SUBLEASE AGREEMENT
THIS SUBLEASE AGREEMENT (this "SUBLEASE") is entered into as of July 20, 1999,
by and between TIMES SQUARE STUDIOS LTD, a New York corporation ("SUBLANDLORD"),
and APPLIED THEORY CORPORATION, a Delaware corporation ("SUBTENANT"), with
reference to the following facts:
A. Zapco 1500 Investment, L.P., a Delaware limited partnership ("MASTER
LANDLORD"), as landlord, and Disney Enterprises, Inc. ("DISNEY
ENTERPRISES"), as tenant, entered into that certain Amended and
Restated Lease dated as of November 11, 1997 which, together with all
exhibits, schedules and other attachments thereto are referred to
herein as the "MASTER LEASE".
B. Pursuant to that certain Assignment and Assumption Agreement dated as
of June 11, 1998, between Disney Enterprises and Sublandlord, Disney
Enterprises assigned its interest as tenant under the Master Lease to
Sublandlord.
C. Under the Master Lease, as assigned, Sublandlord currently leases
certain space from Master Landlord consisting of approximately 76,897
rentable square feet in the Building, which is commonly known as 1500
Broadway, New York, New York 10036 (the "MASTER PREMISES"). A full and
complete copy of the Master Lease (with certain economic terms
redacted) is attached hereto as EXHIBIT A.
D. Sublandlord wishes to sublease to Subtenant, and Subtenant wishes to
hire from Sublandlord, a portion of the Master Premises consisting of
approximately 22,193 rentable square feet (17,311 usable square feet)
on the third floor of the Building (collectively, the "PREMISES"). The
Premises are depicted on EXHIBIT B attached hereto.
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Sublandlord and Subtenant agree as follows:
1. GRANT; SUBLEASE SUBJECT TO MASTER LEASE.
(a) Sublandlord hereby subleases the Premises to Subtenant, and
Subtenant hereby hires the Premises from Sublandlord, according to the terms and
conditions of this Sublease. Where not expressly inconsistent with the terms
hereof and except as otherwise stated herein to the contrary, this Sublease is
subject and subordinate to all of the terms and conditions of the Master Lease.
All of the terms and conditions of the Master Lease, except as otherwise set
forth herein, are hereby incorporated into this Sublease and shall be binding
upon Subtenant and Sublandlord to the same extent as if Subtenant were named as
Tenant and Sublandlord were named as Landlord under the Master Lease; provided,
however, that Sublandlord shall not be liable for any defaults by Master
Landlord. For purposes of this Sublease, with respect to the incorporation of
the terms of the Master Lease herein, all references in the Master Lease to
"Premises" shall be deemed to refer to the Premises herein defined and not to
any other portion of the
Master Premises. Terms defined in the Master Lease have the same meaning when
used herein unless such terms are specifically defined herein. In the event of a
conflict between the Master Lease and this Sublease, the terms of this Sublease
shall prevail; provided, however, that if there is a conflict between the Master
Lease and this Sublease with respect to obligations owed to Master Landlord, the
Master Lease shall prevail.
(b) For purposes of incorporation herein, the terms of the Master Lease
are subject to the following modifications:
(i) With respect to the Tax Payment, Subtenant's
share ("SUBTENANT'S SHARE") shall be
calculated by dividing (a) the actual number
of rentable square feet of floor space
within the Premises, measured to the
exterior faces of exterior walls (which is
currently 22,193 rentable square feet) by
(b) the actual number of rentable square
feet in the Building, which is currently
501,429 rentable square feet. For purposes
of this Sublease, the "BASE TAXES" shall
mean Taxes for the Tax Year commencing on
July 1, 1998 and ending on June 30, 1999.
All references to Tenant's Share in the
Master Lease shall be deemed to refer to
Subtenant's Share for purposes of this
Sublease.
(ii) With respect to Article 27 of the Master
Lease, Subtenant shall have no obligation to
pay for increases in or escalations of the
Operating Payment, or otherwise contribute
toward the payment of Operating Expenses
payable by Sublandlord under the Master
Lease, whether or not attributable to the
Premises, it being hereby stipulated and
agreed that Subtenant's Share of Operating
Expenses (including all escalations and
increases) is included in the Fixed Rent
reserved hereunder.
(iii) Subject to compliance with all Requirements,
the Premises shall be used and occupied by
Subtenant solely as general office space and
for no other purpose. All other provisions
of the Master Lease referencing permitted
uses of the Premises are specifically
excluded from this Sublease.
(iv) With respect to Section 9.2 of the Master
Lease, Subtenant shall have no right to
self-insure.
(v) With respect to Section 13 of the Master
Lease, Subtenant shall have no right to
elect direct metering.
(vi) With respect to Article 27 of the Master
Lease, Subtenant shall have no right to
cause Sublandlord or Landlord to initiate
tax reduction proceedings.
(vii) In all provisions of the Master Lease
requiring the approval or consent of Master
Landlord, Subtenant shall be required to
obtain
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the approval or consent of both Sublandlord
and Master Landlord, which consent by Master
Landlord and Sublandlord (as if Sublandlord
were Master Landlord) shall be subject to
the qualifications contained in the Master
Lease unless otherwise provided herein;
(viii) The term "Indemnitees" shall mean
Sublandlord, Landlord, Agent and their
respective direct and indirect partners,
shareholders, officers, directors, employees
and contractors.
(ix) In all provisions of the Master Lease
requiring Sublandlord to submit, exhibit to,
supply or provide Master Landlord with
evidence, certificates, or any other matter
or thing related to the Premises, Subtenant
shall be required to submit, exhibit to,
supply or provide, as the case may be, the
same to Sublandlord. In any such instance,
Sublandlord shall determine if such
evidence, certificate or other matter or
thing shall be satisfactory in accordance
with the standards set forth in the Master
Lease; and
(x) Sublandlord shall have no obligation to
Subtenant to restore or rebuild any portion
of the Premises after any destruction and/or
taking by eminent domain but Sublandlord's
obligations to Master Landlord shall remain
as stated in the Master Lease.
(c) In addition to any provisions specifically excluded above, the
following provisions of the Master Lease are specifically excluded from this
Sublease (provided, however, that if terms are defined in any of such provisions
of the Master Lease, such definitions will not be excluded from this Sublease):
the definition of "Tenant's Share," Sections 1.1, 1.2, 1.3, 1.4, 2.1(C), (D) and
(F), 2.4, 3.2, the 3rd sentence of Section 3.3(B), Sections 3.3(H), 3.6(B) and
3.8, the 2nd sentence of Section 10.3, Sections 12.4(B), 13.3(A)-(D), 16.1(B),
18.2, 27.1(C), 27.3 28.2, 31.1(B)(ii), 31.2(B) and 31.6; and Articles 26, 34,
39, 43, 46, 48, 49 and 50. Further, all provisions in the Master Lease regarding
or relating to either the "Ex-Landlord's Work" and/or "Asbestos Removal Work"
are specifically excluded from this Sublease (including, without limitation,
Exhibit 3 of the Master Lease), and Subtenant shall have no liability or
obligation with respect thereto.
