Document:

Exhibit
10.31

 

 

EXECUTION COPY

 

CERTAIN CONFIDENTIAL
INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY ASTERISKS, HAS BEEN OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

INTERNATIONAL
MANUFACTURING AND PACKAGING AGREEMENT

between

 

WEA
INTERNATIONAL INC.  (“WMI”)

 

and

 

WARNER
MUSIC MANUFACTURING EUROPE GmbH (to be renamed

CINRAM GmbH) (“Company”)

 

Dated
as of October 24, 2003

 

Capitalized terms not defined where they
appear in the text are defined in Paragraph 14.

 

1.                                       Appointment.  (a)

 

(i)  WMI hereby appoints Company to render, and
Company shall render, M&P Services for one hundred percent (100%) of
Products in accordance with the terms hereof. 
Additionally, Company shall have non-exclusive rights to render and
shall, at the request of WMI, render M&P Services for Products for WMI and
WMI’s affiliates located outside the Territory.

 

(ii)  Notwithstanding anything to the contrary
contained in Paragraph 1(a)(i), from and after the effective date of a Recorded
Music Major Transaction (the “RMMT Effective Date”), the appointment of
Company hereunder shall instead be to render, and Company shall render, M&P
Services for at least the Specified Percentage (and, at WMI’s election, more
than the Specified Percentage) of Products in accordance with the terms hereof.  WMI shall use commercially reasonable efforts
to provide that the Combined Entity’s ordering of units of Products and
Components hereunder (i.e., mix of New Releases and Catalog Titles and special
packaging orders) following the RMMT Effective Date remains generally
consistent with WMI’s ordering of units of Products and Components hereunder
prior to the RMMT Effective Date.  The “Specified
Percentage” equals the fraction, expressed as a percentage: (A) the
numerator of which shall be one hundred percent (100%) of the number of units
of Products manufactured and packaged for sale in the Territory by Company for
WMI under this Agreement (and/or by WMI on its own behalf, if applicable)
during the twelve (12) complete calendar months immediately preceding the RMMT
Effective Date (the “WMI Output”); and (B) the denominator of which
shall be the WMI Output plus one hundred percent (100%) of the number of
units of Records, in any Optical Disc format, manufactured and packaged for
sale in the Territory by or for

 

 

the recorded music business of the applicable
Major during the same twelve (12)-month period. 
For the avoidance of doubt, in calculating the WMI Output no units
manufactured or packaged by Company (and/or WMI, if applicable) for WHV or its
affiliates shall be included.

 

(iii)  Notwithstanding Paragraphs 1(a)(i) and
1(a)(ii), in relation to Excluded Products WMI shall be entitled to appoint a
third party manufacturer and packager.  WMI
shall include Company in the tender process.

 

(b)  Reservation
of Rights.  WMI hereby reserves all
rights in and to Products not otherwise expressly granted to Company herein.

 

(c)  Reports.  Company shall prepare for WMI the production,
shipments and inventory reports in the same format and details as were received
by WMI or its affiliates prior to this Agreement and shall supply WMI and its
affiliates with such reports on at least a monthly basis during the Term.  If Company provides more detailed reports to
any other party during the Term, Company shall, at WMI’s request, provide such
more detailed reports to WMI hereunder as of the date that Company commences
providing such more detailed reports to such other party but subject to the
same terms and conditions under which such reports are provided to such other
party (e.g., any additional fees or amounts charged to such party for
such more detailed reports).  Nothing in
such reports shall impart any competitively-sensitive information about
Company, Company’s affiliates or any third parties for which Company renders
any services or any personal data possessed by Company.

 

2.                                       Title.  Title to units of Components and Products
manufactured and packaged hereunder (including all copyrights and trademarks
contained therein) shall remain in WMI or WMI’s affiliates.  Company
acknowledges that Products (including all intellectual property contained
therein and relating thereto) are protected under copyright laws and that WMI
is the rightful owner or license holder of such copyrights.  Company acknowledges that any removal of any
such materials from Company’s approved facilities without WMI’s written
approval, and any distribution of any such materials in the Territory without
WMI’s written approval, is an infringement of WMI’s copyright.  Company shall bear the risk of loss for units
of Products in Company’s possession, under Company’s control or in transit from
Company or its designees to any Facility, provided, however, that
WMI shall bear the risk of loss for any units of Products in transit for which
WMI is responsible for paying the shipping.

