UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended January 1, 2006
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___ to ___
Commission File No. 0-26841
1-800-FLOWERS.COM, Inc.
(Exact name of registrant as specified in its charter)
DELAWARE 11-3117311 -------- ---------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes (X) No ( )
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes (X) No ( )
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ( ) No (X)
The number of shares outstanding of each of the Registrant's classes of common stock:
1-800-FLOWERS.COM, Inc.
TABLE OF CONTENTS
INDEX
Page
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Part I. Financial Information
Item 1. Consolidated Financial Statements:
Consolidated Balance Sheets - January 1, 2006
(Unaudited) and July 3, 2005 1
|
Consolidated Statements of Income (Unaudited) - Three and Six Months Ended January 1, 2006 and December 26, 2004 2
Consolidated Statements of Cash Flows (Unaudited) - Three and Six Months Ended January 1, 2006 and December 26, 2004 3
Notes to Consolidated Financial Statements (Unaudited) 4
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 12
Item 3. Quantitative and Qualitative Disclosures About Market Risk 19
Item 4. Controls and Procedures 19
Part II. Other Information
Item 1. Legal Proceedings 20
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 20
Item 3. Defaults upon Senior Securities 20
Item 4. Submission of Matters to a Vote of Security Holders 20
Item 5. Other Information 21
Item 6. Exhibits 21
Signatures 22
PART I. - FINANCIAL INFORMATION
ITEM 1. - CONSOLIDATED FINANCIAL STATEMENTS
1-800-FLOWERS.COM, Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands, except share data)
January 1, July 3,
2006 2005
-------------- ------------
(unaudited)
Assets
Current assets:
Cash and equivalents $60,872 $ 39,961
Short-term investments - 6,647
Receivables, net 15,536 10,619
Inventories 38,967 28,675
Deferred income taxes 7,149 10,219
Prepaid and other 6,027 5,289
-------------- ------------
Total current assets 128,551 101,410
Property, plant and equipment, net 56,555 50,474
Goodwill 66,692 63,219
Other intangibles, net 15,580 14,215
Deferred income taxes 17,161 17,161
Other assets 6,647 5,473
------------- ------------
Total assets $291,186 $251,952
============= ============
Liabilities and stockholders' equity
Current liabilities:
Accounts payable and accrued expenses $93,053 $ 57,121
Current maturities of long-term debt and obligations under capital leases 2,243 2,597
------------- ------------
Total current liabilities 95,296 59,718
Long-term debt and obligations under capital leases 2,388 3,347
Other liabilities 2,606 2,553
------------- ------------
Total liabilities 100,290 65,618
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value, 10,000,000 shares authorized, none issued - -
Class A common stock, $.01 par value, 200,000,000 shares authorized, 29,781,118
and 29,888,603 shares issued at January 1, 2006 and July 3, 2005, respectively 298 300
Class B common stock, $.01 par value, 200,000,000 shares authorized, 42,138,465
and 42,144,465 shares issued at January 1, 2006 and July 3, 2005, respectively 421 421
Additional paid-in capital 259,910 258,848
Retained deficit (55,488) (59,198)
Deferred compensation - (1,116)
Treasury stock, at cost-1,562,850 and 1,380,850 Class A shares at January 1,
2006 and July 3, 2005, respectively and 5,280,000 Class B shares (14,245) (12,921)
------------- ------------
Total stockholders' equity 190,896 186,334
------------- ------------
Total liabilities and stockholders' equity $ 291,186 $251,952
============= ============
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See accompanying notes.
1-800-FLOWERS.COM, Inc. and Subsidiaries Consolidated Statements of Income
(in thousands, except per share data)
(unaudited)
Three Months Ended Six Months Ended
--------------------------------- ---------------------------------
January 1, December 26, January 1, December 26,
2006 2004 2006 2004
---------------- ---------------- --------------- ----------------
Net revenues $277,829 $230,014 $390,594 $327,528
Cost of revenues 152,837 127,402 219,576 185,344
---------------- ---------------- --------------- ----------------
Gross profit 124,992 102,612 171,018 142,184
Operating expenses:
Marketing and sales 87,874 72,841 126,098 102,733
Technology and development 4,797 3,292 9,566 6,396
General and administrative 10,357 7,954 20,993 15,556
Depreciation and amortization 3,809 3,770 7,333 7,666
---------------- ---------------- --------------- ----------------
Total operating expenses 106,837 87,857 163,990 132,351
---------------- ---------------- --------------- ----------------
Operating income 18,155 14,755 7,028 9,833
Other income (expense):
Interest income 141 275 356 657
Interest expense (113) (124) (197) (265)
Other (143) 21 (137) 25
---------------- ---------------- --------------- ----------------
Total other income (expense), net (115) 172 22 417
---------------- ---------------- --------------- ----------------
Income before income taxes 18,040 14,927 7,050 10,250
Income taxes (7,704) (6,223) (3,340) (4,256)
---------------- ---------------- --------------- ----------------
Net income $10,336 $8,704 $3,710 $5,994
================ ================ =============== ================
Basic and diluted net income per common share $0.16 $0.13 $0.06 $0.09
================ ================ =============== ================
Weighted average shares used in the calculation
of net income per common share
Basic 65,065 66,061 65,076 66,135
================ ================ =============== ================
Diluted 66,395 67,637 66,395 67,627
================ ================ =============== ================
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See accompanying notes.
1-800-FLOWERS.COM, Inc. and Subsidiaries Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Six Months Ended
--------------------------------
January 1, December 26,
2006 2004
--------------- --------------
Operating activities:
Net income $3,710 $5,994
Reconciliation of net income to net cash provided by operations:
Depreciation and amortization 7,333 7,666
Deferred income taxes 3,070 4,256
Stock based compensation 1,997 -
Bad debt expense 160 146
Other non-cash items 166 -
Changes in operating items, excluding the effects of acquisitions:
Receivables (4,455) (11,078)
Inventories (8,190) (7,719)
Prepaid and other 264 (620)
Accounts payable and accrued expenses 33,334 15,765
Other assets (1,576) 1,592
Other liabilities 54 296
--------------- --------------
Net cash provided by operating activities 35,867 16,298
Investing activities:
Purchase of investments - (32,866)
Sale of investments 6,695 40,903
Acquisition, net of cash acquired (4,959) (9,674)
Capital expenditures, net of non-cash expenditures (13,083) (5,653)
Other 86 2
--------------- --------------
Net cash used in investing activities (11,261) (7,288)
Financing activities:
Acquisition of treasury stock (1,324) (2,175)
Proceeds from employee stock options/purchase plan 179 645
Repayment of notes payable and bank borrowings (1,815) (654)
Payment of capital lease obligations (735) (856)
--------------- --------------
Net cash used in financing activities (3,695) (3,040)
--------------- --------------
Net change in cash and equivalents 20,911 5,970
Cash and equivalents:
Beginning of period 39,961 80,824
--------------- --------------
End of period $60,872 $86,794
=============== ==============
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See accompanying notes.
1-800-FLOWERS.COM, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 1 - Accounting Policies
Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared by 1-800-FLOWERS.COM, Inc. and subsidiaries (the "Company") in accordance with accounting principles generally accepted in the United States for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six months ended January 1, 2006 are not necessarily indicative of the results that may be expected for the fiscal year ending July 2, 2006.
The balance sheet information at July 3, 2005 has been derived from the audited financial statements at that date.
For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended July 3, 2005.
Use of Estimates
The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
Comprehensive Income
For the three and six months ended January 1, 2006 and December 26, 2004, the Company's comprehensive income was equal to the respective net income for each of the periods presented.
Note 2 - Net Income Per Common Share
The following table sets forth the computation of basic and diluted net income per common share:
Three Months Ended Six Months Ended
---------------------------------- ----------------------------------
January 1, December 26, January 1, December 26,
2006 2004 2006 2004
----------------- --------------- ---------------- ----------------
(in thousands, except per share data)
Numerator:
Net income $10,336 $8,704 $3,710 $5,994
================= =============== ================ ================
Denominator:
Weighted average shares outstanding 65,065 66,061 65,076 66,135
Effect of dilutive securities:
Employee stock options 1,297 1,576 1,294 1,492
Employee restricted stock awards 33 - 25 -
----------------- --------------- ---------------- ----------------
1,330 1,576 1,319 1,492
----------------- --------------- ---------------- ----------------
Adjusted weighted-average shares and assumed
conversions 66,395 67,637 66,395 67,627
================= =============== ================ ================
Net income per common share:
Basic and diluted $0.16 $0.13 $0.06 $0.09
================= =============== ================ ================
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1-800-FLOWERS.COM, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Note 3 - Stock-Based Compensation
The Company has a Long Term Incentive and Share Award Plan, which is more fully described in Note 9 of the Company's 2005 Annual Report on Form 10-K, that provides for the grant to eligible employees, consultants and directors of stock options, share appreciation rights (SARs), restricted shares, restricted share units, performance shares, performance units, dividend equivalents, and other share-based awards.
Prior to July 4, 2005, as permitted under SFAS No. 123, the Company accounted for its stock option plans following the recognition and measurement principles of Accounting Principles Board (APB) Opinion No. 25, "Accounting for Stock Issued to Employees," and related interpretations. Accordingly, no stock-based compensation had been reflected in net income for stock options, as all options granted had an exercise price equal to the market value of the underlying common stock on the date of grant and the related number of shares granted was fixed at that point in time.
In December 2004, the Financial Accounting Standards Board (FASB) issued SFAS No. 123 (R), "Share-Based Payment." This Statement revised SFAS No. 123 by eliminating the option to account for employee stock options under APB No. 25 and requires companies to recognize the cost of employee services received in exchange for awards of equity instruments based on the grant-date fair value of those awards (the "fair-value-based" method).
Effective July 4, 2005, the Company adopted the fair value recognition provisions of SFAS No. 123(R) using the modified prospective application method. Under this transition method, compensation cost recognized in the three and six months ended January 1, 2006 includes amounts of: (a) compensation cost of all stock-based payments granted prior to, but not yet vested as of, July 4, 2005 (based on grant-date fair value estimated in accordance with the original provisions of SFAS No. 123, and previously presented in the pro-forma footnote disclosures), and (b) compensation cost for all stock-based payments granted subsequent to July 3, 2005 (based on the grant-date fair value estimated in accordance with the new provision of SFAS No. 123(R)). In accordance with the modified prospective method, results for prior periods have not been restated. Prior to the Company's adoption of SFAS No. 123(R), benefits of tax deduction in excess of recognized compensation costs were reported as operating cash flows. SFAS No. 123(R) requires excess tax benefits be reported as a financing cash inflow rather than as a reduction of taxes paid. There were no significant excess tax benefits for the six-month period ended January 1, 2006.
The following table summarizes the effect of adopting SFAS No. 123(R) as of July 4, 2005:
Three Months Six Months
Ended Ended
January 1, 2006 January 1, 2006
-------------------- ------------------
Stock-option compensation expense recognized (*): (in thousands, except per share data)
Marketing and sales $332 $630
Technology and development 142 269
General and administrative 473 898
----------- -----------
Total 947 1,797
Related deferred income tax expense 196 371
----------- ----------
Decrease in net income $751 $1,426
=========== ==========
Impact on basic and diluted net income per common share ($0.01) ($0.02)
=========== ==========
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(*) excludes the amortization of restricted stock awards in the amount of $113 and $200 for the three and six months ended January 1, 2006, respectively. ($68 and $120, net of tax for the three and six months ended January 1, 2006, respectively).
Compensation expense related to the amortization of restricted stock awards was recognized prior to the implementation of SFAS No. 123(R). Total stock based compensation expense, which includes both expense from
1-800-FLOWERS.COM, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
stock options and restricted stock awards, totaled $1.1 million and $2.0 million ($0.8 million and $1.5 million, net of tax) during the three and six months ended January 1, 2006, respectively.
Under the modified prospective application method, results for prior periods have not been restated to reflect the effects of implementing SFAS No. 123(R). The following pro-forma information, as required by SFAS No. 148, "Accounting for Stock-Based Compensation-Transition and Disclosure, an amendment of FASB Statement No. 123," is presented for comparative purposes and illustrates the effect on net income and net income per common share for the periods presented as if the Company had applied the fair value recognition provisions of SFAS No. 123 to stock-based employee compensation prior to July 4, 2005:
Three Months Six Months
Ended Ended
December 26, December 26,
2004 2004
--------------- --------------
(in thousands except per share
data)
Net income - As reported $8,704 $5,994
Less: Stock option compensation expense (*) 1,996 3,690
--------------- --------------
Net income - Pro forma $6,708 $2,304
=============== ==============
Net income per share:
Basic and diluted - As reported $0.13 $0.09
===== =====
Basic and diluted - Pro forma $0.10 $0.03
===== =====
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(*) no restricted stock awards were made prior to January 2005
The weighted average fair value of stock options on the date of grant, and the assumptions used to estimate the fair value of the stock options using the Black-Scholes option valuation model were as follows:
Three Months Ended Six Months Ended
------------------------------- -----------------------------
January 1, December 26, January 1, December 26,
2006 2004 2006 2004
--------------- --------------- -------------- --------------
Weighted average fair value of
options granted $3.09 $4.65 $3.11 $4.66
Expected volatility 46% 61% 46% 62%
Expected life 5.3 yrs 5.0 yrs 5.3 yrs 5.0 yrs
Risk-free interest rate 4.47% 3.86% 4.45% 3.79%
Expected dividend yield 0.00% 0.00% 0.00% 0.00%
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The expected volatility of the option is determined using historical volatilities based on historical stock prices. The expected life of options granted in fiscal 2005 was based on the Company's historical share option exercise experience. Due to minimal exercising of stock options, in fiscal 2006, the Company estimated the expected life of options granted to be the average of the Company's historical expected term from vest date and the midpoint between the average vesting term and the contractual term. The risk-free interest rate is determined using the yield available for zero-coupon U.S. government issues with a remaining term equal to the expected life of the option. The Company has never paid a dividend, and as such the dividend yield is 0.0%.
The following table summarizes stock option activity during the six months ended January 1, 2006:
Weighted
Average
Weighted Remaining Aggregate
Average Contractual Intrinsic
Options Exercise Price Term Value (000s)
-----------------------------------------------------------
Outstanding at July 3, 2005 9,477,461 $8.35
Granted 837,500 $6.58
Exercised (42,047) $5.32
Forfeited (255,856) $10.41
-------------
Outstanding at January 1, 2006 10,017,058 $8.15 6.2 years $7,222
=============
Options vested or expected to vest at January 1, 2006 9,536,239 $8.15 6.2 years $6,875
Exercisable at January 1, 2006 6,494,805 $8.79 5.2 years $7,220
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As of January 1, 2006, the total future compensation cost related to nonvested options not yet recognized in the statement of income was $7.8 million and the weighted average period over which these awards are expected to be recognized was 2.4 years.
The Company grants shares of Common Stock to its employees that are subject to restrictions on transfer and risk of forfeiture until fulfillment of applicable service conditions and, in certain cases, holding periods (Restricted Stock). In fiscal 2005, the Company recorded the grant date fair value of unvested shares of Restricted Stock as unearned stock-based compensation ("Deferred Compensation"). In accordance with SFAS No. 123(R), in fiscal 2006, the Company reclassified the balance of Deferred Compensation against additional paid-in capital, and reduced its shares of Class A Common Stock issued accordingly.
The following table summarizes the activity of non-vested restricted stock during the six months ended January 1, 2006:
Weighted
Average Grant
Date Fair
Shares Value
------------- ---------------
Non-vested at July 3, 2005 155,919 $8.39
Granted 150,649 $6.71
Vested - -
Forfeited (8,313) $8.41
-------------
Non-vested at January 1, 2006 298,255 $7.54
=============
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The fair value of nonvested shares is determined based on the closing stock price on the grant date. As of January 1, 2006, there was $1.6 million of total unrecognized compensation cost related to non-vested restricted stock-based compensation to be recognized over a weighted-average period of 3.3 years.
1-800-FLOWERS.COM, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Note 4 - Acquisitions
The Company accounts for its business combinations in accordance with SFAS No. 141, "Business Combinations," which addresses financial accounting and reporting for business combinations and requires that all such transactions be accounted for using the purchase method. Under the purchase method of accounting for business combinations, the aggregate purchase price for the acquired business is allocated to the assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. Operating results of the acquired entities are reflected in the Company's consolidated financial statements from date of acquisition.
Acquisition of Wind & Weather
On October 31, 2005, the Company acquired Wind & Weather, a Fort Bragg, California based direct marketer of weather-themed gifts, with annual revenues of approximately $14.4 million during its most recent year ended March 31, 2005. The purchase price of approximately $5.2 million, including acquisition costs, was funded utilizing the Company's line of credit which was repaid during the quarter utilizing cash generated from operations, and excludes the assumption of Wind & Weather's $1.2 million balance on its seasonal working capital line. The Company is currently relocating the operations of Wind & Weather to its Madison, Virginia facility.
The Company is in the process of obtaining independent appraisals for the purpose of allocating the purchase price to individual assets acquired and liabilities assumed. This will result in potential adjustments to the carrying value of Wind & Weather's recorded assets and liabilities, the establishment of certain additional intangible assets, revisions of useful lives of intangible assets, some of which will have indefinite lives not subject to amortization, and the determination of any residual amount that will be allocated to goodwill. The preliminary allocation of the purchase price included in the current period balance sheet is based on the best estimates of management and is subject to revision based on final determination of asset fair values and useful lives. The following table summarizes the preliminary allocation of purchase price to the estimated fair values of assets acquired and liabilities assumed at the date of acquisition:
Wind & Weather
Purchase Price
Allocation
(Preliminary)
--------------------
(in thousands)
Current assets $4,014
Property, plant and equipment 68
Intangible assets 1,750
Goodwill 3,246
Other non-current assets 20
--------------------
Total assets acquired 9,098
--------------------
Current liabilities 3,810
Non-current liabilities 39
--------------------
Total liabilities assumed 3,849
--------------------
Net assets acquired $5,249
====================
|
Of the $1.8 million of acquired intangible assets related to the Wind & Weather acquisition, $1.0 million was assigned to trademarks that are not subject to amortization, while the remaining acquired intangibles of $0.8 million were allocated primarily to customer lists which are being amortized over the assets' preliminarily determinable useful life of 5 years.
1-800-FLOWERS.COM, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Acquisition of Cheryl & Co.
On March 28, 2005, the Company acquired all of the outstanding common stock of Cheryl & Co., a Westerville, Ohio-based manufacturer and direct marketer of premium cookies and related baked gift items, with annual revenues of approximately $33 million during its most recent year ended January 29, 2005. The purchase price of approximately $41.1 million, including acquisition costs, was funded utilizing the Company's available cash and investment balance, and included $6.3 million used to retire Cheryl & Co.'s outstanding debt.
Acquisition of The Winetasting Network
On November 15, 2004, the Company acquired all of the outstanding common stock of The Winetasting Network, a Napa, California based distributor and direct-to-consumer wine marketer. The purchase price of approximately $9.7 million, including acquisition costs, was funded utilizing the Company's available cash and investment balance and included $2.4 million used to retire The Winetasting Network's long-term debt.
Pro forma Results of Operation
The following unaudited pro forma consolidated financial information has been
prepared as if the acquisitions of Wind & Weather, Cheryl & Co. and The
Winetasting Network had taken place at the beginning of each fiscal year
presented. The following unaudited pro forma information is not necessarily
indicative of the results of operations in future periods or results that would
have been achieved had the acquisitions taken place at the beginning of the
periods presented.
Three Months Ended Six Months Ended
------------------------------- -----------------------------
January 1, December 26, January 1, December 26,
2006 2004 2006 2004
--------------- --------------- -------------- --------------
Net revenues $278,863 $262,276 $393,428 $365,414
Operating income $18,158 $21,825 $6,844 $15,890
Net income $10,327 $12,464 $3,577 $9,039
Net income per common share
Basic $0.16 $0.19 $0.05 $0.14
Diluted $0.16 $0.18 $0.05 $0.13
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Note 5 - Goodwill and Intangible Assets
The change in the net carrying amount of goodwill is as follows:
January 1, 2006
-----------------
(in thousands)
Goodwill - beginning of year $63,219
Acquisition of Wind and Weather 3,246
Other 227
-----------
Goodwill - end of period $66,692
===========
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1-800-FLOWERS.COM, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
The Company's other intangible assets consist of the following:
January 1, 2006 July 3, 2005
---------------------------------------- ----------------------------------------
Gross Gross
Amortization Carrying Accumulated Carrying Accumulated
Period Amount Amortization Net Amount Amortization Net
-------------- ------------- --------------- ----------- ----------- --------------- ------------
(in thousands)
Intangible assets with
determinable lives
Investment in licenses 14 - 16 years $4,927 $3,600 $1,327 $4,927 $3,438 $1,489
Customer lists 3 - 6 years $5,390 1,412 3,978 4,640 1,145 3,495
Other 5 - 8 years 555 194 361 555 170 385
------------ --------------- ----------- ----------- --------------- ------------
10,872 5,206 5,666 10,122 4,753 5,369
Trademarks with
indefinite lives 9,914 - 9,914 8,846 - 8,846
------------ --------------- ----------- ----------- --------------- ------------
Total identifiable
intangible assets $20,786 $5,206 $15,580 $18,968 $4,753 $14,215
============ =============== =========== =========== =============== ============
|
Estimated amortization expense is as follows: remainder of fiscal 2006 - $0.7 million, fiscal 2007 - $1.2 million, fiscal 2008 - $1.1 million, fiscal 2009 - $1.1 million, fiscal 2010 - $1.0 million, fiscal 2011 - $0.5 million and thereafter - $0.1 million.
Note 6 - Long-Term Debt
The Company's long-term debt and obligations under capital leases consist of the
following:
January 1, July 3,
2006 2005
-------------- -----------
(in thousands)
Commercial notes and revolving credit lines $3,610 $4,152
Seller financed acquisition obligations 23 46
Obligations under capital leases 998 1,746
-------------- -----------
4,631 5,944
Less current maturities of long-term debt and obligations under
capital leases 2,243 2,597
-------------- -----------
$2,388 $3,347
============== ===========
|
In order to fund working capital requirements during its most recent holiday selling season and to support outstanding letters of credit, as well as temporarily finance the acquisition of Wind & Weather referred to in Note 4, on October 27, 2005, the Company established a second line of credit in the amount of $20.0 million, bringing its total available credit facilities to $25.0 million. The credit facilities, which are collateralized by the Company's working capital, bear interest equal to the applicable LIBOR Index plus 1.50% per annum. At January 1, 2006, there were no amounts outstanding under its credit facilities.
1-800-FLOWERS.COM, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Note 7 - Income Taxes
At the end of each interim reporting period, the Company estimates its effective income tax rate expected to be applicable for the full year. This estimate is used in providing for income taxes on a year-to-date basis and may change in subsequent interim periods. The Company's effective tax rate for the three and six months ending January 1, 2006 was 42.7% and 47.4%, respectively, compared to 41.7% and 41.5% during the comparative three and six month periods ended December 26, 2004, respectively. The effective tax rate during the three and six months ended January 1, 2006 includes the impact of stock-based compensation recognized in accordance with SFAS No. 123(R), and resulted in an increase in the effective annual income tax rate of approximately 5.5%, resulting primarily from the associated book/tax differences in accounting for incentive stock options.
Note 8 - Commitments and Contingencies
Legal Proceedings
From time to time, the Company is subject to legal proceedings and claims arising in the ordinary course of business. The Company is not aware of any such legal proceedings or claims that it believes will have, individually or in the aggregate, a material adverse effect on its consolidated financial position, results of operations or liquidity.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Forward Looking Statements
Certain of the matters and subject areas discussed in this Quarterly Report on Form 10-Q contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical information provided herein are forward-looking statements and may contain information about financial results, economic conditions, trends and known uncertainties based on the Company's current expectations, assumptions, estimates and projections about its business and the Company's industry. These forward-looking statements involve risks and uncertainties. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of several factors, including those more fully described under the caption "Risk Factors that May Affect Future Results" within the Company's Annual Report on Form 10-K. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's analysis, judgment, belief or expectation only as of the date hereof. The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. The Company undertakes no obligation to publicly update any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.
Overview
For more than 25 years, 1-800-FLOWERS.COM Inc. - "Your Florist of Choicesm" -
has been providing customers around the world with the freshest flowers and
finest selection of plants, gift baskets, gourmet foods and confections, and
plush stuffed animals perfect for every occasion. 1-800-FLOWERS.COM(R) offers
the best of both worlds: exquisite, florist-designed arrangements individually
created by some of the nation's top floral artists and hand-delivered the same
day, and spectacular flowers shipped from our growers to your door fresh.
Customers can shop 1-800-FLOWERS.COM 24 hours a day, 7 days a week via the phone
or Internet (1-800-356-9377 or www.1800flowers.com) or by visiting a
Company-operated or franchised store. Gift advisors are available 24/7, and fast
and reliable delivery is offered same day, any day. As always, 100 percent
satisfaction and freshness is guaranteed. The 1-800-FLOWERS.COM collection of
brands also includes home decor and garden merchandise from Plow & Hearth(R)
(1-800-627-1712 or www.plowandhearth.com); premium popcorn and specialty treats
from The Popcorn Factory(R) (1-800-541-2676 or www.thepopcornfactory.com);
exceptional cookies and baked gifts from Cheryl&Co.(R) (1-800-443-8124 or
www.cherylandco.com); gourmet foods from GreatFood.com(R) (www.greatfood.com);
children's gifts from HearthSong(R) (www.hearthsong.com) and Magic Cabin(R)
(www.magiccabin.com) and wine gifts from the WineTasting Network(R)
(www.ambrosiawine.com and www.winetasting.com). 1-800-FLOWERS.COM, Inc. stock is
traded on the NASDAQ market under ticker symbol FLWS.
Results of Operations
Net Revenues
Three Months Ended Six Months Ended
----------------------------------------------- ---------------------------------------------
January 1, December 26, January 1, December 26,
2006 2004 % Change 2006 2004 % Change
--------------- ---------------- -------------- --------------- -------------- --------------
(in thousands)
Net revenues:
Online $133,362 $107,686 23.8% $195,635 $160,772 21.7%
Telephonic 125,122 109,570 14.2% 163,504 147,156 11.1%
Retail/fulfillment 19,345 12,758 51.6% 31,455 19,600 60.5%
--------------- ---------------- --------------- -------------
Total net revenues $277,829 $230,014 20.8% $390,594 $327,528 19.3%
=============== ================ =============== =============
|
Net revenues consist primarily of the selling price of the merchandise, service or outbound shipping charges, less discounts, returns and credits. The Company's revenue growth of 20.8% and 19.3% during the three and six months ended January 1, 2006 resulted primarily from the acquisitions of Cheryl & Co., a manufacturer and direct marketer of cookies and baked gifts, which was acquired in fiscal April 2005, and Wind & Weather, a direct marketer of weather-themed gifts, acquired in fiscal November 2005. Revenue growth excluding the impact of acquisitions, was 6.0% and 7.0%, during the three and six months ended January 1, 2006, reflecting: (i) the Company's strong brand name recognition, (ii) continued leveraging of its
existing customer base, and (iii) increased spending on its marketing and selling programs, designed to improve customer acquisition and accelerate top-line growth.
The Company fulfilled approximately 4,285,000 and 5,881,000 orders through its combined telephonic and online sales channels during the three and six months ended January 1, 2006, an increase of 17.9 % and 16.7% respectively over the prior year periods. Order volume through the Company's online sales channel, which contributed 51.6% and 54.5% of total combined telephonic and online revenues during the three and six months ended January 1, 2006, compared to 49.6% and 52.2% in the prior year period, increased by 23.8% and 21.7% respectively, as a result of additional marketing efforts through search engines and affiliates, and the continued migration of customers from the Company's telephonic sales channel. During the three and six months ended January 1, 2006, revenue generated through the Company's telephonic sales channel increased by 14.2% and 11.1% respectively, driven primarily by the sales of Cheryl & Co., which was acquired in fiscal April 2005 and Wind & Weather, which was acquired in fiscal November 2005. The Company's combined telephonic and online average order value of $60.33 and $61.08 during the three and six months ended January 1, 2006, was consistent with the same periods of the prior year.
During the three and six months ended January 1, 2006, non-floral gift products accounted for 70.3% and 61.2% respectively of total combined telephonic and online net revenues, compared to 66.3% and 57.8% during the same period of the prior year, primarily as a result of the shift in product mix due to the Company's recent acquisitions.
Retail and fulfillment revenues for the three and six months ended January 1, 2006 increased in comparison to the same period of the prior year, primarily as a result of: (i) the retail and wholesale bakery product revenue from Cheryl & Co., (ii) incremental winery services revenue generated by The Winetasting Network, acquired in November 2004 and (iii) increased membership and sales of product and service offerings to the Company's BloomNet(TM) network.
During the second half of fiscal 2005, the Company implemented plans designed to extend the Company's leadership position in the floral and thoughtful gift marketplace, through increased marketing spend intended to drive customer acquisition, particularly in the floral gift category, and to further extend its popular gourmet and sweetshop offerings through internal growth and acquisition of complementary product lines. Over the last several quarters, the Company has seen the success of these programs, driving revenue growth through both organic growth and through the expansion of its Food, Wine and Gift Basket collections, providing our customers with a broad range of gifting options necessary to compete in an increasingly fast paced online world. The second half of the Company's fiscal year features far more floral gifting holidays which will enable the Company to achieve continued strong growth for the balance of the year, during which time, the Company will continue its expanded level of media presence and depth of its marketing programs, and further expand its BloomNet business-to-business floral operations. While the Company believes that these investments have impacted the Company's earnings growth over the short term, over the longer term, the Company believes that this strategy will enable it to achieve sustainable double digit revenue growth and provide further leverage within its business model and therefore improved profitability.
Gross Profit
Three Months Ended Six Months Ended
--------------------------------------------- ----------------------------------------------
January 1, December 26, January 1, December 26,
2006 2004 % Change 2006 2004 % Change
-------------- --------------- ------------- --------------- --------------- -------------
(in thousands)
Gross profit $124,992 $102,612 21.8% $171,018 $142,184 20.3%
Gross margin % 45.0% 44.6% 43.8% 43.4%
|
Gross profit consists of net revenues less cost of revenues, which is comprised primarily of florist fulfillment costs (primarily fees paid directly to florists), the cost of floral and non-floral merchandise sold from inventory or through third parties, and associated costs including inbound and outbound shipping charges. Additionally, cost of revenues include labor and facility costs related to direct-to-consumer merchandise operations, as well as facility costs on properties that are sublet to the Company's franchisees. Gross profit increased during the three and six months ended January 1, 2006, in comparison to the same period of the prior year, as a result of increased revenues across all sales channels, as well as improved gross margin percentage, up 40 basis points over the prior year. This improvement, despite higher carrier fuel surcharges and increased promotional pricing due to the competitive nature of the year-end holiday shopping period, was the result of pricing initiatives and product mix, which was favorably impacted by the additions of the Cheryl & Co. and Wind & Weather product lines, which have higher gross margins.
During fiscal 2006, although varying by quarter due to seasonal changes in product mix, the Company expects that its gross margin percentage will continue to improve, primarily through the growth of its higher margin non-floral gifts lines, including the recent acquisitions of Cheryl & Co. and Wind & Weather, as well as through improved product sourcing, pricing initiatives and customer service and fulfillment enhancements which are expected to mitigate continued pressure on shipping costs.
Marketing and Sales Expense
Three Months Ended Six Months Ended
---------------------------------------------- ----------------------------------------------
January 1, December 26, January 1, December 26,
2006 2004 % Change 2006 2004 % Change
--------------- --------------- ------------- -------------- --------------- --------------
(in thousands)
Marketing and sales $87,874 $72,841 20.6% $126,098 $102,733 22.7%
Percentage of net revenues 31.6% 31.7% 32.3% 31.4%
|
Marketing and sales expense consists primarily of advertising and promotional
expenditures, catalog costs, online portal and search agreements, retail store
and fulfillment operations (other than costs included in cost of revenues) and
customer service center expenses, as well as the operating expenses of the
Company's departments engaged in marketing, selling and merchandising
activities. Although the Company's revenues grew by 20.8% during the three
months ended January 1, 2006, the Company spent behind a higher growth target,
particularly in its floral gift category due to increasing competition from last
minute providers of non-floral gifts. During the three and six months ended
January 1, 2006, marketing and sales expenses increased over the prior year, as
a result of: (i) the Company's efforts to increase new customer acquisition and
accelerate top-line growth through increased marketing efforts both online and
through broadcast advertising, (ii) personnel required to expand its
BloomNet(TM) business-to-business floral operations, (iii) incremental costs
associated with the recent acquisitions, including the Winetasting Network,
Cheryl & Co. and Wind & Weather, which, while contributing to revenue growth and
achieving higher gross product margins, also incur higher marketing costs, and
(iv) the impact of adopting SFAS No. 123(R), "Share-Based Payment" - refer below
to Recent Accounting Pronouncements for further details. During the three and
six month periods ended January 1, 2006, the Company added 1,332,000 and
1,839,000 new customers, increases of 8.8% and 9.2% over the same periods of the
prior year. Customer retention efforts resulted in 1,369,000 and 1,896,000
existing customers placing orders during the three and six months ended January
1, 2006, representing increases of 6.1% and 7.0%, respectively, in comparison to
the same periods of the prior year. Of the 2,701,000 and 3,735,000 customers who
placed orders during the three and six months ended January 1, 2006,
approximately 50.7% were repeat customers, compared to 51.3% in the prior year
periods.
During the remainder of fiscal 2006, the Company expects to maintain its higher level of marketing and sales spending in order to continue its higher rate of new customer acquisition, while also leveraging its already significant customer base through cost effective, customer retention initiatives. Such spending will continue to be in online search and affiliate relationships, as well as in direct marketing and broadcast advertising programs. In addition, the Company plans to continue to add personnel to grow its BloomNet(TM) membership and support the anticipated growth of its recently acquired businesses. As a result, over the short term the Company expects that marketing and sales expense, as a percentage of revenue, will remain consistent when compared to the prior year.