2. TERM; OPTION TO TERMINATE. The term of this Sublease (the "SUBLEASE TERM")
shall commence on the date this Sublease is executed by both parties (the
"SUBLEASE COMMENCEMENT DATE") and shall continue through the day before the 10th
anniversary of the Sublease Rent Commencement Date (as defined below). This
Sublease may be terminated prior to the expiration of the Sublease Term on the
following terms and conditions:
(a) SUBLANDLORD'S TERMINATION OPTION. Sublandlord shall have a one-time
right to terminate this Sublease, which termination shall be effective as of the
day before the fifth (5th) anniversary of the Sublease Rent Commencement Date
(the "EARLY
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TERMINATION DATE") to allow Sublandlord or a Related Entity of Sublandlord to
use the Premises; provided that Sublandlord delivers written notice of its
intent to terminate this Sublease to Subtenant at least seven (7) months prior
to the Early Termination Date.
(b) SUBTENANT'S TERMINATION OPTION. Subtenant shall have a one-time
right to terminate this Sublease, which termination shall be effective as of the
Early Termination Date; provided that Subtenant delivers written notice of its
intent to terminate this Sublease ("SUBTENANT'S TERMINATION NOTICE") to
Sublandlord at least six (6) months prior to the Early Termination Date and
provided, further, that Subtenant delivers to Sublandlord, together with
Subtenant's Termination Notice, the sum of all the following: (a) the
unamortized portion of the Tenant Improvement Allowance, the Brokerage
Commission and the Free Rent (all of which terms are defined below), which
amounts shall be amortized over the full Sublease Term at an annual interest
rate of nine percent (9%), and (b) the amount that is equal to five (5) months
of Fixed Rent (collectively, the "TERMINATION FEE"). The Termination Fee is
equal to Eight Hundred Ninety Thousand Eight Hundred Seventy-six Dollars and
Thirty-Three Cents ($890,876.33).
(c) SUBTENANT DEFAULT. If this Sublease is terminated prior to the end
of the Sublease Term because of an Event of Default by Subtenant, then in
addition to any other amounts due Sublandlord, Subtenant shall pay to
Sublandlord the sum of the unamortized portions of the Tenant Improvement
Allowance, the Brokerage Commission and the Free Rent, which amount shall be
amortized over the full Sublease Term at an annual interest rate of nine percent
(9%).
(d) NO OBLIGATION TO OPERATE. Anything contained in the Master Lease or
this Sublease to the contrary notwithstanding, it is expressly acknowledged that
this Sublease contains no implied or express covenant for Subtenant to conduct
business in the Premises, continuously or otherwise, or (when conducting
business in the Premises) to operate during any particular hours or, subject to
the terms of this Sublease and the Master Lease, to conduct its business in any
particular manner; provided, however, that Subtenant shall be obliged to
illuminate the Premises during Business Hours pursuant to Subsection 31.1(B)(i)
of the Master Lease, and provided further, that Subtenant shall comply with all
of its obligations under this Sublease, including, without limitation, the
obligation to pay Rent hereunder, to maintain and secure the Premises, and to
insure the Premises.
3. RENT. Subtenant shall pay Rent (defined in Section 3(b) below) to Sublandlord
without prior demand, deduction or set-off, other than as provided in this
Sublease. Subtenant shall pay Rent to Sublandlord or, upon written notice from
Sublandlord, to Sublandlord's designee, during the Sublease Term by check to
Sublandlord's primary notice address (set out in Section 13 below) or to such
other place as Sublandlord may from time to time designate in writing to
Subtenant.
(a) FIXED RENT. Subtenant shall pay to Sublandlord, without prior
demand, the following annual "FIXED RENT" during the Sublease Term, in equal
monthly installments, on the first day of each calendar month during the
Sublease Term,
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commencing on the date that is one hundred twenty (120) days following the
Sublease Commencement Date (the "SUBLEASE RENT COMMENCEMENT DATE"). The period
between the Sublease Commencement Date and the Sublease Rent Commencement Date
shall be a free rent period and the value attributed to such free rent period is
One Hundred Eighty Thousand Dollars ($180,000.00) (the "FREE RENT"). Annual
Fixed Rent shall be:
(i) Five Hundred Forty Thousand Dollars
($540,000.00) or Sublease Year (defined
below) 1;
(ii) Five Hundred Forty-Nine Thousand Four
Hundred Fifty Dollars ($549,450.00) for
Sublease Year 2.
(iii) Five Hundred Fifty-Nine Thousand Sixty-Five
Dollars and Thirty-Seven Cents ($559,065.37)
for Sublease Year 3;
(iv) Five Hundred Sixty-Eight Thousand Eight
Hundred Forty-Nine Dollars and Two Cents
($568,849.02) for Sublease Year 4;
(v) Five Hundred Seventy-Eight Thousand Eight
Hundred Three Dollars and Eighty-Eight Cents
($578,803.88) for Sublease Year 5;
(vi) Six Hundred Sixty Thousand Dollars
($660,000.00) for Sublease Year 6;
(vii) Six Hundred Seventy-One Thousand Five
Hundred Fifty Dollars ($671,550.00) for
Sublease Year 7;
(viii) Six Hundred Eighty-Three Thousand Three
Hundred Two Dollars and Twelve Cents
($683,302.12) for Sublease Year 8;
(ix) Six Hundred Ninety-Five Thousand Two Hundred
Fifty-Nine Dollars and Ninety-One Cents
($695,259.91) for Sublease Year 9; and
(x) Seven Hundred Seven Thousand Four Hundred
Twenty-Six Dollars and Ninety-Six Cents
($707,426.96 for Sublease Year 10.
For purposes of calculating Rent under this Sublease, each "SUBLEASE YEAR" shall
be a period of one year (or, for the Sublease Year in which this Sublease
expires or is terminated, a portion of one year), the first of which periods
shall begin on the first day of the month in which the Sublease Rent
Commencement Date occurs.
(b) ADDITIONAL RENT. All monetary obligations of Subtenant under this
Sublease that are in addition to Fixed Rent, including but not limited to any
taxes, fees, charges, insurance obligations, costs, expenses, obligations,
assessments, payments, disbursements, reimbursements and other amounts
whatsoever payable by, attributable to or the responsibility of Subtenant, are
intended as and shall be deemed "ADDITIONAL
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RENT." Fixed Rent and Additional Rent are sometimes collectively referred to
herein as "RENT."
(c) INTEREST. Any amount due from Subtenant which is not paid within
five (5) days of when due shall bear interest for the benefit of Sublandlord at
the lower of (i) the maximum rate per annum permitted under applicable law, or
(ii) three percent (3%) per annum plus the Base Rate (such lower rate referred
to herein as the "SUBLEASE RATE"); provided, however, that no such interest
shall be due from Subtenant for the first payment of Fixed Rent in each calendar
year which Subtenant pays after the due date therefor, but within five (5) days
of receipt of notice from Sublandlord that the same is past due. Interest shall
accrue from the date such payment is due until paid, but the payment of such
interest shall not excuse or cure any uncured default by Subtenant under this
Sublease. Such rate shall remain in effect after the occurrence of any breach or
default hereunder by Subtenant to and until payment of the entire amount due.