 

3.                                       Services.  (a)  Level
of Services.  [*]  In addition, the Services:

 

(i)  shall
be rendered on a so-called “label blind” basis;

 

2

 

(ii)  shall be rendered in at least the same
general manner, subject to at least the same general standards and in at least
the same general quality as provided by Company to all other parties whose
Records are manufactured and/or packaged by Company in the Territory,  [*]. This Paragraph 3(a)(ii) shall not
require that Company provide any new services to WMI if the cost of providing
such services would be unreasonably burdensome to Company; provided, however,
that nothing in this sentence shall limit Company’s obligations set forth in
Paragraph 6;

 

(iii)  [*]

 

(iv)  shall be rendered in accordance with “first-class”
standards that meet the highest quality available in the industry;

 

(v)  shall be rendered in accordance with, or
exceed, each of the service level requirements set forth on Schedule A
hereto (the requirements set forth on Schedule A hereto being the “Service
Level Requirements”); and

 

(vi)  shall, to the extent rendered for the
production of Products in CD or DVD format, be rendered in accordance with the
technical specifications set forth on Schedule B hereto (the requirements
set forth on Schedule B hereto being the “Technical Specifications”).

 

Notwithstanding the foregoing, to the extent
that the standards set forth in clauses (ii) and (iv) above are not being met
as of the commencement of the Term, Company shall have a period of ninety (90)
days from the commencement of the Term in which to meet such standards.

 

(b)  Copy
Protection and Digital Rights Management. 
WMI may from time to time require the integration of copy protection and
digital rights management technology into certain Products.  Company shall use its commercially reasonable
efforts to ensure that it is equipped to provide such technology and shall
obtain necessary licenses from the supplier therefore.  WMI shall, unless otherwise agreed, be
responsible for the copy protection or digital rights management technology
license fees and the cost of any packaging adaptation necessary to provide notification
of the use of such technology as may be required by the applicable law in the
country of sale, and (except as otherwise expressly set forth in this Paragraph
3(b)) all other costs relating to copy protection and digital rights management
shall be borne by Company.  Company shall
report units

 

3

 

manufactured and technologies used to WMI on a monthly basis to
facilitate the administration of the copy protection and digital rights
management license fees.  Company shall
assist WMI in assessing and testing new copy protection and digital rights
management technologies, and on forty-five (45) days’ notice will make
provision for new copy protection and digital rights management technologies to
be implemented, but only so long as such new technologies are available to
Company for use.  To the extent that the
actual, documented, out-of-pocket, non-overhead cost to Company for the
assessment, testing and implementation of such new copy protection and digital
rights management technologies exceeds [*] in the aggregate in respect of any
Contract Year, then WMI shall reimburse Company for any such excess (but solely
to the extent that WMI requested that Company assess, test or implement such
new technology).  To the extent that any
other parties serviced by Company actually utilize any such new copy protection
and digital rights management technology, WMI’s obligation to reimburse Company
for any such excess shall be reduced pro rata based on the total number of
Company’s customers utilizing the new copy protection and digital rights
management technology.  If WMI has
already reimbursed Company pursuant to the preceding sentence and subsequently
is entitled to a pro rata reduction as provided herein, Company shall refund
such amount within thirty (30) days of the date such other party begins
utilizing such new copy protection
and digital rights management technology. 
Implementation of copy protection or digital rights management
technology shall not be considered a factor that shall impact capacity or
production time downstream of the mastering process.  WMI and Company further agree that pursuant
to Article 6.4 Directive 2001/29/EC on the Harmonization of Certain
Aspects of Copyright and related Rights in the Information Society, each will
accommodate statutory privileges relating to use regardless of the use of any
such copy protection technology or digital rights management technology.