Technology and Development Expense
Three Months Ended Six Months Ended
--------------------------------------------- ---------------------------------------------
January 1, December 26, January 1, December 26,
2006 2004 % Change 2006 2004 % Change
-------------- --------------- -------------- -------------- --------------- -------------
(in thousands)
Technology and development $4,797 $3,292 45.7% $9,566 $6,396 49.6%
Percentage of net revenues 1.7% 1.4% 2.4% 2.0%
|
Technology and development expense consists primarily of payroll and operating expenses of the Company's information technology group, costs associated with its Web sites, including hosting, design, content development and maintenance and support costs related to the Company's order entry, customer service, fulfillment and database systems. During the three and six months ended January 1, 2006, technology and development expense increased as a result of the incremental expenses associated with the acquisitions of the Winetasting Network, Cheryl & Co., and Wind & Weather, as well as for increases in the cost
of maintenance and license agreements required to support the Company's technology platform, and the impact of adopting SFAS No. 123(R), "Share-Based Payment" - refer below to Recent Accounting Pronouncements for further details. During the three and six months ended January 1, 2006, the Company expended $8.8 million and $18.0 million respectively, on technology and development, of which $4.0 million and $8.4 million, has been capitalized.
Although over the longer term, the Company believes that it will continue to demonstrate its ability to leverage its IT platforms, during the remainder of fiscal 2006, the Company intends to improve the technology infrastructure of its wine gift business, and cookies and baked gifts business, as well as integrate its Wind & Weather product line into its existing technology platforms, and therefore expects that technology and development spending as a percentage of net revenues will be consistent with, or increase slightly over the prior year.
General and Administrative Expense
Three Months Ended Six Months Ended
---------------------------------------------- ---------------------------------------------
January 1, December 26, January 1, December 26,
2006 2004 % Change 2006 2004 % Change
---------------- --------------- ----------- -------------- --------------- ------------
(in thousands)
General and administrative $10,357 $7,954 30.2% $20,993 $15,556 35.0%
Percentage of net revenues 3.7% 3.5% 5.4% 4.7%
|
General and administrative expense consists of payroll and other expenses in support of the Company's executive, finance and accounting, legal, human resources and other administrative functions, as well as professional fees and other general corporate expenses. General and administrative expense increased during the three and six months ended January 1, 2006 in comparison to the prior year, primarily as a result of the following: (i) incremental expenses associated with the Company's acquired businesses, (ii) expenses associated with the Company's corporate headquarters relocation, which was completed in the second quarter of fiscal 2006, (iii) increased costs associated with the Company's BloomNet business-to-business expansion, and (iv) the impact of adopting SFAS No. 123(R), "Share-Based Payment" - refer below to Recent Accounting Pronouncements for further details.
Although the Company believes that its current general and administrative infrastructure is sufficient to support existing requirements and drive operating leverage, as a result of the incremental expenses associated with the acquisitions Cheryl & Co. and Wind & Weather and the seasonal nature of these businesses, this leverage is largely offset for the remainder of fiscal 2006. As such, the Company expects that its general and administrative expenses as a percentage of net revenue during the remainder of fiscal 2006 will be consistent with fiscal 2005.
Depreciation and Amortization Expense
Three Months Ended Six Months Ended
-------------------------------------------- -----------------------------------------------
January 1, December 26, January 1, December 26,
2006 2004 % Change 2006 2004 % Change
-------------- --------------- ------------ --------------- --------------- ------------
(in thousands)
Depreciation and amortization $3,809 $3,770 1.0% $7,333 $7,666 (4.3%)
Percentage of net revenues 1.4% 1.6% 1.9% 2.3%
|
Depreciation and amortization expense during the three months and six months ended January 1, 2006 decreased as a percentage of revenue in comparison to their respective prior year periods, reflecting the impact of the Company's declining rate of capital additions, and the leverage of the Company's existing infrastructure.
Although the Company believes that continued investment in its infrastructure, primarily in the areas of technology and development, including the improvement of the technology platform of the Company's wine and cookies businesses, are critical to attaining its strategic objectives, the Company expects that depreciation and amortization for the remainder of fiscal 2006 will continue to decrease as a percentage of net revenues in comparison to prior years.
Other Income (Expense)
Three Months Ended Six Months Ended
-------------------------------------------- ---------------------------------------------
January 1, December 26, January 1, December 26,
2006 2004 % Change 2006 2004 % Change
-------------- --------------- ----------- --------------- --------------- ------------
(in thousands)
Interest income $141 $275 (48.7%) $356 $657 (45.8%)
Interest expense (113) (124) 8.9% (197) (265) 25.7%
Other (143) 21 (781.0%) (137) 25 (648.0%)
------------- ------------- --------------- ---------------
($115) $172 (166.9%) $22 $417 (94.7%)
============= ============= =============== ===============
|
Other income (expense) consists primarily of interest income earned on the Company's investments and available cash balances, offset by interest expense, primarily attributable to the Company's capital leases and other long-term debt, as well as its revolving line of credit. The decrease in other income (expense) during the three and six months ended January 1, 2006 was primarily attributable to lower interest income, resulting from a decrease in average cash balances, due to the acquisitions of the Winetasting Network in November 2004, Cheryl & Co. in fiscal April 2005 and most recently Wind & Weather in fiscal November 2005, as well as the Company's stock buy-back programs and losses resulting from the closure of several retail floral stores, offset in part by lower interest expense due to maturing debt and capital lease obligations.
Income Taxes
During the three and six months ended January 1, 2006, the Company recorded income taxes of $7.7 million and $3.3 million, respectively. The Company's effective tax rate for the three and six months ending January 1, 2006 was 42.7% and 47.4%, respectively, compared to 41.7% and 41.5% during the comparative periods of the prior year. The effective tax rate during the three and six months ended January 1, 2006 includes the impact of stock-based compensation recognized in accordance with SFAS No. 123(R), and resulted in an increase in the effective annual income tax rate of approximately 5.5%, resulting primarily from the associated book/tax differences in accounting for incentive stock options.
Liquidity and Capital Resources
At January 1, 2006, the Company had working capital of $33.3 million, including cash and equivalents of $60.9 million, compared to working capital of $41.7 million, including cash and equivalents and short-term investments of $46.6 million, at July 3, 2005.
Net cash provided by operating activities of $35.9 million for the six months ended January 1, 2006 was primarily attributable to the Company's net income and non-cash charges of depreciation and amortization, deferred income taxes and stock-based compensation as well as changes in working capital, including increase in accounts payable and accrued expenses, as a result of timing of vendor payments related to the Christmas holiday, offset in part by increases in accounts receivable due to the timing of the Christmas holiday, as well as increases in inventories due to purchases for the upcoming floral Holidays.
Net cash used in investing activities of $11.3 million for the six months ended January 1, 2006 was primarily attributable to capital expenditures related to the Company's technology infrastructure as well as the acquisition of Wind & Weather in fiscal November 2005, offset in part by net proceeds from the sale of the Company's short-term investments.
Net cash used in financing activities of $3.7 million for the six months ended January 1, 2006, resulted primarily from cash used to repurchase 182,000 shares of the Company's Class A common stock, which were placed in treasury, for approximately $1.3 million, as well as the repayment of amounts outstanding under the Company's credit facilities and long-term capital lease obligations, offset in part by the net proceeds received upon the exercise of employee stock options.
The Company has historically utilized cash generated from operations to meet its cash requirements, including all operating, investing and debt repayment activities. In order to fund working capital requirements during its most recent holiday selling season and to support outstanding letters of credit, as well as temporarily finance the acquisition of Wind & Weather, on October 27, 2005, the Company established a second line of credit in the amount of $20.0 million, bringing its total available credit facilities to $25.0 million. The credit facilities, which are collateralized by the Company's working capital, bear
interest equal to the applicable LIBOR Index plus 1.50% per annum. At January 1, 2006, there were no amounts outstanding under its credit facilities, and based upon its current business, the Company does not expect to draw down on the facility except during its fiscal second quarter as required by pre-holiday inventory requirements.
At January 1, 2006, the Company's contractual obligations consist of:
Payments due by period
----------------------------------------------------------------------------------
(in thousands)
Less than 1 1 - 3 3 - 5 More than 5
Total year years years years
------------ --------------- ------------ ------------- --------------
Long-term debt $3,943 $1,540 $1,518 $885 $-
Capital lease obligations 1,090 932 158 - -
Operating lease obligations 61,241 8,818 16,083 8,915 27,425
Sublease obligations 8,027 2,277 3,375 1,601 774
Purchase commitments (*) 14,025 12,525 1,500 - -
----------- --------------- ------------ ------------- ----------------
Total $88,326 $26,092 $22,634 $11,401 $28,199
=========== =============== ============ ============= ================
|
(*) Purchase commitments consist primarily of inventory, equipment purchase orders and online marketing agreements made in the ordinary course of business.
On May 12, 2005, the Company's Board of Directors increased the Company's authorization to repurchase the Company's Class A common stock up to $20 million, from the previous authorized limit of $10 million. Any such purchases could be made from time to time in the open market and through privately negotiated transactions, subject to general market conditions. The repurchase program will be financed utilizing available cash. As of January 1, 2006, the Company had repurchased 1.5 million shares of common stock for $11.1 million, of which 182,000 shares of common stock for $1.3 million was repurchased during the six months ending January 1, 2006.
Critical Accounting Policies and Estimates
The Company's discussion and analysis of its financial statements and results of operations are based upon the consolidated financial statements of 1-800-FLOWERS.COM, Inc., which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amount of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, management evaluates its estimates, including those related to revenue recognition, inventory and long-lived assets, including goodwill and other intangible assets related to acquisitions. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions. Management believes the following critical accounting policies, among others, affects the Company's more significant judgments and estimates used in preparation of its consolidated financial statements.
Revenue Recognition
Net revenues are generated by online, telephonic and retail fulfillment operations and primarily consist of the selling price of merchandise, service or outbound shipping charges, less discounts, returns and credits. Net revenues are recognized upon product shipment.
Accounts Receivable
The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. If the financial condition of the Company's customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.
Inventory
The Company states inventory at the lower of cost or market. In assessing the realization of inventories, we are required to make judgments as to future demand requirements and compare that with inventory levels. It is possible that changes in consumer demand could cause a reduction in the net realizable value of inventory.
Goodwill and Other Intangible Assets
Goodwill represents the excess of the purchase price over the fair value of the net assets acquired and is evaluated annually for impairment. The cost of intangible assets with determinable lives is amortized to reflect the pattern of economic benefits consumed, on a straight-line basis, over the estimated periods benefited, ranging from 3 to 16 years.
The Company periodically evaluates acquired businesses for potential impairment indicators. Judgment regarding the existence of impairment indicators is based on market conditions and operational performance of the Company. Future events could cause the Company to conclude that impairment indicators exist and that goodwill and other intangible assets associated with our acquired businesses are impaired.
Capitalized Software
The carrying value of capitalized software, both purchased and internally developed, is periodically reviewed for potential impairment indicators. Future events could cause the Company to conclude that impairment indicators exist and that capitalized software is impaired.
Stock-based Compensation
With the implementation of SFAS No. 123(R) effective July 4, 2005, stock-based compensation changes our financial statements as detailed in Note 3 to the financial statements. Determining the amount and distribution of expense for stock-based compensation, as well as the associated impact to the balance sheet and statement of cash flows, requires the Company to develop estimates of the fair value of stock-based compensation expenses. The most significant factors of that expense require estimates or projections including the expected volatility, expected lives and estimate forfeiture rates of employee stock options, and are determined based on historical measurements and expected outcomes, and the Company's interpretation of regulatory guidance.
Income Taxes
The Company has established deferred income tax assets and liabilities for temporary differences between the financial reporting bases and the income tax bases of its assets and liabilities at enacted tax rates expected to be in effect when such assets or liabilities are realized or settled. The Company has recognized as a deferred tax asset the tax benefits associated with losses related to operations, which are expected to result in a future tax benefit. Realization of this deferred tax asset assumes that the Company will be able to generate sufficient taxable income so that these assets will be realized. The factors that the Company considers in assessing the likelihood of realization include the forecast of future taxable income and available tax planning strategies that could be implemented to realize the deferred tax assets.
Recent Accounting Pronouncements
In December 2004, the Financial Accounting Standards Board (FASB) issued SFAS No. 123 (R), "Share-Based Payment." This Statement revised SFAS No. 123 by eliminating the option to account for employee stock options under APB No. 25 and requires companies to recognize the cost of employee services received in exchange for awards of equity instruments based on the grant-date fair value of those awards (the "fair-value-based" method).
Effective July 4, 2005, the Company adopted the fair value recognition provisions of SFAS No. 123(R) using the modified prospective application method. Under this transition method, compensation cost recognized in the three and six months ended January 1, 2006, includes amounts of: (a) compensation cost of all stock-based payments granted prior to, but not yet vested as of, July 4, 2005 (based on grant-date fair value estimated in accordance with the original provisions of SFAS No. 123, and previously presented in the pro-forma footnote disclosures), and (b) compensation cost for all stock-based payments granted subsequent to July 3, 2005 (based on the grant-date fair value estimated in accordance with the new provision of SFAS No. 123(R)). In accordance with the modified prospective method, results for prior periods have not been restated. Prior to the Company's adoption of SFAS No. 123(R), benefits of tax deduction in excess of recognized compensation costs were reported as operating cash flows. SFAS No. 123(R) requires excess tax benefits be reported as a financing cash inflow rather than as a reduction of taxes paid. There was no significant excess tax benefits for the six-month period ended January 1, 2006
The following table summarizes the effect of adopting SFAS No. 123(R) as of July 4, 2005:
Three months Six months
ended ended
January 1, 2006 January 1, 2006
------------------- ------------------
Stock-option compensation expense recognized (*): (in thousands, except per share data)
Marketing and sales $332 $630
Technology and development 142 269
General and administrative 473 898
----------- -----------
Total 947 1,797
Related deferred income tax expense 196 371
----------- -----------
Decrease in net income $751 $1,426
=========== ===========
Impact on basic and diluted net income per common share ($0.01) ($0.02)
=========== ===========
|
(*) excludes the amortization of restricted stock awards in the amount of $113 and $200 for the three and six months ended January 1, 2006, respectively.($68 and $120, net of tax for the three and six months ended January 1, 2006, respectively).
Compensation expense related to the amortization of restricted stock awards was recognized prior to the implementation of SFAS No. 123(R). Total stock based compensation expense, which includes both expense from stock options and restricted stock awards, totaled $1.1 million and $2.0 million for the three and six months respectively, ($0.8 million and $1.5 million, net of tax) during the three and six months ended January 1, 2006.
Refer to Note 3 - Stock-Based Compensation for further information regarding disclosure required in accordance with SFAS No. 123(R).
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's earnings and cash flows are subject to fluctuations due to changes in interest rates primarily from its investment of available cash balances in investment grade corporate and U.S. government securities. Under its current policies, the Company does not use interest rate derivative instruments to manage exposure to interest rate changes.
ITEM 4. CONTROLS AND PROCEDURES
Under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rules 13a-15(e) and 15d-15(e) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, these disclosure controls and procedures are effective. There were no changes in our internal control over financial reporting (as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) during the six months ended January 1, 2006 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
PART II. - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, the Company is subject to legal proceedings and claims arising in the ordinary course of business. The Company is not aware of any such legal proceedings or claims that it believes will have, individually or in the aggregate, a material adverse effect on its business, consolidated financial position, results of operations or liquidity.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The following table sets forth, for the months indicated, the Company's purchase
of common stock during the first half of fiscal 2006 which includes the period
July 4, 2005 through January 1, 2006.
Total Number of Dollar Value of
Shares Purchased as Shares that May Yet
Part of Publicly Be Purchased Under
Total Number of Average Price Announced Plans or the Plans or
Period Shares Purchased Paid Per Share Programs Programs
-----------------------------------------------------------------------------------------------------------------
(in thousands, except average price paid per share)
7/4/05 - 7/31/05 120.5 $7.19 120.5 $9,315
8/1/05 - 8/28/05 61.5 $7.31 61.5 $8,863
8/29/05 - 10/2/05 - $- - $8,863
10/3/05 - 10/30/05 - $- - $8,863
10/31/05 - 11/27/05 - $- - $8,863
11/28/05 - 1/1/06 - $- - $8,863
---------------- ----------------- ---------------------
Total 182.0 $7.23 182.0
|
On May 12, 2005, the Company's Board of Directors increased the Company's authorization to repurchase the Company's Class A common stock up to $20 million, from the previous authorized limit of $10 million. All share purchases were made in open-market transactions. The average price paid per share is calculated on a settlement basis and excludes commission.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's Annual Meeting of Stockholders was held on December 2, 2005.
The following nominees were elected as directors, each to serve until the 2008 Annual Meeting or until their respective successors shall have been duly elected and qualified, by the vote set forth below:
Nominee For Withheld ---------------------------- ----------------------------------- ------------------------------------------ James F. McCann 350,106,539 186,888 Christopher G. McCann 350,156,077 137,350 |
The following Directors who were not nominees for election at this Annual Meeting will continue to serve on the Board of Directors of the Company: John J. Conefry, Jr., Leonard J. Elmore, Kevin O'Connor, Mary Lou Quinlan, Deven Sharma and Jeffrey Walker.
The proposal to ratify the selection of Ernst & Young LLP, independent public accountants, as auditors of the Company for the fiscal year ending July 3, 2006 was approved by the vote set forth below:
For Against Abstain
------------------------- ----------------------------------- ------------------------------------------
350,017,537 270,981 4,909
|
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS
(a) Exhibits.
10.34 Lease Agreement dated May 20, 2005 by and among Treeline Mineola, LLC and 1-800-FLOWERS.COM, INC. ("Company") for the Company's corporate headquarters located at One Old Country Road, Carle Place, New York 11514.
10.35 First Modification to the Lease Agreement dated November 16, 2005 by and among Treeline Mineola, LLC and 1-800-FLOWERS.COM, INC. ("Company") for the Company's corporate headquarters located at One Old Country Road, Carle Place, New York 11514.
31.1 Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1 Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
1-800-FLOWERS.COM, Inc.
(Registrant)
Date: February 10, 2006 /s/ James F. McCann
----------------------- ----------------------------------
James F. McCann
Chief Executive Officer
Chairman of the Board of Directors
(Principal Executive Officer)
Date: February 10, 2006 /s/ William E. Shea
----------------------- -----------------------------------
William E. Shea
Senior Vice President Finance and
Administration (Principal Financial
and Accounting Officer)
|
Exhibit 31.1
CERTIFICATIONS PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, James F. McCann, certify that:
(1) I have reviewed this quarterly report on Form 10-Q of 1-800-FLOWERS.COM, Inc.;
(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
(3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
(4) The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
(5) The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: February 10, 2006 /s/ James F. McCann
James F. McCann
Chief Executive Officer and
Chairman of the Board of Directors
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I, William E. Shea, certify that:
(1) I have reviewed this quarterly report on Form 10-Q of 1-800-FLOWERS.COM, Inc.;
(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
(3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
(4) The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
(5) The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a) all significant deficiencies and material weaknesses in the design or operation of internal control over the financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: February 10, 2006 /s/ William E. Shea
William E. Shea
Senior Vice President of Finance and
Administration and Chief Financial
Officer
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Exhibit 32.1
CERTIFICATIONS PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of 1-800-FLOWERS.COM, Inc. (the "Company") hereby certifies, to such officer's knowledge, that:
(1) the Quarterly Report on Form 10-Q of the Company for the quarterly period ended January 1, 2006, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934; as amended; and
(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Dated: February 10, 2006
/s/ James F. McCann
James F. McCann
Chief Executive Officer and
Chairman of the Board
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Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of 1-800-FLOWERS.COM, Inc. (the "Company") hereby certifies, to such officer's knowledge, that:
(1) the Quarterly Report on Form 10-Q of the Company for the quarterly period ended January 1, 2006, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934; as amended; and
(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Dated: February 10, 2006
/s/William E. Shea
William E. Shea
Senior Vice President of Finance
and Administration and Chief
Financial Officer
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A signed original of each of these written statements required by Section 906 has been provided to 1-800-FLOWERS.COM, Inc. and will be retained by 1-800-FLOWERS.COM, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.
Exhibit 10.35
FIRST MODIFICATION TO LEASE AGREEMENT
This First Lease Modification Agreement (this "Agreement") is executed by TREELINE 1 OCR LLC, a New York limited liability company having offices c/o Treeline Management Corp., 200 Garden City Plaza, Suite 325, Garden City, New York 11530, as successor in interest to TREELINE MINEOLA LLC ("Landlord"), and 1-800 FLOWERS.COM, INC., a Delaware corporation having offices at 1600 Stewart Avenue, Westbury, New York 11590 ("Tenant"), as of the 16th day of November, 2005 with reference to the following facts:
WHEREAS, Treeline Mineola LLC (predecessor in interest to Landlord) and Tenant previously entered into a certain Agreement of Lease (the "Lease") with respect to certain premises as more specifically set forth in such Lease, in the building commonly known as 1 Old Country Road, Carle Place, New York (the "Building") dated May 20, 2005;
WHEREAS, Landlord and Tenant entered into a Letter Agreement dated June 6, 2005 pursuant to which both the Landlord and the Tenant acknowledged that there were three (3) typographical errors in the Lease; as set forth in the letter annexed hereto as Exhibit "E";
WHEREAS, Landlord and Tenant desire to amend the Lease to, among other things, provide for Landlord to perform additional work on behalf of Tenant, on the terms set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual promises contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant agree as follows:
1. Except to the extent modified by this Agreement, all defined terms contained in this Agreement shall, for the purposes hereof, have the same meanings ascribed to those terms in the Lease.
2. In consideration of (i) resolving and eliminating any and all claimed Tenant's Delays, (ii) resolving and eliminating any claims of Landlord's delay or failure to timely deliver possession of the Demised Premises (iii) resolving and eliminating any and all claimed additional costs to Landlord, including but not limited to, any and all additional costs for labor, materials, engineering, consultants, insurance, administrative and/or management fees and filing fees, as well as, reimbursement of Holdover Rent (as defined in Article 44 of the Lease) (iv) modifying the Work Letter (as set forth as Exhibit "B" to the Lease) to clarify Landlord's existing obligations and to provide for Landlord to perform additional work, including the purchasing and installation of Tenant Extras (as set forth in Exhibit "A"), all at Landlord's sole cost and expense and to be done in compliance with all applicable codes, laws, rules and regulations, and (v) for other good and valuable consideration, the sufficiency hereof is hereby acknowledged, Landlord and Tenant agree to the following terms provided for in this Agreement.
3. (a) Tenant does hereby waive its right to receive, or be credited for, (i) the Relocation Allowance of $900,000 due from Landlord under section 45.01(i) of the Lease, (ii) any payment due from Landlord to Tenant with respect to Tenant's computer wiring (as more specifically set forth in Section (xiii) of Article 11 of Exhibit "B" to the Lease; (iii) the one month abatement of Fixed Annual Rent as provided for in section 1.06 of the Lease; (iv) any rent abatement provided for under Section 22.02 of the Lease; and (v) any Hold Over Rent which may have been due and payable on or after August 31, 2005 by Landlord to Tenant, it being understood that Landlord's obligation to pay Hold Over Rent pursuant to Article 44.01 has been satisfied in full.
(b) On the Rent Commencement Date Tenant shall pay to Landlord the rent due on December 1, 2005 in the amount of $180,192.33 and an additional sum of $185,787.69 which represents the fixed monthly rent payment due on December 1, 2006, this sum is prepaid December 2006 fixed monthly rent and will be applied on December 1, 2006.
(c) Section 1.02(a) is hereby deleted in its entirety, it being the intent of the parties hereto that notwithstanding anything in the Lease to the contrary, the Commencement Date and the Rent Commencement Date are deemed to be December 1, 2005. Tenant's obligation to pay rent with respect to the Original Premises, the Expansion Space and the Storage Space (as modified in Section 3 below) commences on such date. Simultaneously with the execution of this Agreement, Tenant will execute and deliver to Landlord a Tenant Estoppel certificate for the Original Premises, the Expansion Space and the Storage Space in the form set forth as Exhibit "G" annexed hereto and made part hereof. Landlord's remains obligated to deliver the Demised Premises in accordance with the Lease, the Plan, the plans submitted to the Building Department by Landlord, the Workletter, the punch list attached as Exhibit F and any punch lists for the Third Floor Space and the First Floor Space, and this Amendment.
(d) Tenant acknowledges that it accepts possession of the Original Premises, the Expansion Space, and the Storage Space in its "as is" condition subject to (i) the punch list as set forth herein on Exhibit "F", completion of Landlord's Work on the First and Third Floor Spaces, and the provisions of this Agreement, including but not limited the provisions of section 3(e) of this Agreement. Landlord will use due diligence to timely complete all work required of it to be performed.
(e) Tenant and Landlord will after the First Floor Space and the Third Floor Space are completed prepare a punch list for the spaces. The Computer in the First Floor Space is completed except for the items set forth in the Punch List attached hereto as Exhibit "F". Landlord will use due diligence to timely complete all undisputed punch items for the First Floor Space and the Third Floor Space In the event of a dispute Gerard Gallagher and Glenn Schor will work to resolve any dispute as to the validity of any punch list request. Tenant waives the requirement of the Landlord to obtain Occupancy Approvals as of the date hereof and the Commencement Date of the Lease, but Landlord shall obtain same as provided for herein. Nothing in this Agreement is intended to waive any requirements of the Landlord to obtain all Occupancy Approvals as provided for in the Lease nor is Tenant waiving any representations, warranties or obligations of the Landlord as provided for in the Lease, except as specifically modified by the terms of this Agreement.
With respect to the First Floor portion of the Demised Premises (the "First Floor Space") Landlord and Tenant each acknowledge as follows:
a. The First Floor Space is currently under construction.
b. Landlord represents that the entire first floor space (both those
portions of the Original Premises and the First Expansion Space) was
filed as one project.
c. To date, except for the installation of the carpet and the punch
list related to the Computer Room, Landlord has completed the first
floor portion of the Original Premises. Landlord warrants that it will
commence the installation of the carpet in the Original Premises of the
First Floor Space by no later than December 1, 2005 and thereafter
shall work on a continuous basis to complete said installation by
December 9, 2005.
d. Tenant has been given possession of the "Computer Room" in the
Original First Floor Space. With the exception of those specifically
set forth in Exhibit "F" Tenant acknowledges that there are no punch
list items to be completed in the Computer Room.
e. Landlord has commenced completion of the Expansion Space on the
First Floor. Landlord anticipates completing the First Floor Space by
December 9, 2005. Landlord agrees to work diligently and on a daily
basis to complete the work. In any event the Tenant is permitted to
take full occupancy of the Original Spaces of the First Floor Space
starting on the night of December 9, 2005.
f. Tenant shall submit a punch list for the First Floor Space (with the
exception of the Computer Room). Landlord shall complete the punch list
to the extent the same accurately sets forth the undisputed conditions
and obligations of Landlord.
g. In all events, Landlord will allow Tenant to fully occupy all
portions of the First Floor Space on or before December 15th, 2005,
subject to the following conditions:
(a) In the event Tenant's occupancy of the First Floor Space
materially interferes with Landlord obtaining a Certificate of
Occupancy Tenant will immediately vacate the areas so that the
Certificate of Occupancy may be issued; and
(b) In the event Tenant causes any condition which prohibits the
issuance of a Certificate of Occupancy Tenant, at its expense,
shall forthwith cease and desist from said conduct and remedy
said condition so that the Certificate of Occupancy may be
issued. If Tenant does not remedy said condition, at its sole
cost and expense, within a reasonably time period (but in no
event longer than ten (10) days from Landlord's written notice
to Tenant of said condition, Landlord shall have the right to
remedy the same and Tenant, at its sole cost and expense, shall
reimburse Landlord for all costs associated with remedying the
condition.
With respect to the Fifth Floor portion of the Demised Premises (the
"Fifth Floor Space"): Landlord and Tenant each acknowledge that the
Fifth Floor Space is completed, subject to the punch list items, and
the Certificate of Occupancy has been obtained from the Town of North
Hempstead. Landlord represents that to the best of its knowledge there
are no other Occupancy Approvals required for the Fifth Floor Space.
Tenant accepts possession of, and may fully occupy, the Fifth Floor
Space upon execution of this Agreement and Landlord's sole remaining
obligation with respect to Landlord's Work in the Fifth Floor Space is
limited to completing the items set forth in the Punch List attached
hereto as Exhibit "F".
With respect to the Third Floor Space portion of the Demised Premises
(the "Third Floor Space"): Landlord and Tenant acknowledge that the
Third Floor Space is currently under construction. The estimated date
of completion of the Third Floor Space is December 2, 2005. Landlord
shall work on a continuous basis to complete Landlord's Work on the
Third Floor Space in a timely manner.
Landlord will allow Tenant to fully occupy all portions of the Third
Floor Space starting on the night of December 5th, 2005, subject to the
following conditions: (i)In the event Tenant's occupancy of the Third
Floor Space materially interferes with Landlord obtaining a Certificate
of Occupancy Tenant will immediately vacate the areas so that the
Certificate of Occupancy may be issued; and (ii) In the event Tenant
causes any condition which prohibits the issuance of a Certificate of
Occupancy Tenant, at its expense, shall forthwith cease and desist from
said conduct and remedy said condition so that the Certificate of
Occupancy may be issued. If Tenant does not remedy said condition, at
its sole cost and expense, within a reasonably time period (but in no
event longer than ten (10) days from Landlord's written notice to
Tenant of said condition, Landlord shall have the right to remedy the
same and Tenant, at its sole cost and expense, shall reimburse Landlord
for all costs associated with remedying the condition.
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With respect to the Lower Level portion of the Demised Premises (the "Lower Level Space"): Landlord and Tenant acknowledge that the Lower Level Space is completed, subject to the punch list, and the Certificate of Occupancy has been obtained from the Town of North Hempstead. Landlord represents that to the best of its knowledge no other Occupancy Approvals are required for the Lower level Space. Tenant accepts possession of, and can fully occupy, the Lower Level Space upon execution of this Agreement.
With respect to the Storage Spaces: The Storage Space has been delivered to Tenant and Tenant has accepted occupancy of the same. Tenant acknowledges that there are no punch list items except as specifically set forth in Exhibit "F" and Landlord's obligations with respect to Exhibit "F" is to complete the items set forth therein, Exhibit "F".
Landlord and Tenant each acknowledge that the dates noted above are not intended to include the date or dates that Landlord expects to receive the "Certificate of Occupancy" for the respective spaces; notwithstanding the above, Landlord will use best efforts to obtain the "Certificate of Occupancy" and any other required Occupancy Approvals in an expedited fashion through John Notaro.
The parties hereto acknowledge that the Town of North Hempstead may issue a "Certificate of Completion" in lieu of a "Certificate of Occupancy". Accordingly, for purposes of this Agreement the term "Certificate of Occupancy" and "Certificate of Completion" shall be deemed to have the same meaning and the issuance of a "Certificate of Completion" in lieu of a "Certificate of Occupancy" for any portion of the Demised Premises shall be deemed to satisfy Landlord's obligations as that is the certificate that the Town of North Hempstead issued. Tenant shall continue to be able to perform its work in conjunction with Landlord's Work as has been done to date. Tenant shall do no work or perform no act that shall materially interfere with, delay or impede Landlord from obtaining the "Certificate of Occupancy" or other Occupancy Approval.
Section 2.02 of the Lease is hereby deleted in its entirety and replaced by this provision.
Notwithstanding the foregoing the establishment of the December 1, 2005 Commencement Date and the December 1, 2005 Rent Commencement Date as provided herein and the estimated dates of completion, the Landlord remains obligated to perform the Landlord's Work including all upgrades, additions and extras contained in Exhibit "A" hereto, all items on any Punch Lists to the extent that the same accurately sets forth the undisputed conditions and obligations of Landlord, and to obtain and deliver to Tenant copies of all Occupancy Approvals with respect to the First Floor Space and the Third Floor Space as required under the terms of the Lease and this Agreement.
Tenant, upon the delivery of the Occupancy Approvals for the First Floor Space and the Third Floor Space by the Landlord, shall execute a new Estoppel Certificate the entire Premises which Estoppel Certificate shall be in the form substantially similar to the Estoppel Letter attached hereto as Exhibit G and Tenant shall deliver same within ten (10) days of its receipt of the Occupancy Approvals for these spaces.
Landlord and Tenant agree that Tenant may store its equipment and furniture (collectively, the "Tenant's Personalty") in the storage rooms. Landlord and Tenant further agree that Tenant may store unassembled modular furniture in areas that are completed and await final "Certificate of Occupancy". As to any personalty brought on to such portions of the Demised premises which are awaiting the final "Certificate of Occupancy" Tenant's right to bring same on to the Demised Premises is conditioned upon Tenant being responsible for the safekeeping and security of the same. Landlord, its agents, servants, employees and contractors shall at no time bear liability for any items stored by Tenant or its contractors in accord with the provisions of this Agreement, except to the extent that the liability arises from the negligence or willful misconduct of the Landlord, its agents, servants, employees, contractors, visitors and invitees. Furthermore, Landlord, its agents, servants, employees, contractors, visitors and invitees are hereby released from any liability with respect to the storage of said items, and its maintenance, protection, loss, damage of any kind type or nature, except to the extent the liability arises from the negligence or willful misconduct of the Landlord, its agents, servants, employees, contractors, visitors and invitees. Tenant acknowledges that Landlord is not a bailee of Tenant's property. Nothing in this paragraph is intended to prevent Tenant from fully occupying the First Floor Space and the Third Floor Space by the dates provided for in the earlier paragraphs of this Section 3.
The raised floor and the ceiling in the Computer Room have been completed. Accordingly, Landlord and Tenant acknowledge that Tenant has delivered and may deliver and install its computer equipment ("Computer Equipment") in the Computer Room located on the First Floor Space. Tenant shall be responsible for the said "Computer Equipment", including but not limited to any loss or damage from any and all causes, except to the extent any such loss or damage arises from the negligence or willful misconduct of Landlord, its agents, servants, employees, contractors, visitors and invitees. Tenant hereby releases Landlord, its agents, servants, employees, contractors, visitors and invitees from any liability with respect to the said equipment its maintenance, protection, loss, damage of any kind type or nature, except to the extent the liability arises from the negligence or willful misconduct of Landlord, its agents, servants, employees, contractors, visitors and invitees. Tenant acknowledges that Landlord is not a bailee of Tenant's property.