(d) LATE FEES. In the event Subtenant is more than five (5) days late
in paying any of its obligations under this Sublease, Subtenant shall pay
Sublandlord a late charge equal to three percent (3%) of the delinquent amount;
provided, however, that no late fee shall be due from Subtenant for the first
payment of Fixed Rent in each calendar year which Subtenant pays after the due
date therefor, but within five (5) days of receipt of notice from Sublandlord
that the same is past due. The parties agree that it would be impractical or
extremely difficult to fix Sublandlord's actual damages due to a late payment by
Subtenant and that the amount of such late charge represents a reasonable
estimate of the cost and expense that would be incurred by Sublandlord in
processing each delinquent payment by Subtenant and that such late charge shall
be paid to Sublandlord in processing each delinquent payment by Subtenant and
that such late charge shall be paid to Sublandlord as liquidated damages for
each delinquent payment. The parties further agree that the payment of late
charges and the payment of interest provided for in Section 3(c) above are
distinct and separate from one another in that the payment of interest is to
compensate Sublandlord for the use of Sublandlord's money by Subtenant, while
the payment of a late charge is to compensate Sublandlord for the additional
administrative expense incurred by Sublandlord in handling and processing
delinquent payments. The payment of any late charge by Subtenant and the
acceptance thereof by Sublandlord shall not be deemed a waiver by Sublandlord of
its rights regarding any default by Subtenant under this Sublease.
4. SECURITY DEPOSIT.
(a) SECURITY DEPOSIT. Concurrently with the execution of this Sublease,
Subtenant shall deposit with Sublandlord the sum of Six Hundred Fifty Thousand
Dollars ($650,000) (the "SECURITY DEPOSIT"), which shall be held by Sublandlord
as security for the full and faithful performance by Subtenant of its covenants
and obligations under this Sublease. The Security Deposit is not an advance Rent
deposit, an advance payment of any other kind, nor a measure of Sublandlord's
damage in case of Subtenant's default. If Subtenant defaults in the full and
timely performance of any or all of Subtenant's covenants and obligations set
forth in this Sublease, and each default shall continue beyond any applicable
period of notice or cure, then Sublandlord may, from time to time,
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upon written notice to Subtenant, but without waiving any other remedy available
to Sublandlord, use the Security Deposit, or any portion thereof, to the extent
necessary, in Sublandlord's judgment, to cure or remedy the default or to pay
Sublandlord for all or a part of the damages sustained by Sublandlord resulting
from Subtenant's default. Subtenant shall deposit with Sublandlord within ten
(10) days following Sublandlord's written demand, the amount so applied in order
to restore the Security Deposit to its required amount, and Subtenant's failure
to immediately do so shall constitute a default under this Sublease. Upon
written request by Subtenant, Sublandlord agrees to provide copies of invoices,
receipts or other documentation supporting the amount applied by Sublandlord to
such default, but delivery of such documentation may be used by Subtenant only
to verify the amount of the Security Deposit applied by Sublandlord, and
Subtenant shall not be entitled to dispute Sublandlord's judgment. Subtenant may
not assign or encumber the Security Deposit, and any attempt to do so shall be
void and shall not be binding on Sublandlord. If Subtenant is not in default
with respect to any of the covenants and obligations set forth in this Sublease
at the expiration or earlier termination of the Sublease, Sublandlord shall
cause the Security Deposit to be returned to Subtenant after the expiration or
earlier termination of this Sublease. If Subtenant is in default with respect to
any of the covenants and obligations set forth in this Sublease at the
expiration or earlier termination of this Sublease, Subtenant shall be required
to cure such default before Sublandlord is required to cause the Security
Deposit to be returned to Subtenant; provided, however, if the cure of such
default requires that Subtenant have access to the Premises and Subtenant no
longer has access to the Premises, or if the default is otherwise incapable of
being cured by Subtenant, Sublandlord may deduct an amount necessary, in
Sublandlord's judgment, to cure or remedy the default to pay Sublandlord for the
damages sustained by Sublandlord resulting from Subtenant's default.
Sublandlord's obligations with respect to the Security Deposit are those of a
debtor and not a trustee. Sublandlord shall not be required to maintain the
Security Deposit separate and apart from its general or other funds and may
commingle the Security Deposit with any of its general or other funds. Subtenant
shall not at any time be entitled to interest on the Security Deposit.
(b) LETTER OF CREDIT. In lieu of delivering the Security Deposit to
Sublandlord, Subtenant may, at Subtenant's sole option, concurrently with the
execution of this Sublease, deliver to Sublandlord an unconditional, irrevocable
letter of credit (the "LETTER OF CREDIT") in the amount of the Security Deposit
as security for the full and faithful performance by Subtenant of its covenants
and obligations under this Sublease. The Letter of Credit shall be in form and
substance reasonably satisfactory to Sublandlord, and shall be issued by a bank
reasonably acceptable to Sublandlord. Sublandlord shall cause the Letter of
Credit to include the requirements set forth on Exhibit C attached hereto (the
"L/C CONDITIONS"). The Letter of Credit shall not contain any conditions
precedent to Sublandlord's ability to draw on the Letter of Credit other than
the L/C Conditions. Subtenant shall pay all costs, expenses, points and fees
incurred in connection with obtaining the Letter of Credit. Subtenant shall
cause the Letter of Credit to be in effect during the Sublease Term and for
sixty (60) days after the expiration or earlier termination of the Sublease
Term. Subtenant may, from time to time, replace any existing Letter of Credit
with a new Letter of Credit if the new Letter of Credit: (i) becomes effective
at least thirty (30) days before the expiration of the Letter of Credit it
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replaces; (ii) is in the required amount; (iii) is issued by a bank reasonably
acceptable to Sublandlord; and (iv) otherwise complies with the requirements of
this Section 4(b). The Letter of Credit is not an advance Rent deposit, an
advance payment of any other kind, nor a measure of Sublandlord's damage in case
of Subtenant's default. If Subtenant defaults in the full and timely performance
of any or all of Subtenant's covenants and obligations set forth in this
Sublease, then Sublandlord may, from time to time, without waiving any other
remedy available to Sublandlord, draw on the Letter of Credit, or any portion
thereof, to the extent necessary to cure or remedy the default or to pay
Sublandlord for all or a part of the damages sustained by Sublandlord resulting
from Subtenant's default; provided, however, that Sublandlord shall comply with
the L/C Conditions if such conditions are included in the Letter of Credit. Any
amount of the Letter of Credit that is drawn on by Sublandlord but not applied
shall be held by Sublandlord as a security deposit (the "L/C SECURITY DEPOSIT")
which may be applied by Sublandlord for the purposes described in Section 4(a)
above, unless Subtenant delivers a replacement Letter of Credit in the full face
amount required hereunder, in which event Sublandlord shall refund the amount of
any L/C Security Deposit within ten (10) Business Days of Sublandlord's receipt
of the replacement Letter of Credit. If Sublandlord has drawn on the Letter of
Credit in accordance with the provisions of this Section and the L/C Conditions,
and has applied the sums in accordance with this Section 4(b), Subtenant shall
replace the Letter of Credit, within ten (10) days following Sublandlord's
written demand therefor, with a Letter of Credit in the required amount, and
Subtenant's failure to immediately do so shall constitute a default under this
Sublease. If Subtenant fails to renew or replace the existing Letter of Credit
at least thirty (30) days prior to its expiration, Sublandlord may, without
prejudice to any other remedy it may have, draw on all of the Letter of Credit.
