the resulting
amount of Tenant's Tax Payment to be paid by Tenant to Landlord shall be
resolved by arbitration substantially in the manner set forth in Section
3.03(e)(ii) hereof.
Tenant, pending the resolution of any contest pursuant to the terms of this
Article 4 regarding the appropriate amount of Tenant's Operating Payment or
Tenant's Tax Payment, shall pay to Landlord the sum of (i) Tenant's version of
the appropriate amount of Tenant's Operating Payment or Tenant's Tax Payment, as
the case may be, plus (ii) fifty (50%) percent of the difference between
Landlord's and Tenant's versions of the appropriate amount of Tenant's Operating
Payment or Tenant's Tax Payment, as the case may be, and upon the resolution of
such contest, suitable adjustment shall be made in accordance therewith with
appropriate payment to be made to Landlord by Tenant or refund to be made by
Landlord to Tenant (or credit allowed Tenant against Fixed Rent and Additional
Charges becoming due) if required thereby, including, in either case, interest
at an annual rate equal to the Interest Rate.
If either party reasonably believes that it is necessary to clarify the terms of
this lease as a result of such conversion in the form of ownership of the
Building, Landlord and Tenant shall promptly execute an agreement clarifying
their respective obligations under this lease; PROVIDED, HOWEVER, that neither
party shall be required to execute any such instrument which would diminish or
detract from the rights of such party or expand or enhance the obligations of
such party, in either case under this lease, including the first sentence of
this Section 4.04. Subject to the foregoing, such agreement shall reflect the
change in the form of ownership and amend the lease accordingly, redacting
terminology relating to condominium ownership.
4.05. Landlord covenants and agrees that Landlord and its successors
and assigns shall throughout the term of this lease duly perform and observe all
of the terms, provisions and conditions of the Condominium Agreement on its part
to observe and perform which affect this lease or any of Tenant's rights,
obligations and/or liabilities under this lease.
4.06. As a material inducement to Tenant to enter into this lease,
for so long as Tenant meets the Signage Occupancy Requirement Tenant shall have
the right to observe official meetings of the Board of Managers and Landlord
shall give Tenant reasonable prior notice of each such meeting.
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ARTICLE 5
SUBORDINATION, NOTICE TO SUPERIOR LESSORS AND MORTGAGEES
5.01. Subject to the provisions of any Conforming SNDA between Tenant
and any Superior Party, this lease, and all rights of Tenant hereunder, are and
shall be subject and subordinate to all ground leases, overriding leases and
underlying leases of the Land and/or the Unit and/or the Building and/or that
portion of the Unit or the Building of which the Premises are a part, now or
hereafter existing and to all mortgages which may now or hereafter affect the
Land and/or the Unit and/or the Building and/or that portion of the Unit or the
Building of which the Premises are a part and/or any of such leases, whether or
not such mortgages shall also cover other lands and/or units and/or buildings
and/or leases, to each and every advance made or hereafter to be made under such
mortgages, and to all renewals, modifications, replacements and extensions of
such leases and such mortgages and spreaders and consolidations of such
mortgages. This Section 5.01 shall be self-operative and no further instrument
of subordination shall be required. In confirmation of such subordination,
Tenant shall promptly execute, acknowledge and deliver any instrument that
Landlord, the lessor under any such lease or the holder of any such mortgage or
any of their respective successors in interest may reasonably request to
evidence such subordination; provided that in no event shall such instrument
decrease Tenant's rights under this lease or increase Tenant's obligations or
liabilities under this lease. Any lease to which this lease is, at the time
referred to, subject and subordinate is herein called "SUPERIOR LEASE" and the
lessor of a Superior Lease or its successor in interest, at the time referred
to, is herein called "Superior Lessor"; and any mortgage to which this lease is,
at the time referred to, subject and subordinate is herein called "SUPERIOR
MORTGAGE" and the holder of a Superior Mortgage is herein called "SUPERIOR
MORTGAGEE". Each Superior Mortgagee and Superior Lessor is hereinafter sometimes
called a "SUPERIOR PARTY".