(e) Notwithstanding anything to the contrary contained in the Lease, including, without limitation, anything contained in Section 44.01 of the Lease, Landlord's obligation to pay Holdover Rent pursuant to such Section 44.01 ends effective August 31, 2005. Tenant is under no obligation to reimburse the Landlord for any Holdover rent previously paid by the Landlord.
(f) The Expiration Date set forth in Article A (4) of the Lease is hereby amended so that the Lease term is hereby extended to May 31, 2018.
(g) In consideration of Tenant's agreeing to the Commencement Date and Rent Commencement Date of December 1, 2005, Landlord and Tenant respectively hereby forever waives and releases their respective claims one against the other for Tenant Delay and Landlord Delay. Landlord and Tenant release any claim one against the other for any and all Delay and any and all additional costs incurred by either party by reason of any claimed Delay or other failure to heretofore timely perform their respective obligations under the Lease. In light of such waiver and release, the deadlines and penalties set forth in Section 22.02 of the Lease, against both Landlord and Tenant, are hereby deleted. Landlord hereby agrees to work diligently and continually to complete, at Landlord's sole cost and expense, Landlord's Work and the Additional Work set forth on Exhibit A hereto as soon as possible using commercially reasonable efforts and taking into account the necessary coordination of the various trades and the delivery of items ordered by Landlord prior to the date hereof, but in no event later than the time periods set forth in 3(d) above.
(h) Except as otherwise provided herein, none of Tenant's employees may occupy any of the respective spaces until the respective "Certificates of Occupancy" are received for the respective Demised Premises.
4. In accordance with Section 1.02(d) of the Lease, with the exception of Suite 497, Landlord has relocated the Storage Space to space located in the basement of the Building. In addition, Tenant has requested and Landlord has agreed to lease Suite 432 to Tenant as additional storage space. Accordingly, the rent schedule set forth for Storage Space is hereby deleted in its entirety and the rent schedule set forth on Exhibit B is inserted in its stead.
5. Article 13 of the Lease is hereby deleted in its entirety and the following inserted in its stead:
Article 13.
Parking
13.01. Landlord represents that with the availability of the roof deck parking presently being repaired there is approximately 1,500 available parking spaces at the Building. It is anticipated that the roof deck repair will be substantially completed and available for use by the tenants on the Lease Commencement Date. Landlord shall use commercially reasonable efforts to have the roof deck repair completed by the Lease Commencement Date, including having the contractors work continuously on the roof deck repair weather conditions permitting.
13.02. Landlord and Tenant acknowledge that there will be Eighty-Three (83) interior reserved and designated parking spaces at the Building on the middle level. In addition the exterior macadam lot and the front of the Building are reserved parking areas. Tenant shall not use these reserved and designated parking areas, except that the Tenant shall have ready access to all handicapped parking spaces for its employees and invitees in common with the other tenants, employees and invitees at the Building on a first come, first serve basis. Notwithstanding the foregoing, as provided in Subsection 13.03(b) the Tenant may use ten (10) of the eighty-three (83) middle level reserved spaces.
13.03. Landlord will reserve for Tenant's exclusive use, at no cost to Tenant for use throughout the term of the Lease, in an enclosed and gated area or areas, one hundred (100) parking spaces which spaces shall not be used by other tenants.
(a) Ninety (90) of the reserved parking spaces shall be located in an enclosed, gated card accessible area. The ninety parking spaces shall be on the lower level of covered parking. Attached hereto as Exhibit D is a plan of these enclosed spaces. Landlord reserves the right to relocate the reserved spaces within the covered parking area of the garage and in close proximity to the Building, subject to Tenant's reasonable approval.
Notwithstanding anything in Section 13.01 to the contrary, with the exception of the gate, which Landlord has ordered but has not yet received (and which will be installed promptly upon Landlord's receipt of the same) the lower level parking shall be substantially completed and available for use by the Tenant and the other tenants by the Commencement Date. Until such time as the gate has been installed, Landlord shall, during Business Hours, provide a patrol car to circulate through the enclosed parking area to insure that the reserved spaces noted above are available for Tenant's use only.
(b) Tenant shall be given ten (10) of its reserved spaces in contiguous spaces on the middle level in the generally reserved area referred to in Article 13.02 above, which area is enclosed, gated and card accessed and available to other tenants. These spaces shall have the name of the Tenant painted on the spaces. The Landlord does not undertake to police the use of these spaces, but upon the Lease Commencement Date, Landlord agrees to notify the other tenants of the Building in writing that they are not permitted to park in any parking spaces reserved for Tenant. Notwithstanding anything in Section 13.01 to the contrary, the middle level parking shall be substantially completed and available for use by the Tenant and the other tenants by the Commencement Date.
(c) Tenant agrees to assign all of its reserved parking spaces and to issue pass cards to its employees for the reserved parking areas. Tenant agrees to notify those employees issued parking passes for the reserved areas to park in the reserved areas and not to use the general unreserved parking spaces. The Tenant shall observe Landlord's rules and regulations for the issuance of access cards to the reserved parking area, provided they do not violate any law, rule ordinance or regulation The said regulations shall be reasonable but may include the requirement to provide a copy of the Driver's License of the occupants of the reserved area, and the identification and ownership of each vehicle parked in the reserved area. Landlord agrees to keep all personally identifiable information strictly confidential and not share same with any third party.
13.04. In addition to its reserved parking spaces, Tenant may use the non-reserved spaces in common with other tenants, invitees, guests and employees at the Building on a first come, first serve basis. Tenant may use in common with the other Tenant's, their respective employees, invitees and others the handicapped Spaces at the Building. Tenant shall at no time park in the commercial spaces at the Building except for a period of less than ten minutes and then only in connection with deliveries or services.
13.05. Landlord reserves the right, at any time, to reserve on a permanent basis non-reserved parking spaces at the Building and/or to reduce the number of parking spaces available at the Building. In the event Landlord elects to reserve parking spaces to other tenants of the Building, except for the spaces mentioned in Section 13.02 above that Landlord has currently reserved or reduce the available parking spaces on a permanent basis that were formerly available to all tenants, on a first come first serve basis, then and in such event Landlord shall increase Tenant's reserved enclosed, gated, card accessible spaces as follows:
One (1) parking space to Tenant for each two (2) parking spaces reserved for others or reduced permanently from the approximately 1,500 spaces (which include the reserved and non-reserved spaces, the handicapped spaces and the commercial spaces) available when the repairs to the parking garage are completed at about the Commencement Date. Any such additional spaces reserved for the Tenant shall be contiguous to the reserved spaces noted in section 13.03(a) above (Lower Level Spaces).
(a) It is the intent of the parties that the term "permanent" shall be deemed to mean the loss of use of existing general undesignated parking for a period of time in excess of the time needed to effect the provisions noted in Section 13.08 herein below.
Once Landlord permanently reserves a non-designated space or spaces for any reason then this designation shall be deemed a permanent designation for the earlier of (i) full term of the Tenant's Lease and (ii) the date that Landlord no longer reserves any such spaces.
13.06. Without limiting the above, in the event Tenant leases additional office space it shall be entitled to one (1) additional reserved enclosed, card accessed space per one thousand two hundred (1,200) rentable square feet of space leased. The additional spaces shall be contiguous to the reserved spaces noted in section 13.03 (a) above. The designation of these reserved spaces shall not be deemed a diminution of parking at the Building.
13.07. Tenant shall be given, at no cost and expense, One Hundred (100) pass cards upon the commencement of the Lease term. Landlord, at no charge to Tenant, shall replace up to eight (8) pass cards free of charge per calendar year and thereafter Tenant shall pay $50.00 per pass card in advance of the same being issued.
13.08. Tenant and Landlord acknowledge that from time to time parking may be temporarily reduced due to weather conditions, repairs to the parking structure or to the Building, construction within the parking structure or the Building or re-paving of the parking lot or outside parking areas. Tenant acknowledges that the forgoing does not constitute a diminution of parking spaces, provided that Landlord undertakes all reasonable steps to promptly restore the original spaces that were temporarily reduced pursuant to this section 13.08. Tenant acknowledges that from time to time the number of handicapped spaces may be increased or the number of commercial spaces may be increased. Such changes do not constitute a diminution of parking spaces within the meaning of this provision of the Lease.
13.09. Tenant acknowledges that the Lower Parking Level and the Upper Parking Level may be locked and closed after 9:00 P.M. on weekdays, legal holidays and Saturday afternoon from 5:00 P.M. through Monday morning at 7:00 A.M. The Tenant agrees to remove its cars from these areas during those designated hours and to relocate them to the main level or outdoor parking areas so that the Landlord may lock the gate(s) leading to said Lower Parking Level and Upper Parking Level. In the event that Tenant's employees wish to leave a car temporarily in the Lower Parking Level in connection with Tenant's business Tenant shall notify Landlord of the same twenty four (24) hours in advance via facsimile and Landlord shall bear no responsibility for said car while it remains overnight in the Lower Level Parking. Notwithstanding the foregoing the Landlord agrees that with advance notice during Tenant's special seasons the Landlord will allow these areas of the parking lot to remain open and accessible to the Tenant.
6. The following additional modifications are made to the Lease:
A. Sections 2.03 and 2.04 are deleted in their entirety.
B. Subpart (v) of the second paragraph of Section 6.01 is amended in its entirety to read:
"(v) The cost of said Cosmetic Alterations at no time, in the aggregate for any one alteration, exceeds One Hundred and Eighty Thousand ($180,000.00) Dollars".
7. (a) Landlord and Tenant acknowledge and agree that, pursuant to that
certain Letter Agreement dated August 19, 2005 between Landlord and
Tenant, a copy of which is annexed hereto as Exhibit "C" (the "IT Wiring
Agreement"), (a) Landlord shall not be responsible for (i) the quality or
the timing of the work performed by Tenant's contractor regarding the
installation of Tenant's computer wiring and cabling (the "IT Wiring") or
(ii) any materials or tools stored in the Building by such contractors
and (b) Tenant shall undertake and complete the IT Wiring within each
suite contained in the Demised Premises as well as the IT Wiring
connecting Tenant's respective suites, in and throughout the Building,
including the common areas.
(b) Tenant is solely responsible for the payment of the IT Wiring contractor and shall deliver to the Landlord, all appropriate governmental approvals, if same are required, and a waiver of mechanic lien within thirty days of the Landlord delivering the "Certificate of Occupancy" for the First Floor Space.
(c) Tenant assumes all liability for the IT Wiring. The IT Wiring in all manner and form are excluded from any warranties express or implied for Landlord's work stated under and pursuant to the Lease. The IT Wiring is not Landlord Work.
(d) Tenant is and shall at all times be responsible for the installation, repair and maintenance of the IT Wiring.
8. The Workletter attached to the Lease as Exhibit B is amended as follows:
(a) The last paragraph of the Workletter attached as Exhibit B to the Lease (the "Workletter") is hereby clarified in that such paragraph requires Landlord to hire Tenant's Architect as a design consultant and expeditor for the work to be performed by Landlord pursuant to the Workletter at a cost not to exceed $5,000 ("Architect Allocation"). Said provision is hereby amended to delete the words "at a cost not to exceed $5,000". Landlord has retained the firm of Notaro Grupp Associates and Landlord shall be solely responsible for the sums charged by said Architect for the services rendered as a Design Consultant and Expediter.
(b) Section 11(viii) of the Workletter is hereby amended to provide that the 250kw diesel back-up generator referred therein shall be located in the loading dock area of the Building. The Workletter is hereby amended to provide that the condensers for the Liebert Units will be installed on the roof. Landlord represents that said installation has been completed.
(c) Landlord hereby agrees that, as part of the Additional Work set forth on Exhibit "A" hereto, which Landlord shall perform for Tenant pursuant to this Agreement, Landlord shall purchase and install a second 250kw diesel back-up generator, at Landlord's cost and expense. Such second generator shall be located in the loading dock area of the Building at Landlord's sole cost and expense. Both generators shall be installed, which includes the connections to the Building's electrical system, in compliance with all applicable codes, laws, rules and regulations. The generators shall be installed on raised concrete pads and shall have a post placed on the ground at all the outer corners, said post to be painted in a bright color or such other method as required by the appropriate governmental agency.
(d) In accordance with the terms of the Lease, Landlord shall warrant the installation and the mechanical functioning of the generators for a period of one year from the Commencement Date. That after the completion of the first 12 months of the Lease following the Commencement Date, Tenant shall at all times be responsible for the maintenance and repair of the two (2) generators and shall, at Landlord's option, remove same from the property appurtenant to the Building (the "Property") at the expiration or earlier termination of the Lease. During the initial twelve (12) month period from December 1, 2005 through November 30, 2006, the Landlord shall be responsible for repair of the generators and the maintenance thereof but only to the extent that the same is not routine inspections, testing and/or routine maintenance. Both generators shall be installed by Landlord in an area acceptable to the controlling governmental agency and, if not, Landlord shall, at its sole cost and expense, promptly relocate same to an area acceptable to the governmental agency. Without limiting the provisions of this Section 8, both generators shall be installed and in good working order by December 10, 2005. The foregoing date does not include any required governmental certificates or inspection.
(e) Tenant shall prepare, execute, and deliver to the Landlord for filing the Registration Application for the Storage of Flammable/Combustible Liquids and send such other documents as may be required by the governmental agency regulating the generators. The Tenant shall be listed as the "owner and operator" of the generators. Landlord and Tenant acknowledge that this form has been duly completed and submitted to the Office of the Fire Marshall, County of Nassau.
(f) The Tenant agrees not to test both generators at the same time. The Tenant agrees that it may only test the generators from the hours of 7:00 A.M. to 8:30 A.M. and from 6:00 P.M. to 9:00 P.M. on weekdays and from the hours of 10:00 A.M. until 6:00 P.M. on Saturday, Sunday or Legal Holidays.
(g) The Tenant shall supply and store the diesel fuel required for the operation of the generators in the tanks provided with the Generators. The fuel shall be stored and maintained in a safe environmentally safe condition and in accordance with law and ordinance.
(h) That the condensers for the four 5 ton units of HVAC being installed on the first floor level shall be installed by Landlord on a secure shelf above the loading dock. Tenant may also at its cost and expense install up to 2 condensers (each approximately 20 inches high, 38 inches in length and 29 inches deep and weighing approximately 215 pounds) for Tenant's refrigeration to be utilized in the retail store on the first floor on a rack that will be provided by the Landlord in the loading dock above the generators. Landlord will locate the condensers for the refrigeration such that the access for servicing shall be substantially similar to the access to the HVAC condensers installed by Landlord. The condensers and the refrigeration equipment shall be wired to Tenant's sub meter. The Landlord shall install and wire the HVAC condensers and the Tenant shall install, connect and wire at its sole cost and expense the condenser(s) for its refrigeration equipment that shall be wired to the Tenant's sub meter. Tenant shall at all times be responsible for the maintenance and repair of such refrigeration equipment and shall, at Landlord's option, remove it from the Property at the expiration or earlier termination of the Lease.
(i) As part of the Additional Work set forth on Exhibit A to this Agreement and notwithstanding the capacity limitations set forth in Article 12 of the Lease, Landlord, at its sole cost and expense has provided for Tenant's exclusive use, a new 600 Amp at 480 volt electrical service. Landlord represents that the transformers that Landlord provided are installed, are operational and comply with all applicable codes, rules, laws and regulations. These transformers as well as the disconnect switches for the generators are installed in the Tenant's storage space in the basement. Landlord acknowledges that it has had an opportunity to review the Tenant's current electrical capacity and current use demands for the Demised Premises and that such demands, including without limitation any electricity used with reference to the signage to be installed at the Demised Premises, complies with Article 12 of the Lease. The parties agree that the new electrical service meets the requirements of Tenant at the Lease Commencement for the computer room, provided same is in proper working order.
(j) The parties agree that the electrical capacity from one suite of the Demised Premises (as each suite is specifically designated in the Lease) to another suite of the Demised Premises (with the exception of the initial suites leased to Tenant which are located on the first floor which, for these purposes, shall be deemed a single suite) may not be interchanged, unless Tenant shall pay Landlord to install, at Tenant's sole cost and expense, any necessary additional electrical panels and related wiring. Landlord and Tenant agree that the Landlord has calculated the wiring of the electric service for Suite 500, the Third Floor Space and the Lower Level to be at approximately capacity of the seven watts. The parties acknowledge that the First Floor Space has been provided with additional electrical capacity through the installation of additional service and transformers in accord with Tenant's stated requests.
(k) Landlord shall provide Tenant, at Tenant's request, with overtime heating and air conditioning in the lower level ("Overtime HVAC") of the Demised Premises at the rate of $82.50 per hour of Overtime HVAC. Landlord may increase such overtime charge over the term of the Lease by the same percentage that Landlord increases the overtime charge that it generally charges to other tenants of the Building. For purposes of the Lease, overtime hours ("Overtime Hours") are all hours other than 8:00 A.M. to 7:00pm on weekdays, and 8:00am to 1:00pm on Saturdays, excluding legal holidays. Nothing herein is intended to limit or increase, in any way, the obligations of the Landlord as set forth in Article 21 of the Lease.
(l) Landlord hereby agrees to allow Tenant to maintain an interior doorway in the wall between Tenant's the retail store area and the balance of the adjoining first floor portion of the Demised Premises, provided (a) such adjoining portion of the first floor space is occupied by certain of Tenant's employees on a 24 hour a day, 7 day a week basis.
(m) Notwithstanding the requirement set forth in Section (ix)(c) of Article 11 of Exhibit "B" of the Lease, Landlord shall not be required to supply and install electric baseboard heating in the CEO's office.
(n) The Landlord and Tenant agree that Tenant has satisfied any claim for payment towards the restrooms discussed under Section 11(vi) of Exhibit "B" to the Lease and no monies are due for same from the Tenant.
9. Landlord and Tenant acknowledge and agree that there are currently no parking
spaces located adjacent to Tenant's retail area. Therefore, Paragraph 2 of
Exhibit T of the Lease shall be deemed modified so that, in addition to
permitting Tenant to secure the necessary permits and to supply and install
parking signage at the western side of the Building (similar to that installed
by HSBC on the eastern side), Tenant shall have the right to install, at
Tenant's sole cost and expense, up to five (5) parking spaces in the vicinity of
the retail store area. Tenant shall be responsible to obtain any and all
necessary approvals in connection with the parking spaces. Tenant shall be
responsible for all landscape design and execution subject to Landlord's
approval of the same. Landlord agrees to cooperate, including executing any
documents required, with reference to tenant's obtaining all necessary
approvals. Tenant's right to install parking spaces provided for under this
Section 9 is in addition to Tenant's parking rights under Article 13 hereof.
10. Except as specifically modified by this Agreement, all of the terms and conditions of the Lease are ratified and confirmed by Landlord and Tenant. All references to the "Lease" in any future correspondence, notice or dealings between the parties hereto shall be deemed to refer to the Lease, as amended by this Agreement.
11. The agreements, terms and conditions contained in this Agreement shall be binding upon, and inure to the benefit of, Tenant, Landlord and Landlord's successors and assigns. The Landlord shall forthwith submit this Agreement to its lender in accord with the terms of its Mortgage.
12. This Agreement may not be changed orally, but only by a writing signed by the party against whom enforcement may be sought.
13. This Agreement shall be governed by and interpreted in accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have executed this First Lease Modification Agreement as of the day and year first above written.
LANDLORD:
TREELINE 1 OCR LLC
By: __________________________
C. Glenn Schor
President
TENANT:
1-800 FLOWERS.COM, INC.
By: _______________________________
Name: _____________________________
Title: ______________________________
Federal Identification No.: _____________
EXHIBIT A
ADDITIONAL WORK TO BE COMPLETED
1) The items set forth under Section 8 of the Agreement
2) HVAC upgraded to 20 additional tons on the first floor
3) 8 Herculite doors on the 5th floor
4) Door between retail store area and the Bridge
5) Counter top room #502
6) Counter, cabinet, & sink in #508
7) Frosted glass on bottom rows (designated rooms on the fifth floor )
8) 15 feet of drywall #501
9) Drywall opening & new closet room #570
10) Dedicated outlet room #548
11) Lower level outlets
12) High hats room #501
13) Supplemental HVAC Lower Level training room
14) Supplemental HVAC room #510 (conference room)
15) Gas meter & installation for CEO & President's offices so that the
offices will be supplied with gas heat by the Landlord
at Tenant's sole cost and expense 16) Rewiring for the generator Lower
Level and 5th floor 17) The additional reserved parking spaces provided for
in this Agreement
EXHIBIT B
RENT SCHEDULE FOR STORAGE SPACE
storage space
Suite 497
Monthly
Lease Year From To Fixed Annual Rent Installment
----- ---- -- ----------------- -----------
1 12/1/2005 11/31/2006 $12,600.00 $1,050.00
2 12/1/2006 11/31/2007 $12,978.00 $1,081.50
3 12/1/2007 11/31/2008 $13,367.34 $1,113.95
4 12/1/2008 11/31/2009 $13,768.36 $1,147.36
5 12/1/2009 11/31/2010 $14,181.41 $1,181.78
6 12/1/2010 11/31/2011 $14,606.85 $1,217.24
7 12/1/2011 11/31/2012 $15,045.06 $1,253.75
8 12/1/2012 11/31/2013 $15,496.41 $1,291.37
9 12/1/2013 11/31/2014 $15,961.30 $1,330.11
10 12/1/2014 11/31/2015 $16,440.14 $1,370.01
11 12/1/2015 11/31/2016 $16,933.35 $1,411.11
12 12/1/2016 11/31/2017 $17,441.35 $1,453.45
13 11/1/2017 5/31/2018 $17,964.59 $1,497.05
Basement Space
Lease Monthly
Year From To Fixed Annual Rent Installment
---- ---- -- ----------------- -----------
1 12/1/2005 11/31/2006 $30,330.00 $2,527.50
2 12/1/2006 11/31/2007 $31,239.90 $2,603.33
3 12/1/2007 11/31/2008 $32,177.10 $2,681.42
4 12/1/2008 11/31/2009 $33,142.41 $2,761.87
5 12/1/2009 11/31/2010 $34,136.68 $2,844.72
6 12/1/2010 11/31/2011 $35,160.78 $2,930.07
7 12/1/2011 11/31/2012 $36,215.61 $3,017.97
8 12/1/2012 11/31/2013 $37,302.07 $3,108.51
9 12/1/2013 11/31/2014 $38,421.14 $3,201.76
10 12/1/2014 11/31/2015 $39,573.77 $3,297.81
11 12/1/2015 11/31/2016 $40,760.98 $3,396.75
12 12/1/2016 11/31/2017 $41,983.81 $3,498.65
13 12/1/2017 5/31/2018 $43,243.33 $3,603.61
Suite 432
Lease Monthly
Year From To Fixed Annual Rent Installment
---- ---- -- ----------------- -----------
1 9/1/2005 8/31/2006 $11,637.00 $ 969.75
2 9/1/2006 8/31/2007 $11,986.11 $ 998.84
3 9/1/2007 8/31/2008 $12,345.69 $1,028.81
4 9/1/2008 8/31/2009 $12,716.06 $1,059.67
5 9/1/2009 8/31/2010 $13,097.55 $1,091.46
6 9/1/2010 8/31/2011 $13,490.47 $1,124.21
7 9/1/2011 8/31/2012 $13,895.19 $1,157.93
8 9/1/2012 8/31/2013 $14,312.04 $1,192.67
9 9/1/2013 8/31/2014 $14,741.40 $1,228.45
10 9/1/2014 8/31/2015 $15,183.65 $1,265.30
11 9/1/2015 8/31/2016 $15,639.15 $1,303.26
12 9/1/2016 8/31/2017 $16,108.33 $1,342.36
13 9/1/2017 2/28/2018 $16,591.58 $1,382.63
|
EXHIBIT C
IT WIRING AGREEMENT
EXHIBIT D
PARKING
EXHIBIT E
LETTER OF JUNE 6, 2005 MODIFYING TYPOGRAPHICAL ERRORS IN LEASE
EXHIBIT F
PUNCH LIST
Storage Spaces:
1) Install additional ceiling tiles (substantially similar to those
located in lower level storage area) in order to extend out ceiling in
the Basement Storage Area.
2) Reinstall pre-existing doors in the front of the fenced storage area so
that only key access is available. Keys to be held by Landlord and
Tenant.
3) Room 432--complete half finished ceiling and paint walls 4) Room
497--paint walls
First Floor (Computer Room):
1) Install fifteen (15) circuit breakers to the panel for use in the computer
room. 2) Landlord to switch off temporary power source and turn on permanent
power source. 3) Complete Generators Connections.
Fifth Floor:
1) Rm 591--install 2-2x2 light fixtures
2) Rm 594---install 2-2x2 light fixtures
3) Hook up generator power
4) Install white write on paper in the Board Room.
5) Relocate condenser pump in room 508.
6) On the 2 doors leading into legal department, Landlord to reverse the
stops so doors open into the open area outside of the legal department.
EXHIBIT G
TENANT ESTOPPEL CERTIFICATE
TO: Bank of America, N.A.
NC1-027-20-03
214 North Tryon Street
Charlotte, North Carolina 28255
Attention: Closing Coordinator
RE: One Old Country Road, Carle Place, New York
The undersigned (the "Tenant"), as tenant under that certain lease (the "Lease") dated May 20, 2005, as the same has been modified, made with Treeline Mineola LLC (together with its successors and/or assigns, the "Landlord"), for space at the Landlord's property generally described as One Old Country Road, Carle Place, New York in Nassau County, State of New York (the "Premises"), a true and complete copy of which is annexed hereto, hereby certifies as follows:
(1) The Tenant has entered into occupancy of the Premises described in the Lease and the Lease is in full force and effect and has not been assigned, modified, supplemented or amended in any way, except as follows: Letter Agreement dated June 6, 2005, Letter Agreement dated August 19, 2005, and First Modification to Lease Agreement dated November 16, 2005 (the "Lease Modification"). The Lease, as amended as indicated in the preceding sentence, represents the entire agreement between the parties as to said leasing.
(2) The commencement date of the term of the Lease is December 1, 2005 and the expiration date of the term of the Lease is May 31, 2018. The Tenant has no rights to renew or extend the term of the Lease except as follows: Two successive five (5) year periods.
(3) Except as specifically set forth in the Lease Modification, all conditions of the Lease to be performed by the Landlord and necessary to the enforceability of the Lease as of the date hereof have been satisfied. There are no defaults by either the tenant or, to the Tenant's knowledge, the Landlord thereunder, and, to the Tenant's knowledge, no event has occurred or situation exists which would, with the passage of time, constitute a default under the Lease. All improvements or work required under the Lease to be made by the Landlord to date, if any, have been completed. On this date there are no existing defenses, offsets, claims or credits which the Tenant has against the enforcement of the Lease by the Landlord.
(4) Monthly rent is payable on the 1st day of each month. The initial fixed monthly rent is $180,192.33 which amount escalates as specifically set forth in the Lease. All rent due for the current month has been paid, and no rents have been prepaid more than two (2) months in advance. The Tenant has paid to the Landlord a security deposit in the amount of $0.
(5) The Tenant has no option or preferential right to purchase all or any part of the Premises, or the land of which the Premises are a part. The Tenant has no rights or interest with respect to the Premises other than as a tenant under the Lease. The Tenant has not assigned or sublet its interest in the Premises.
(6) That as of the date hereof, there are no actions, whether voluntary or otherwise, pending against the Tenant under the bankruptcy or insolvency laws of the United States or any state thereof.
(7) The Tenant understands that Bank of America, N.A., (the "Lender") intends to make a mortgage loan (the "Loan") to the Landlord (or its successor and/or assign with respect to the Landlord's interest in the Lease) in reliance upon, among other things, this certificate, and that the Lender's successors and/or assigns may rely on this certificate in making, or acquiring any interest in, the aforesaid Loan. The Tenant hereby acknowledges that the Lease and the rent and other sums due thereunder are to be assigned by the Landlord to the Lender as security for the Loan. If the Lender becomes the owner of the Premises demised under the Lease, such as by foreclosure, the Tenant shall attorn to Lender as landlord under the Lease. If the Lender or any entity servicing the Loan for the Lender notifies the Tenant of a default under the Loan Documents evidencing the Loan and demands that the Tenant make all rental and all other payments under the Lease directly to the Lender or a designated lockbox or elsewhere, the Tenant shall honor such demand and shall make all rental and other Lease payments as required pursuant to such notice and demand.
EXECUTED effective as of this 1st day of December, 2005.
TENANT:
1-800 FLOWERS .COM, INC.
By: __________________________
(SEAL)
Name:_________________________
Title: _______________________
ATTEST/WITNESS:
Exhibit 10.34
AGREEMENT OF LEASE
Between
TREELINE MINEOLA LLC,
Landlord,
and
1-800-FLOWERS.COM, INC.,
Tenant.
Dated: May 20, 2005
PREMISES
1 Old Country Road
Carle Place, New York
Suite LL08, 500, 110, 112, 120, 122, 300 and the Storage Space
(as herein defined)
AGREEMENT OF LEASE, made as of this __ day of May, 2005, by and between Treeline Mineola LLC, a New York limited liability company, as Landlord (the "Landlord"), with its address c/o Treeline Management Corp., 200 Garden City Plaza, Suite 325, Garden City, New York 11530, and 1-800 FLOWERS.COM, INC., a Delaware corporation, with offices at 1600 Stewart Avenue, Westbury, New York 11590 (the "Tenant").
W I T N E S S E T H:
The parties hereto, for themselves, their heirs, distributees, executors, administrators, legal representatives, trustees, successors and assigns, hereby covenant as follows:
ARTICLE A
Lease Definitions
In addition to other terms elsewhere defined in this Lease, the Following terms whenever used in this Lease shall have the meanings set forth below.
(2) Demised Premises: The Demised Premises shall consist of Suites 500, 110, 112, and LL08, which comprises approximately 74,773 rentable square feet (the "Original Premises"); Suites 122 and 120, which comprise approximately 3,513 rentable square feet (the "First Expansion Space"); and Suite 300 which comprises approximately 9,057 rentable square feet (the "Second Expansion Space", and collectively with the First Expansion Space, the "Expansion Space"). Furthermore, Landlord shall lease to Tenant on the Commencement Date approximately 5,085 rentable square feet of Storage Space in the Building, consisting of Suites LL14, 470, 497 and 432. Tenant shall have the right to lease from Landlord, as more fully set forth below, up to an additional 5,000 rentable square feet of Storage Space. Landlord represents that Suites 112, 120 and 122 are contiguous spaces. The Demised Premises may also from time to time referred to herein as the "Premises". A copy of the approved space plan for each of the suites comprising the Demised Premises (the "Plan") shall be prepared by Landlord's architects and shall be incorporated herein as "Exhibit A" in an addendum as soon as the same has been prepared and agreed upon by the parties hereto.
Tenant shall, within seven (7) BUSINESS days from FULL execution AND DELIVERY of this Lease, deliver to Landlord and Landlord's architect ("Architect") its specifications with respect to the proposed Plan whereupon Landlord shall cause the Architect to promptly prepare the proposed Plan. Tenant shall have UNTIL JUNE 20, 2005 (TIME BEING OF THE ESSENCE) to review, revise and approve the proposed Plan so that the same may be finalized and construction drawings prepared for filing. In the event that Tenant is unable to approve the Plan (Through no fault of landlord ITS AGENTS, SERVANTS, EMPLOYEES, CONTRACTORS, SUBCONTRACTORS or the architect) BY june 20, 2005 (TIME BEING OF THE ESSENCE) it shall be subject to the penalty set forth in Article 2.06.
(3) Commencement Date: Upon substantial completion of Landlord's Work and
obtaining all necessary written approvals ("Occupancy Approvals") in connection
with Landlord's Work (which shall in no event be deemed to include the Retail
Use Approvals, as defined in Section (9) below) from all municipal and
governmental agencies having jurisdiction for the property on which the Building
is situated (the "Property"), currently estimated to be September 1, 2005 for
the Original Premises and on or about June 1, 2006 for the Expansion Space.
Except as specifically set forth in Article 1.02 below, Fixed Annual Rent shall
commence for the Original Premises upon substantial completion of Landlord's
Work for said space. Landlord shall provide Tenant with ten (10) days written
notice of when it will have substantially completed the (i) Original Premises
and (ii) Expansion Space.
[NEED TO REINSERT INDEMNITY][NEED TO REINSERT COMMENCEMENT DATE MEMORANDUM]
(4) Expiration Date: Twelve (12) Years Six (6) Months after the Commencement Date, currently estimated to be February 28, 2018. Notwithstanding the foregoing, the Expiration Date for the Original Premises, the Storage Space and the Expansion Space shall be co-terminus.
(6) Fixed Annual Rent:
(i) Any Space Above Lower Level: $24.50 per rentable square foot per annum in the first Lease Year, with an annual escalation of $0.75 per rentable square foot in each of Lease Years 2 through 7 (imposed on each anniversary of the Commencement Date for the applicable space) and an annual escalation of $1.00 per rentable square foot in each Lease Year from 8 through the remainder of the original term of the Lease (imposed on each anniversary of the Commencement Date for the applicable space).
(ii) Any Space on Lower Level: $22.00 per rentable square foot per annum in the first Lease Year, with an annual escalation of $0.75 per rentable square foot in each of Lease Years 2 through 7 (imposed on each anniversary of the Commencement Date for the applicable space) and an annual escalation of $1.00 per rentable square foot in each Lease Year from 8 through the remainder of the original term of the Lease (imposed on each anniversary of the Commencement Date for the applicable space).
(iii) Storage Space: $9.00 per rentable square foot per annum in the first Lease Year, with an annual escalation of three percent (3%), imposed upon each anniversary of the Commencement Date.
(iv) "Lease Year" shall mean the twelve month period between the Commencement Date and each succeeding anniversary thereof.