Notwithstanding the drawing of the Letter of Credit pursuant to the foregoing
sentence, Sublandlord shall remit all sums so drawn to Subtenant within ten (10)
Business Days of Sublandlord's receipt of replacement Letter of Credit in the
full face amount required hereunder and payment of all costs and expenses
incurred by Sublandlord with respect to the same. If Subtenant shall fail to
replace the Letter of Credit after its expiration, the sums drawn by Sublandlord
shall be held by Sublandlord as an L/C Security Deposit and shall be applied by
Sublandlord for the purposes described in Section 4(a) above, in accordance with
the terms and conditions of such Section. Subtenant may not assign or encumber
its interest in the Letter of Credit or the L/C Security Deposit, and any
attempt to do so shall be void and shall not be binding on Sublandlord. If there
is a good faith dispute as to whether or not Landlord has the right to draw down
funds from the Letter of Credit and Subtenant obtains an arbitration decision
(in accordance with the terms of Section 41.1 of the Master Lease, as
incorporated herein) stating that Landlord has inappropriately drawn down all or
any part of the Letter of Credit, Sublandlord shall reimburse Subtenant for the
funds inappropriately drawn down.
(c) FIRST REDUCTION. The amount of the Security Deposit or the Letter
of Credit, as applicable, shall be reduced to Five Hundred Twenty-Five Thousand
Dollars ($525,000) at the conclusion of the thirtieth (30th) month following the
month in which the Sublease Rent Commencement Date occurs (the "FIRST REDUCTION
DATE"), and if Subtenant has delivered the Security Deposit, Sublandlord shall
refund the difference of One Hundred Twenty-Five Thousand Dollars ($125,000) on
or before thirty (30) days
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after Subtenant's request therefor (which request may not be made earlier than
the First Reduction Date), or if Subtenant has delivered the Letter of Credit,
Subtenant may deliver a replacement Letter of Credit (in accordance with the
requirements of Section 4(b) above) in the reduced amount; provided that no
breach or default shall exist and be continuing as of the First Reduction Date
and Sublandlord has had no occasion to use any portion of the Security Deposit
or draw on the Letter of Credit on or before the First Reduction Date.
(d) SECOND REDUCTION. The amount of the Security Deposit or the Letter
of Credit, as applicable, shall be further reduced to Four Hundred Thousand
Dollars ($400,000) at the conclusion of the sixtieth (60th) month following the
month in which the Sublease Rent Commencement Date occurs (the "SECOND REDUCTION
DATE"), and if Subtenant has delivered the Security Deposit, Sublandlord shall
refund the difference of One Hundred Twenty-Five Thousand Dollars ($125,000)
within thirty (30) days of Subtenant's request therefor (which request may not
be made earlier than thirty (30) days prior to the Second Reduction Date), or if
Subtenant has delivered the Letter of Credit, Subtenant may deliver a
replacement Letter of Credit (in accordance with the requirements of Section
4(b) above) in the reduced amount; provided that no breach or default shall
exist and be continuing as of the Second Reduction Date, and Sublandlord has had
no occasion to use any portion of the Security Deposit or draw on the Letter of
Credit on or before the Second Reduction Date.
(e) TRANSFER OF THE PREMISES. If Sublandlord disposes of its interest
in the Premises, Sublandlord may deliver or credit the Security Deposit, or
transfer or assign the Letter of Credit, as applicable, to Sublandlord's
successors-in-interest in the Premises and thereby be relieved of further
responsibility with respect to the Security Deposit or the Letter of Credit, as
applicable. If Sublandlord does not so deliver or credit the Security Deposit,
or transfer or assign the Letter of Credit, as the case may be, Sublandlord
shall return the Security Deposit or transfer the Letter of Credit, as
appropriate, to Subtenant within fifteen (15) days of the effective date of the
transfer of its interest in the Premises.
5. TAXES, UTILITIES AND OTHER CHARGES.
(a) TAXES. Subtenant shall pay Subtenant's Share of the Tax Payment, as
the same may be increased form time to time pursuant to Article 27 of the Master
Lease, to Sublandlord no later than thirty (30) days after receipt of
Sublandlord's request for payment of Subtenant's Share of Taxes, which request
shall be accompanied by a breakdown of the determination of Subtenant's Share of
Taxes and a copy of the tax bill from the taxing authority. Under no
circumstances shall the Tax Payment include penalties or interest due to the
later payment of the Tax Payment by Sublandlord.
(b) HVAC. At Sublandlord's cost and expense, Sublandlord shall provide
building standard heating, ventilation and air conditioning ("HVAC") via
perimeter window heating/cooling induction units and interior air supply from
the base Building Systems, and in accordance with base Building design, to that
portion of the Premises depicted on EXHIBIT D attached hereto, which area is not
currently served by HVAC (the "RECAPTURED Space"). Sublandlord will cause the
interior air supply into the Premises to
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be at least 8200 CFM (cubic feet per minute). Subtenant acknowledges and agrees
that (i) the work to supply perimeter HVAC to the Recaptured Space will be
performed concurrently with Subtenant's Work and will not affect the Sublease
Commencement Date or the Sublease Rent Commencement Date; (ii) the work to
supply interior air HVAC to the Recaptured Space will not include any means or
method of distributing HVAC within or through the Recaptured Space or the
Premises; and (iii) Sublandlord is not performing any work on the system which
is currently in place to provide HVAC to that portion of the Premises which does
not constitute the Recaptured Space.
(c) ELECTRICITY. The Premises may be directly metered or submetered as
determined by Sublandlord in its sole and absolute discretion. If the Premises
is directly metered, Subtenant shall be responsible for its actual electrical
usage. If the Premises is submetered, Subtenant shall pay its share of
electrical usage based on the average cost per kilowatt-hour to Sublandlord, as
determined under Section 13.1(B) of the Master Lease, and Subtenant shall pay
its share to Sublandlord no later than thirty (30) days after receipt of
Sublandlord's request for payment therefor (including supporting documentation
and calculation of Subtenant's share). The Premise shall have a minimum total
connected load of at least six (6) watts of power per useable square foot
throughout the Sublease Term.
(d) OTHER CHARGES. Upon written request by Sublandlord, Subtenant shall
reimburse Sublandlord within thirty (30) days of written request therefor, which
request shall include reasonable supporting documentation of the amounts set
forth therein, for any bona fide charges which are billed by Master Landlord to
Sublandlord under the Master Lease (including, without limitation, charges for
Overtime Periods or After Hours Periods, subject, however, to the provisions of
this Section 5(d)), provided that such charges are reasonably and appropriately
attributable to the Premises or Subtenant's use thereof during the Sublease
Term. All such charges are intended to be and shall be deemed Additional Rent.