5.02. Intentionally Omitted.
5.03. Intentionally Omitted.
5.04. Landlord hereby represents and warrants that there are no
existing Superior Mortgages or Superior Leases affecting the Unit or the
Building as of the date of this lease.
5.05. (a) With respect to any and all Superior Mortgages and
Superior Leases, the provisions of Section 5.01 hereof shall be conditioned upon
the execution and delivery by and between Tenant and any such Superior Mortgagee
or Superior Lessor of a subordination, non-disturbance and attornment agreement
substantially in the form of EXHIBIT H-1 annexed hereto with respect to a
Superior Mortgagee (herein called a "SUPERIOR MORTGAGEE SNDA AGREEMENT") or
EXHIBIT H-2 annexed hereto with respect to a Superior Lessor (herein called a
"SUPERIOR LESSOR SNDA AGREEMENT"), in each case with such DE MINIMIS
modifications as the holder of
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such Superior Mortgage or Superior Lease may require in accordance with Section
5.05(b) below.
(b) Landlord shall cause each Superior Party, as a condition
precedent to the subordination of this lease to the Superior Mortgage or
Superior Lease of the Superior Party in question, to execute, acknowledge and
deliver to Tenant a Superior Mortgagee SNDA Agreement or a Superior Lessor SNDA
Agreement, as applicable, substantially in the form of EXHIBIT H-1 annexed
hereto with respect to a Superior Mortgage or EXHIBIT H-2 annexed hereto with
respect to a Superior Lease, with such DE MINIMIS modifications as the holder of
such Superior Mortgage or Superior Lease shall require, provided that such
modifications do not increase Tenant's obligations or liabilities or decrease or
otherwise adversely affect Tenant's rights as set forth in EXHIBIT H-1 or
EXHIBIT H-2 (each being herein called a "CONFORMING SNDA", which Tenant shall
promptly execute and deliver to the Superior Party). Tenant agrees to execute
any such Conforming SNDA and return same to Landlord within ten (10) Business
Days after Landlord's written request therefor (herein called the "SNDA
REQUEST"), provided that such SNDA Request is given in the manner provided in
Section 5.05(c) below, accompanied by execution copies of such Conforming SNDA.
If Tenant shall fail to execute, acknowledge and return any such Conforming SNDA
within such ten (10) Business Day period, Landlord shall have the right to send
to Tenant a follow-up notice (herein called the "SNDA FOLLOW-UP") and, provided
that such SNDA Follow-up is given in the manner provided in Section 5.05(c)
below, if Tenant shall fail to execute, acknowledge and return any such
Conforming SNDA within two (2) Business Days after the giving of the SNDA
Follow-up, then this lease shall be subordinate to such future Superior
Mortgages or future Superior Leases, as the case may be, pursuant to the terms
and conditions of such Conforming SNDA, and Tenant shall be deemed to have
executed and delivered such Conforming SNDA to the Superior Lessor or Superior
Mortgagee requesting such execution, notwithstanding the fact that Tenant has
not, in fact, executed and delivered such Conforming SNDA, unless Tenant gives
notice to Landlord that the Superior Lessor SNDA Agreement or Superior Mortgagee
SNDA Agreement does not meet the requirements set forth in this Section 5.05(b)
at any time prior to the expiration of the two (2) Business Day period following
the giving of the SNDA Follow-up, time being of the essence with respect to the
giving of such notice. Any dispute by Tenant that the form of the Superior
Lessor SNDA Agreement or Superior Mortgagee SNDA Agreement utilized by the
Superior Lessor or the Superior Mortgagee does not meet the requirements set
forth in this Section 5.05(b) shall be resolved by arbitration pursuant to
Article 39 hereof.
(c) In order to be effective, the SNDA Request and the SNDA
Follow-up must: (i) specifically refer to the provisions of Section 5.05(b)
hereof with respect to the failure of Tenant to execute, acknowledge and return
any such SNDA Agreements within two (2) Business Days after the giving of the
SNDA Follow-up and (ii) be given in accordance with the provisions of Section
29.01 hereof.