(7) Tenant's Proportionate Share: Tenant's proportionate share (calculated using a total Building size of 314,614 rentable square feet) shall be as follows: (i) upon delivery of the Original Space, 23.77% in total; upon delivery of the First Expansion Space, 24.88% in total; and upon delivery of the Second Expansion Space, 27.76% in total.
(8) Base Year: 2005-06 School Tax; 2006 Town Tax; Electric Base Year - Calendar Year 2006. At no time shall Tenant be charged or held responsible to pay any additional rent pertaining to Real Estate Taxes during the initial twelve months of the Lease term.
(9) Permitted Use: General Business Offices (which shall include the use of the Demised Premises as an internet and telephone call center provided that the same does not in any way violate the Building's certificate of occupancy). Provided Tenant, at its sole cost and expense, obtains all necessary approvals (including, but not limited to any special use or variances that may be necessary) from any and all applicable municipal and governmental agencies having jurisdiction over the Property (the "Retail Use Approvals"), Landlord consents to Tenant's use of a portion of the Demised Premises on the first floor only for retail sales of flowers, plants, gourmet baskets, and other gifts and products presently offered by Tenant or any of its Affiliates. Tenant's right to use any of the Demised Premises for retail use shall be limited to Tenant and shall at no time extend to any assignee of Tenant with the exception of any of Tenant's Affiliates or in the case of a merger or acquisition of or by Tenant. Tenant may however, sublet the retail space, subject to Landlord's right of recapture as set forth in Article 11.04. The parties hereto acknowledge and understand that at no time shall Landlord be responsible to obtain the Retail Use Approvals, nor shall any delay in Tenant obtaining the same in any way affect the Commencement Date.
(10) Broker(s): Real Estate Strategies, Ltd. and Treeline Leasing LLC.
(11) Security Deposit: None.
ARTICLE 1.
DEMISED PREMISES; RENT
1.01. Landlord hereby leases to Tenant, and Tenant hereby hires from Landlord, the Demised Premises for the term to commence on the respective Commencement Date and to end at 11:59 p.m. on the Expiration Date or until such term shall sooner cease and terminate as hereinafter provided.
1.02. (a) Notwithstanding the Commencement Date set forth above, unless the
Original Premises and the Expansion Space are substantially completed and
delivered to Tenant on the first day of a given month, the Fixed Annual Rent for
the first month shall not be payable until the first day of the second calendar
month following the month in which the Landlord substantially completes
Landlord's Work and either (i) all necessary written Occupancy Approvals have
been obtained or (ii) Landlord indemnifies Tenant in accordance with Article A,
Section 3 (the "Rent Commencement Date"). By way of example, in the event the
Commencement Date is set for June 15, 2005, Fixed Annual Rent shall commence on
August 1, 2005 subject to the rent abatement, as set below, bringing the first
actual payment of Fixed Annual Rent to September 1, 2005; in the event the
Commencement Date is set for June 1, 2005, the Fixed Annual Rent shall commence
on July 1, 2005, subject to the rent abatement set forth below as set below,
bringing the first actual payment of Fixed Annual Rent to August 1, 2005.
(b) From and after the Rent Commencement Date, subject to the rent abatement set forth in Article 1.06 below, Tenant shall pay to Landlord the Fixed Annual Rent as stated below in each period, said sum to be paid in advance on the first of each and every calendar month in an amount equal to one-twelfth thereof during the term of this Lease as follows:
[RENT SCHEDULES BEGIN ON NEXT PAGE]
ORIGINAL PREMISES
Suite LL08 12,865 RSF Proportionate Share: 4.09%
----------
Lease Total Fixed Annual Monthly
Year From To Base Rent Installment
---- ---- -- - --------- -----------
1 9/1/2005 8/31/2006 $283,030.00 $23,585.83
2 9/1/2006 8/31/2007 $292,678.75 $24,389.90
3 9/1/2007 8/31/2008 $302,327.50 $25,193.96
4 9/1/2008 8/31/2009 $311,976.25 $25,998.02
5 9/1/2009 8/31/2010 $321,625.00 $26,802.08
6 9/1/2010 8/31/2011 $331,273.75 $27,606.15
7 9/1/2011 8/31/2012 $340,922.50 $28,410.21
8 9/1/2012 8/31/2013 $353,787.50 $29,482.29
9 9/1/2013 8/31/2014 $366,652.50 $30,554.38
10 9/1/2014 8/31/2015 $379,517.50 $31,626.46
11 9/1/2015 8/31/2016 $392,382.50 $32,698.54
12 9/1/2016 8/31/2017 $405,247.50 $33,770.63
13 9/1/2017 2/28/2018 $418,112.50 $34,842.71
Suite 110 2,084 RSF Proportionate Share: 0.66%
---------
Lease Total Fixed Annual Monthly
Year From To Base Rent Installment
---- ---- -- - --------- -----------
1 9/1/2005 8/31/2006 $51,058.00 $4,254.83
2 9/1/2006 8/31/2007 $52,621.00 $4,385.08
3 9/1/2007 8/31/2008 $54,184.00 $4,515.33
4 9/1/2008 8/31/2009 $55,747.00 $4,645.58
5 9/1/2009 8/31/2010 $56,760.00 $4,730.00
6 9/1/2010 8/31/2011 $58,308.00 $4,859.00
7 9/1/2011 8/31/2012 $59,856.00 $4,988.00
8 9/1/2012 8/31/2013 $61,920.00 $5,160.00
9 9/1/2013 8/31/2014 $63,984.00 $5,332.00
10 9/1/2014 8/31/2015 $66,048.00 $5,504.00
11 9/1/2015 8/31/2016 $68,112.00 $5,676.00
12 9/1/2016 8/31/2017 $70,176.00 $5,848.00
13 9/1/2017 2/28/2018 $72,240.00 $6,020.00
Suite 112 6,824 RSF Proportionate Share: 2.17%
---------
Lease Total Fixed Annual Monthly
Year From To Base Rent Installment
---- ---- -- - --------- -----------
1 9/1/2005 8/31/2006 $167,188.00 $13,932.33
2 9/1/2006 8/31/2007 $172,306.00 $14,358.83
3 9/1/2007 8/31/2008 $177,424.00 $14,785.33
4 9/1/2008 8/31/2009 $182,542.00 $15,211.83
5 9/1/2009 8/31/2010 $187,660.00 $15,638.33
6 9/1/2010 8/31/2011 $192,778.00 $16,064.83
7 9/1/2011 8/31/2012 $197,896.00 $16,491.33
8 9/1/2012 8/31/2013 $204,720.00 $17,060.00
9 9/1/2013 8/31/2014 $211,544.00 $17,628.67
10 9/1/2014 8/31/2015 $218,368.00 $18,197.33
11 9/1/2015 8/31/2016 $225,192.00 $18,766.00
12 9/1/2016 8/31/2017 $232,016.00 $19,334.67
13 9/1/2017 2/28/2018 $238,840.00 $19,903.33
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Suite 500 53,000 RSF Proportionate Share: 16.85%
---------
Lease Total Fixed Annual Monthly
Year From To Base Rent Installment
---- ---- -- - --------- -----------
1 9/1/2005 8/31/2006 $1,298,500.00 $108,208.33
2 9/1/2006 8/31/2007 $1,338,250.00 $111,520.83
3 9/1/2007 8/31/2008 $1,378,000.00 $114,833.33
4 9/1/2008 8/31/2009 $1,417,750.00 $118,145.83
5 9/1/2009 8/31/2010 $1,457,500.00 $121,458.33
6 9/1/2010 8/31/2011 $1,497,250.00 $124,770.83
7 9/1/2011 8/31/2012 $1,537,000.00 $128,083.33
8 9/1/2012 8/31/2013 $1,590,000.00 $132,500.00
9 9/1/2013 8/31/2014 $1,643,000.00 $136,916.67
10 9/1/2014 8/31/2015 $1,696,000.00 $141,333.33
11 9/1/2015 8/31/2016 $1,749,000.00 $145,750.00
12 9/1/2016 8/31/2017 $1,802,000.00 $150,166.67
13 9/1/2017 2/28/2018 $1,855,000.00 $154,583.33
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FIRST EXPANSION SPACE
Suite 122 207 RSF Proportionate Share: 0.07%
---------
Lease Total Fixed Annual Monthly
Year From To Base Rent Installment
---- ---- -- - --------- -----------
1 9/1/2005 8/31/2006 $5,071.50 $422.63
2 9/1/2006 8/31/2007 $5,226.75 $435.56
3 9/1/2007 8/31/2008 $5,382.00 $448.50
4 9/1/2008 8/31/2009 $5,537.25 $461.44
5 9/1/2009 8/31/2010 $5,692.50 $474.38
6 9/1/2010 8/31/2011 $5,847.75 $487.31
7 9/1/2011 8/31/2012 $6,003.00 $500.25
8 9/1/2012 8/31/2013 $6,210.00 $517.50
9 9/1/2013 8/31/2014 $6,417.00 $534.75
10 9/1/2014 8/31/2015 $6,624.00 $552.00
11 9/1/2015 8/31/2016 $6,831.00 $569.25
12 9/1/2016 8/31/2017 $7,038.00 $586.50
13 9/1/2017 2/28/2018 $7,245.00 $603.75
Suite 120 3,306 RSF Proportionate Share: 1.05%
---------
Lease Total Fixed Annual Monthly
Year From To Base Rent Installment
---- ---- -- - --------- -----------
1 9/1/2005 8/31/2006 $80,997.00 $6,749.75
2 9/1/2006 8/31/2007 $83,476.50 $6,956.38
3 9/1/2007 8/31/2008 $85,956.00 $7,163.00
4 9/1/2008 8/31/2009 $88,435.50 $7,369.63
5 9/1/2009 8/31/2010 $90,915.00 $7,576.25
6 9/1/2010 8/31/2011 $93,394.50 $7,782.88
7 9/1/2011 8/31/2012 $95,874.00 $7,989.50
8 9/1/2012 8/31/2013 $99,180.00 $8,265.00
9 9/1/2013 8/31/2014 $102,486.00 $8,540.50
10 9/1/2014 8/31/2015 $105,792.00 $8,816.00
11 9/1/2015 8/31/2016 $109,098.00 $9,091.50
12 9/1/2016 8/31/2017 $112,404.00 $9,367.00
13 9/1/2017 2/28/2018 $115,710.00 $9,642.50
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SECOND EXPANSION SPACE [REPLACE WITH CORRECT SCHEDULE]
STORAGE SPACE
Suite LL14 1,471 RSF
Lease Total Fixed Annual Monthly
Year From To Base Rent Installment
---- ---- -- - --------- -----------
1 9/1/2005 8/31/2006 $13,239.00 $1,103.25
2 9/1/2006 8/31/2007 $13,636.17 $1,136.35
3 9/1/2007 8/31/2008 $14,045.26 $1,170.44
4 9/1/2008 8/31/2009 $14,466.61 $1,205.55
5 9/1/2009 8/31/2010 $14,900.61 $1,241.72
6 9/1/2010 8/31/2011 $15,347.63 $1,278.97
7 9/1/2011 8/31/2012 $15,808.06 $1,317.34
8 9/1/2012 8/31/2013 $16,282.30 $1,356.86
9 9/1/2013 8/31/2014 $16,770.77 $1,397.56
10 9/1/2014 8/31/2015 $17,273.89 $1,439.49
11 9/1/2015 8/31/2016 $17,792.11 $1,482.68
12 9/1/2016 8/31/2017 $18,325.87 $1,527.16
13 9/1/2017 2/28/2018 $18,875.65 $1,572.97
Suite 470 921 RSF
---------
Lease Total Fixed Annual Monthly
Year From To Base Rent Installment
---- ---- -- - --------- -----------
1 9/1/2005 8/31/2006 $8,289.00 $690.75
2 9/1/2006 8/31/2007 $8,537.67 $711.47
3 9/1/2007 8/31/2008 $8,793.80 $732.82
4 9/1/2008 8/31/2009 $9,057.61 $754.80
5 9/1/2009 8/31/2010 $9,329.34 $777.45
6 9/1/2010 8/31/2011 $9,609.22 $800.77
7 9/1/2011 8/31/2012 $9,897.50 $824.79
8 9/1/2012 8/31/2013 $10,194.42 $849.54
9 9/1/2013 8/31/2014 $10,500.26 $875.02
10 9/1/2014 8/31/2015 $10,815.26 $901.27
11 9/1/2015 8/31/2016 $11,139.72 $928.31
12 9/1/2016 8/31/2017 $11,473.91 $956.16
13 9/1/2017 2/28/2018 $11,818.13 $984.84
|
Suite 497 1,400 RSF
---------
Lease Total Fixed Annual Monthly
Year From To Base Rent Installment
---- ---- -- - --------- -----------
1 9/1/2005 8/31/2006 $12,600.00 $1,050.00
2 9/1/2006 8/31/2007 $12,978.00 $1,081.50
3 9/1/2007 8/31/2008 $13,367.34 $1,113.95
4 9/1/2008 8/31/2009 $13,768.36 $1,147.36
5 9/1/2009 8/31/2010 $14,181.41 $1,181.78
6 9/1/2010 8/31/2011 $14,606.85 $1,217.24
7 9/1/2011 8/31/2012 $15,045.06 $1,253.75
8 9/1/2012 8/31/2013 $15,496.41 $1,291.37
9 9/1/2013 8/31/2014 $15,961.30 $1,330.11
10 9/1/2014 8/31/2015 $16,440.14 $1,370.01
11 9/1/2015 8/31/2016 $16,933.35 $1,411.11
12 9/1/2016 8/31/2017 $17,441.35 $1,453.45
13 9/1/2017 2/28/2018 $17,964.59 $1,497.05
Suite 432 1,293 RSF
---------
Lease Total Fixed Annual Monthly
Year From To Base Rent Installment
---- ---- -- - --------- -----------
1 9/1/2005 8/31/2006 $11,637.00 $969.75
2 9/1/2006 8/31/2007 $11,986.11 $998.84
3 9/1/2007 8/31/2008 $12,345.69 $1,028.81
4 9/1/2008 8/31/2009 $12,716.06 $1,059.67
5 9/1/2009 8/31/2010 $13,097.55 $1,091.46
6 9/1/2010 8/31/2011 $13,490.47 $1,124.21
7 9/1/2011 8/31/2012 $13,895.19 $1,157.93
8 9/1/2012 8/31/2013 $14,312.04 $1,192.67
9 9/1/2013 8/31/2014 $14,741.40 $1,228.45
10 9/1/2014 8/31/2015 $15,183.65 $1,265.30
11 9/1/2015 8/31/2016 $15,639.15 $1,303.26
12 9/1/2016 8/31/2017 $16,108.33 $1,342.36
13 9/1/2017 2/28/2018 $16,591.58 $1,382.63
|
The Commencement Dates reflected in the above charts may be modified in the
event that the Commencement Dates for the Original Premises, the Expansion Space
or the Storage Space differ from that stated in the above charts. Landlord and
Tenant shall execute a certificate ("Commencement Date Memorandum") confirming
(i) the actual Commencement Date and Expiration Date (subject to Tenant's
Renewal Option set forth in Article 41 hereof) for each of the spaces rented to
Tenant; (ii) the actual rentable square footage for each of the spaces rented to
Tenant; (iii) Tenant's Proportionate Share for each of the spaces rented to
Tenant; and the total Fixed Annual Rent for each such space. Said Commencement
Date Memorandum being jointly executed upon confirmation and delivery by
Landlord to Tenant of the applicable space.
(c) Tenant acknowledges that the Expansion Space, with the exception of Suite
122 (which is occupied by a month-to-month tenant) is presently occupied by
other tenants pursuant to valid leases in full force and effect. Landlord shall
use best efforts to cause such spaces to be vacated by the tenants in possession
of said spaces as soon as is reasonably practical after execution of this Lease.
Notwithstanding, Tenant shall accept possession of the Expansion Space on such
date as Landlord is able to deliver same to Tenant in the condition contemplated
by this Lease.
(d) Landlord shall, on the Commencement Date for the Original Premises, deliver to Tenant the Storage Space. The Storage Space shall initially consist of approximately 5,085 rentable square feet of space. Tenant shall have the right to lease from Landlord during the term of this Lease up to an additional 5,000 rentable square feet of storage space in the basement of the Building. Notwithstanding anything to the contrary herein contained, Landlord may, at any time and in Landlord's sole discretion, relocate all or any portion of the Storage Space to an alternative location within the Building upon ten (10) days prior written notice to Tenant; provided, however, that the replacement Storage Space provided by Landlord contains approximately the same rentable square footage as the Storage Space Landlord is requiring Tenant to vacate. Landlord shall bear all reasonable and actual costs of relocating Tenant's Storage Space.
(e) The parties hereto acknowledge that the Fixed Annual Rent due for the Demised Premises is an aggregate of all of the rent schedules and nothing herein shall in any manner be construed as to separate the Demised Premises or the obligations set forth herein it being understood and agreed by the purpose of the separate rent schedules is for convenience purposes only as there is a possibility that the commencement date may not be the same for each of the suites.
(f) The parties hereto acknowledge that the term of the Lease shall be co-terminus for all of the Demised Premises. As such, the term for the Expansion Space shall terminate on the same date as the term for the Original Space.
1.03. (a) Intentionally Omitted.
(b) All sums (other than Fixed Annual Rent) payable hereunder shall be deemed additional rent, and together with Fixed Annual Rent shall be payable without setoff or deduction whatsoever, except as may be occasioned by the occurrence of any event permitting a deduction from or abatement of rent as specifically set forth in Articles 10 and 14. It is expressly understood and agreed that the Base Electric Charge (as hereinafter defined) that is due hereunder are part of the additional rent due and owing and Tenant's failure to pay same as and when due shall be a material default hereunder. Fixed Annual Rent and additional rent shall be paid in lawful money of the United States by electric funds transfer ("EFT"), or by good and sufficient check (subject to collection) drawn to Landlord's order on a bank which is a member of the New York Clearinghouse Association or a successor thereto or by money order. Said checks shall be sent to Landlord at the office of Landlord's Managing Agent, Treeline Management Corp., P.O. Box 341, Carle Place, New York 11514 or to such other party or parties and/or at such other address(es) as Landlord shall designate by written notice to Tenant.
1.04. If Tenant shall fail to pay any installment of Fixed Annual Rent or any payment of additional rent for a period of five (5) days after such installment or payment shall have become due, Tenant shall pay a late charge to Landlord of $350.00 plus interest at the Interest Rate (as such term is defined in Article 33 hereof), from the date when such installment or payment shall have become due to the date of the payment thereof, and such interest shall be deemed additional rent.
1.05. Tenant shall have twenty four (24) hour a day, seven (7) day a week access to, and use of the Demised Premises, the Building, and the Property (with the exception of the gated parking area in which access will only be available until on Business Days, Monday through Friday from 7:00 A.M. to 9:00 P.M.), which access shall be by passcard access after business hours and on days other than Business Days. Notwithstanding the foregoing, Landlord shall provide Tenant with up to twelve (12) gated and marked parking spaces on the upper level of the parking garage, as to which Tenant will have access twenty four (24) hours a day, seven (7) days a week, via passcard access. Landlord shall provide Tenant with five (5) passcards per each 1,000 rentable square feet of space being leased by Tenant upon commencement of the Lease Term. Additional passcards (at the same ratio) will be delivered to Tenant upon the commencement of the Lease term for the Expansion Space. Tenant shall have the right to fifty (50) replacement cards per year at no cost to Tenant. In addition, Tenant shall have the right to additional passcards (at the same ratio of five (5) passcards per each 1,000 rentable square feet of space being leased) in the event it exercises its right of first offer as set forth in Article 42 herein. Subject to the above rights, if Tenant shall require replacement of any passcard issued to it, Tenant shall pay to Landlord as additional rent a charge of $50.00 per passcard requiring replacement. Tenant shall surrender to Landlord all passcards issued to it upon the expiration or earlier termination of this Lease. Landlord shall have no liability to Tenant in the event that the passcard access system malfunctions and Tenant cannot gain access to the Demised Premises and the Building after business hours or on days other than business days; provided, however, that Landlord agrees to regularly service and maintain the passcard access system in good working order and shall promptly repair the passcard access system as soon as is reasonably practical after receipt of written or oral notice that same has malfunctioned.
1.06. Tenant shall be entitled to an abatement of Fixed Annual Rent for the first month of the initial term of this Lease as to the Original Space and the Expansion Space. Said free rent period shall consist of the first full calendar month after the Commencement Date of the term of this Lease for the applicable space.
ARTICLE 2.
CONDITION OF PREMISES
2.01. Landlord, at Landlord's sole cost and expense, shall perform the work in and to the Demised Premises described in Exhibit B annexed to this Lease (the "Workletter"). Tenant acknowledges that the Workletter represents the agreement of Landlord and Tenant concerning all work to be performed by Landlord in the Demised Premises and that any work not specifically delineated in the Workletter shall not be performed by Landlord. Landlord reserves the right to make such changes and/or substitutions in the Workletter as may be required by any governmental agency having jurisdiction over the Demised Premises or as may be required by site conditions, subject to Tenant's written approval, which approval shall not be unreasonably withheld or delayed. All of the facilities, materials and work to be furnished, installed and performed by Landlord in the Demised Premises pursuant to the Workletter are referred to herein as "Landlord's Work". Any upgrades or additional work not included in the Workletter and any amendments or addendums thereto, that Tenant requests Landlord to perform shall not be deemed a portion of Landlord's Work and may be performed by Landlord after payment by Tenant of the cost of such upgrades or additional work in cash, electronic funds transfer ("EFT") or by check, as directed by Landlord; it is expressly understood and agreed that Landlord shall have no obligation whatsoever to perform any such additional work, except as stated expressly in the Workletter and any amendments or addendums thereto, unless the same is required for the issuance of the certificate of occupancy for the Original Premises and for the Expansion Space, as the same is applicable. Attached hereto as Exhibit "T" is a list of Tenant's requested upgrades or additional work that Landlord has agreed as of the date hereof to perform. Landlord shall not be obligated to accept any additional requests from Tenant for additional work in the Demised Premises except as set forth on Exhibit "T".
2.02. Landlord's Work for the Original Premises and/or the Expansion Space shall be deemed to have been substantially completed notwithstanding that minor or insubstantial details of construction, decoration or mechanical adjustment and/or minor "punch list" items remain to be performed, provided that (x) any and all required life safety systems (as hereinafter defined) in connection with the issuance of certificate of occupancy for the respective space are installed and properly functioning; (y) the aggregate cost of the "punch list" items for the Original Premises does not exceed One Hundred and Forty Thousand ($140,000) Dollars and the aggregate cost of the "punch list" items for the Expansion Space does not exceed Forty Thousand ($40,000) Dollars; and (z) the Original Premises or Expansion Space, as the same is applicable, are accessible and reasonably usable for the conduct of Tenant's business. Landlord shall provide Tenant with ten (10) days prior written notice of when it will have substantially completed the (i) Original Premises and (ii) the Expansion Space.. If Landlord shall be delayed in substantially completing Landlord's Work as a direct result of any act, neglect, failure or omission of Tenant, its agents, servants, employees, contractors, or subcontractors such delay shall be deemed a "Tenant Delay". A Tenant Delay shall include, without limitation, the following items:
(i) Tenant's failure to supply necessary information requested by Landlord necessary to substantially complete the Demised Premises after written request by Landlord; or
(ii) Tenant's untimely request for materials, finishes or installations other than as set forth in the Workletter which are not readily available at the time Landlord is ready to install same or are not consistent with the Workletter or the Tenant Upgrades; or (iii) Tenant's changes in drawings, plans or specifications for Landlord's Work in the Demised Premises pursuant to the Workletter which would require Landlord to either refile or amend its filings with the Building Department.
2.03. Tenant shall pay to Landlord a sum equal to any reasonable additional cost to Landlord (i.e., the total cost incurred by Landlord for labor, materials and engineering in excess of the aggregate costs which Landlord would have incurred to complete Landlord's Work if there had been no Tenant Delay) in completing Landlord's Work resulting from any Tenant Delay. Any such sums shall be paid to Landlord within thirty (30) days after Tenant receives Landlord's invoices therefor. Such costs shall be collectible in the same manner as additional rent whether or not the term of this Lease shall have commenced, and in default of payment thereof, Landlord shall (in addition to all other remedies) have the same rights as in the event of default of payment of Fixed Annual Rent.
2.04. If the occurrence of the Commencement Date shall be delayed by direct result of any Tenant Delay, the Commencement Date shall be accelerated by the number of days of such Tenant Delay.
2.05. Tenant, by entering into possession of the Original Premises and/or the Expansion Space for the conduct of its business, shall be deemed to have conclusively agreed that Landlord has performed all of its obligations hereunder solely with respect to Landlord's Work with respect to applicable space, and that the Original Premises and/or the Expansion Space are in satisfactory condition as of the date of such possession, except for latent defects and items remaining to be performed by Landlord pursuant to Section 2.01 above and subject to the one (1) year warranty given to Tenant by Landlord as set forth in Article 7.
2.06. Notwithstanding anything to the contrary contained herein, (a) if Tenant provides Landlord with an approved Plan for the Original Premises by June 20, 2005 (TIME BEING OF THE ESSENCE), and Landlord fails to deliver possession to Tenant of the Original Premises in the condition required by this Lease by (i) October 15, 2005, Tenant shall be entitled to a rent abatement equal to one (1) day of Fixed Annual Rent for the Original Premises for each day thereafter that Landlord fails to so deliver the Original Premises to Tenant, or (ii) November 1, 2005, Tenant shall be entitled to a rent abatement equal to two (2) days of Fixed Annual Rent for the Original Premises for each day thereafter that Landlord fails to so deliver the Original Premises to Tenant; or (b) if Tenant fails to deliver to Landlord an approved Plan for the Original Premises by June 20, 2005, (i) Landlord's time to complete the Original Space shall be extended for two (2) days for each day that Tenant fails to so deliver the approved Plan to Landlord, and (ii) Tenant shall forfeit one (1) day of Holdover Rent (as defined in Article 44) for each day after June 20, 2005 that Tenant fails to so deliver the approved Plan to Landlord.
ARTICLE 3.
CAFETERIA
3.01. The parties hereto acknowledge that there is currently a cafeteria in the
Building (the "Cafeteria") pursuant to a lease (the "Cafeteria Lease") with
Landlord (the "Cafeteria Tenant"). Landlord shall notify Tenant in the event the
Cafeteria Tenant is unable to meet its obligations pursuant to its lease and
vacates the Cafeteria whereupon Landlord and Tenant shall each endeavor to find
a new cafeteria operator for the Cafeteria. The business terms for the new
cafeteria operator shall be based upon the same material terms (i.e. the same
rental charge per annum with similar annual escalations for any period remaining
in the term of the Cafeteria Lease, regardless of whether the lease with the
prospective cafeteria operator is for the remaining term of the Cafeteria Lease
or for an extended term) as the Cafeteria Lease. At no time shall this Article
be deemed to require Landlord to accept a cafeteria operator which Landlord does
not wish to accept as a tenant in the Building, however Landlord's acceptance of
the cafeteria operator shall not be unreasonably withheld, conditioned or
delayed. In the event Landlord does not accept the cafeteria operator chosen by
Tenant, Landlord shall notify Tenant of the same and Landlord's reasons for its
refusal to accept said cafeteria operator.
ARTICLE 4.
REAL ESTATE TAX ESCALATION
4.01. For the purposes of this Article 4, the following definitions shall apply:
(a) The term "Base Tax" shall mean the Taxes payable for the Base Year, net of any special assessments and as finally determined. If the Base Tax subsequently shall be adjusted, corrected or reduced whether as the result of protest, by means of agreement or as the result of legal proceedings, the Base Tax for the purpose of computing any additional rent payable pursuant to this Article shall be the Base Tax as so adjusted, corrected or reduced. Until the Base Tax is so adjusted, corrected or reduced, if ever, Tenant shall pay additional rent hereunder based upon the unadjusted, uncorrected or unreduced Base Tax and upon such adjustment, correction or reduction occurring, any additional rent payable by Tenant prior to the date of such occurrence shall be recomputed and Tenant shall pay to Landlord any additional rent found due by such recomputation within ten days after being billed therefor (which bill shall set forth in reasonable detail the pertinent date causing and comprising such recomputation).
(b) The term "Taxes" shall mean all fully assessed real estate taxes, assessments or any other governmental charge, general or special, ordinary or extraordinary, unforeseen as well as foreseen, of any kind or nature whatsoever, that are or may be assessed, levied or imposed upon all or any part of the land (hereinafter referred to as the "Land") on which the Building is situated, the Building and sidewalks or streets in front of or adjacent thereto imposed by Federal, State or local government (but excluding any income, franchise, corporate, estate, inheritance, succession, capital stock, transfer or mortgage recording tax, unless same shall be in substitution for or in lieu of a real estate tax assessment) and any and all personal property taxes imposed upon the fixtures, machinery, equipment, apparatus, systems and appurtenances in, upon or used in connection with the Building and Land for operation thereof; it being expressly understood and agreed that it is the intention of the parties for the term "Taxes" to have the broadest possible meaning and not to be limited by the foregoing description. If, due to a future change in the method of taxation or in the taxing authority, a new or additional tax or assessment is imposed against Landlord, and/or the Land and/or the Building, and/or the sidewalks or streets in front of or adjacent thereto or the rents or income therefrom, in addition to, or in substitution in whole or in part for any tax which would constitute "Taxes", or in lieu of additional Taxes, such tax or imposition shall be deemed for the purposes hereof to be included within the term "Taxes".
(c) The term "Tax Year" shall mean each calendar year 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 taxing authorities.
(d) The term "Escalation Statement" shall mean a statement setting forth the amount payable by Tenant for a specified Tax Year pursuant to this Article 4.
4.02. (a) Tenant shall pay as additional rent for each Tax Year a sum ("Tenant's Tax Payment") equal to Tenant's Proportionate Share of the amount by which the Taxes for such Tax Year exceed the Base Tax. Tenant's Tax Payment for each Tax Year shall be due and payable in twelve equal monthly installments, in advance, on the first day of each month during the Tax Year, based upon the Escalation Statement furnished prior to the commencement of such Tax Year, until such time as a new Escalation Statement for a subsequent Tax Year shall become effective. If an Escalation Statement is furnished to Tenant after the commencement of the Tax Year in respect of which such Escalation Statement is rendered, Tenant shall, within thirty (30) days thereafter, pay to Landlord an amount equal to the amount of any underpayment of Tenant's Tax Payment with respect to such Tax Year and, in the event of any overpayment, Landlord shall permit Tenant to credit against subsequent payments under this Section 4.02 the amount of Tenant's overpayment, or if the Lease has expired or terminated, provided there are no outstanding amounts due to Landlord, promptly reimburse said overpayment to Tenant. If there shall be any increase in Taxes for any Tax Year, whether during or after such Tax Year, Landlord shall furnish a revised Escalation Statement for such Tax Year, and Tenant's Tax Payment for such Tax Year shall be adjusted and paid substantially in the same manner as provided in the preceding sentence. If during the term of this Lease, Taxes are required to be paid (either to the appropriate taxing authorities or as tax escrow payments to a superior mortgagee) in full or in 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 to the taxing authorities or the superior mortgagee. Provided Tenant has timely paid the Taxes due hereunder to Landlord, Tenant shall not be liable for the payment of any interest or penalties associated with the late or partial payment of such Taxes by Landlord to any federal, state or local government or agency.
(b) If the real estate tax fiscal year of any taxing authority shall be changed during the term of this Lease, any Taxes for such fiscal year, a part of which is included within a particular Tax Year and a part of which is not so included, shall be apportioned on the basis of the number of days in such fiscal year included in the particular Tax Year for the purpose of making the computations under this Section 4.02.
(c) If the Taxes for any Tax Year for which Tenant shall have paid additional rent pursuant to this Article shall be adjusted, corrected or reduced whether as the result of protest of any tentative assessment, or by means of agreement, or as the result of legal proceedings, the additional rent becoming due in said Tax Year pursuant to this Article shall be determined on the basis of said corrected, adjusted or reduced Taxes. If Tenant shall have paid any additional rent pursuant to this Article for such Tax Year prior to any said adjustment, Landlord shall credit or refund to Tenant any excess amount thus paid as reflected by said adjusted Taxes, less Tenant's Proportionate Share of any cost, expense or fees (including reasonable experts' and reasonable attorneys' fees ) incurred by Landlord in obtaining said tax adjustment. If said tax adjustment shall occur prior to Tenant's payment of any of said Taxes due hereunder as additional rent, Tenant shall pay, as additional rent, Tenant's Proportionate Share of any cost, expenses or fees (including reasonable experts' and reasonable attorneys' fees ) incurred by Landlord in obtaining said tax adjustment.
4.03. In the event that the Commencement Date shall be other than the first day of a Tax Year or the date of the expiration or other termination of this Lease shall be a day other than the last day of a Tax Year, then, in applying the provisions of this Article 4 with respect to any Tax Year in which such event shall have occurred, appropriate adjustments shall be made to reflect the occurrence of such event on the basis of the portion of such Tax Year that shall have elapsed after the term hereof commences in the case of the Commencement Date, and prior to the date of such expiration or termination in the case of the Expiration Date or other termination.
4.04. Payments shall be made pursuant to this Article 4 notwithstanding the fact that an Escalation Statement is furnished to Tenant after the expiration of the term of this Lease. In no event shall the Fixed Annual Rent be reduced by the operation of this Article 4. The rights and obligations of Landlord and Tenant under the provisions of this Article 4 with respect to any additional rent shall survive the expiration or other termination of this Lease.
4.05. Landlord's failure to render an Escalation Statement with respect to any Tax Year shall not prejudice Landlord's right thereafter to render an Escalation Statement with respect thereto or with respect to any subsequent Tax Year, provided said Escalation Statement does not relate to any Tax Year more than thirty six (36) months from the date the Escalation Statement should have been presented to Tenant.