Without limiting the generality of the foregoing, Subtenant shall reimburse
Sublandlord for all amounts attributable to the Premises and paid to Master
Landlord for services provided to office space to the extent such services are
reasonably available to and either requested by or made use of by Subtenant, and
excluding any services provided during any After Hours Periods and/or Overtime
Periods for which Subtenant did not request services and during which periods
the Premises are not being used by Subtenant. Such charges shall specifically
exclude the following:
(i) the cost of any service(s) which, although available
to Subtenant, are provided at the request of
Sublandlord or other tenant of the Building and which
are not used by Subtenant; and
(ii) payments for Electricity, Taxes and Operating
Expenses, provisions for the payment of which are
expressly provided for elsewhere in this Sublease.
Sublandlord agrees that no charges, costs, or expenses billed to Subtenant
pursuant to this Section 5(d) shall be duplicative of any charges, costs or
expenses paid or payable by Subtenant pursuant to the provisions of this
Sublease. Subtenant hereby confirms that
10
Master Landlord has confirmed that the current overtime charge for base Building
HVAC is $350 per hour, inclusive of the personnel required to operate such
machinery.
6. DELIVERY OF POSSESSION. Sublandlord agrees to deliver the Premises in broom
clean condition to the possession of Subtenant by or after 8:00 am on the day
following mutual execution of this Sublease. The Premises are leased without any
representation or warranty by Sublandlord whatsoever (except as may be expressly
set forth herein), "AS IS", "WHERE IS" and in their existing condition as of the
date hereof, subject to all faults and defects whatsoever. Subtenant further
acknowledges that Subtenant has verified to Subtenant's satisfaction (among
other things Subtenant deems relevant), zoning, the size and dimensions of the
Premises (including, without limitation, the size and location of load-bearing
walls, beams and columns), ceiling height, size, access for loading, and
Subtenant's ability to obtain all permits, licenses or other governmental
approvals or consents (including, without limitation, a certificate of occupancy
(or its local equivalent)) as may be required for the design, construction,
improvement, occupancy and use of the Premises by the applicable laws, statutes,
ordinances, rules and regulations of the jurisdictions in which the Premises is
located (collectively, the "PERMITS"). Subtenant, at its sole cost and expense,
shall obtain any and all Permits and shall deliver copies of all Permits to
Sublandlord prior to commencing Subtenant's Work (defined below).
7. SUBTENANT'S WORK; TENANT IMPROVEMENT ALLOWANCE.
(a) Subtenant shall be responsible, at its sole cost and expense, for
the design and construction of all improvements required to construct a
first-class office space in accordance with the requirements of this Sublease
and all Requirements, pursuant to the provisions of the Master Lease, including,
without limitation, the provisions of Article 3 of the Master lease, as modified
herein (collectively, "SUBTENANT'S WORK"). Notwithstanding anything to the
contrary contained herein or in the Master Lease, Subtenant agrees that, it
shall not at any time place or construct any kitchen, bathroom or other
facilities which involve running water ("WATER FACILITIES") such that the same
shall be located in the area of the Premises which is directly above the portion
of the Master Premises that will be operated as a broadcasting studio (the
"RESTRICTED AREA"). However, Subtenant shall have no obligation to relocate any
Water Facilities existing as of the Sublease Commencement Date, whether or not
now or hereafter located in a Restricted Area, nor any obligation at any time to
relocate Water Facilities located in a non-restricted area as of the Sublease
Rent Commencement Date, which later become located within a Restricted Area due
to the construction, expansion and/or relocation of the broadcasting studio
after the date of the construction of the respective Water Facilities. In
addition, Subtenant agrees that any ducts, pipes, and/or conduits installed by
Subtenant that are placed within the Restricted Area by Subtenant will be sealed
watertight. Subtenant shall deliver all items required to be delivered under the
terms of the Master Lease to Sublandlord at least five (5) Business Days prior
to the date such items are required to be delivered to master landlord under the
terms of the Master Lease, and Sublandlord shall have a period of five (5)
Business Days in addition to the time periods provided in the Master Lease to
consider any matter to be approved by Master Landlord under the terms of the
Master Lease. Sublandlord covenants and agrees that it
11
shall contribute the lesser of (i) Six Hundred Twelve Thousand Two Hundred
Fifty-Five Dollars ($612,255) or (ii) Subtenant's actual out-of-pocket cost to
complete Subtenant's Work (the "TENANT IMPROVEMENT ALLOWANCE"), to be paid upon
the completion of Subtenant's Work within thirty (30) days of the date that
Subtenant delivers bona-fide receipts and underlying support documentation
reasonably acceptable to Sublandlord in connection with the construction of
Subtenant's Work.
(b) In connection with any construction-related meetings Sublandlord or
its representatives may have with Master Landlord or its representatives,
Subtenant agrees to reasonably cooperate in providing such information, plans or
documentation as Sublandlord may request.
(c) Subtenant acknowledges that Sublandlord intends to begin
broadcasting from the Master Premises on or about September 1, 1999, and that
any construction during broadcasting would be highly disruptive and damaging to
Sublandlord. Subtenant therefore agrees to use commercially reasonable efforts
to substantially complete construction of the Alterations at the Premises and
furnishing of the Premises on or before September 1, 1999. Subtenant agrees that
under no circumstances shall Subtenant conduct any construction activities after
August 30, 1999 without first submitting a written daily construction schedule
to Sublandlord and receiving Sublandlord's written consent to such construction
schedule. Subtenant further agrees to strictly abide by such approved
construction schedules. The parties agree that time is of the essence with
respect to this Section 7(c).
8. INSURANCE. Throughout the Sublease Term, Subtenant agrees to obtain and
maintain insurance meeting the requirements of Article 9 of the Master Lease, as
modified by this Sublease. Subtenant shall name both Master Landlord and
Sublandlord as additional insureds under the insurance policies. Subtenant shall
provide certificates evidencing the required insurance to Sublandlord and Master
Landlord prior to and as a condition of occupancy of the Premises. Sublandlord'
s insurance obligations shall be those of Tenant under the Master Lease.
9. ACCESS; BUILDING SECURITY. Subtenant shall be entitled to have access to the
Premises 24 hours a day/7 days a week without notice to Sublandlord of Master
Landlord and without the presence of a Master Landlord or Sublandlord
representative. Subtenant agrees to comply with all reasonable security
regulations of Sublandlord and Master Landlord of which Subtenant has been
provided written notice. Subtenant acknowledges and agrees that, except as
specifically provided in the Master Lease (as incorporated herein), Sublandlord
shall have no obligation to provide security or security services to Subtenant.