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ARTICLE 6
QUIET ENJOYMENT
6.01. So long as Tenant is not in default hereunder beyond the
expiration of any applicable notice and cure periods, Tenant shall peaceably and
quietly have, hold and enjoy the Premises without hindrance, ejection or
molestation by Landlord or any person lawfully claiming through or under
Landlord, subject, nevertheless, to the provisions of this lease and to Superior
Leases and Superior Mortgages. This covenant shall be construed as a covenant
running with the Land, and is not, nor shall it be construed as, a personal
covenant of Landlord, except to the extent of Landlord's interest in the Real
Property and only so long as such interest shall continue, and thereafter
Landlord shall be relieved of all liability hereunder thereafter arising and
this covenant shall be binding only upon subsequent successors in interest of
Landlord's interest in this lease, to the extent of their respective interests,
as and when they shall acquire the same, and so long as they shall retain such
interest, but nothing contained herein shall be deemed to relieve Landlord of
any liability of Landlord which has accrued or arisen through the date on which
Landlord transfers its interest in the Unit to a third party.
ARTICLE 7
ASSIGNMENT, SUBLETTING AND MORTGAGING
7.01. Except as otherwise provided in this lease, Tenant shall not,
whether voluntarily, involuntarily, or by operation of law or otherwise (a)
assign or otherwise transfer this lease or the term and estate hereby granted,
(b) sublet the Premises or any part thereof, or (subject to the provisions of
Section 7.03 hereof by Affiliates and/or Service and Business Relationship
Entities) allow the same to be used, occupied or utilized by anyone other than
Tenant, or (c) mortgage, pledge, encumber or otherwise hypothecate this lease or
the Premises or any part thereof in any manner whatsoever, without in each
instance obtaining the prior written consent of Landlord (which consent Landlord
shall grant or withhold in accordance with the following provisions of this
Article 7). Notwithstanding the foregoing, if Tenant's outside accounting firm
or any governmental regulatory agencies shall require the use of temporary desk
space within the Premises to conduct audits or other regulatory or advisory
functions related to Tenant's business, the use of such portions of the Premises
by such firms or agencies shall not require the consent of Landlord.
Notwithstanding anything to the contrary contained herein, in no event shall a
partial assignment of this lease be permitted.
For purposes hereof, the following terms shall have the following
meanings:
"AFFILIATE" shall mean, with respect to any person or entity, any
other person or entity which, directly or indirectly, controls, is
controlled by, or is under common control with, the person or entity in
question.
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"CITI TENANT" shall mean any tenant under this lease from time to time
that is either (i) the Named Tenant, (ii) an Affiliate of the Named Tenant,
(iii) a Corporate Successor of either the Named Tenant or an Affiliate of
the Named Tenant or (iv) an Affiliate of any such Corporate Successor.
"CONTROL" shall mean, in the case of a corporation, ownership or
voting control, directly or indirectly, of thirty (30%) percent or more of
all the voting stock, and in case of a joint venture, partnership or
limited liability company (herein called a "LLC"), or similar entity,
ownership, directly or indirectly, of thirty (30%) percent or more of all
the general or other partnership or membership (or similar) interests
therein; in either case together with the ability to exert control over the
policies and activities of such corporation or LLC. Notwithstanding the
foregoing, a person or entity shall be deemed to have "control" of a public
corporation if it is the largest shareholder of such corporation and owns
or has voting control over not less than twenty-five (25%) percent of all
of the then voting stock of such corporation.
"CORPORATE SUCCESSOR" shall mean either (i) any corporation which is a
successor to Tenant or Citibank, N.A. by merger, consolidation or
reorganization or (ii) a purchaser of all or substantially all of Tenant's
assets or the assets of Citibank, N.A.
"NAMED TENANT" shall mean Citigroup Inc.
"SERVICE AND BUSINESS RELATIONSHIP ENTITIES" shall mean (i) persons
engaged in providing services to Tenant or to any Affiliate of Tenant, (ii)
Tenant's (or