4.06. Each Escalation Statement shall be conclusive and binding upon Tenant unless within the later of thirty (30) days after receipt of such Escalation Statement and ten (10) days from Tenant's receipt of the Tax Records, as defined below. At Tenant's request Landlord shall provide Tenant with evidence supporting the tax amount, either with a complete copy of the tax bill or such other evidence as is in Landlord's possession ("Tax Records"). Tenant shall notify Landlord that it disputes the correctness of such Escalation Statement and shall state the basis upon which Tenant believes in good faith that same is incorrect. Pending the determination of such dispute, Tenant shall pay all amounts due pursuant to the Escalation Statement in dispute, without prejudice to Tenant's position, however, such payment shall in no way prejudice Tenant's right to dispute said payment.
4.07. If Tenant shall fail to pay any amounts due pursuant to this Article as and when due, the terms of Section 1.04 hereof shall apply and Landlord shall be entitled to impose late charges and interest in accordance with the terms of that Section.
4.07. 4.08. In the event Tenant applies for and receives a reduction and/or an abatement of the Taxes as part of any economic incentive program directly due to Tenant's use or occupancy of the Building or directly due to its conducting its business operations in the state, county or local municipality and Tenant can provide Landlord with evidence of the same, Tenant shall receive a credit against its proportionate share of Taxes owed to Landlord in an amount equal to such reduction and/or abatement upon Landlord's receipt of said reduction and/or abatement. Landlord shall cooperate with Tenant in connection with Tenant's application for such economic development incentives pursuant to Article 47.02 herein but in no event shall Landlord be required to execute any documentation which would in any manner materially adversely affect Landlord, the Property or the Building. Tenant shall reimburse Landlord for any and all reasonable costs incurred by Landlord (including but not limited to reasonable attorneys' fees) in connection with the application.
4.09. Notwithstanding anything to the contrary herein contained, Tenant shall
not be charged any additional rent pertaining to Real Estate Taxes during the
initial twelve months of the initial term of this Lease.
ARTICLE 5.
USE
5.01. The Demised Premises shall be used by Tenant solely as and for the Permitted Use and for no other purpose. No sublease, assignment or other transfer of any of Tenant's rights hereunder shall be inconsistent with the Permitted Use, absent Landlord's consent which shall not be unreasonably withheld, conditioned or delayed. In no event shall Landlord be required to consent to a change in the Permitted Use that, in Landlord's reasonable judgment, is inconsistent with the Building's status as a Class A office building in Nassau County, New York.
5.02. Tenant shall not use or permit the use of the Demised Premises or any part thereof in any way that would violate the Permitted Use or any of the covenants, agreements, terms, provisions and conditions of this Lease or for any unlawful purpose or in any unlawful manner or in violation of the Certificate of Occupancy for the Demised Premises or the Building, and Tenant shall not suffer or permit the Demised Premises or any part thereof to be used in any manner, or anything to be done therein or anything to be brought into or kept therein, that, in the reasonable judgment of Landlord, in any way impairs or tends to impair the character, reputation or appearance of the Building as a high quality office building, impairs or interferes with, or tends to impair or interfere with, any of the Building services or the proper and economic heating, cleaning, air-conditioning, ventilating or other servicing of the Building or the Demised Premises, or impairs or interferes with, or tends to impair or interfere with, the use of any of the other areas of the Building by, or occasions material discomfort, inconvenience or annoyance of, any other tenants or occupants of the Building, or increases, or tends to increase, Landlord's costs of operating the Building. Tenant shall not install any electrical or other equipment of any kind that, on the reasonable judgment of Landlord, might cause any such impairment, interference, discomfort, inconvenience or annoyance. Upon ten (10) days written notice to Tenant (except in the case which Landlord, in its reasonable discretion, deems a bona fide emergency, in which case no notice is required) Landlord shall be permitted to take such "peaceable" actions as Landlord reasonably deems necessary to obtain Tenant's compliance with this Section including, without limitation, removal at Tenant's sole cost and expense of any installations of Tenant that violate the terms of this Section in Landlord's judgment.
5.03. Landlord shall at all times comply with all applicable federal, state and local laws with respect to the Building and the Property. If any governmental license or permit, other than a Certificate of Occupancy for the Building, shall be required for the proper and lawful conduct of Tenant's business in the Demised Premises or any part thereof, Tenant at its expense shall procure and maintain and comply with the terms and conditions of such license or permit and submit the same to Landlord for inspection.
ARTICLE 6.
ALTERATIONS AND INSTALLATIONS
6.01. Tenant shall make no alterations, installations, additions or improvements in or to the Demised Premises without Landlord's prior written consent and then only by contractors or mechanics first approved by Landlord, which consent and approval may be withheld in Landlord's reasonable discretion. Landlord's approval shall not be construed as a representation, warranty or statement by Landlord that any work to be performed by Tenant in the Demised Premises is in compliance with applicable law or is otherwise properly designed or efficacious for Tenant's intended purpose. All work, alterations, installations, additions and improvements shall be done at Tenant's sole expense and at such times and in such manner as Landlord may from time to time designate in Landlord's sole discretion, shall be done in a good and workmanlike manner, and shall be effected in compliance with all applicable laws, ordinances, rules and regulations, including, without limitation, the Americans with Disabilities Act. Landlord may impose such conditions in addition to those expressly provided in this Lease as to guaranty of completion and payment, or otherwise, as Landlord may consider necessary in its sole and absolute discretion.
Notwithstanding anything herein to the contrary, provided Tenant is not in
default under the terms of this Lease beyond any applicable notice and cure
period, Tenant may, without notice or consent of Landlord perform Cosmetic
Alterations (as hereinafter defined below) to the interior of the Demised
Premises provided that (i)Tenant shall, at all times comply with the Building
Rules and Regulations as well as any requirements that are, or may at some
future date, be set by Landlord's insurance carrier; (ii) Tenant shall deliver
such items as are required herein pursuant this Article 6 of the Lease,
including but limited to all insurance requirements set forth herein; (iii) at
no time shall the alterations be performed in a manner which may in any way
either unreasonably disturb other tenants in the Building or unreasonably
disturb the normal operations of the Building; (iv) the alteration must be
performed in a workmanlike manner and shall be performed and completed in
accordance with any and all federal, state and local laws and regulations; and
(v) the cost of said Cosmetic Alterations at no time, in the aggregate, exceeds
One Hundred and Eighty Thousand ($180,000.00) Dollars. For purposes of this
provision "Cosmetic Alterations" shall be deemed to mean alterations solely
cosmetic in nature (i.e. re-painting, replacement of floor covering; change of
ceiling tiles change of decorative fixtures or furniture) which do not, at any
time, require filing with the Building Department.
6.02. Any work, alterations, installations, additions or improvements in or to the Demised Premises shall be effected solely in accordance with plans and specifications first approved in writing by Landlord unless such items are Cosmetic Alterations and meet the conditions hereinbefore set forth. Such plans and specifications shall be prepared at Tenant's sole cost and expense by a professional registered architect and shall be complete, finished detailed architectural drawings and specifications for the work to be done. Tenant shall reimburse Landlord promptly upon demand for any reasonable third party costs and expenses incurred by Landlord in connection with Landlord's review of such Tenant's plans and specifications.
6.03. Any approved alterations, installations, additions and improvements to the Demised Premises shall be performed in accordance with the foregoing Sections and the following provisions:
(a) Tenant shall furnish to Landlord copies of all governmental permits and authorizations that are required in connection with such work. All such governmental permits and authorizations shall be obtained by Tenant at its sole cost and expense and Tenant shall pay the cost of filing Tenant's plans and specifications with appropriate governmental authorities in such form as Landlord has agreed to in its reasonable discretion. Tenant shall also obtain all required sign-offs of any permits applied for by Tenant. If Tenant fails to do so, Landlord may, upon thirty (30) days written notice, do so at Tenant's sole cost and expense and may charge Tenant as additional rent to be paid immediately Landlord's actual costs associated with obtaining such sign-offs.
Notwithstanding anything herein to the contrary, the thirty (30) day written notice set forth above shall be reduced to ten (10) days written notice in the event that Tenant's failure to obtain the required sign-offs shall cause a delay in Landlord's ability to close on either the sale or refinancing of the Building or in any way creates a default under the terms of Landlord's then existing financing.
(b) All work to be performed by Tenant shall be done in a manner that will not unreasonably interfere with or disturb other tenants or occupants of the Building.
(c) Prior to commencement of any work, Tenant shall furnish to
Landlord certificates evidencing the existence of (i) workers'
compensation insurance covering all persons employed for such work; and
(ii) comprehensive general liability (including contractual liability)
and property damage insurance from an insurance company or companies
acceptable to Landlord in its reasonable discretion, naming Landlord,
its designees and Tenant as insured, with coverage of at least
$3,000,000 per occurrence for bodily or personal injury (including
death) and $1,000,000 in respect of property damage, or in such higher
amounts as Landlord may reasonably require. Such insurance shall be
maintained at all times during the performance of the work and shall
not be cancelable except on 30 days' prior written notice to Landlord.
6.04. Tenant shall cause to be removed and discharged of record, at Tenant's sole cost and expense, any mechanic's lien or other similar lien filed, or attaching by operation of law, against the Demised Premises or the Building for work claimed to have been done for, or materials claimed to have been furnished to, Tenant by payment or filing of any bond required by law or otherwise, within thirty (30) days after Tenant's notice of any such filing or attachment of any such lien, whether by Landlord or otherwise.
6.05. Except for Tenant's trade fixtures, equipment and improvements all fixtures, improvements, alterations, installations, additions, paneling, partitions, doors, railings and like installations installed in the Demised Premises at any time, either by Tenant or by Landlord or others on Tenant's behalf and whether installed or purchased at Landlord's or Tenant's expense (collectively, the "Leasehold Improvements") shall become the property of Landlord upon installation. The Leasehold Improvements shall remain upon, and shall be surrendered with, the Demised Premises. At no time shall the any high density file systems or the like, signage installed by Tenant pursuant to Article 38 herein, nor the Satellite Equipment installed by Tenant pursuant to Article 37 herein be deemed to be the property of Landlord it being expressly understood and agreed that the same will be removed by Tenant, at its sole cost and expense upon the expiration or earlier termination of this Lease. 6.06. Where furnished by or at the expense of Tenant, all furniture, furnishings and trade fixtures, and any other movable property shall remain the property of Tenant and Tenant shall remove all of such property at any time prior to the expiration or other termination of the term of this Lease.
6.07. If any alterations, installations, additions, improvements or other
property that Tenant is required to remove (unless otherwise agreed to by
Landlord)as provided in this Lease are not removed on or prior to the expiration
or sooner termination of the term of this Lease Landlord shall have the right to
remove such property and to dispose of the same without accountability to Tenant
and at the sole cost and expense of Tenant. In case of any damage to the Demised
Premises or the Building resulting from the removal of such property (whether
such removal is performed by Landlord due to Tenant's failure to do so as
required by the terms of this Lease, or by Tenant), Tenant shall repair such
damage or, in default thereof, shall reimburse Landlord for Landlord's actual
costs in repairing such damage. Tenant's obligations under this Section 6.07 and
under Sections 6.05 and 6.06 shall survive the expiration or other termination
of this Lease.
ARTICLE 7.
REPAIRS
7.01. Landlord, at its sole cost and expense, shall maintain and repair, as necessary, the Life Safety System, roof, roof membrane and any interior ceiling damage due to roof leaks, the Building mechanical systems, the electrical system serving and/or in the Demised Premises, the structural components of the Building including the structural components in the Demised Premises, the common areas, the parking lot, the landscaping as well as all HVAC servicing and/or in the Demised Premises (with the exception of the supplemental HVAC units servicing and/or in Tenant's computer room [approximately 2,000 rsf] and the Tenant's 24 hour call center area] in the Demised Premises (the "Supplemental Units"), which Supplemental Units shall, after the first Lease Year, be maintained at Tenant's sole cost and expense, the electric, the plumbing and any sprinkler system (if the same is installed in the Demised Premises) in and servicing the Demised Premises and the Building (collectively, the "Building Systems"). Notwithstanding the foregoing, Landlord shall, at its sole cost and expense, (i) for a period of one (1) year from the applicable Commencement Date, repair the Original Premises and the Expansion Space, including, without limitation the Supplemental Units (which shall, at all times, be maintained by Tenant but shall be repaired by Landlord for the first year of the Lease term), and the bathroom and plumbing fixtures and appurtenances in the Demised Premises; and (ii) at all times throughout the term of this Lease repair the supplemental air conditioning and ventilation units and the electric baseboard heating installed in the President's office and the CEO's office, as indicated on the Plan. Subsequent to the one year period, with the exception of the Building Systems, Tenant shall, at its sole cost and expense, take good care of the Demised Premises and the fixtures and appurtenances therein) and make all non-structural repairs thereto as and when needed to preserve them in good working order and condition, notwithstanding whether the repair in question is ordinary or extraordinary, foreseen or unforeseen. All damage or injury to the Building, the Property and/or the Demised Premises and to any Structural or Non-Structural portions of the Building, the fixtures, appurtenances and equipment caused by Tenant moving property in or out of the Building, or by the installation or removal of furniture, fixtures or other property, or from any other cause of any other kind or nature whatsoever due to carelessness, omission, neglect, improper conduct or other cause on the part of Tenant, its servants, employees, agents, visitors, invitees or licensees, shall be repaired, restored or replaced promptly at Tenant's sole cost and expense to the reasonable satisfaction of Landlord. All such repairs, restorations and replacements made by Tenant shall be in quality and class equal to the original work or installations that were damaged by Tenant. If Tenant fails to make such repairs, restoration or replacements within a commercially reasonable time period, but in no event more than ten (10) days, upon written notice to Tenant, the same may be made by Landlord at the sole cost and expense of Tenant and such expenses shall be collectible as additional rent and shall be paid by Tenant within thirty (30) days after rendition by Landlord of a bill therefor.
7.02. Tenant shall not, without prior written consent of Landlord, install a high density file system or any similar equipment or fixture of similar weight and density. without Landlord's consent, which consent shall not be unreasonably withheld, conditioned or delayed.
7.03. There shall be no allowance to Tenant for a diminution of rental value and no liability on the part of Landlord by reason of any inconvenience, annoyance or injury to Tenant's business arising from the making of any repairs, alterations, additions, improvements in or to any portion of the Building or the Demised Premises or in or to fixtures, appurtenances or equipment thereof by Landlord, Tenant or any other tenant or other third party. Landlord shall exercise ordinary diligence in performing work in the Building so as to minimize interference with Tenant's business operations, if possible, but shall not be required to perform any work on an overtime or premium pay basis to avoid, reduce or minimize any such interference.
Notwithstanding anything herein to the contrary, Landlord shall act expeditiously to repair conditions in the Building that would potentially interfere with Tenant's normal operations in the Demised Premises so that the same is restored in a prompt and timely manner. Landlord further agrees that it will incur extra shipping charges to obtain necessary parts to repair building systems and pay for overtime work in the event the HVAC or the main electrical panel fails to operate.
7.04. Notwithstanding anything to the contrary herein contained, with the exception of the first year of the Lease term for each of the respective spaces, Landlord shall not be responsible for the replacement of light bulbs, ballasts or other electrical equipment and facilities in the Demised Premises. If Tenant requests that Landlord repair or replace any of the foregoing, and Landlord elects to do so in its sole and absolute discretion, Landlord shall bill Tenant for such materials and services at Landlord's customary rates. All such charges incurred by Tenant shall be deemed additional rent and shall be payable by Tenant within thirty (30) days from Landlord invoicing Tenant therefor.
7.05. Notwithstanding anything to the contrary herein contained, in the event that Landlord is required to perform any repairs in the Demised Premises, with the exception of that specifically noted in the second paragraph of Article 7.03 above, under no circumstances and in no event shall Landlord be required to perform same on overtime or premium pay hours. Landlord shall be entitled to perform such repairs during normal business hours on business days, if Landlord deems it appropriate, and Tenant shall not be entitled to any rent abatement as a result of the conduct by Landlord of repair work in the Demised Premises.
ARTICLE 8.
REQUIREMENTS OF LAW
8.01. Landlord represents and warrants that Landlord's Work shall be performed
in compliance with all applicable laws, orders and regulations in connection
with the issuance of a certificate of occupancy for the Demised Premises. Tenant
shall comply in all respects with all present and future laws, orders and
regulations of federal, state, county and municipal authorities, and of all
insurance bodies, and with any direction of any public officer or officers,
pursuant to law, which shall impose any violation, order or duty upon Landlord
or Tenant with respect to the Demised Premises or the use or occupation thereof
. If Tenant receives any notice of any violation of any law, ordinance, rule,
order or regulation applicable to the Demised Premises or the Building, Tenant
shall give prompt written notice thereof to Landlord. Notwithstanding the
foregoing, with the exception of all permits, approvals, etc. which Tenant may
be required to obtain pursuant to the terms of this Lease, to the extent the any
laws, orders and regulations relate to those portions of the Demised Premises
and the Building for which, under the terms of this Lease, Landlord is obligated
to repair and maintain, the Landlord shall be solely responsible for the same.
ARTICLE 9.
INSURANCE, LOSS REIMBURSEMENT, LIABILITY
9.01. Tenant shall not do, permit or suffer to be done any act or thing upon the Demised Premises that would invalidate or be in conflict with New York standard fire insurance policies covering the Building, and fixtures and property therein, or that would increase the rate of fire insurance applicable to the Building to an amount higher than it otherwise would be; and Tenant neither shall do nor shall Tenant permit to be done any act or thing upon the Demised Premises that shall or might subject Landlord to any liability or responsibility for injury to any person or person to property by reason of any business or operation being carried on within the Demised Premises.
9.02. If, as a result of any act or omission by Tenant or violation by Tenant of the terms of this Lease, the rate of fire insurance applicable to the Building shall be increased in an amount higher than it otherwise would be, Tenant shall reimburse Landlord for all increases of Landlord's fire insurance premiums so caused; such reimbursement to be additional rent payable upon the first day of the month following any outlay by Landlord for such increased fire insurance premiums. In any action or proceeding wherein Landlord and Tenant are parties, a schedule or "make-up" of rates for the Building or Demised Premises by the body making fire insurance rates for the Demised Premises, shall be presumptive evidence of the facts therein stated and of the several items and charges in the fire insurance rate then applicable to the Demised Premises.
9.03. Landlord and its agents shall not be liable for any injury or damage to persons or property (including, but not limited to, loss of profits and injury to business) resulting from fire, explosion, falling plaster, steam, gas, electricity, water, rain or snow or leaks from any part of the Building, or from the pipes, appliances or plumbing works or from the roof, street or subsurface or from any other place or by dampness or by any other cause of any nature, unless any of the foregoing shall be caused by or due to the gross negligence or willful misconduct of Landlord.
9.04. Landlord and its agents shall not be liable for any damage which Tenant may sustain, if at any time any window of the Demised Premises is broken, or temporarily or permanently closed, darkened or bricked up for any reason whatsoever, except in the case of Landlord's arbitrary acts if the result is permanent, and Tenant shall not be entitled to any compensation therefor or abatement of rent or to any release from any of Tenant's obligations under this Lease, nor shall the same constitute an eviction.
9.05. Landlord and its agents, officers, directors and shareholders shall have absolutely no personal liability with respect to any provision of this Lease or any obligation or liability arising therefrom or in connection therewith. Tenant shall look solely to Landlord's estate and interest in the Land and Building for the satisfaction of any right or remedy of Tenant for the collection of a judgment (or other judicial process) requiring the payment of money by Landlord, in the event of any liability by Landlord, and no other property or assets of Landlord or any agent, officer, director or shareholders shall be subject to levy, execution, attachment, or other enforcement procedure for the satisfaction of Tenant's remedies under or with respect to this Lease, the relationship of Landlord and Tenant hereunder, or Tenant's use and occupancy of the Demised Premises, or any other liability of Landlord of Tenant. Nothing contained in this Section shall be construed to permit Tenant to offset against rents due a successor landlord a judgment (or other judicial process) requiring the payment of money by reason of any default of a prior landlord unless such successor landlord comprises the same or substantially the same members and/or principals as a prior landlord or Landlord.
9.06. Tenant shall obtain on or before the Commencement Date and shall keep in force during the term hereof, all-risk insurance, from an insurance company or companies reasonably acceptable to Landlord , in an amount equal to eighty (80%) percent of the full replacement cost of Tenant's furniture, furnishings and other removable personal property and of all fixtures including Leasehold Improvements.
9.07. Tenant shall provide on or before the Commencement Date and shall keep in force during the term hereof for the benefit of Landlord and Tenant a comprehensive general liability insurance policy , from an insurance company or companies reasonably acceptable to Landlord , protecting Landlord and Tenant against any liability whatsoever, arising out of the use of the Demised Premises or any appurtenances thereto or occasioned by any occurrence on or about the Demised Premises or any appurtenances thereto. Such policy shall be in such limits as Landlord may reasonably require which, as of the date of this Lease, are (a) not less than the amount of $1,000,000 per occurrence for bodily or personal injury (including death) and (b) not less than the amount of $1,000,000 in respect of property damage. Landlord reserves the right to change such limits in its reasonable discretion at any time, and from time to time, but in no event more than twice within any twenty four (24) month period, that Landlord deems necessary; provided, however, that Tenant shall have thirty (30) days from receipt of written notice from Landlord regarding the date of any change in Landlord's insurance limits to obtain any required additional coverage. Prior to the time such insurance is first required to be carried by Tenant and thereafter, at least fifteen (15) days prior to the effective date of any such policy, Tenant shall deliver to Landlord either a duplicate original of the aforesaid policies or evidence of such insurance. Said policy or evidence of insurance shall name Landlord, Landlord's managing agent and, if Landlord so requests, Landlord's mortgage lender, as additional insureds and contain an endorsement that such insurance may not be cancelled except upon thirty (30) days prior written notice to Landlord. Tenant's failure to provide and keep in force the aforementioned insurance shall be regarded as a default hereunder entitling Landlord to exercise any or all of the remedies provided in this Lease in the event of Tenant's default.
ARTICLE 10.
DAMAGE BY FIRE OR OTHER CAUSE
10.01. If the Demised Premises or any part thereof shall be damaged by fire or other casualty, Tenant shall give prompt notice thereof to Landlord and this Lease shall continue in full force and effect except as hereinafter set forth.
10.02. (a) If the Demised Premises are partially damaged or rendered partially untenantable by fire or other casualty (i.e., less than 50% of the rentable square footage of the Demised Premises is substantially damaged or destroyed), then, within thirty (30) days of the occurrence of such casualty, Landlord shall commence repairing the damage and complete said repair within six (6) months of the date of such notice. The damage thereto shall be repaired by and at the expense of Landlord and the Fixed Annual Rent shall be apportioned from the day following the casualty until such repair shall be substantially completed and any required Occupancy Approvals are obtained by Landlord in connection with the affected space.
(b) If the Demised Premises are substantially damaged or are rendered wholly or substantially untenantable by fire or other casualty (i.e., more than 50% of the rentable square footage of the Demised Premises is substantially damaged or destroyed), then, within thirty (30) days of the occurrence of such a casualty, Landlord shall notify Tenant in writing if Landlord is able to repair such casualty within six (6) months of the date of such notice. If Landlord notifies Tenant that it can repair such damage within such six (6) month period, the Fixed Annual Rent shall be paid up proportionately to the time of the casualty and thenceforth shall cease until the date when the Demised Premises shall have been repaired and restored by Landlord and any required Occupancy Approvals are obtained by Landlord. If, however, Landlord notifies Tenant that is cannot, or elects not to, repair said damage within such six (6) month period, Tenant may, upon written notice given no later than thirty (30) days after receipt of Landlord's notice, cancel this Lease.
(c) If the Demised Premises or Building are totally destroyed due to fire or other casualty, Tenant shall have the right to terminate this Lease by written notice to Landlord within thirty (30) days and this Lease shall be cancelled and terminated.
(d) If the Demised Premises are totally or substantially damaged or if the Building shall be so damaged that Landlord shall decide to demolish it or to rebuild it, or if at least 50% of the floor area of the Demised Premises is damaged or destroyed during the last 18 months of the then current term of this Lease, then, in any of such events, Landlord may elect to terminate this Lease by written notice to Tenant given within ninety (90) days after such fire or casualty specifying a date for the expiration of the Lease, which date shall not be more than sixty (60) days after the giving of such notice. Upon the expiration date specified in such notice, the term of this Lease shall expire as fully and completely as if such date were the date set forth above for the termination of this Lease and Tenant shall forthwith quit, surrender and vacate the Demised Premises without prejudice, except to Landlord's rights and remedies against Tenant under the Lease provisions in effect prior to such termination, and any rent owing shall be paid up to such date (subject to abatement as provided in subparagraph (b) above) and any payments of rent made by Tenant that were on account of any period subsequent to such date shall be returned to Tenant. Unless Landlord shall serve a termination notice as provided for herein (or unless Tenant has terminated the Lease pursuant to its rights herein), Landlord shall make the repairs and restorations under the conditions of (a) and (b) hereof, with ordinary diligence during business days and business hours, subject to delays due to adjustment of insurance claims, labor troubles and causes beyond Landlord's control. After any such casualty, Tenant shall cooperate with Landlord's restoration by removing from the Demised Premises as promptly as reasonably possible, all of Tenant's salvageable inventory and movable equipment, furniture and other property. Tenant's liability for rent shall resume thirty (30) days after written notice from Landlord that the Demised Premises shall be substantially ready for Tenant's occupancy and Landlord's receipt of all Occupancy Approvals.
10.03. No damages, compensation or claim shall be payable by Landlord for inconvenience, loss of business or annoyance arising from any repair or restoration of any portion of Demised Premises or of the Building pursuant to this Article 10.
10.04. Landlord will not carry separate insurance of any kind on Tenant's property and, except as provided by a law or by reason of its breach of any of its obligations hereunder, shall not be obligated to repair any damage thereto or replace the same.
10.05. The provisions of this Article 10 shall be considered an express agreement governing any cause of damage or destruction of the Demised Premises by fire or other casualty, and Section 227 of the Real Property Law of the State of New York, providing for such a contingency in the absence of an express agreement, and any other law of like import, now or hereafter in force, shall have no application in such case.
ARTICLE 11.
ASSIGNMENT, MORTGAGING, SUBLETTING, ETC.
11.01. Tenant shall not by operation of law or otherwise (a) assign or otherwise transfer this Lease or the term and estate hereby granted, (b) sublet the Demised Premises or any part thereof or allow the same to be used or occupied by others, other than Tenant's employees, (c) mortgage, pledge or encumber this Lease or the Demised Premises or any part thereof in any manner by reason of any act or omission on the part of Tenant, or (d) advertise, or authorize a broker to advertise, for a subtenant or an assignee, without, in each instance, obtaining the prior written consent of Landlord which shall not be unreasonably withheld, conditioned, or delayed. For purposes of this Article 11, (i) the transfer of a majority of the issued and outstanding capital stock of any corporate tenant, or of a corporate subtenant, or the transfer of a majority of the total interest in any partnership tenant or subtenant, or the transfer of control in any limited partnership tenant or subtenant, however accomplished, whether in a single transaction or in a series of related or unrelated transactions, shall be deemed an assignment of this Lease, except that the transfer of the outstanding capital stock of any corporate tenant, or subtenant, shall be deemed not to include the sale of such stock by persons or parties other than those deemed "Affiliates" of Tenant within the meaning of Rule 144 promulgated under the Securities Act of 1933, as amended, through the "over-the-counter market" or through any recognized stock exchange, (ii) a takeover agreement shall be deemed a transfer of this Lease, (iii) an agreement by any other person or entity, directly or indirectly, to assume Tenant's obligations under this Lease shall be deemed an assignment, (iv) any person or legal representative of Tenant, to whom Tenant's interest under this Lease passes by operation of law, or otherwise, shall be bound by the provisions of this Article 11, and (v) a modification, amendment or extension of a sublease shall be deemed a sublease. Tenant shall promptly notify Landlord of any proposed assignment, sublease or "transfer", as defined in this Section.
Notwithstanding anything herein to the contrary, provided Tenant is not in default beyond any notice and cure period, under the terms of this Lease, Tenant shall have the right to assign the Lease or sublet portions of the Demised Premises (i) to an affiliate of Tenant, (ii) in connection with any merger or acquisition of or by Tenant or (iii)to any applicable governmental agency in connection with any economic development incentives received by Tenant without Landlord's prior written consent, provided that Tenant notifies Landlord of said assignment or sublease, in writing, which notice shall include a copy of the fully executed assignment or sublease, as the same may be applicable. Nothing herein will allow Tenant or its subtenant or assignee to use the Demised Premises in any manner other than the Permitted Use.
11.02. Any assignment or transfer shall be made only if, and shall not be effective until, the assignee shall execute, acknowledge and deliver to Landlord a recordable agreement, in form and substance reasonably satisfactory to Landlord, whereby the assignee shall assume the obligations and performance of this Lease and shall agree to be bound by and upon all of the covenants, agreements, terms, provisions and conditions hereof on the part of Tenant to be performed or observed and whereby the assignee shall agree that the provisions of Section 11.01 hereof shall, notwithstanding any assignment or transfer, whether or not in violation of the provisions of this Lease, and notwithstanding the acceptance of rent by Landlord from an assignee or transferee or any other party, remain in full force and effect. Tenant shall remain fully and primarily liable for the payment of the Fixed Annual Rent and additional rent due and to become due under this Lease and for the performance of all of the covenants, agreements, terms, provisions and conditions of this Lease on the part of Tenant to be performed or observed, notwithstanding any such assignment. No sublease shall release Tenant of any liability hereunder of any kind or nature whatsoever.
11.03. Landlord shall not unreasonably withhold, condition or delay its consent to an assignment of this Lease or a subletting of the whole or part of the Demised Premises for substantially the remainder of the term of this Lease, provided:
(a) Tenant shall furnish Landlord with the name and business address of the proposed subtenant or assignee, information with respect to the nature and character of the proposed subtenant's or assignee's business, or activities, such references and current financial information with respect to net worth, credit and financial responsibility as are reasonably satisfactory to Landlord, and an executed counterpart of the sublease or assignment agreement;
(b) The proposed subtenant or assignee is a reputable party whose financial net worth, credit and financial responsibility is, considering the responsibilities involved, reasonably satisfactory to Landlord;
(c) The nature and character of the proposed subtenant or assignee, its business or activities and intended use of the Demised Premises is, in Landlord's reasonable judgment, in keeping with the standards of the Building and the floor or floors on which the Demised Premises are located (it is expressly understood and agreed that Landlord will not consent to the assignment or subletting of the Demised Premises to any physician or other medical practitioner that performs abortions or to any other organization that Landlord deems in its sole and absolute discretion to be inconsistent with the character of the Building notwithstanding that the proposed assignee or subtenant's use of the Demised Premises conforms with the Permitted Use);
(d) The proposed subtenant or assignee is not then an occupant of any part of the building or a party who dealt with Landlord or Landlord's agent (directly or through a broker) with respect to space in the Building during the twelve (12) months immediately preceding Tenant's request for Landlord's consent;
(e) All costs incurred with respect to providing reasonably appropriate means of ingress and egress from the sublet space or to separate the sublet space from the remainder of the Demised Premises shall, subject to the provisions of Article 6 with respect to alterations, installations, additions or improvements, be borne by Tenant;
(f) Each sublease shall state specifically that (i) it is
subject to all of the terms, covenants, agreements, provisions and
conditions of this Lease, (ii) the subtenant or assignee, as the case
may be, will not have the right to a further assignment thereof or
sublease or assignment thereunder, or to allow the Demised Premises to
be used by others, without the consent of Landlord in each instance,
(iii) a consent by Landlord thereto shall not be deemed or construed to
modify, amend or affect the terms and provisions of this Lease, or
Tenant's obligations hereunder, which shall continue to apply to the
premises involved, and the occupants thereof, as if the sublease or
assignments had not been made, (iv) if Tenant defaults in the payment
of any rent, Landlord is authorized to collect any rents due or
accruing from any assignee, subtenant or other occupant of the Demised
Premises and to apply the net amounts collected to the Fixed Annual
Rent and additional rent reserved herein, (v) the receipt by Landlord
of any amounts from an assignee or subtenant, or other occupant of any
part of the Demised Premises shall not be deemed or construed as
releasing Tenant from Tenant's obligations hereunder (except to the
extent that Tenant will receive a credit for any amounts received by
Landlord from third parties, it being the intent of the parties that
Landlord shall not be entitled to a double recovery)or the acceptance
of that party as a direct tenant, and (vi) Tenant is not released from
primary liability hereunder as a result of any assignment or sublease;
and
(g) Tenant, together with requesting Landlord's consent hereunder, shall have paid Landlord One Thousand ($1,000) Dollars to review the requested consent including any attorneys' fees incurred by Landlord.
Landlord may withhold its consent to any assignment or sublease if Tenant fails to provide in a timely fashion any and all reasonably required information hereunder or if any of the information concerning the proposed assignment or sublease is reasonably unacceptable to Landlord .
11.04. Provided Tenant is not in default pursuant to the terms of this Lease beyond any applicable notice and grace period, Tenant may notify Landlord that it wishes to sublet the portion of the first floor space which is utilized for retail sales (the "Retail Space") to a bona fide third party (other than Tenant's Affiliates or as a result of a merger or acquisition of or by Tenant). Upon receipt of said notice and Tenant's compliance with those items set forth in (a) through (g) above, Landlord may, in its sole and absolute discretion, either, (i) accept said sublease or (ii) recapture the Retail Space within ninety (90) days from the date of said notice from Tenant. Upon recapture, the Lease shall no longer apply with respect to the Retail Space and the Fixed Annual Rent, additional rent (to the extent applicable) and Tenant's Proportionate Share shall be reduced proportionately based upon the size of the Retail Space.