10. UTILITIES AND SERVICES. Sublandlord agrees to arrange with Master Landlord
for electricity, water, and other services necessary for the operation of
Subtenant's business from the Premises ("NECESSARY SERVICES") to be provided to
Subtenant on the terms set forth in the Master Lease. Except as specifically
provided in Section 5(b) and 5(c) above, Sublandlord makes no representation
about the availability or adequacy of such services, and Sublandlord shall not
be responsible for Master
12
Landlord's failure to provide the same. Anything contained in the foregoing to
the contrary notwithstanding, Sublandlord hereby covenants and warrants that if
the Necessary Services are not available to the Premises at any time during the
term of this Sublease, and provided that there shall be no Event of Default
hereunder, Sublandlord shall use commercially reasonable efforts (which shall
not be deemed to require litigation) in seeking to obtain the same from the
Master Landlord to the extent that Master Landlord is obligated to provide such
services to Sublandlord under the Master Lease.
11. THE MASTER LEASE.
(a) Subtenant covenants and agrees that all obligations of "Tenant"
under the terms of the Master Lease (as herein incorporated) shall be done or
performed by Subtenant with respect to the Premises, except as otherwise
provided by this Sublease, and Subtenant's obligations shall run to Sublandlord
or Master Landlord as Sublandlord may reasonably determine to be appropriate or
required by the respective interests of Sublandlord and Master Landlord. In any
case where Subtenant has rights under the Master Lease which would ordinarily
run to "Tenant" under the Master Lease and which require the consent of Master
Landlord, Subtenant agrees to direct any request regarding that right to
Sublandlord, who will then communicate directly to Master Landlord regarding the
request. Sublandlord agrees to forward any such request to Master Landlord
immediately upon Sublandlord's receipt thereof, but in any case within three (3)
Business Days of Sublandlord's receipt of any such request. Sublandlord agrees
to promptly communicate any response from Master Landlord to Subtenant in
writing no more than three (3) Business Days after receipt; provided, however,
that in no event shall the foregoing be deemed to extend the time period within
which Sublandlord is required to respond to Subtenant's request hereunder.
Subtenant agrees to indemnify Sublandlord and hold it harmless from and against
any and all claims, damages, losses, expenses and liabilities (including
reasonable attorneys' fees) incurred by Sublandlord as a result of the
non-performance or non-observance of any Sublandlord's obligations under the
Master Lease which are the result of a default by Subtenant under this Sublease.
Sublandlord agrees to indemnify Subtenant and hold it harmless from and against
any and all claims, damages, losses, expenses and liabilities (including
reasonable attorneys' fees) incurred by Subtenant as a result of the
non-observance by Sublandlord of any of Sublandlord's obligations as "Tenant"
under the Master Lease. Neither Subtenant nor Sublandlord shall do, nor permit
to be done, any act or thing which is, or with notice or the passage of time
would be, a default under this Sublease, and/or the Master Lease.
(b) Sublandlord agrees that Subtenant shall be entitled to receive all
services and repairs to be provided by Master Landlord to Sublandlord under the
Master Lease with respect to the Premises, except as otherwise provided by this
Sublease or by the Master Lease (as incorporated herein), and Sublandlord hereby
agrees to use commercially reasonable efforts (which shall not be deemed to
require litigation) in seeking to enforce said rights of Subtenant against
Master Landlord. Subtenant acknowledges that Sublandlord is not the owner of the
Building and Subtenant shall not, under any circumstances, seek nor require
Sublandlord to perform any of such services, nor shall Subtenant make any claim
upon Sublandlord for any damages which may arise
13
by reason of Master Landlord's default under the Master Lease so long as
Sublandlord is complying with its obligations under Sections 10 and 11 of this
Sublease to seek enforcement of the Master Lease against Master Landlord. Any
condition resulting from a default by Master Landlord shall not constitute an
eviction, actual or constructive, of Subtenant and no such default shall excuse
Subtenant from the performance or observance of any of its obligations to be
performed or observed under this Sublease, or entitle Subtenant to receive any
reduction in or abatement of the rent provided for in this Sublease so long as
Sublandlord is complying with its obligations under Sections 10 and 11 of this
Sublease. In furtherance of the foregoing, Subtenant does hereby waive any cause
of action and any right to bring any action against Sublandlord by reason of any
act or omission of Master Landlord under the Master Lease. Sublandlord covenants
and agrees with Subtenant that Sublandlord will pay all fixed rent and
additional rent payable by Sublandlord pursuant to the Master Lease to the
extent that failure to perform the same would adversely affect Subtenant's use
or occupancy of the Premises.
(c) In the event Subtenant shall be in default of any covenant of, or
shall fail to honor any obligation under, this Sublease, Sublandlord shall have
available to it against Subtenant all of the remedies available to Master
Landlord under the Master Lease in the event of a similar default on the part of
Sublandlord as "Tenant" thereunder, as if Sublandlord were Master Landlord and
Subtenant were Tenant.
(d) In the event Sublandlord shall be in default of any covenant of, or
shall fail to honor any obligation under, this Sublease, Subtenant shall have
available to it against Sublandlord all of the remedies available to Sublandlord
as "Tenant" under the Master Lease in the event of a similar default on the part
of the Master Landlord thereunder, as if Sublandlord were Master Landlord and
Subtenant were Tenant. In addition, subject to any Unavoidable Delays, if
Sublandlord fails to perform any of Sublandlord's obligations pursuant to this
Sublease which materially affect Subtenant's reasonable access to the Premises
and/or Subtenant's ability to conduct its business in the Premises, or if Master
Landlord fails to perform any of its obligations under the Master Lease with
respect to the Premises which materially affect Subtenant's reasonable access to
the Premises and/or Subtenant's ability to conduct its business in the Premises,
Subtenant may provide written notice of such failure (the "FIRST NOTICE") to
Sublandlord specifying in detail the nature and manner of such failure (any such
failure referred to herein as a "SUBLANDLORD DEFAULT"), specifying in what
respects the Sublandlord Default materially affects Subtenant's ability to
conduct its business in the Premises, and stating Subtenant's intent to exercise
its rights under this Section 11(d). If either (i) the Sublandlord Default shall
not have been cured by either Sublandlord or Master Landlord within thirty (30)
days following Sublandlord's receipt of the First Notice or (ii) the Sublandlord
Default is not capable of cure within thirty (30) days and Sublandlord or Master
Landlord has not commenced cure of the Sublandlord Default within such 30-day
period and diligently prosecuted the cure to completion within a reasonable
time, then Subtenant may provide a second written notice (the "SECOND NOTICE")
of such Sublandlord Default to Sublandlord specifying in detail the nature and
manner of the continuing Sublandlord Default, specifying in what respects the
Sublandlord Default materially affects Subtenant's reasonable access to the
Premises and/or Subtenant's ability to conduct its business in the Premises,
stating Subtenant's intent to exercise its rights
14
under this Section 11(d) and stating that it is the second and final notice. If
either (i) the Sublandlord Default shall not have been cured by either
Sublandlord or Master Landlord within thirty (30) days following Sublandlord's
receipt of the Second Notice or (ii) the Sublandlord Default is not capable of
cure within thirty (30) days and Sublandlord or Master Landlord has not
commenced cure of the Sublandlord Default within such 30-day period and
diligently prosecuted the cure to completion within a reasonable time, then
Subtenant may cure such Sublandlord Default if such cure may be effected within
the Premises without affecting any Building Systems, the structure of the
Building, or any area outside of the Premises. Nothing contained herein shall
give Subtenant the right to cure a Sublandlord Default which originates or
requires work outside the Premises. If Subtenant is prohibited from exercising
its right to cure a Sublandlord Default under this Section 11(d) due to the fact
that the cure by Subtenant would affect a Building System, the structure of the
Building or any area outside the Premises, and if the Sublandlord Default shall
continue for more than thirty (30) days (subject to extension as provided above)
following Sublandlord's receipt of the Second Notice, then Subtenant's Rent
shall be abated from the date that Sublandlord's cure rights hereunder expire
until the date that the Sublandlord's Default shall have been cured by the
Sublandlord or Master Landlord. Anything contained in the foregoing or elsewhere
in this Sublease to the contrary notwithstanding, if the Sublandlord Default
shall be of such a nature that its continuation without repair would create an
immediate danger to the health or safety of individuals and/or would create an
immediate danger of substantial or material damage to or waste of the Premises
or Subtenant's property located in the Premises, Subtenant shall immediately
give written notice thereof to Sublandlord and, so long as Subtenant gives
written notice of the emergency, Subtenant shall have the right to immediately
take whatever actions within the Premises as are reasonably necessary to
alleviate such danger, the notice requirements of this Section notwithstanding.
Any exercise by Subtenant of its rights under this Section 11(d) shall be at
Subtenant's sole risk. Subtenant hereby indemnifies and holds the Indemnitees
harmless from any and all losses, costs, damages, liability and/or claims made
by any Persons (including, without limitation, other tenants) in connection with
Subtenant's exercise of its rights under this Section 11(d). If Subtenant cures
the Sublandlord Default as permitted under this Section 11(d) Sublandlord shall
reimburse Subtenant for the reasonable, out-of-pocket expenses incurred by
Subtenant in completing such cure within thirty (30) days following
Sublandlord's receipt of Subtenant's invoice, including reasonable supporting
documentation of all amounts. If Sublandlord fails to timely pay Subtenant the
invoiced amounts, the unpaid amount shall accrue interest at the Sublease Rate
from and after the expiration of the thirty (30) day period until paid in full.
If Sublandlord disputes any matter under this Section 11(d), such dispute shall
be resolved in accordance with the Dispute Resolution Procedure set forth in
Section 41.1 of the Master Lease, but pending the resolution of such dispute,
Sublandlord's judgment shall control.
(e) Subtenant agrees that the consent of Subtenant shall not be
required for any amendment or modification of the Master Lease as long as such
change does not materially or unreasonably increase Subtenant's obligations
hereunder or Subtenant's Share, nor shorten the term of the Sublease or
otherwise materially affect any of the economic or operating terms of this
Sublease or Subtenant's ability to conduct business in the Premises.
15
12. BROKERS; NO THIRD PARTY BENEFICIARIES. Each party warrants that it has had
no dealings with any real estate broker or agent other than Jones Lang LaSalle
Partners, or The Widewaters Group, Inc. (collectively, "BROKER") in connection
with the negotiation of this Sublease, except that Subtenant has been
represented in part by Equis. Each party agrees to indemnify and hold the other
party harmless from any cost, expense or liability, including reasonable
attorney's fees, for any compensation, commissions or charges claimed by any
other real estate broker or agent (including Equis) other than Broker employed
or claiming to represent or to have been employed by each party in connection
with the negotiation of this Sublease. Sublandlord will be responsible for the
payment of all brokerage commissions due to Broker in connection with this
Sublease (the "BROKERAGE Commission") in accordance with one or more separate
broker's agreements. Nothing in this Section 12 or in any other provision of
this Sublease is intended or shall be deemed to confer any rights or benefits
upon any entity or person other than the parties hereto or to make or render any
such other entity or person a third-party beneficiary of this Sublease.
13. NOTICES. All notices and other communications authorized or required
hereunder shall be deemed adequate if in writing and delivered by a nationally
recognized courier service (against a signed receipt) or if sent by registered
or certified mail, postage prepaid, return receipt requested, to the parties at
the following addresses:
If to Sublandlord: Times Square Studios Ltd
c/o Walt Disney Imagineering -
Corporate Real Estate
1401 Flower Street
P.O. Box 25020
Glendale, CA 91201
Attn: Lease Administration
With a copy to: The Walt Disney Company
500 South Buena Vista Street
Burbank, CA 91521-6371
Attn: Corporate Legal Real Estate
If to Subtenant: Applied Theory Corporation
125 Elwood David Road
Liverpool, NY 13088
Attn: Terri Kennett
With a copy to: Applied Theory Corporation
1500 Broadway
Suite 300
New York, NY 10036
Attn: Diane Barker
The name or address for notice may be changed by giving notice in accordance
with this section. Notice shall be deemed given upon receipt or refusal of same.
16
14. ASSIGNMENT AND SUBLETTING.
(a) Subject to the provisions of the Master Lease, including, without
limitation, the obligation to obtain Master Landlord's and Sublandlord's (as if
Sublandlord were Master Landlord) prior written consent under Article 12 of the
Master Lease, Subtenant may assign this Sublease or sublet all of the Premises;
provided, however, that if any prospective assignee or subtenant of Subtenant,
or any affiliate or subsidiary of such prospective assignee or subtenant
(whether or not such entity is a Related Entity of Subtenant), is engaged in any
line of business in which ABC, Inc. or any of its affiliates or subsidiaries is
engaged (a "SIMILAR ENTITY"), Sublandlord may grant or withhold its consent in
its sole and absolute discretion. Notwithstanding anything to the contrary
herein or in the Master Lease, Subtenant may not assign this Sublease or sublet
the Premises to more than one Person. Any assignment of this Sublease or any
sublease of the Premises shall not relieve Subtenant of any of its obligations
under this Sublease. Notwithstanding anything to the contrary contained herein,
except as otherwise provided above or in the Master Lease (as incorporated
herein), this Sublease shall not be assigned, encumbered or otherwise
transferred or the Premises further sublet in whole or in part, or any part
thereof suffered or permitted by Subtenant to be used or occupied by others,
without the prior written consent of Master Landlord in each instance, which
consent shall be granted or withheld in accordance with the provisions of
Article 12 of the Master Lease, to the extent Master Landlord's consent is
required by Article 12 of the Master Lease. Sublandlord hereby convenants and
warrants that it shall cooperate with Subtenant in obtaining the consent of
Master Landlord in such cases as such consent may be required.
(b) Sublandlord shall be entitled to receive fifty percent (50%) of any
Assignment Profit and/or Sublease Profit derived from an assignment or further
sublease of the Premises in accordance with the provisions of Section 12.7 of
the Master Lease.
15. FORCE MAJEURE. The period of time during which the either party is prevented
from performing any act required to be performed pursuant to this Sublease by
events beyond the reasonable control of such party shall be added to the time
for performance of such acts.