11.05. (a) Subject to Tenant's right to assign or sublet without Landlord's consent, as specifically set forth herein, if, without first obtaining Landlord's written consent thereto Tenant shall have assigned this Lease or sublet the Demised Premises, in whole or in part, to any assignee, sublessee , then Landlord shall have the right of "Recapture" (hereinafter defined) as set forth below, in addition to any other right or remedy available to Landlord under this Lease or at law or in equity, and without limiting any of such rights;in the case of an assignment of this Lease, or a proposed assignment of this Lease to any third party other than an Affiliate of Tenant or in connection with a merger or acquisition of or by Tenant, Landlord shall have the right to terminate this Lease (a "Recapture") by giving Tenant a notice of termination (the "Recapture Notice") within twenty (20) days following Landlord's receipt of Tenant's notice or request for consent to such assignment or within six (6) months following Landlord's actual knowledge of such assignment, whereupon this Lease (including all renewal options, whether or not theretofore exercised by Tenant) shall cease and terminate on the date set forth in Landlord's Recapture Notice as though such date were the date herein originally fixed for the expiration of this Lease and Tenant and every assignee or occupant of the Demised Premises claiming by, under or through Tenant shall surrender this Lease and possession of the Demised Premises to Landlord in the condition required pursuant to this Lease and Landlord may thereafter re-let the Demised Premises for Landlord's sole benefit. In addition to the foregoing, Landlord may exercise all rights and remedies available to it upon the occurrence of an event of default under this Lease.
ARTICLE 12.
ELECTRICITY
12.01. Landlord shall, at its sole cost and expense, furnish an electric sub-meter for the Original Premises and Expansion Space only (it being understood that this shall not include any additional space leased in connection with Article 42). The meter shall measure all electric usage in the Demised Premises including but not limited to lighting, office equipment, computer equipment and any other related equipment. Tenant will be responsible for all electric charges determined by such sub-meter, billed at the actual cost, including the actual cost to read the sub-meter and any and all actual maintenance costs in connection with the submeter, and billed as additional rent to Tenant each month (such charge shall be referred to herein as either the "sub-meter electric charge" or the "Base Electric Charge"). In consideration of Tenant's timely payment of the sub-metered electric charge, Landlord shall furnish electric energy to the Demised Premises as is ordinarily and reasonably required by Tenant for use of the Demised Premises in accordance with the Permitted Use. Consistent with the electrical capacity contained, or the capacity to be furnished to Landlord, at its sole cost and expense, of no more and no less than seven (7) watts per rentable square foot in the Demised Premises, Landlord shall permit Tenant to use the electric facilities for Tenant's reasonable lighting and other ordinary electrical fixtures, appliances and equipment (such as personal computers, telephones and fax machines) as Landlord may permit to be installed in the Demised Premises, consistent with Tenant's business operations and the Permitted Use.
12.02. Tenant's use of electric energy in the Demised Premises shall not at any
time, (i) exceed the capacity of any of the electrical conductors and equipment
in or otherwise serving the Demised Premises (which shall be no less than seven
(7) watts per rentable square foot) or (ii) cause or result in any adverse
impairment or interference with Building systems, annoyance or inconvenience to
other tenants or the overloading of the risers or feeders serving the Building.
Tenant shall not, without Landlord's prior consent in each instance, connect any
fixtures, appliances or equipment to the Building's electric distribution system
or make any alteration or addition to the electric system of the Demised
Premises. Should Landlord grant such consent, all additional risers or other
equipment required therefore shall be provided by Landlord and the cost thereof
shall be paid by Tenant to Landlord on demand. As a condition to granting such
consent, Landlord may require Tenant to agree to an increase in the additional
annual rent to an amount which will reflect the value to Tenant of the potential
additional electric energy to be made available to Tenant based upon the
estimated additional capacity of such additional risers or the connected load of
such fixtures, appliances or equipment. The amount of such increase shall be
determined by an electrical consultant selected by Landlord and paid by Tenant.
Such determination shall be binding and conclusive upon the parties. Landlord,
its agents and consultants may survey the electrical fixtures, appliances and
equipment in the Demised Premises and Tenant's use of electric energy therein
from time to time to ascertain whether Tenant is complying with its obligations
under this Section. Each increase in the additional rent under this Section
shall be effective from the date such additional electric energy is made
available to Tenant.
ARTICLE 13.
PARKING
13.01. Landlord shall provide Tenant with seventy five (75) gated reserved parking spaces (which spaces shall be marked by number), in the parking area designated for use by tenants of the Building, and the related parking passes, at no cost to Tenant for use throughout the term of this Lease; provided, however, that if Tenant requires replacement of any parking passes, Landlord shall provide eight replacement parking passes per year free of charge and thereafter Tenant shall pay to Landlord the sum of $50.00 per parking pass prior to the issuance of same. Of the aforementioned seventy five (75) gated reserved parking spaces, twelve (12) spaces shall be marked and located on the upper level of the parking garage in the gated area (with access 24 hours a day, 7 days a week by passcard access) and the remaining sixty three (63) spaces shall be located on the lower level of the parking garage. Landlord reserves the right to relocate (except for the purpose of allocating such reserved parking for any other tenant in the Building or to any other third party) Tenant's reserved parking spaces within the parking areas for the Building, provided that Tenant's parking spaces are at all times within reasonable proximity to the Building or to Tenant's reserved parking spaces that Landlord seeks to relocate. Tenant acknowledges that the reserved parking is within an area and is not by assignment but rather access and that the spaces are on a first come first serve basis. Tenant shall not have the right to use any other parking spaces at the Building, except for those that are not designated for use by other tenants, other than Tenant's reserved parking spaces. In the event that Tenant materially defaults under the Lease (i.e. any default in the payment of Annual Fixed Rent or additional rent), as modified hereby, beyond the expiration of any applicable grace period, Landlord may immediately and without notice to Tenant revoke Tenant's reserved parking provided hereunder until such time as such default is cured. Landlord represents that inclusive of the foregoing gated reserved parking spaces (and not including in said calculation any parking space on the upper level of the parking garage), there is no less than five (5) parking spaces per 1,000 rentable square feet of space in the Building.
ARTICLE 14.
CONDEMNATION
14.01. In the event that the whole of the Demised Premises lawfully shall be condemned or taken in any manner for any public or quasi-public use, this Lease and the term and estate hereby granted shall cease and terminate as of the date of vesting of title. In the event that only a part of the Demised Premises shall be so condemned or taken, then, effective as of the date of vesting of title, the Fixed Annual Rent and the additional rent payable pursuant to Articles 3 and 4 hereunder shall be abated in an amount thereof apportioned according to the area of the Demised Premises so condemned or taken. If a condemnation or taking shall be of a substantial part of the Demised Premises or of a substantial part of the means of access thereto, Tenant, at Tenant's option, by delivery of notice in writing to Landlord within thirty (30) days following the date on which Tenant shall have received notice of vesting or impending vesting of title, may terminate this Lease and the term and estate hereby granted as of the date of vesting of title. If Tenant elects not to terminate this Lease, as aforesaid, this Lease shall be and shall remain unaffected by such condemnation or taking, except that the Fixed Annual Rent and the additional rent payable pursuant to Article 4 shall be abated to the extent hereinbefore provided in this Article 14. In the event that only a part of the Demised Premises shall be so condemned or taken and this Lease and the term and estate hereby granted with respect to the remaining portion of the Demised Premises are not terminated as hereinbefore provided, Landlord, with reasonable diligence and at its expense, will restore the remaining portion of the Demised Premises as nearly as practicable to the same condition as it was in prior to such condemnation or taking.
14.02. In the event of the termination of this Lease in any of the cases hereinbefore provided, this Lease and the term and estate hereby granted shall expire as of the date of such termination with the same effect as if that were the Expiration Date and the Fixed Annual Rent and the additional rent payable under Article 4 shall be apportioned as of such date.
14.03. Except as specifically set forth below, in the event of any condemnation or taking hereinbefore mentioned of all or a part of the Building, Landlord shall be entitled to receive the entire award in the condemnation proceeding. Tenant shall be entitled to make separate claim for the unamortized value of its trade fixtures actually taken, leasehold interest, for moving expenses and "good will" value.
14.04. The provisions of this Article 14 shall not be applicable to any condemnations or taking for governmental occupancy for a limited period of less than ten (10) days.
14.05. In the event of any taking of less than the whole of the Building that
does not result in a termination of this Lease, or in the event of a taking for
a temporary use or occupancy of all or any part of the Demised Premises that
does not result in a termination of this Lease, Landlord, at its expense, to the
extent that any award or awards shall be sufficient for the purpose, shall
proceed with reasonable diligence to repair, alter and restore the remaining
parts of the Building and the Demised Premises to substantially their former
condition to the extent that the same may be feasible and so as to constitute a
complete and tenantable Building and Demised Premises. Tenant shall, in such an
event, continue to pay that portion of the Fixed Annual Rent and additional rent
attributable to the unaffected portions of the Demised Premises due hereunder
during the period that Landlord is restoring the Building and the Demised
Premises. Fixed Annual Rent and Additional Rent for those affected portions of
the Demised Premises shall be abated.
14.06. In the event that any part of the Demised Premises are taken to effect
compliance with any law or requirement of public authority other than in the
manner hereinabove provided in this Article 14, then, (i) if such compliance is
the obligation of Tenant under this Lease, Tenant shall not be entitled to any
diminution or abatement of rent or other compensation from Landlord therefor,
but (ii) if such compliance is the obligation of Landlord under this Lease, the
Fixed Annual Rent payable under Article 1 shall be reduced and additional rent
payable under Articles 3 and 4 shall be adjusted in the same manner as is
provided in Section 14.01 according to the reduction in rentable area of the
Demised Premises resulted from such taking.
ARTICLE 15.
ACCESS TO DEMISED PREMISES; CHANGES
15.01. Tenant shall permit Landlord to erect, use and maintain pipes, ducts and conduits in and through the Demised Premises, provided that the same are installed and/or concealed in a manner reasonably consistent with Tenant's decor or concealed behind walls and ceilings of the Demised Premises or otherwise installed in such manner as shall not materially and adversely impair Tenant's business operations and use of the Demised Premises consistent with the Permitted Use. To the extent reasonably practical, Landlord shall install such pipes, ducts and conduits by methods and at locations that will not materially interfere with or impair Tenant's layout, business operations or use of the Demised Premises consistent with the Permitted Use. Except in the case of a bona fide emergency upon which Landlord may enter the Demised Premises at any time, Landlord or its agents or designees shall have the right to enter the Demised Premises, upon 24 hours written notice, at reasonable times during business hours on business days and at other times, provided it shall not materially and adversely impair Tenant's business operations, to examine same or to make such repairs or alterations that Landlord may deem necessary or desirable for the Building, or that Landlord shall be required to, or shall have the right to, make by the provisions of this Lease. At no time and in no event shall Tenant have the right to delay Landlord from entering the Demised Premises for a period in excess of ten (10)days. Landlord's failure or delay in making any repairs to the Demised Premises due to Tenant exercising its rights pursuant to this provision shall at no time be deemed a default under the terms of this Lease Landlord, upon twenty four (24) hours prior written notice, shall have the right to enter the Demised Premises for the purpose of exhibiting them to prospective purchasers or lessees of the entire Building or to prospective mortgagees or to prospective assignees of any such mortgages or to the holder of any mortgage on the Landlord's interest in the Building, its agents or designees. Landlord shall be allowed to take all material into and upon the Demised Premises (but shall not store its materials overnight without Tenant's consent, which consent shall not be unreasonably withheld, conditioned or delayed)that may be required for the repairs or alterations above mentioned without the same constituting an eviction of Tenant in whole or in part, and the Fixed Annual Rent and additional rent due hereunder shall in no way abate while said repairs or alterations are being made by reason of loss or interruption of the business of Tenant because of the prosecution of any such work. Landlord shall exercise reasonable diligence to minimize the disturbance but nothing contained herein shall be deemed to require Landlord to perform the same on an overtime or premium pay basis.
15.02. Landlord reserves the right, without the same constituting an eviction and without incurring liability to Tenant therefor, to change the arrangement and/or location of public entrances, passageways, doors, doorways, corridors, elevators, stairways, bathrooms and other public areas and amenities of the Building; provided, however, that reasonable access to the Building during business hours on business days shall not be cut off without Landlord providing an alternative means of access thereto.
15.03. Landlord may, during the twelve (12) months prior to expiration of the term of this Lease, exhibit the Demised Premises for rent to prospective tenants upon not less than twenty four (24) hours prior written notice.
15.04. In case of fire or other bona fide emergency, affecting the Demised Premises or any other part of the Building and if Tenant is not present in that portion of the Demised Premises to open and permit an entry into the Demised Premises Landlord or Landlord's agents may enter upon the Demised Premises forcibly without rendering Landlord or such agents liable therefor and without in any manner affecting the obligations and covenants of this Lease. If during the last month of the term of this Lease, Tenant shall have removed all or substantially all of Tenant's property from the Demised Premises, Landlord immediately may enter, alter, renovate or redecorate the Demised Premises without limitation or abatement of rent and without incurring liability to Tenant for any compensation and such act shall have no effect on this Lease or Tenant's obligations hereunder.
ARTICLE 16.
CONDITIONS OF LIMITATION
16.01. This Lease and the term and estate hereby granted are subject to the limitation that whenever Tenant or any guarantor of Tenant's obligations hereunder shall be unable to pay its debts generally as they become due, or shall make an assignment of the property of Tenant or any guarantor of Tenant's obligations hereunder for the benefit of creditors, or shall consent to, or acquiesce in, the appointment of a liquidator, receiver, trustee, or other custodian of itself or the whole or any part of its properties or assets, or shall commence a voluntary case for relief under the United States Bankruptcy Code or file a petition or take advantage of any bankruptcy or insolvency act or applicable law of like import, or whenever an involuntary case under the United States Bankruptcy Code shall be commenced against Tenant or any guarantor of Tenant's obligations hereunder or if a petition shall be filed against it seeking similar relief under any bankruptcy or insolvency or other applicable law of like import, or whenever a receiver, liquidator, trustee, or other custodian of Tenant or any guarantor of Tenant's obligations hereunder or for substantially all of the property of Tenant shall be appointed without Tenant's consent or acquiescence, then, (a) at any time after receipt of notice of the occurrence of any such event, or (b) if such event occurs without the acquiescence of Tenant or any guarantor of Tenant's obligations hereunder, at any time after the event continues for thirty (30) days, Landlord may give Tenant a notice of intention to end the term of this Lease at the expiration of five (5) days from the date of service of such notice of intention, and upon the expiration of said five (5) day period, this Lease and the term and estate hereby granted, whether or not the term shall theretofore have commenced, shall terminate with the same effect as if that day were the Expiration Date, but Tenant shall remain liable for damages as provided in Article 18.
16.02. This Lease and the term and estate hereby granted are subject to further limitation as follows:
(a) whenever Tenant shall default in the payment of any
installment of Fixed Annual Rent or in the payment of any additional rent on any
day that the same become due, and such default shall continue uncured for ten
(10) days; provided, however, that if Tenant is delinquent in the payment of
Fixed Annual Rent or additional rent beyond the expiration of the foregoing
grace period more than three (3) times in any Lease Year, the grace period
herein provided shall no longer apply and Landlord may immediately proceed to
exercise its rights and remedies herein provided; or
(b) whenever Tenant shall do or permit anything to be done, whether by action or inaction, contrary to any of Tenant's obligations hereunder, and if such default shall continue and shall not be remedied by Tenant within twenty (20) days (within ten (10) days, in the case of Tenant's failure to furnish any certificate of insurance required hereunder) after Landlord shall have given to Tenant a notice specifying the same, or, in the case of a happening or default that cannot with due diligence be cured within a period of twenty (20) days and the continuation of which for the period required for cure will not subject Landlord to the risk of criminal liability or termination of any superior lease or foreclosure of any superior mortgage, if Tenant shall not, (i) within said twenty (20) days period advise Landlord of Tenant's intention duly to institute all steps necessary to remedy such situation, (ii) duly institute within said twenty (20) day period, and thereafter diligently and continuously prosecute to completion all steps necessary to remedy the same and (iii) complete such remedy within such time after the date of the giving of said notice by Landlord as is reasonably necessary; or
(c) whenever any event shall occur or any contingency shall arise whereby this Lease or the estate hereby granted or the unexpired balance of the term hereof, by operation of law or otherwise, would devolve upon or pass to any person, firm or corporation other than Tenant, except as expressly permitted by Article 11; or
(d) whenever Tenant shall abandon the Demised Premises, except in the case of an assignment of sublease in accordance with Article 11; or
(e) whenever Tenant shall default in the due keeping, observing or performance of any other covenant, agreement, provision or condition of this Lease which are not incorporated in (a) through (d) above, on the part of Tenant to be kept, observed or performed and such default shall continue and shall not be remedied by Tenant within twenty (20) days after Landlord shall have given to Tenant a notice specifying the same;
then in any of said cases set forth in the foregoing subsections (a), (b), (c),
(d) and (e), Landlord may give to Tenant a notice of intention to end the term
of this Lease at the expiration of five (5) days from the date of the service of
such notice of intention, and upon the expiration of said five (5) days this
Lease and the term and estate hereby granted, whether or not the term shall
theretofore have commenced, shall terminate with the same effect as if that day
were the Expiration Date, but Tenant shall remain liable for damages as provided
in Article 18.
ARTICLE 17.
RE-ENTRY BY LANDLORD; INJUNCTION
17.01.If Tenant shall default in the payment of any installment of Fixed Annual
Rent, or of any additional rent, on any date that the same becomes due, and such
default shall continue uncured for ten (10) days, or if this Lease shall expire
as provided in Article 16, Landlord and Landlord's agents and employees
immediately or at any time thereafter may peaceably re-enter the Demised
Premises, or any part thereof, either by summary dispossess proceedings or by a
suitable action or proceeding at law without being liable to indictment,
prosecution or damages therefrom, to the end that Landlord may have, hold and
enjoy the Demised Premises again as and of its first estate and interest
therein. In the event of any termination of this Lease under the provisions of
Article 16 or if Landlord shall re-enter the Demised Premises under the
provisions of this Article 17 or in the event of the termination of this Lease,
or of re-entry, by or under any summary dispossess or other proceeding or action
or any provision of law, by reason of default hereunder on the part of Tenant,
(i) Tenant thereupon shall pay to Landlord the Fixed Annual Rent and additional
rent payable by Tenant to Landlord up to the time of such termination of this
Lease, or of such recovery of possession of the Demised Premises by Landlord, as
the case may be, (ii) Tenant shall pay to Landlord all actual and reasonable
expenses, including court costs and reasonable attorneys' fees and
disbursements, incurred by Landlord in recovering possession of the Demised
Premises and all costs and charges for the care of the Demised Premises while
vacant and (iii) Tenant also shall pay to Landlord damages as provided in
Article 18.
17.02. In the event of a breach by Tenant of any of its obligations under this
Lease which continues beyond any applicable cure period, Landlord also shall
have the right of injunction in any case in which Landlord in its reasonable
discretion deems Tenant is adversely affecting the normal operation of the
Building or any of the other tenant's use thereof. The special remedies to which
Landlord may resort hereunder are cumulative and are not intended to be
exclusive of any other remedies or means of redress to which Landlord lawfully
may be entitled at any time and Landlord may invoke any remedy allowed at law or
in equity as if specific remedies were not provided for herein.
17.03. If this Lease shall terminate under the provisions of Article 16, or if Landlord shall re-enter the Demised Premises under the provisions of this Article 17, or in the event of the termination of this Lease, or of re-entry, by or under any summary dispossess or other proceeding or action or any provision of law by reason of default hereunder on the part of Tenant, Landlord shall be entitled to retain all moneys, if any, paid by Tenant to Landlord, whether as advance rent, security or otherwise, but such moneys shall be credited by Landlord against the time of such termination or re-entry or, at Landlord's option against any damages payable by Tenant under Article 18 or pursuant to law, it being the parties intent that at no time shall Landlord receive a double-recovery for amounts owed.
ARTICLE 18.
DAMAGES
(a) 18.01. If this Lease is terminated under the provisions of Article 16, or if
Landlord shall re-enter the Demised Premises under the provisions of Article 17,
or in the event of the termination of this Lease, or of re-entry, by or under
any summary dispossess or other proceeding or action or any provision of law by
reason of any default hereunder on the part of Tenant, Tenant shall pay to
Landlord as damages, sums equal to Landlord's costs in connection with the
leasing of the Demised Premises (as well as any additional space leased to
Tenant pursuant to Article 42 herein)to Tenant, including, but not limited to
any and all cost in connection with (i)Landlord's Work, (ii) leasing commissions
paid in connection with this Lease, (iii)the Relocation Allowance set forth in
Article 45 herein, (iv)the Holdover Rent set forth in Article 44 herein, (v)the
Work Allowance set forth in Article 41 herein and the cost of restoring the
Demised Premises to its original condition (herein collectively referred to as
"Landlord's Costs"). The amount of said damage shall be reduced annually on a
straight line basis over the term of this Lease. The parties hereto acknowledge
that the above referenced damages are due and payable upon default so that the
same is to be collected immediately.
(b) sums equal to the aggregate of the Fixed Annual Rent and
the additional rent (as above presumed) payable hereunder that would have been
payable by Tenant had this Lease not so terminated, or had Landlord not so
re-entered the Demised Premises, payable upon the due dates therefor specified
herein following such termination or such reentry and until the Expiration Date;
provided, however, that Landlord shall make commercially reasonable effort to
mitigate its damages and re-let the Demised Premises during said period and if
Landlord shall re-let the Demised Premises during said period, Landlord shall
credit Tenant with the net rents received by Landlord from such re-letting, such
net rents to be determined by first deducting from the gross rents as and when
received by Landlord from such re-letting, the actual reasonable expenses
incurred or paid by Landlord in terminating this Lease in re-entering the
Demised Premises and in securing possession thereof, as well as the expenses of
re-letting, including altering and preparing the Demised Premises for new
tenants, brokers' commissions, reasonable attorneys' fees and disbursements, and
all other expenses properly chargeable against the Demised Premises and the
rental thereof; it being understood that any such re-letting may be for a period
shorter or longer than the remaining term of this Lease and that Landlord may
grant concessions and free rent; but in no event shall Tenant be entitled to
receive any excess of such net rents over the sums payable by Tenant to Landlord
hereunder, nor shall Tenant be entitled in any suit for the collection of
damages pursuant to this subsection to a credit in respect of any net rents from
a re-letting, except to the extent that such net rents actually are received by
Landlord. If the Demised Premises or any part thereof should be re-let in
combination with other space, then proper apportionment on a square foot basis
shall be made of the rent received from such re-letting and of the expenses of
re-letting. Landlord in no event shall be liable in any way whatsoever for
failure to re-let the Demised Premises nor shall such failure affect Tenant's
liability for damages, it being expressly understood and agreed that Landlord
has no obligation to mitigate Tenant's damages hereunder.
If the Demised Premises or any part thereof shall be re-let by Landlord for the unexpired portion of the term of this Lease, or any part thereof, before presentation of proof of such damages to any court, commission or tribunal, the amount of rent reserved upon such re-letting, prima facie, shall be the fair and reasonable rental value for the Demised Premises, or part thereof, so re-let during the term of the re-letting.
18.02. Suit or suits for the recovery of such damages, or any installments thereof, may be brought by Landlord from time to time at its election, and nothing contained herein shall be deemed to require Landlord to postpone suit until the date when the term of this Lease would have expired if it had not been so terminated under the provisions of Article 16, or under any provision of law, or had Landlord not re-entered the Demised Premises. Nothing herein contained shall be construed to limit or preclude recovery by Landlord against Tenant of any sums or damages to which, in addition to the damages particularly provided above, Landlord lawfully may be entitled by reason of any default hereunder on the part of Tenant. Nothing herein contained shall be construed to limit or prejudice the right of Landlord to prove and obtain as liquidated damages by reason of the termination of this Lease or re-entry of the Demised Premises or the default of Tenant under this Lease, an amount equal to the maximum allowed by any statute or rule of law in effect at the time when, and governing the proceedings in which, such damages are to be proved whether or not such amount be greater than, equal to, or less than any of the sum referred to in Section 18.01.
18.03. Notwithstanding the foregoing, in no event shall Landlord be entitled to accelerate the Fixed Annual Rent or additional rent.
ARTICLE 19.
LANDLORD'S RIGHT TO PERFORM TENANT'S OBLIGATIONS
19.01. If Tenant shall default in the observance or performance of any term or covenant on Tenant's part to be observed or performed under or by virtue of any of the terms or provisions in any Article of this Lease, (a) Landlord may, but shall not be obligated to, remedy such default for the account of Tenant, immediately and without notice in case of emergency, or in any other case only provided that Tenant shall fail to remedy such default within twenty (20) days after Landlord shall have notified Tenant in writing and Tenant's receipt of the same) of such default and the applicable grace period for curing such default shall have expired; and (b) if Landlord makes any reasonable expenditures or incurs any expenses in connection with such default including, but not limited to, reasonable attorneys' fees in instituting, prosecuting or defending any action or proceeding, such sums paid or obligations incurred, with interest at the Interest Rate, shall be deemed to be additional rent hereunder and shall be paid by Tenant to Landlord as additional rent upon rendition of a bill to Tenant therefor.
ARTICLE 20.
QUIET ENJOYMENT
20.01. Landlord covenants and agrees that, subject to the terms and provisions of this Lease, if, and so long as, Tenant keeps and performs each and every material covenant, agreement, term, provision and condition herein (which shall include, but shall not be limited to any the payment of any monetary obligation set forth herein) contained on the part or on behalf of Tenant to be kept or performed, then Tenant's rights under this Lease shall not be cut off or ended before the expiration of the term of this Lease, subject however, to (i) the obligations of this Lease, and (ii) the matters provided in Article 25 hereof that affect this Lease.
ARTICLE 21.
SERVICES AND EQUIPMENT
21.01. Landlord shall:
(a) provide necessary elevator facilities on business days from 8:00 a.m. to 7:00 p.m. and on Saturdays from 8:00 a.m. to 1:00 p.m. and shall have at least two elevators subject to call 24 hours a day, 7 days per week.
(b) maintain and keep in good order and repair the all air conditioning, heating and ventilating systems ("HVAC") servicing and/or in the Demised Premises and the Building regardless of where said systems are located in or about the Building (with the exception of the Supplemental Units, beyond the one year period herein specified) installed by Landlord or existing in the Demised Premises at the Commencement Date. The heating system will function when seasonably required on business days from 8:00 a.m. to 7:00 p.m.and on Saturdays from 8:00 a.m. to 1:00 p.m. The air-conditioning and ventilating systems will function when seasonably required on business days from 8:00 a.m. to 7:00 p.m. and on Saturdays from 8:00 a.m. to 1:00 p.m. Landlord shall have no responsibility or liability for the ventilating conditions and/or temperature of the Demised Premises during the hours or days Landlord is not required to furnish heat, ventilation or air-conditioning pursuant to this subsection (b). Landlord shall maintain the temperature in and throughout the Demised Premises at 70 to 74 degrees (the "Temperature"), other than in the President's office and the CEO's office, as indicated on Plan, as these spaces will have separate heating and air conditioning not connected to the Building system and subject to the Tenant's control. Landlord's obligation to maintain the Temperature is conditioned upon (i) Tenant not over utilizing any area in the Demised Premises (i.e. the assembly of large groups of people in any area beyond that set forth in the Plan) and (ii) the heat generated from Tenant's equipment (i.e. personal computers, printers, fax machines) in the Demised Premises. Tenant shall comply with and observe all regulations and requirements prescribed by Landlord for the proper functioning of the heating, ventilating and air-conditioning systems. Landlord shall, at no cost to Tenant, supply HVAC from 8:00 A.M. to 8:00 P.M. for an aggregate period of up to six days a year during the Christmas, Valentines Day and Mother's Day season, which days shall be chosen by Tenant, in its discretion upon ten (10) days written notice to Landlord. If Tenant shall require air-conditioning, heating or ventilation at times when Landlord is not required to furnish same, Tenant shall give Landlord reasonable advance notice (oral or written)of such requirement and, provided Tenant is not in material default after any applicable notice and grace period Landlord shall furnish same to Tenant and Tenant shall pay within thirty (30) days of receipt of Landlord's invoice Landlord's customary charges (which charges are currently at a rate of $150.00 per hour but may escalate from time to time)therefor as additional rent.
(c) provide cleaning and janitorial services on business days, which shall include cleaning of the bathrooms common areas and removal of trash from the Demised Premises. Landlord represents that a day porter or matron will clean the restrooms in the Building once per day on business days during normal business hours and that the restrooms will be cleaned again each night after normal business hours. A copy of the janitorial services provided to the Building are annexed hereto as Exhibit "E".
(d) furnish hot and cold water for pantry and lavatory purposes (including private restrooms in accordance with Exhibit "B").
(e) allow Tenant to utilize the Building's trash compactor at no additional charge.
(f) provide an on site security guard from 7:00 A.M. to 9:00 P.M., Monday through Friday who will circulate in and around the Building, including but not limited to the lobby areas. If Tenant shall at any time request that Landlord deactivate the passcard access system for the Building in order to permit Tenant expanded after business hours access to the Building and the Demised Premises, Landlord shall have the right, at Tenant's sole cost and expense, to post a security guard at the Building for the duration of the time that the passcard system is deactivated. Tenant shall promptly pay to Landlord upon demand the cost of such security guard, which Landlord represents is presently $15 per hour. In the event that the cost of security services increases, Tenant shall pay to Landlord any such increased amount, provided that in no event shall Landlord make any profit with respect to providing the security guard and that such rates remain competitive.
(g) provide a security patrol car which shall circulate the parking lot of the Building, seven days a week from 10:00 P.M. to 6:00 A.M. Tenant acknowledges and agrees that Landlord may use the same security patrol car to patrol other buildings in the Central Nassau County area presently owned, or hereinafter acquired, by Landlord or affiliates of Landlord.
21.02. Landlord reserves the right, without any liability whatsoever and without abatement of Fixed Annual Rent or additional rent, to stop the heating, air-conditioning, elevator, plumbing, sanitary, electric and other systems when necessary by reason of accident or emergency or for repairs, alterations, replacements or improvements, provided that, except in the case of emergency, Landlord will reasonably notify Tenant in advance, in writing, of any such stoppage and, if ascertainable, its estimated duration, and will proceed diligently with the work necessary to resume such service as promptly as reasonably possible and in a manner so as to minimize interference with Tenant's use and enjoyment of the Demised Premises. Landlord shall not be liable in any way to Tenant for any failure of the heating, air-conditioning, elevator, plumbing, sanitary, electric and other systems by reason of any failure or defect in the supply or character of electric energy furnished to the Building or the Demised Premises by the public utility serving the Building nor shall Tenant be entitled to any rent abatement whatsoever in the event of such a failure or interruption of service.
21.03. Landlord shall not be required to furnish any other services, except as otherwise provided in this Lease.
21.04. Tenant acknowledges that the lower level gated parking area shall only be accessible on Business Days from 7:00 A.M. Monday through 9:00 P.M. Friday.
ARTICLE 22.
FAILURE TO GIVE POSSESSION
22.01. If the Demised Premises, any portion thereof, or any additional space to
be included within the Demised Premises shall not be available for occupancy by
Tenant on the specific date (if any) hereinbefore designated for the
commencement of term of this Lease or for the inclusion of such space for any
reason whatsoever, then this Lease shall not be affected thereby but, in such
case, said specific date shall be deemed to be postponed until the date when the
Demised Premises or such additional space shall be available for occupancy by
Tenant, and Tenant shall not be entitled to possession of those affected
portions of the Demised Premises or such additional space until the same are
available for occupancy by Tenant; provided, however, unless specifically set
forth in this Lease to the contrary, that Tenant shall have no claim against
Landlord, and Landlord shall have no liability to Tenant by reason of any such
postponement of said specific date, and the parties hereto further agree that
any failure to have the Demised Premises or such additional space available for
occupancy by Tenant on said specific date or on the Commencement Date shall in
no way affect the obligations of Tenant hereunder nor shall the same be
construed in anyway to extend the term of this Lease and furthermore, this
Section 22.01 shall be deemed to be an express provision to the contrary of
Section 223-a of the Real Property Law of the State of New York and any other
law of like import now or hereafter in force.
Notwithstanding anything herein to the contrary, provided (i)Tenant approves the Plan for the Original Premises by no later than June 20, 2005 in accordance with Article A(2) and (ii) there are no Tenant Delays, as hereinbefore defined, in the event Landlord is unable to substantially complete Landlord's Work in the Original Premises by October 15, 2005, Tenant shall receive a rent abatement equal to one (1) day of Fixed Annual Rent for each day subsequent to October 15, 2005 in which Landlord's Work is not substantially completed. In the event Landlord's Work is not substantially completed by November 1, 2005 the rent abatement shall be increased from one (1) day of Fixed Annual Rent for each day of delay to two (2) days of Fixed Annual Rent for each day of delay.
ARTICLE 23.
INVALIDITY OF ANY PROVISION
23.01. If any term, covenant, condition or provision of this Lease or the application thereof to any circumstance or to any person, firm or corporation shall be invalid or unenforceable to any extent, the remaining terms, covenants, conditions and provisions of this Lease or the application thereof to any circumstances or to any person, firm or corporation other than those as to which any term, covenant, condition and provision of this Lease shall be valid and shall be enforceable to the fullest extent permitted by law.
ARTICLE 24.
BROKERAGE
24.01. Each party hereto covenants, represents and warrants to the other that they have had no dealings or negotiations with any broker or agent other than the Broker(s)(as hereinbefore defined)in connection with the consummation of this Lease, and each party covenants and agrees to pay, hold harmless and indemnify the other from and against any and all cost, expense (including reasonable attorneys' fees and costs) and liability in connection with any compensation, commissions or charges claimed by any broker or agent, other than the Brokers, with respect to this Lease or the negotiation thereof.
ARTICLE 25.
SUBORDINATION
25.01. This Lease is and shall be subject and subordinate to all present and future ground or underlying leases and to all mortgages, options, and building loan agreements that may now or hereafter affect such leases or the real property of which the Demised Premises are a part and to all renewals, modifications, consolidations, replacements and extensions of any such ground or underlying leases, options, building loan agreements and mortgages. The provisions of this Section 25.01 shall be self-operative and no further instrument of subordination shall be required. In confirmation of such subordination, Tenant shall execute and deliver promptly at its own cost and expense any instrument, in recordable form, if required, that Landlord, the lessor of any ground or underlying lease or the holder of any such mortgage or any of their respective successors in interest or assigns may request to evidence such subordination. Tenant shall be liable to Landlord for damages, including actual, consequential and punitive damages, caused by Tenant's failure to deliver a subordination agreement in form acceptable to Landlord and the party requesting same.