16. FURTHER ASSURANCES. Each party to this Sublease will at its own cost and
expense, execute and deliver such further documents and instruments and will
take such other actions as may be reasonably required to evidence or carry out
the intent and purposes of this Sublease.
17. SUCCESSORS AND ASSIGNS. This Sublease is binding on and shall inure to the
benefit of the parties hereto and their respective representatives, successors
and assigns.
18. GOVERNING LAW. This Sublease will be governed by, and construed in
accordance with, New York law.
17
19. CONFIDENTIALITY. Except as expressly directed by the other party, or as
required by law, Subtenant, Sublandlord and their respective officers,
directors, employees, agents and contractors shall keep in strict confidence and
shall not use, publish or divulge any Confidential Information (defined below)
whatsoever relating to the terms of this Sublease or the business or finances of
the other party to any third party. Except as expressly directed or permitted by
Sublandlord, Subtenant shall not make or issue any public statement referencing
Sublandlord or any of its subsidiaries or affiliates (including, without
limitation, Disney, ABC and ESPN) to the press or to other media. Sublandlord
and Subtenant agree that they shall be responsible for any disclosure of
Confidential Information by their respective directors, officers, employees, and
agents that would constitute a breach of this Sublease. In the event of any
breach of this Section, the non-breaching party will be entitled, in addition to
any other remedies that it may have at law or in equity, to injunctive relief or
an order of specific performance. The provisions of this Section shall survive
the expiration or sooner termination of this Sublease for a period of two (2)
years. For purposes of this Sublease, "CONFIDENTIAL INFORMATION" means all
non-public, confidential or proprietary information that one party or any of its
affiliates make available to the other party any of its affiliates make
available to the other party any of its affiliates, in connection with this
Sublease, Confidential Information shall include, but not be limited to, the
specific terms and conditions of this Sublease as well as information related to
the past, present and future plans, ideas, business strategies, marketing
programs, activities, customers and suppliers of Sublandlord, Sublandlord's
affiliates, Subtenant and/or Subtenant's affiliates. Confidential Information
shall not include information that is or becomes generally available to the
public other than as a result of a breach of this Sublease by the receiving
party.
20. SEVERABILITY. If any term or provision of this Sublease is held to be
invalid or unenforceable to any extent, the remainder of this Sublease will not
be affected, and each term or provision of this Sublease will be valid and will
be enforced to the fullest extent permitted by law. If the application of any
term or provision of this Sublease to any person or circumstance is held to be
invalid or unenforceable, the application of that term or provision to persons
or circumstances other than those as to which it is held invalid or
unenforceable will not be affected, and such term or provision will be valid and
will be enforced to the fullest extent permitted by law.
21. AUTHORITY. The individuals signing this Sublease on behalf of a corporate
party or other legal entity represent and warrant that each of them is duly
authorized to execute and deliver this Sublease on behalf of the corporation or
entity, as the case may be, and that this Sublease is binding on such party in
accordance with its terms. Concurrently with the execution of this Sublease,
each party to this Sublease shall deliver to the other party a duly certified
copy of a resolution of the corporation's board of directors or governing body,
as appropriate, authorizing execution of this Sublease. Sublandlord hereby
represents and warrants that it has full power and authority to enter into this
Sublease and to perform its obligations hereunder.
22. EFFECTIVENESS OF SUBLEASE. This Sublease is conditioned upon and shall only
be effective upon receipt of the approval of Master Landlord, Credit Lyonnais
18
New York Branch and Starwood Financial Trust. In connection with the approval by
the Master Landlord, such approval shall include the delivery of an estoppel
certificate in accordance with Section 7.4 of the Master Lease. If such consents
shall not be obtained within (60) sixty days following the date hereof, then
either Sublandlord or Subtenant shall have the right to terminate this Sublease
upon notice delivered to the other party, any upon the deliver of such notice
(unless such consents shall have been obtained), this Sublease shall terminate
and be of no further force or effect and neither party shall have any further
rights against the other by reason thereof, except pursuant to Sections 4,
11(a), 12 and 19 hereof. Sublandlord hereby convenants to use commercially
reasonable efforts to obtain the approvals required under this Section 22 within
the time permitted. Provided Subtenant and Sublandlord execute this Sublease and
Master Landlord grants its consent to this Sublease, Sublandlord agrees to
reimburse Subtenant for all out-of-pocket costs and expenses incurred by
Subtenant in connection with this Sublease in the event that the approvals of
Credit Lyonnais New York Branch and Starwood Financial Trust are not received
within 90 days following the date hereof and this Sublease is terminated
pursuant to this Section 22.
23. NO USE OF TRADEMARK. Subtenant does not acquire any right under this
Sublease to use, and shall not use, Sublandlord's name "Disney" (either alone or
in conjunction with or as part of any other word or name) or any registered
trademarks or service market or any fanciful characters or designs of
Sublandlord or Sublandlord's affiliates: (a) in any advertising, publicity or
promotion; (b) to express or imply any endorsement by Sublandlord of any
services of Subtenant or any other person or entity; or (c) in any other manner
whatsoever whatsoever (whether or not similar to the uses hereinabove
specifically prohibited). The provisions of this Section shall survive the
expiration or earlier termination of this Sublease).
24. SIGNAGE. Subtenant hereby acknowledges and agrees that all windows of the
Premises (a) facing Broadway and (b) along 43rd Street (starting from the corner
of Broadway) between the first two column bays, on the exterior of the Building
may be blocked by the signage of Sublandlord or others, and that Subtenant shall
have no ability or right to object to such signage in any manner whatsoever.
25. ENTIRETY OF AGREEMENT. This Sublease, together with all Exhibits and the
portions of the Master Lease incorporated herein, constitutes the entire
Sublease and supersedes all previous agreements, promises, representations,
understandings and negotiations between the parties has been induced to enter
into this Sublease, nor is any party relying on any representation or warranty
outside those expressly set forth in this Sublease. Any agreement made after the
date of this Sublease is ineffective to modify, waiver or terminate this
assignment, in whole or in part, unless that agreement is in writing, is signed
by the parties to this Sublease, and specifically refers to this Sublease.
26. COUNTERPARTS. This Sublease may be executed in one or more separate
counterparts, each of which, when so executed, shall be deemed to be an original
and which, together, shall constitute and be one and the same instrument.
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IN WITNESS WHEREOF, the parties have executed this Sublease
Agreement as of the day and year first above written.
SUBLANDLORD
TIMES SQUARE STUDIOS LTD,
a New York corporation
By: /s/ Tony Basalari
-----------------------
Name: Tony Basalari
---------------------
Its: Vice President
----------------------
SUBTENANT:
APPLIED THEORY CORPORATION,
a Delaware corporation
By: /s/ David A. Buckel
-----------------------
Name: David A. Buckel
---------------------
Its: V.P./CFO
----------------------
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1500 Broadway (New York, NY) Sublease Agreement - Times Square Studios Ltd., Applied Theory Corp. and Zapco 1500 Investment LP
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