Landlord shall obtain a non-disturbance agreement from the existing, and all future lenders that have a mortgage interest in the Building ("Mortgagee"), as well as any party in which Landlord may convey the Building or ground lease ("Future Owner") substantially similar to provisions set forth in the Subordination Non-Disturbance and Attornment Agreement ("SNDA")annexed hereto as Exhibit "F" within ninety (90) days (but in no event sooner than ninety (90) days from the Commencement Date) or the conveyance of the mortgage interest, ground lease or title, as the case may be.
25.02. In the event of a termination of any ground or underlying lease, or if the interests of Landlord under this Lease are sold, transferred by reason of, or assigned in lieu of, a mortgage or if the holder of any mortgage acquires this lease in substitution therefor, then Tenant, at the option of the lessor under such ground or underlying lease or such mortgagee or purchaser, assignee or lessee, as the case may be, either (i) will attorn to it as if said lessor, such mortgagee or purchaser, assignee or lessee, were the landlord originally named in this Lease, or (ii) will enter into a new lease with said lessor or such mortgagee or purchaser, assignee or lessee, as landlord, for the remaining term of this Lease and otherwise on the same terms and conditions as this Lease. The foregoing provisions of clause (i) of this Section 25.02 shall inure to the benefit of such lessor, mortgagee, purchaser, assignee or lessee and the Tenant, shall be self-operative upon the exercise of such option, and no further instrument shall be required to give effect to said provisions. Tenant, however, upon demand of any such lessor, mortgagee, purchaser, assignee or lessee, shall execute, from time to time, instruments in confirmation of the foregoing provisions of this Section 25.02, reasonably satisfactory to the Tenant and to any such lessor, mortgagee, purchaser, assignee or lessee, acknowledge in such attornment and setting forth the terms and conditions of its tenancy.
25.03. Intentionally Omitted.
ARTICLE 26.
CERTIFICATE OF TENANT
26.01. Tenant, without charge, at any time and from time to time, within fifteen
(15) days after request by Landlord, shall deliver a written instrument to
Landlord or to any other person, firm or corporation specified by Landlord, duly
executed and acknowledged, certifying, among other things (it being expressly
understood and agreed that the list of items below shall not act to limit the
scope of items as to which Landlord may request Tenant to certify):
(a) that this Lease is unmodified and in full force and effect or, if there has been any modification, that the same is in full force and effect as modified and stating any such modification, that there is no existing basis to cancel or terminate this Lease, or shall advise otherwise, and to the best of Tenant's knowledge Landlord is not in default thereunder, provided that is in fact the case;
(b) whether the term of this Lease has commenced and rent become payable thereunder, and whether Tenant is in possession of all of the Demised Premises except for such portions of the Demised Premises that have been sublet or being held for sublet pursuant to the provisions of this Lease;
(c) whether or not there are then existing any defenses or offsets that are not claims under paragraph (e) of this Section 26.01 against the enforcement of any of the agreements, terms, covenants, or conditions of this Lease and any modification thereof upon the part of Tenant to be performed or complied with, and, if so, specifying the same;
(d) the amount of the Fixed Annual Rent payable under this Lease and the dates to which the Fixed Annual Rent and additional rent and other charges thereunder have been paid;
(e) whether or not Tenant has made any claims against Landlord under this Lease and, if so, the nature and the dollar amount, if any, of such claim.
Tenant acknowledges and agrees that any estoppel certificate delivered by Tenant may be relied upon by any prospective purchaser of the Building, any lender, mortgagee, lessee, assignee or other party as Landlord may designate.
26.02. It is expressly understood and agreed by Tenant that it shall be an event of default under this Lease for Tenant to fail to deliver the certificate required by this Article 26, in the form requested by Landlord or to demand any concession or payment of any kind or nature in connection with the delivery of this certificate. It is further expressly understood and agreed that delivery of this certificate shall not be excused as a result of Tenant asserting any claims against Landlord. Tenant agrees that it shall be liable to Landlord for damages and all costs incurred as a result of Tenant's delay or failure to deliver such certificate in a timely fashion (including reasonable attorneys' fees). Without limiting the generality of the foregoing, if Tenant shall fail to deliver to Landlord an estoppel certificate within fifteen (15) days after Landlord's request for the same, if the same is not executed and returned to Landlord within ten (10) days of Landlord's second request for the same, in addition to damages, Tenant shall pay to Landlord an administrative fee of $250.00 per day that the estoppel certificate is not so delivered.
ARTICLE 27.
LEGAL PROCEEDINGS; WAIVER OF JURY TRIAL; ATTORNEYS' FEES
27.01. Landlord and Tenant hereby waive trial by jury in any action, proceeding or counterclaim brought by either of the parties hereto against the other on any matters whatsoever arising out of or in anyway connected with this Lease, the relationship of Landlord and Tenant, Tenant's use or occupancy of the Demised Premises, and/or any other claims (except claims for personal injury or property damage), and any emergency statutory or any other statutory remedy. If Landlord commences any summary proceeding for non-payment of rent, Tenant shall not interpose and hereby waives the right to interpose any counterclaim of whatever nature or description in any such proceeding with the exception of any compulsory counterclaim. Notwithstanding the foregoing, Tenant shall be entitled to commence a separate action or proceeding against Landlord regarding any claim or defense it may have against Landlord. Tenant shall reimburse Landlord, in such amounts as determined by the court, for all costs and expenses (including reasonable attorneys' fees and disbursements and court costs, whether in connection with an action or proceeding commenced by Landlord, by Tenant, by a third party or otherwise) incurred by Landlord in connection with (i) enforcing Tenant's obligations under this Lease, (ii) the termination of this Lease and the eviction of Tenant through summary or other proceedings or for any other relief against Tenant including the recovery of damages pursuant to Article 18 hereof, (iii) recovering any sums due under this Lease or any damages for Tenant's breach of the terms of this Lease, (iv) the defense of any claim against Landlord or any shareholder partner, officer, director, employee, agent or servant of Landlord arising under this Lease, whether brought by Tenant or a third party , and (v) as otherwise provided in this Lease. All such amounts shall be deemed to be additional rent, but shall be collectible whether incurred before or after the expiration or termination of this Lease.
27.02. Provided Tenant prevails on the merits, Landlord shall reimburse Tenant, as determined by the court, for all reasonable costs and expenses (including reasonable legal fees and disbursements and court costs) incurred by Tenant in connection with (i) enforcing Landlord's obligations under this Lease, and (ii) the wrongful termination of this Lease by Landlord, (iii) recovering any sums due under this Lease or any damages for Landlord's breach of the terms of this Lease but only to the extent the right to damages against Landlord, if any, are specifically set forth in this Lease; and (iv) the defense of any claim against Tenant or any shareholder, partner, officer, director, employee, agent or servant of Tenant arising under the Lease due to Landlord's failure to comply with the terms of this Lease.
ARTICLE 28.
SURRENDER OF PREMISES
28.01. Upon the expiration or other termination of the term of this Lease,
Tenant shall quit and surrender the Demised Premises to Landlord, broom clean,
in good order and condition, ordinary wear and tear and damage excepted, and
Tenant shall remove all of its high density file systems and the like, trade
fixtures, equipment and personal property (collectively, the "Leasehold
Improvements")as herein provided. Without limiting the generality of the
foregoing, Tenant shall remove, upon the expiration or earlier termination of
this Lease, signage and rooftop equipment and all such other items installed in
or on the Building and the Demised Premises by Tenant. Tenant's obligation to
observe or perform this covenant shall survive the expiration or other
termination of the term of this Lease. If Tenant shall fail to remove its
Leasehold Improvements, signage and Rooftop Equipment from the Demised Premises
upon the expiration or earlier termination of this Lease, such Leasehold
Improvements Rooftop Equipment, signage property shall be deemed abandoned by
Tenant and Landlord shall have the right to remove such property and dispose of
same in any manner that Landlord deems appropriate, in its sole and absolute
discretion. Landlord shall have no liability to Tenant for such Leasehold
Improvements Rooftop Equipment and signage or any damage thereto as a result of
such removal, it being expressly understood and agreed that Landlord may do
whatever it wishes with Leasehold Improvements, the Rooftop Equipment and
signageleft in the Demised Premises after the expiration or earlier termination
of this Lease. Tenant shall be liable to Landlord for all damages, costs and
expenses associated with the removal of any of Tenant's Leasehold Improvement,
Rooftop Equipment and signage from the Demised Premises. The provisions of this
Section 28.01 shall survive the expiration or earlier termination of this
Lease.28.02. Tenant acknowledges that possession of the Demised Premises must be
surrendered to Landlord at the expiration or earlier termination of the term of
this Lease. The parties recognize and agree that the damage to Landlord
resulting from any failure by Tenant to timely surrender possession of the
Demised Premises as aforesaid may be substantial, may exceed amount of the
monthly rent and additional rent theretofore payable hereunder, and maybe
impossible to accurately measure. Tenant therefore agrees that if possession of
the Demised Premises is not surrendered to Landlord within 48 hours after the
expiration or earlier termination of the term of this Lease, then,
notwithstanding anything to the contrary contained in this Lease, Tenant shall
pay to Landlord for each month and for each portion of any month during which
Tenant holds over in the Demised Premises after the expiration or sooner
termination of the term of this Lease, rent at a rate equal to the greater of
(a) one hundred and fifty percent (150%) of that portion of the Fixed Annual
Rent and additional rent that was payable under this Lease for the last month of
the term hereof Nothing herein contained shall be deemed to permit Tenant to
retain possession of the Demised Premises after the expiration or sooner
termination of the term of this Lease. The provisions of this Section 28.02
shall survive the expiration or earlier termination of this Lease.
ARTICLE 29.
RULES AND REGULATIONS
29.01. Tenant and Tenant's invitees, employees and agents shall observe faithfully and comply strictly with such Rules and Regulations as Landlord or Landlord's agents may reasonably adopt from time to time (a copy of the present Rules and Regulations are annexed hereto as Exhibit C); provided, however, that in case of any conflict or inconsistency between the provisions of this Lease and of any of the Rules and Regulations as originally or as hereafter adopted, the provisions of this Lease shall control. Reasonable written notice of any changes to the Rules and Regulations shall be given to Tenant. Landlord shall uniformly enforce the Rules and Regulations and shall not enforce the Rules and Regulations against Tenant in a discriminatory manner.
29.02. Landlord shall have no liability to Tenant, nor shall Tenant be entitled to any abatement of rent whatsoever, as a result of the failure of any other tenant in the Building to comply with the Rules and Regulations or for the failure of Landlord to enforce the Rules and Regulations in any respect.
ARTICLE 30.
CONSENTS AND APPROVALS
30.01. Wherever in this Lease Landlord's consent or approval is required, if Landlord shall unreasonably delay, condition, or withhold such consent or approval (unless Landlord has the right to grant such approval in its sole and absolute discretion, in which event Tenant shall have no claim or remedy against Landlord whatsoever), Tenant in no event shall be entitled to make, nor shall Tenant make, any claim, and Tenant hereby waives any claim, for money damages (nor shall Tenant claim any money damages by way of set-off, counterclaim or defense) based upon any claim or assertion by Tenant that Landlord unreasonably withheld or unreasonably delayed its consent or approval. Tenant's sole remedy shall be an action or proceeding to enforce any such provision, for specific performance, injunction or declaratory judgment. The losing party shall pay all of the prevailing party's costs in, including but not limited to all reasonable attorney's fees connection with the claim, action or proceeding.
ARTICLE 31.
NOTICES
31.01. Any notice, demand, consent, approval, disapproval, or statement (collectively, "Notices") from Landlord to Tenant or from Tenant to Landlord shall be in writing and shall be deemed duly given: (i) if mailed by certified mail, postage prepaid, return receipt requested, (ii) if sent via nationally recognized overnight mail carrier with receipt acknowledged, or (iii) only in the case of Notices that are Escalation Statements or bills for rent, if mailed by first class mail, postage prepaid, to the address(es) for Notices set forth in this Article 31. Notices to Tenant shall be sent to the address of Tenant set forth on page 1 of this Lease until Tenant shall be in occupancy of the Demised Premises and, thereafter, to the Demised Premises. Any Notices to Tenant, with the exception of billing invoices, shall also be sent to Gallagher, Walker, Bianco & Plastaras, Esqs.98 Willis Avenue, Mineola, New York 11501 to the attention of Gerard M. Gallagher, Esq. or such other address as Tenant, or their attorneys, may designate in writing from time to time. Landlord's attorney shall be entitled to serve any required notices hereunder on behalf of Landlord. Notices to Landlord shall be sent (i) to the address of Landlord set forth on page 1 of this Lease or (ii) to such other address as Landlord shall have last designated by notice in writing to Tenant. Notice shall be deemed given on the third (3rd) business day after depositing same in an official depository of the United States Postal Service (or successor organization) or, if given by nationally recognized overnight mail carrier, upon delivery to Landlord or Tenant, as the case may be.
31.02. Notwithstanding anything to the contrary contained in this Lease, prior
to entering in and upon the Demised Premises (except in the case of an
emergency, in which event this clause shall be inapplicable), Landlord shall
provide Tenant with written notice of such planned entry at least twenty four
(24) hours prior thereto, and shall, in such notice, provide Tenant with the
approximate time of such entry. Said written notice may be in any reasonable
format such as a facsimile, hand delivered or mail delivered letter, email or
other generally acceptable format. Landlord shall not be required to deliver
such a notice to any party other than Tenant at the Demised Premises.
ARTICLE 32.
NO WAIVER
32.01. No agreement to accept a surrender of this Lease shall be valid unless in writing signed by Landlord. No employee of Landlord or of Landlord's agents shall have any power to accept the keys to the Demised Premises prior to the termination of this Lease. The delivery of keys to any employee of Landlord or Landlord's agent shall not operate as termination of this Lease or a surrender of the Demised Premises. If Tenant at any time desires to have Landlord sublet the Demised Premises for Tenant's account, Landlord or Landlord's agents are authorized to receive said keys for such purpose without releasing Tenant from any of the obligations under this Lease. The failure of either party to seek redress for violation of, or to insist upon the strict performance of, any covenant or condition of this Lease or any of the Rules and Regulations adopted by Landlord, shall not prevent a subsequent act, which would have originally constituted a violation, from having all the force and effect of an original violation. The receipt by Landlord of rent, nor the payment of such rent by Tenant, with knowledge by either party of the breach of any covenant of this Lease shall not be deemed a waiver of such breach. The failure ofLandlord to enforce (or the Tenant to insist upon enforcement) of any of the Rules and Regulations shall not be deemed a waiver by either party of any violation thereof or of Landlord's right to enforce, or Tenant's right to insist upon enforcement,same according to their terms in the future. No provision of this Lease shall be deemed to have been waived by either party, unless such waiver is in writing signed by the party to be charged by the waiver. Except as may be specifically set forth to the contrary, no payment by Tenant or receipt by Landlord of a lesser amount than the full Fixed Annual Rent and additional rent stipulated herein shall be deemed a satisfaction of Tenant's obligations hereunder. All partial payments shall be applied to the earliest outstanding amounts owed by Tenant to Landlord. No endorsement or statement on any check or any letter accompanying any check or payment of rent shall be deemed an accord and satisfaction, and Landlord may accept such check or payment without prejudice to Landlord's right to recover the balance of such rent or pursue any other remedy provided in this Lease.
ARTICLE 33.
DEFINITIONS
33.01. Except as otherwise set forth to the contrary herein, the term "Landlord" as used in this Lease means only the owner, or the mortgagee in possession, for the time being of the Land and Building (or the owner of a lease of the Building or of the Land and Building), so that in the event of any transfer of title to said Land and Building or said lease, or in the event of a lease of the Building, or of the Land and Building, upon notification to Tenant of such transfer or lease the said transferor landlord shall be and hereby is entirely freed and relieved of all existing or future covenants, obligations and liabilities of Landlord hereunder, and it shall be deemed and construed as a covenant running with the land without further agreement between the parties or their successors in interest, or between the parties and the transferee of title to said Land and Building or said lease, or the said lessee of the Building, or of the Land and Building, that the transferee or the lessee has assumed and agreed to carry out any and all such covenants, obligations and liabilities of Landlord hereunder.
33.02. The term "business days" as used in this Lease shall exclude Saturdays, Sundays and all days observed by the federal, state or local government as legal holidays as well as all other days recognized as holidays under applicable union contracts.
33.03. The term "Interest Rate" shall mean a fluctuating rate of interest per annum equal to the lesser of (a) 1% above the prime commercial lending rate of interest listed from time to time by Citibank, N.A., or, if such bank is no longer in business, such other lending institution as the Landlord shall designate in its reasonable discretion or (b) the maximum applicable legal rate of interest, if any.
33.04. The term "Life Safety System" shall mean those safety systems required by federal, state and local law in connection with the Building.
33.05 The term "Affiliates" with respect to Tenant, shall mean any person or
entity directly or indirectly controlling, controlled by, or under
common control with Tenant.
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ARTICLE 34.
INABILITY TO PERFORM
34.01. Except as may be otherwise specifically set forth to the contrary, this Lease and the obligation of Tenant to pay rent hereunder and to perform all of the other covenants and agreements hereunder on the part of Tenant to be performed shall in no way be affected, impaired or excused because Landlord is unable to fulfill any of its obligations under this Lease or to supply, or is delayed in supplying, any service expressly or impliedly to be supplied, or is unable to make, or is delayed in making, any repairs, additions, alterations or decorations or is unable to supply, or is delayed in supplying, any equipment or fixtures if Landlord is prevented or delayed from so doing by reason of strike or labor troubles or any cause whatsoever beyond the reasonable control of Landlord including, but not limited to, government preemption in connection with a National Emergency or by reason of any rule, order or regulation of any department or subdivision thereof or any government agency or by reason of the conditions of supply and demand which have been or are affected by war or other emergency, provided however, Landlord shall be required to promptly notify Tenant, in writing, of its inability to perform under this Lease and shall promptly resume performance as soon as said impediment is no longer present.
ARTICLE 35.
ENTIRE AGREEMENT; NO REPRESENTATIONS; NO ORAL MODIFICATION
35.01. This Lease and the Schedules attached hereto set forth all of the covenants, promises, assurances, agreements, representations, conditions, warranties, statements and understandings (collectively, the "Representations") between Landlord and Tenant concerning the Demised Premises and the Building, and there are no Representations, either oral or written, between Landlord and Tenant other than those set forth in this Lease.
35.02. This Lease supercedes and revokes all previous negotiations, arrangements, letters of intent, offers to lease, lease proposals, brochures, Representations, and information conveyed whether oral or in writing, between Landlord and Tenant or their respective representatives or any other person purporting represent Landlord to Tenant. Tenant acknowledges that it has not been induced to enter into this Lease by any Representations of Landlord not expressly set forth in this Lease, it has not relied on any such Representations, no such Representations shall be used in the interpretation or construction of the Lease, and Landlord shall have no liability for any consequences arising as a result of any such Representations.
35.03. Except as otherwise provided in this Lease, no subsequent alteration, amendment, change or addition to this Lease shall be binding upon Landlord or Tenant unless in writing and signed by the party against whom enforcement of the alteration, amendment, change or addition is sought.
ARTICLE 36.
NON-LIABILITY AND INDEMNIFICATION
36.01. Neither Landlord nor any partner, member, director, officer, agent,
servant or employee of Landlord shall be liable to Tenant for any loss, injury
or damage to Tenant or to any other person, or to its or their property,
irrespective of the cause of such injury, damage or loss. exceptto the extent
the same are caused by or result from the negligence or willful misconduct of
Landlord, its agents, servants or employees in the operation or maintenance of
the Demised Premises or the Building.
36.02. Tenant shall indemnify and hold harmless Landlord and all lessors under
underlying leases, of, and mortgagees under mortgages affecting, the Land and/or
the Building and its and their respective partners, members, directors,
officers, agents and employees from and against any and all claims arising from
or in connection with the use or occupation of the Demised Premises by Tenant or
anyone in the Demised Premises with Tenant's permission or from any breach of
this Lease by Tenant.
36.03 Landlord shall indemnify and hold harmless Tenant and its Affiliates and their respective directors, officers, agents and employees from and against any and all claims arising from or in connection with the ownership, operation or maintenance (to the extent Landlord is responsible for the same) of the Demised Premises or the Building by Landlord, its agents or employees or from any breach of this Lease by Landlord. This provision shall at no time be deemed to create any third party beneficiary rights between Tenant and Landlord's insurance carrier.
ARTICLE 37.
LICENSE TO USE ROOF IN CONNECTION
WITH SATELLITE DISH AND ANENNAS
37.01. Provided Tenant is not in default under the terms of this Lease beyond any applicable notice and cure period, Tenant, upon ten (10) days written notice to Landlord shall have the right to install a Satellite Dish, antennas and other equipment/infrastructure supporting Tenant's operations (collectively, "Satellite Equipment") on the roof of the Building on the following conditions:
(1) Tenant shall have the right to install the Satellite Equipment at no additional charge to Tenant;
(2)Tenant may only run cable and conduits from the Satellite Equipment to the Demised Premises (which shall include the Expansion Space subsequent to its lease commencement date) in the manner and location approved by Landlord, but in no event through any other tenant's premises. Tenant shall repair any damage to the roof or other parts of the Building caused by the installation, presence, use of and removal of the Satellite Equipment and any related cables, conduits or equipment installed by or on behalf of Tenant;
(3) The Satellite Equipment, cables and conduits shall remain the property of Tenant for the term of this Lease. Upon the expiration of the Lease term, Tenant, at its sole cost and expense, shall remove the Satellite Equipment and any related cables, conduits or equipment and repair any damage to the Building caused by the installation, use or removal;
(4) Tenant shall provide Landlord with a survey describing the proposed mounting method, location, point of entry to the Building and cable route, which will require Landlord's approval,which shall not be unreasonably withheld, conditioned or delayed, prior to installation;
(5) Tenant may not hire any contractor to install the Satellite Equipment without Landlord's prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed. Tenant shall promptly notify Landlord of the name of the contractor and provide Landlord with whatever information Landlord deems necessary in determining whether the contractor is acceptable. All work shall be conducted by workmen bonded in amounts reasonably acceptable to Landlord. Furthermore, Tenant will provide insurance coverage and certificates in the amounts more specifically set forth in the Lease, naming Landlord, its lender, its managing agent, and any and all other parties required by Landlord, as additional insured;
(6) Tenant shall at no time create a nuisance or unreasonably interfere with the rights of other tenants in the Building or the use of common areas, elevators or stairways;
(7) Tenant will apply for all necessary approvals, permits and licenses at no cost to Landlord. Tenant and its contractors shall not perform any work unless and until all necessary approvals, permits and licenses have been obtained by Tenant. Tenant shall provide Landlord with copies of all applications for approvals, permits and licenses as well as all approvals, permits and licenses issued prior to the commencement of any work for Landlord's prior review;
(8) Tenant will provide Landlord with certificates of
completion and lien releases. Tenant warrants that no
mechanic's lien will attach as a result of the
installation and in the event a mechanic's lien is filed,
the same will be bonded and discharged within no more
than ten (10) days;(9) Tenant agrees that the use of the
Satellite Equipment will not materially interfere with the
transmission or reception equipment presently or
subsequently located on the Building. If the installation
of the Satellite Equipment should cause measurable
interference, Tenant shall eliminate it in a timely manner
after notice from Landlord. Furthermore, if the placement
of the Satellite Equipment in any way unreasonably
interferes with the Landlord's use of the roof, upon
written notice from Landlord, Tenant shall, at its sole
cost and expense, relocate the Satellite Equipment to a
different portion of the roof agreed upon by Landlord; and
(10) Tenant will indemnify and hold Landlord its agents,
employees harmless from and against all liability,
damages, costs and expenses, including reasonable
attorney's fees, incurred by Landlord arising out of or in
connection with Tenant's installation, use, maintenance
and removal of the Satellite Equipment, cables and
conduits.
ARTICLE 38.
SIGNAGE
38.01. 38.01. At the inception of the Lease, Landlord, at its sole cost and expense, shall affix the Tenant's name to the building directory and to the standard signage provided by the Landlord at the entrance to the Demised Premises. Thereafter, if the Tenant wishes to change the nomenclature on the signage it shall be done through the Landlord's office, with the Landlord's express consent, which shall not be unreasonably withheld conditioned or delayed and at the Tenant's sole cost and expense. If Tenant affixes any signage in violation of this provision, among other remedies, Landlord may, without notice to Tenant, remove and discard same and Tenant shall be immediately liable to Landlord for the cost of such removal and the restoration of the Building associated with such removal.
38.02. To the maximum extent permitted by zoning laws and regulations, by variance or otherwise, Tenant, at its sole cost and expense, shall have (i) the exclusive right (exclusive to any and all present and future tenants of the Building, the Landlord, and any third parties) to exterior signage above the first floor of the Building for its name or any of its subsidiaries' names, on four sides (north, south, east, and west)of the Building as designated by Tenant("Exterior Building Signage"), (ii) the right to install exterior retail signage at the level of the first floor on the front (Southside) of the Building ("Exterior Retail Signage"), (iii) the exclusive right to install exterior signage on or about the rear (Northside) of the parking garage visible from the Long Island Railroad tracks ("Exterior Parking Garage Signage"), (iv) the exclusive right to install exterior signage on and in conjunction with the existing monument sign depicting the address of the Building, but in no event shall it interfere with the existing lettering set forth on the sign ("Monument Sign"), and (v) the right to install temporary exterior signage during the Mother's Day peak selling period, which temporary signage shall cover, in whole or in part, Tenant's Exterior Signage. Collectively the Exterior Building Signage, Exterior Retail Signage, Exterior Parking Garage Signage and Monument Sign may be referred to as "Exterior Signage". Tenant shall not be required to obtain the approval or consent of Landlord to install said Exterior Signage to the extent that Channel Letter signage similar to the signage used by Tenant at its existing premises (1600 Stewart Avenue, Westbury, NY) is used. In addition, Tenant shall be permitted to install any other interior or exterior signage subject to the approval and consent of Landlord, which approval and consent shall not be unreasonably withheld, conditioned or delayed.
38.03 Tenant shall be responsible for the installation and maintenance and
repair of the signage and shall remove the same so that the area is in
substantially the same condition, reasonable wear and tear excepted, as
immediately prior to the installation or erection of any Exterior Signage upon
the expiration or earlier termination of this Lease. Tenant shall at all times
comply with the terms set forth in Article 6 above (except as may be
specifically contrary herein) and acknowledges and agrees that Tenant shall be
responsible for any and all of Landlord's costs in connection with the signage.
In addition, Tenant shall indemnify and defend Landlord solely in connection
with any claims that may be made against Landlord, or losses sustained by
Landlord, directly due to or solely in connection with the signage (whether it
be directly due to the actual existence of the signage or with respect to the
installation, maintenance, or removal of the signage, or due to any damage or
repair required to the Building or elsewhere.
38.04 Tenant shall be responsible for any and all costs in connection with the
illumination of the Exterior Signage, including but not limited obtaining
electricity to the signage (via sub-meter) as well as the electric charges
associated with the illumination of the signage.
ARTICLE 39.
HAZARDOUS MATERIALS/ENVIRONMENTAL MATTERS
39.01. As used herein, "Hazardous Materials Laws" means all federal, state and local laws, statutes, ordinances and regulations, rules, rulings, policies, orders and administrative actions and orders relating to industrial hygiene, environmental protection or the use, analysis, generation, manufacture, storage, disposal or transportation of any oil, flammable explosives, asbestos, urea, formaldehyde, radioactive materials or waste, infectious waste, or other hazardous, toxic, contaminated or polluting materials, substances or wastes, including, without limitation, any "hazardous substances," "hazardous wastes," "hazardous materials" or "toxic substances" under any such laws, ordinances or regulations (collectively, Hazardous Materials"). Tenant shall, at its own expense, at all times and in all respects: (i) comply with all Hazardous Materials Laws regarding Hazardous Materials introduced in or about the Building by or at the direction of Tenant or in connection with Tenant's use of the Premises ("Tenant's Hazardous Materials"); and (ii) procure, maintain in effect and comply with all conditions of any and all permits, licenses and other governmental and regulatory approvals relating to Tenant's Hazardous Materials within, on, under or about the Building in conformity with all applicable Hazardous Materials Laws and prudent industry practices regarding management of such Hazardous Materials. Landlord recognizes and agrees that Tenant may use Tenant's Hazardous Materials in normal quantities that are applicable to general office use and that such use by Tenant shall not be deemed a violation of this Section, so long as the levels are not in violation of any Hazardous Materials Laws. Upon termination or expiration of the term of this Lease, Tenant shall, at its own expense, cause all of Tenant's Hazardous Materials to be removed from the Demised Premises and the Building and transported for use, storage or disposal in accordance and in compliance with all applicable Hazardous Materials Laws. Tenant shall indemnify, protect, defend (by counsel reasonably acceptable to Landlord), and hold Landlord and Landlord's employees, agents, principals, partners, shareholders, members, attorneys, accountants, professionals and other representatives, free and harmless from and against any and all claims, liabilities, penalties, forfeitures, losses and expenses (including attorneys' fees) or death of in injury to any person or damage to any property whatsoever, including, without limitation, the Building common area, arising from or caused in whole or in part, directly or indirectly, by the presence in or about the Building of any of Tenant's Hazardous Materials or by Tenant's failure to comply with any Hazardous Materials Laws regarding Tenant's Hazardous Materials or in connection with any removal, remediation, clean up, restoration and materials required hereunder to return the Demised Premises and any other property of whatever nature to their condition existing prior to the appearance of Tenant's Hazardous Materials. Landlord shall have the right from time to time, upon reasonable prior written notice, to enter in and upon the Demised Premises and to inspect same for the presence of Hazardous Materials and for Tenant's compliance with all Hazardous Materials Laws.
39.02. A. Landlord represents and warrants that any handling, transportation, storage, treatment or usage of Hazardous Materials that has occurred in the Building and/or in, on, or under the Land was in compliance with all applicable federal, state and local laws, regulations and ordinances. Landlord further represents and warrants that no leak, spill, discharge, emission or disposal of Hazardous Materials has occurred in the Building and/or in, on, or under the Land and that the soil, groundwater and soil vapor in the Building and/or on or under the Land is, or will be, free of Hazardous Materials as of the date hereof. Landlord agrees to indemnify, defend and hold Tenant and its officers, partners, directors, shareholders, Affiliates, employees and agents harmless from any claims, judgments, damages, fines, penalties, costs (including reasonable attorney, consultant and expert fees), liabilities (including sums paid in settlement of claims) or loss which arise during or after the Lease term or any thereof, in connection with the presence of Hazardous Materials in the soil, groundwater, or soil vapor in, on or under the Building and/or the Land, unless such Hazardous Materials are present as the result of the acts of Tenant, its officers, employees or agents. Without limiting the generality of the foregoing, this indemnification shall survive the expiration of this Lease and does specifically cover costs incurred in connection with any investigation of site conditions or any cleanup, remedial, removal or restoration work required by any federal, state or local governmental agency or political subdivision because of the presence of Hazardous Materials in the soil, groundwater or soil vapor in, on or under the Building and/or the Land, unless the Hazardous Materials are present as the result of the acts of Tenant, its officers, agents or employees. Without limiting the generality of the foregoing, this indemnification shall also specifically cover costs in connection with:
1. Hazardous Materials present or suspected to be present in the soil, ground water or soil vapor in, on or under the Building and/or the Land before the date hereof; or
2. Hazardous Materials that migrate, flow, percolate, diffuse or in any way move into, onto or under the Building and/or on the Land after date hereof; or
3. Hazardous Materials present in, on or under the Building and/or the Land as a result of any discharge, dumping, spilling (accidental or otherwise) onto or into the Building and/or the Land during or after the Lease term or any extension thereof by any person or entity.
39.03. Landlord and Tenant shall comply with all laws, ordinances and regulations of the State of New York and the County of Nassau regarding the disclosure of the presence or danger of Tenant's Hazardous Materials. Tenant acknowledges and agrees that all reporting and warning obligations required under the Hazardous Materials Laws with respect to Tenant's Hazardous Materials are the sole responsibility of Tenant, whether or not such Hazardous Materials Laws permit or require Landlord to provide such reporting or warnings, and Tenant shall be responsible for complying with such Hazardous Materials Laws regarding the disclosure of, the presence or danger of Tenant's Hazardous Materials. Landlord and Tenant shall each immediately notify the other, in writing, of any complaints, notices, warnings, reports or asserted violations of which it becomes aware relating to Hazardous Materials on or about the Premises. Landlord and Tenant shall each immediately notify the other if either knows or has reason to believe Hazardous Materials have or will be released in or about the Building.
39.04. Tenant shall not perform or cause to be performed, any Hazardous Materials surveys, studies, reports or inspection, relating to the Demised Premises or the Building without obtaining Landlord's advance written consent, which consent may be withheld in Landlord's sole and absolute discretion. At any time prior to the expiration of the Lease Term, Landlord shall have the right (in case of an emergency, with no notice and in cases of non-emergency, upon not less than five (5) days written notice to Tenant) to enter upon the Demised Premises in order to conduct appropriate tests and to deliver to Tenant the results of such tests to demonstrate that levels of any Hazardous Materials in excess of permissible levels has occurred as a result of Tenant's use of the Demised Premises.
39.05. Tenant is advised that there is present within the Building certain material which has been identified as asbestos containing material ("ACM"). Landlord represents and warrants to Tenant that as of the respective Commencement Date that such ACM has been properly abated from the Original Premises and the Expansion Space in accordance with industry standards and shall not pose a health risk to Tenant, its agents, employees, customers and visitors. The ACM is or may be located in the area in the hung ceiling of the common areas of the Building and the shafts and chases located throughout the Building.
(a) Tenant is advised that due to the presence of this ACM, Tenant must not at any time enter upon or open the ceiling in the common areas of the Building or enter upon any shaft areas or penetrate any of the walls of the Demised Premises. Tenant must advise all those that are in the Tenant's employ or are its independent contractor's of the condition as stated.
(b) It is expressly understood and made a covenant of this Lease that the Tenant shall not, without Landlord's prior written consent, enter upon, allow any person, firm or corporation to enter upon the areas concealed by the ceiling, the walls and any concealed area within the Demised Premises for any reason whatsoever including but not limited to changing wiring, installing wiring, cables or other conduits within the ceiling plenum.
(c) Tenant is advised that entry into such areas shall be only under the Landlord's supervision and the supervision of the Asbestos Contractor or Asbestos Consultant retained by the Landlord. All costs associated with such supervision and entry through the use of the Landlord's Asbestos Contractor or Asbestos Consultant shall be at Tenant's sole cost and expense, provided said Asbestos Contractors or Asbestos Consultant's fees are competitive in the trade in the Nassau County area
(d) Except as specifically set forth in (c) above, Tenant acknowledges that the Landlord in its sole and absolute discretion shall have the right to refuse access to the concealed areas, to mandate that contractor's used by the Tenant have proper certification for the handling of ACM or in the alternative require the Tenant to use such contractors designated by Landlord with such qualifications.
(e) Tenant for itself, its heirs, successors, assigns and or subtenants agrees to follow the Landlord's asbestos operations and maintenance program (the "O&M Plan") in all respects and to fully cooperate to effect compliance with the Landlord's O&M Plan which now exists or may be modified or changed in accord with the requirements of law and the exigencies of the operation of the building.
(f) Landlord through its consultant is monitoring the air quality in the Demised Premises and the Building approximately twice a year. In the event that Landlord's consultant recommends abatement of any area then and in such event, Landlord shall commence such abatement as soon as is reasonably practical thereafter. Tenant agrees to promptly, immediately and fully cooperate in such abatement.
(g) In the event Tenant, in its reasonable discretion, has reason to believe
that there may be an issue with respect to the air quality in the Building, upon
Tenant's written request, but in no event more frequently than once every three
(3) months, Landlord shall supplement the air quality testing by retaining its
contractors to re-test the air quality prior to its customary six month
scheduled monitoring. The cost of any such supplemental air monitoring shall be
borne by Tenant and shall be due and payable to Landlord as additional rent.
39.05. The respective rights and obligations of Landlord and Tenant under this Article shall survive the expiration or termination of this Lease.
ARTICLE 40.
RELOCATION OF DEMISED PREMISES; DEMOLITION, ALTERATION AND REMOVAL
40.01. Intentionally Omitted. 40.02 Intentionally Omitted.
40.03. During the term of this lease, Tenant acknowledges and agrees that Landlord shall retain any and all rights (a) to cause all or any part of the Demised Premises to be combined with any other premises so as to constitute the combined premises into a single zoning lot or development or enlargement, (b) to cause any lot, development or enlargement at any time constituting or including all or any part of the Demised Premises to be subdivided into two or more lots, developments or enlargements, (c) to cause development rights (whether from the Demised Premises or other premises) to be transferred to any such lot, development or enlargement, (d) to cause other combinations, subdivisions and transfers to be effected, whether similar or dissimilar to those now permitted by law and (e) to exploit, sell, convey, lease or otherwise transfer any so called "air rights" or "air space" above the Building. Tenant acknowledges and agrees that Tenant has no rights to any such development rights, "air rights" or comparable rights appurtenant to the Land and the Building, and consents, without further consideration, to any utilization of such rights by Landlord, and agrees to promptly execute and deliver any instruments which may be requested by Landlord, including, but not limited to, instruments merging zoning lots, evidencing such acknowledgment and consent. Nothing herein shall be construed to limit Landlord's rights to sell, convey, lease or otherwise transfer all or any portion of its interest in the Demised Premises subject to the provisions of this Lease.
ARTICLE 41
RENEWAL OPTION
41.01. Provided that Tenant has not been in default hereunder at any time beyond the expiration of any applicable grace period, Tenant shall have the right, exercisable upon one hundred twenty (120) days prior written notice to Landlord (TIME BEING OF THE ESSENCE) to renew and extend the term of this Lease for up to two (2) successive additional five (5)year periods. Tenant acknowledges and agrees that the provision of timely notice of the exercise by Tenant of the option herein contained is a material condition to the exercise of such option. If Tenant shall default hereunder beyond any applicable notice and cure period, between the date of exercise of its option herein contained and the date on which the option period commences, Landlord shall have the right, by notice given to Tenant, to negate Tenant's exercise of Tenant's option hereunder and to have the Lease terminate or expire by its terms as provided herein.
41.02. The Fixed Annual Rent for the first year of the option period shall be the then escalated rent increased by $1.00 per rentable square foot. Thereafter, the Fixed Annual Rent shall continue to be escalated annually at a rate of $1.00 per rentable square foot. In no event and under no circumstance shall the Fixed Annual Rent and the additional rent due hereunder during the first year of the option period be less than the Fixed Annual Rent and additional rent payable hereunder during the last month of the initial term of this Lease.
41.03. In connection with Tenant's exercise of its renewal option, upon the commencement of each five (5) year renewal term, Landlord shall pay to Tenant as a work allowance for the Demised Premises the sum of Three Hundred Thousand ($300,000) Dollars (the "Work Allowance"). Tenant shall utilize the Work Allowance in connection with the Demised Premises or in such manner it deems acceptable, in its sole discretion.
ARTICLE 42.
RIGHT OF FIRST OFFER
42.01. A. Provided Tenant is not in default under the terms of the Lease beyond
any applicable cure period, Landlord agrees not to lease any other space of
2,500 rental square feet or greater (the "Available Offer Space") to another
prospective tenant unless and until Landlord first offers the Available Offer
Space to Tenant in writing (the "First Offer Leasing Notice") and Tenant either
(i) rejects such offer in writing; or (ii) ten (10) business days elapse from
Tenant's receipt of the First Offer Leasing Notice and Tenant has not notified
Landlord in writing of its acceptance of such First Offer Leasing Notice,
whichever event occurs first. Tenant's right of First Offer is subject to
Landlord's right to first offer such space to the existing tenants occupying
their existing space in the Building who wish to extend the term of their lease.
In addition, Tenant's rights hereunder are subject to any existing right of
first offer for the same space. A list of tenant's with an existing right of
first offer are annexed hereto as Exhibit "G". The First Offer Leasing Notice
will contain, at miniumum, the following information:
(1) A description of the Available Offer Space (including the area and location of such Available Offer Space) and a floor plan showing the Available Offer Space crosshatched and a summary of the work to be performed by Landlord in said space;
(2) The anticipated date of availability of the Available Offer Space;
(3) The proportionate share referable to the Available Offer Space; and
(4) The term of the Lease (which shall be at a minimum of five (5) years notwithstanding anything in this Lease which may require the term for all leased spaces to be co-terminus.
B. If Tenant timely delivers to Landlord, in accordance with the conditions of this Article, written notice of Tenant's exercise of the Right of First Offer for all of the Available Offer Space (time being of the essence for such time), then the Available Offer Space shall be deemed added to the Demised Premises and subject to the terms and conditions of the Lease. The Fixed Annual Rent for any additional space leased pursuant to this Article 14 will be calculated at the then applicable base rent per square foot applicable to the Demised Premises (the lower level being $2.50 per rsf less than any of the other floors)as set forth in the above rent schedules. In addition, Tenant will charged an electric charge based upon the lowest rate charged by Landlord to any new tenant who has executed a lease within twenty four months of the right of First Offer.
C. If Tenant declines or fails to duly and timely exercise its Right of
First Offer, Landlord will thereafter be free to lease the Available Offer Space
in portions or in its entirety to any third-party tenant at any time without
regard to the restrictions in this clause and on whatever terms and conditions
Landlord may decide, without again complying with all the provisions of this
Section 42.
ARTICLE 43.
NOTIFICATION OF SALE OF BUILDING
43.01. In the event Landlord decides to market the Building for sale to the general public, Landlord shall notify Tenant of the same and, at Tenant's request, Landlord shall provide Tenant will a copy of the same marketing material being provided to the general public.
ARTICLE 44.
PAYMENT OF TENANT'S HOLDOVER RENT ON EXISTING SPACE
44.01 As the term of Tenant's existing lease expires on May 31, 2005, Landlord shall be responsible to reimburse Tenant for hold over rent being charged by its current landlord and paid for by Tenant at a rate of $85,000 per month (the "Holdover Rent") for a period of up to six (6) months (the "Holdover Payment Period"). Upon execution of this Lease Landlord shall reimburse Tenant for the first three month's of Holdover Rent and thereafter on the first day of each month unless otherwise stated below. Notwithstanding the Holdover Payment Period set forth above, unless the Original Premises are substantially completed and delivered to Tenant on the first day of a given month, Landlord shall be responsible for the payment of the Holdover Rent payable by Tenant until the first day of the second calendar month following the month in which Landlord delivers the Original Premises in accordance with Article 1.02. By way of example, in the event the Commencement Date is set for June 15, 2005, Landlord shall be responsible for the Holdover Rent through July 31, 2005. If however, the Commencement Date is is June 1, 2005, Landlord shall be responsible for the Holdover Rent through June 30, 2005. Furthermore, if the Original Premises is not delivered by Landlord, as provided for herein due to a failure by Landlord to substantially complete Landlord's Work and deliver the Original Premises, then Landlord shall be responsible for Holdover Rent regardless of the Holdover Payment Period as follows: (i)in the event the Commencement Date is a date other than the first day of a month, then for the month in which the Commencement Date takes place as well as the month immediately following the Commencement Date (i.e. in the event of a April 15, 2006 Commencement Date, then Holdover Rent shall continue through May 31, 2006 or (ii) in the event the Commencement Date is on the first day of any given month, then solely for that entire month (i.e. in the event of a April 1, 2006 Commencement Date, then Holdover Rent shall continue through April 30, 2006).
ARTICLE 45.
RELOCATION ALLOWANCE
As an incentive to Tenant to enter into this Lease, upon Landlord executing this Lease, Landlord shall pay to Tenant as a relocation allowance the following sums:
(i) Nine Hundred Thousand ($900,000.00) Dollars upon Lease Commencement; (ii) Five Hundred Thousand ($500,000.00) Dollars upon completion of the fifth Lease Year; (iii) Three Hundred Thousand ($300,000.00) Dollars upon completion of the ninth Lease year. (collectively, the "Relocation Allowance"). Tenant shall utilize the Relocation Allowance as reimbursement of its relocation costs or in such manner it deems acceptable, in its sole discretion.
ARTICLE 46.
CONFERENCE ROOM FACILITY
46.01. As an accommodation, and at no cost or expense to Tenant, for use in
common by all tenants in the Building, a conference room facility is
available on the fourth floor of the Building during Normal Business
Hours on Business Days. Tenant shall have the right to utilize the
conference room at its option, either one (1) full day a week or two
(2) half days per week. Tenant may use the conference room under the
following terms and conditions, which terms and conditions are
subject to change at any time, in Landlord's reasonablediscretion:
(i) Tenant is not in default under the terms of this Lease beyond any applicable cure period;
(ii) Tenant shall have the right to utilize the conference room provided Tenant notifies Landlord in writing of its intent to use the conference room at least twenty four (24) hours in advance and shall not enter the conference room without confirmation from Landlord that the same is available for use;
(iii) Tenant shall at all times adhere to the reserved time period and vacate the conference room in broom clean condition at the end of such designated time period;
(iv) Use of the conference room is on a "first come first serve basis" and as such is subject to other tenant's prior reservation of the same; and
(v) Landlord has the right, in its sole and absolute discretion, at any time and without notice to relocate the conference room.
ARTICLE 47.
MISCELLANEOUS
47.01. Landlord shall provide a security patrol car which shall circulate the parking lot of the Building. The parties hereto acknowledge that the security patrol car shall also be utilized to circulate other Buildings within the Garden City vicinity owned by affiliates of Landlord.
47.02. Landlord shall use commercially reasonable efforts to cooperate with Tenant in connection with Tenant's application for any economic development incentives, including any applications files with the IDA, LIPA and NYS Empire Development Corp. Tenant shall reimburse Landlord with any and all costs, including but not limited to any reasonable legal fees, associated with Landlord's assistance in applying for said economic development incentive. Any and all economic development incentives or benefits of any kind which are awarded, in connection with Tenant's application, as the direct or indirect result of Tenant's use, occupancy, or the conducting of its business operations in the State, county or local municipality shall inure to the exclusive benefit of Tenant and not to Landlord.
47.03. Tenant shall not, without Landlord's prior written consent, which consent may be withheld in Landlord's sole and absolute discretion, record a memorandum of this Lease or any other document related to this Lease is the land records against the Building.
47.04. Irrespective of the place of execution or performance, this Lease shall be governed and construed in accordance with the laws of the State of New York. This Lease shall be construed without regard to any presumption or other rule requiring construction against the party causing this Lease to be drafted.
47.05. Except as otherwise expressly provided in this Lease, each covenant, agreement, obligation or other provision of this Lease on Tenant's part or Landlord's part to be performed shall be deemed and construed as a separate and independent covenant of Landlord and Tenant, not dependent on any other provision of this Lease.
47.06. All terms and words used in this Lease, regardless of the number or gender in which they are used, shall be deemed to include any other number and other gender as the context may require.
47.07. Except as otherwise provided in this Lease, whenever the payment of interest is required to be made by Tenant to Landlord by the terms hereof it shall be at the Interest Rate. In the event that Tenant is in arrears in the payment of Fixed Annual Rent or additional rent hereunder, Tenant waives Tenant's right, if any, to designate the items against which any payments made by Tenant are to be credited, and Tenant agrees that Landlord may apply any payments made by Tenant to any items it sees fit, irrespective of and notwithstanding any designation or request by Tenant as to the items against which any such payments shall be credited.
47.08. The captions are inserted only as a matter of convenience and for reference, and in no way define, limit or describe the scope of this Lease or the intent of any provision hereof.
47.09. Landlord acknowledges that Tenant wishes to retain AT&T and MCI ("Telecom Providers") in connection with its telecommunication systems which will be brought to the Property, installed in the Building and the Demised Premises. Tenant shall have the right to have the Telecom Providers install, maintain and repair Tenant's telecommunications systems in the Demised Premises provided however that (i) the installation, maintenance and repair shall be subject to the terms of Article 6 herein; (ii) all of the Telecom Providers' work is performed in accordance with all federal, state and local applicable law; (iii) no surface mounting shall at any time occur; it being understood that all wiring shall be performed within the walls of the Building; and (iv) Tenant and the Telecom Providers shall reimburse Landlord for any and all losses and costs incurred by Landlord in connection with the Telecom Providers' installation, maintainance and repair of Tenant's telecommunications systems, including, but not limited to the repair of any damage to the Property, Building or Demised Premises caused during the installation, maintanence and repair of the same. Landlord shall use commercially reasonable efforts to cooperate with Tenant and its Telecom Providers in order to install, maintain and repair Tenant's telecommunication systems during the term of this Lease. Tenant shall reimburse Landlord for any and all costs associated with or in connection with any damage that may be caused to the Property, the Building and the Demised Premises in connection with same.
IN WITNESS WHEREOF, Landlord and Tenant have respectively executed this Lease as of the day and year first above written.
LANDLORD:
TREELINE MINEOLA LLC
By: TREELINE MINEOLA CORP.,
Its managing member
By: ______________________
C. Glenn Schor
President
TENANT:
1-800-FLOWERS.COM,INC.
By: _______________________
Name:______________________
Title:_____________________
Federal Identification No.__________________
EXHIBIT A - PLAN OF DEMISED PREMISES
EXHIBIT B - WORKLETTER
Landlord agrees, at its sole cost and expense, to perform the following work in
the Demised Premises, all of which, unless otherwise indicated, shall be of
material, manufacture, design, capacity and finish as established by Landlord's
standards of the Building ("Building Standard") and as indicated on the approved
drawing of the Demised Premises which shall be approved by both Landlord and
Tenant and which shall, upon approval, be annexed hereto as Exhibit A (the
"Plan") which work shall be a "turn key" build out and substantially similar to
Tenant's Existing Space.
Landlord will file for a Building Permit with the appropriate municipality and
will construct the Original Premises and the Expansion Space in accordance with
the Plan, as approved by Landlord and Tenant, and in accordance with the
building permit issued therefrom.
All furniture, workstations and related partitions, cabinetry and the like delineated on the Plan are for reference only and shall not be constructed or provided by Landlord unless otherwise stated herein.
1. Demolish existing partitions as required to permit the construction delineated on the Plan. Construction of the plan is subject to site conditions reasonably permitting the proposed layout. In the event that site conditions require a change in layout Landlord, in consultation with Tenant, will use reasonable efforts to substantially effect the plans.
2. Partitions: Construct interior partition walls per Plan, site conditions permitting. Interior partition walls to be constructed of metal studs, 5/8" sheetrock. Interior partition walls to be constructed up to the underside of the hung ceiling, except for all offices which shall extend no less than 6 inches above the ceiling.
3. Electrical: (a) With the exception of the main conference room and the
CEO and President's offices (see No. 11 below) furnish and install Building
Standard 2x4 fluorescent fixtures with 18 cell parabolic lenses, one
fixture per seventy five (75) usable square feet of space; in offices and
conference rooms;(b) furnish and install duplex electrical outlets per code
and not less than one per wall (but not less than four outlets per room).
Outlets to be placed as per plan or if not denominated on Plan, as
determined by electrician in accordance with applicable building code; (c)
Provide two (2) dedicated electrical outlets per 5,000 rsfat locations
designated on the Plan (if not designated on Plan, as determined by
electrician in accordance with applicable building code); (d) as set forth
in Section 11(ix)(Specialties) herein, finish and install a floor junction
box in the main conference room with a conduit to the wall for low voltage
wiring. Landlord to provide whips and connect the same to Tenant's
furniture, which Tenant shall install (the connection shall be subsequent
to the Commencement Date and shall at no time effect the Commencement
Date). Each cubicle to be wired as per Plan;(e)as set forth in Section
11(x)(Specialties)herein, with respect to the electric charge to any
Exterior Signage, Landlord sole responsibility will be to provide a metal
conduit pipe through the roof membrane from the fifth floor ceiling to the
roof deck and seal the membrane.
4. Ceiling: Furnish and Install Building Standard 2x4 ceiling tile with 2x2 "second look." New Grid to be installed or existing grid to be modified as required to effect ceiling installation.
5. Doors and Trim: Furnish and install interior Building Standard doors in quantity as shown on the Plan. Building Standard doors are solid core, stain grade oak veneer doors with hollow metal door bucks. Door handles are provided without locks except on offices which shall receive keyed locks, not to exceed ten (10) locks. Provide and install glass doors at the entrance and reception area of the Expansion Space provided that the same is allowable by Building Code without Landlord being required to install any other item or equipment or in any way modify the Fire Safety System presently existing in the Building; i.e. installing a sprinkler system.
6. HVAC: Existing system to be re-ducted so as to deliver air conditioning to each room on Plan. Placement of air-conditioning diffusers and return air grilles per the design/building plans so as to provide efficient air-cooling. Existing perimeter, fan coil units (if any) for cooling and/ or radiator to be painted and refurbished.
7. Flooring: See No. 11 Specialties.
Landlord will supply and install Building Standard ceramic tile in the file rooms, storage areas, computer room, file areas, ADA bathroom (as further described below),and utility areas. Landlord will supply and install Building Standard ceramic tile in the non-ADA restroom (subject to the terms described in Section 11(vii) (Specialties) herein, the pantry area and the waiting/reception area. One (1) tile (color and style) for entire areas to receive ceramic tile and one (1) tile (color and style)for entire areas to received ceramic tile.
8. Finishes: Paint entire Demised Premises one (1) coat latex primer and two (2) finish coats. Door frames painted same color as walls; semi gloss finish. Finish coat to be latex satin finish paint, color selected by Tenant with LandlordBenjamin Moore Regal Wall Satin , no more than four (4) colors for private offices and four (4) colors for common areas, NO CUSTOM COLORS. All door bucks painted the same color as wall but in semi - gloss finish. Color selection must be concluded within ten (10) days of lease execution, time of the essence. In the event a color is not designated within the time period set forth Landlord may paint any basic white on the standard paint chart.
9. Entry Door: Existing fire rated entry door to remain. If entry door to be relocated per Plan, Landlord to provide and install single fire rated entry door in style and size equivalent to existing door. All entry doors to have existing door hardware if possible; otherwise, Landlord to provide new entry door hardware. Landlord does not replace or change locks or cylinders to the Demised Premises.
10. Landlord shall provide and install Building Standard window treatments
on the perimeter windows of the Demised Premises. Tenant on taking
possession of the Demised Premises assumes responsibility for the blinds
including but not limited to the cleaning and repair of the same. In the
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event Tenant elects to install window treatments, the same must be approved by the Landlord and shall be consistent with Building Standard.
11. Specialties:
(i) Landlord shall install glass front panels in perimeter offices similar in size, style, and dimension as in Tenant's existing premises at 1600 Stewart Avenue, Westbury, New York (the "Existing Premises").
(ii) Landlord shall install indirect lighting in the open area similar to the Existing Premises; all emergency lighting and exit sign lighting shall be installed in accordance with Building Code.
(iii) Landlord shall provide upgraded carpet consistent with the quality of Tenant's carpet at the Existing Premises (i.e. Collins & Aikman Carpet tiles). Carpet to be glued per manufacturer's specifications with vinyl cove base as per Tenant's specifications and wood floor molding in the main conference room, CEO and President's office. In the event Tenant does not select carpet within twenty (20) days of Lease execution, time of the essence, Landlord may install its selection of carpet and coves.
(iv) Landlord shall install a complex sheetrock ceiling in the main conference room, as depicted in the Plan, and the ceiling in the CEO's office and a plain sheetrock ceiling in the President's office.
(v) Landlord shall supply and install up to twenty five Building Standard hi hats in the conference room, CEO and President's offices as per Plan.
(vi) Landlord shall install a private restroom (including plumbing) of approximately 5 ft. by 9 ft. in dimension in the CEO and the President's offices. Each restroom shall include a Building Standard single quiet flush toilet, a Building Standard single pedestal or vanity cabinet and Building Standard sink, Building Standard single mirrored medicine cabinet, Building Standard fiberglass shower enclosure with glass shower door, Building Standard ceramic tile floor and walls (collectively, the "Restroom Fixtures and Tiles"). Tenant shall select the Restroom Fixtures and Tiles within twenty (20) days of executing this Lease. In the event Tenant does not select Restroom Fixtures and Tiles within ten (10) days of Lease execution, time of the essence, Landlord may install its selection of Restroom Fixtures and tiles.
NOTE: AS NOTED IN EXHIBIT T, LANDLORD SHALL ONLY BE RESPONSIBLE FOR THE GREATER OF (i) THE COST OF ONE RESTROOM OR (ii) $20,000 TOWARDS THE COST OF TWO (2) RESTROOMS. TENANT SHALL BEAR THE COST OF THE SECOND RESTROOM OR THE BALANCE OF THE COST OF THE SECOND RESTROOM IN EXCESS OF LANDLORD'S $20,000 ALLOWANCE, AS THE CASE MAY BE.
(vii) Landlord shall install in the pantry area, as depicted on the Plan, a building standard stainless steel sink and faucet (including all required plumbing) set in a Building Standard laminate lower sink base cabinet with a Building Standard laminate countertop and upper cabinetry with Building Standard ceramic tile flooring. The size and location of the sink, cabinetry and the finish of the countertops (but no more than 30 linear feet) shall be as depicted on the Plan.
(viii) Landlord shall provide and install a back-up generator (250kw) on the roof of the Building for Tenant's exclusive use for which Landlord will tie into the circuits as per Tenant's direction;
(ix) (a) Landlord shall supply and install a computer room air conditioning system - minimum of two units (i.e. Liebert or Mitsubishi) sized to adequately cool a +/-2,000 sq. ft. computer room with 50% redundancy.
(b) Landlord shall supply and install a supplemental air conditioning unit of up to 10 tons, located in the 24 hour call center area.
(c) In lieu of connection to the Building systems, Landlord shall supply and install electric baseboard heating in the President and the CEO offices, as indicated on Plan, and provide a supplemental air conditioning unit sufficient to cool these offices.
(x) Landlord shall provide and install a double set of Building Standard entry doors off the new parking spaces so that Tenant's customers may walk directly into the westerly side of the Demised Premises. Doors shall be located at depicted on Plan.
(xi) In addition to the existing restrooms on the fifth floor, Landlord shall install a Building Standard ADA compliant unisex restroom (substantially similar to the ADA restroom located on the lower level of the Building) on the Fifth floor. The restroom shall contain a Building Standard wall hung sink, a Building Standard vanity and toilet, Building Standard ceramic tiles. The walls of the restroom shall be painted as set forth in Section 8 of this Exhibit "B".
(xii) Landlord shall take steps to prevent other occupants of the Building from being able to access the 5th floor by a one way access to the fifth floor.
(xiii) Landlord shall purchase and install Tenant's computer wiring up to $150,000.00. Any cost for the purchase and installation of computer wiring above $150,000 shall be borne by Tenant.
(xiii) Finish and install a floor junction box in the main conference room with a conduit to the wall for low voltage wiring. Landlord to provide whips and connect the same to Tenant's furniture, which Tenant shall install (which connection shall be subsequent to the Commencement Date). Each cubicle to be wired as per Plan;(Note: See Section 3: Electrical.
(xv) With respect to providing electric charge to any of the Exterior Signage, Landlord sole responsibility will be to provide a metal conduit pipe through the roof membrane from the fifth floor ceiling to the roof deck and seal the membrane. Note: See Section 3: Electrical).
(xvi) Landlord to install Tenant supplied raised floor in the Computer
Room, as indicated on Plan. Tenant shall purchase such raised
floor, and ancillary required materials for its installation, in
sufficient quantities at Tenant's sole cost and expense. Tenant
shall provide Landlord with all required flooring and ancillary
materials within three (3) days after Landlord's request therefor.
If Tenant shall fail to provide such materials within such three
(3) day period, same shall be deemed a Tenant Delay solely with
respect to that portion of the Demised Premises.
12. Landlord shall provided and install a computer room of approximately 2,000 RSF with all electrical work per Plan, dedicated air conditioning and generator, as specifically set forth in this Exhibit "B".
13. Landlord shall provide Tenant with plans and diagrams for all electrical circuits and computer wiring throughout the Demised Premises.
13. Tenant's Responsibility:Except as specifically set forth in (xiii) above Landlord shall not install telephone lines, telephone cabling, gem boxes, conduits or other materials used in the installation of any telephone or computer cables. Landlord does not install any specialized Tenant Equipment nor does landlord accept any responsibility to coordinate the same with the Landlord's contractors. The Landlord retains the right to work day to day to complete the work contemplated herein in an expeditious manner without regard to any special needs of the tenant's contractors. The Tenant agrees during the construction process and prior to allowing any contractor access to the premises to provide advance notice to the Landlord or its designee and to provide and furnish appropriate insurance certificates and permits to the Landlord. All work performed by Tenant's contractors (including but not limited to the installation of telephone lines, telephone cabling, gem boxes, conduits or other materials used in the installation of any telephone or computer cables) shall be in accordance with applicable federal, state and local laws and regulations.
the Terms of this workletter supercede all notations on the plan. Items noted on the plan and not included on this workletter are for illustrative purposes. Tenant must execute an extra authorization and pay for all extras in accord with the terms of the lease.
NOTE: Any extras, changes, additions, or modifications ordered by the Tenant either at the time of lease execution or thereafter are furnished by the Landlord as an accommodation to Tenant. Tenant shall be required to take possession of the Demised premises whether or not the extras, changes, or modifications are complete. Landlord is only responsible for its own work not Tenant's extras, changes, modifications or upgrades.
EXHIBIT C - BUILDING RULES AND REGULATIONS
1. The sidewalks, entrances, driveways, passages, courts, elevators, vestibules, stairways, corridors or halls shall not be obstructed or encumbered by any Tenant or used for any purpose other than for ingress or egress from the Demised Premises and for delivery of merchandise and equipment in a prompt and efficient manner using elevators and passageways designated for such delivery by Landlord. There shall not be used in any space, or in the public areas of the Building, either by any Tenant or by jobbers or others in the delivery or receipt of merchandise, any hand trucks, except those equipped with rubber tires and side guards. Tenant may use the area around the fifth (5th) floor elevators for seating, displays, etc. provided the same complies with applicable Building Code.
2. The water and wash closets and plumbing fixtures shall not be used for any purpose other than those for which they were designed or constructed and no sweeping, rubbish, rags, acids or other substances shall be deposited therein, and the expense of any breakage, stoppage, or damage resulting from the violation of this rule shall be borne by the Tenant who, or whose clerks, agents, employees or visitors, shall have caused it.
3. No carpet, rug or other article shall be hung or shaken out of any window of the Building; and no Tenant shall sweep or throw or permit to be swept or thrown from the Demised Premises any dirt or other substances into any of the corridors or halls, elevators, or out of the doors or windows or stairways of the Building and Tenant shall not use, keep or permit to be used or kept any foul or noxious gas or substance in the Demised Premises, or permit or suffer the Demised Premises to be occupied or used in a manner unreasonably offensive or objectionable to Landlord or other occupants of the Building by reason of noise, odors (excluding flowers and plant odors), and/ or vibrations, or interfere in any way with other tenants or those having business therein, nor shall any animals or birds be kept in or about the Building. Smoking or carrying lighted cigars or cigarettes in the Building is strictly prohibited.
4. No awnings or other projections shall be attached to the outside walls of the Building without the prior written consent of Landlord.
5. No Tenant shall mark, paint drill into, or in any way deface any part of the Demised Premises or the Building of which they form a part. No boring or cutting shall be permitted, except with the prior written consent of the Lessor, and as Lessor may direct. No Tenant shall lay linoleum, or other similar floor covering, so that the same shall come in direct contact with the floor of the Demised Premises, and, if linoleum or other similar floor covering is desired to be used an interlining of builder's deadening felt shall be first affixed to the floor, by a paste or other material, soluble in water, the use of cement or other similar adhesive material being expressly prohibited.
6. No additional locks or bolts of any kind shall be placed upon any of the windows by any Tenant, nor shall any changes be made in existing locks or mechanisms thereof. Each Tenant must, upon termination of its tenancy, restore to Landlord all keys of offices and toilet rooms, either furnished to, or otherwise procured by, such Tenant, and in the event of the loss of any keys, so furnished, such Lessee shall pay to Landlord the cost thereof.
7. Freight, furniture, business equipment, merchandise and bulky matter of any description shall be delivered to and removed from the Demised Premises and/ or Building only on the freight elevators and through the service entrances and corridors, and only during the hours of 5:00 P.M. and 8:00 P.M. and in a manner approved by Landlord. Landlord reserves the right to inspect all freight to be brought into the Building and to exclude from the Building all freight which violates any of these Rules and Regulations of the Lease or which these Rules and Regulations are a part.
8. Canvassing, soliciting and peddling in the Building is prohibited and each Lessee shall cooperate to prevent the same.
9. Landlord reserves the right to exclude from the Building between the hours of 6:00 p.m. and 8:00 a.m. and at all hours on Sundays, and legal holidays all persons who do not present a pass to the Building signed by Tenant. Landlord will furnish passes to persons for whom any Tenant requests same in writing. Each Tenant shall be responsible for all persons whom he requests such pass and shall be liable to Landlord for all acts of such persons.
10. Landlord shall have the right to prohibit any advertising by any Tenant which in Landlord's opinion, tends to impair the reputation of the Building or its desirability as a Building of offices, and upon written notice from Landlord, Tenant shall refrain from or discontinue such advertising. Tenant shall have the right, to the extent specifically set forth in this Lease, to advertise on the Exterior Signage and in the Demised Premises.
11. Tenant shall not bring or permit to be brought or kept in or on the Demised Premises, any inflammable, any combustible or explosive fluid, material, chemical or substance, or cause or permit any odors of cooking or other processes, or any unusual or other objectionable odors (excluding flower and plant odors) to permeate in or emanate from the Demised Premises. Tenant shall not use toaster ovens or other cooking appliances in the Demised Premises except for microwave ovens and/or Fire Underwriting approved coffee brewing and vending machines, to the extent permitted by law.
12. If the Building contains central air conditioning and ventilation, Tenant agrees to keep all windows closed at all times and to abide by all rules and regulations issued by the Landlord with respect to such activities.
13. Tenant shall not move any safe, heavy machinery, heavy equipment, bulky matter, or fixtures into or out of the Demised Premises and/or the Building without Landlord's prior written consent. If such safe, machinery, equipment, bulky matter or fixtures requires special handling, all work in connection therewith shall comply with all legal requirements, insurance requirements and/or environmental Laws and shall be done during such hours as Lessor may designate.
14. Provided that Tenant's use, occupancy and business operations are not materially adversely affected, Landlord shall have the right at any time, and from time to time, to supplement, amend, change, revoke, and alter any or all of these Rules and Regulations provided same are non-discriminatory and uniformly enforced. Landlord shall give Tenant notice of any such additions or changes.
EXHIBIT T - TENANT'S REQUESTED UPGRADES
1. Landlord shall install a private restroom (including plumbing) of approximately 5 ft. by 9 ft. in dimension in the CEO and the President's offices. Each restroom shall include a Building Standard single quiet flush toilet, a Building Standard single pedestal or vanity cabinet and Building Standard sink, Building Standard single mirrored medicine cabinet, Building Standard fiberglass shower enclosure with glass shower door, Building Standard ceramic tile floor and walls.
NOTE: AS NOTED IN EXHIBIT "B", LANDLORD SHALL ONLY BE RESPONSIBLE FOR THE COST OF ONE OF THE TWO RESTROOMS. TENANT SHALL BEAR THE COST OF THE SECOND RESTROOM.
2. Tenant may supply and install parking on the front western side of the Building (similar to that which was installed for HSBC on the eastern side of the Building). Tenant shall be required to obtain any and all permits which may be required in connection with the installation of the parking spaces. The parking shall be marked for the exclusive use by 1-800-Flowers.
3. Tenant shall be responsible for any and all costs of purchasing and installing Tenant's computer wiring which exceed $150,000.00. See No. 11 (xiii) of Exhibit "B".