 

(c)  Fees.  The Packaging Services shall be furnished at
the prices set forth on Schedule C and Schedule D hereto and as set
forth in this Paragraph 3(c), as they may be modified from time to time by
operation of Paragraphs 12 and 15 (the “Printing and Packaging Fees”),
and the Manufacturing Services shall be furnished at the prices set forth on Schedule D
hereto and as set forth in this Paragraph 3(c), as may be modified from time to
time by operation of Paragraphs 12 and 15 (the “Manufacturing Fees” and,
together with the Printing and Packaging Fees, the “Fees”).  Unless otherwise indicated, all amounts set
forth in this Agreement
including the Schedules hereto are denominated in Euros.  [*]

 

4

 

[*]

 

(d)  Subcontracting.  Company may subcontract a portion of its
obligations under this Agreement to any one or more of the subcontractors on Schedule E
hereto (each an “Approved Subcontractor”).  Company may subcontract to a subcontractor
that is not an Approved Subcontractor only with the prior consent of WMI.  Any such subcontracting by Company shall not
relieve Company of its obligations hereunder. 
Orders hereunder shall not be subcontracted to a greater degree than any
other orders.  In addition, Company shall
ensure that any subcontractors comply with all obligations of Company hereunder.  WMI may from time, to time designate
organizations as prohibited subcontractors under this Agreement if WMI
reasonably believes such organizations would not be likely to be able to adhere
to the provisions of this Agreement.

 

(e)  Compliance with Law; Code
of Conduct.  Company shall comply (i)
with all laws and regulations in connection with Company’s undertakings under
this Agreement, except where the failure to do so individually or in the
aggregate is immaterial; and (ii) subject to relevant local laws including
privacy laws, with the code of conduct attached as Schedule F hereto.

 

(f)  Delivery of Source
Materials.  (i)  WMI or its affiliates shall, at WMI’s sole
expense, deliver to Company (or to such suppliers as Company may designate) all
Source Materials.  WMI shall retain title
to all Source Materials supplied to Company or its designees, including all
digital files derived from such Source Materials.  Company shall maintain systems at no charge
to WMI so as to be able to receive Source Materials, metadata and digital
proofs in digital form and online, which shall include Wamnet.

 

(ii)  All products ordered by WMI or its affiliates
and manufactured and finished by Company shall be delivered at Company’s
expense to Company’s central warehouse located in Alsdorf, Germany, or to the
extent that Company elects to re-locate such Facility, then to such relocated
Facility.

 

(g)  Ordering.  (i)  It
shall be WMI’s responsibility to determine its production requirements and to
order Units of Products.  All Orders for
Units of Products shall be evidenced by a written purchase order and may be
placed by WMI or any of its affiliates or any third party licensees.  Orders must include all information necessary
to properly identify the Products to be manufactured and packaged, including artist, title,
catalog number, full UPC/EAN and quantity. 
Company shall use the entire UPC or EAN codes to identify all Products.

 

(ii)  Prior to manufacture, an Order must be
Workable.  Company shall deliver Units of
Products to WMI’s designated locations within the applicable time periods set
forth on Schedule A hereto.  All of
the time periods set forth on Schedule A
hereto are referred to as the applicable Turnaround Times for the manufacture
of Units of Products in each

 

5

 

configuration, respectively, and are measured
from the time the Order is Workable.

 

(iii)  At the times that WMI submits Orders, to the
extent that an Order is for multiple selections, WMI shall have the right to
determine the priority in which the Orders should be filled (that is, it shall
have the right to determine and designate which part of the Order is to be
delivered within the shorter of the applicable Turnaround Times and which part
of the Order is to be delivered within the longer of the applicable Turnaround
Times).

 

(iv)  For each item (i.e., a particular Product) in
an Order, there shall be an allowable fulfillment deviation as set forth below:

 

	
  Order Size in Units

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  0-10,000

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  10,001-50,000

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  50,001-300,000

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  300,001 and
  up

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  

 

Orders filled within such deviation shall be
deemed to be satisfied, and WMI shall pay Company on the actual number of units
delivered at the rate(s) charged by Company pursuant to the original Order to
which such deviation relates.

 

(h)  Quarterly
Meetings.  At least once every
calendar quarter, WMI may meet with Company’s Chief Executive Officer (or
equivalent) and Chief Financial Officer (or equivalent) to assess Company’s performance
under this Agreement and its ongoing ability to perform its obligations under
this Agreement.

 

(i)  Shipping
Costs.  Company shall bear the cost
and expense of shipping of any and all units of Products, Components or other
materials manufactured hereunder from the point of manufacture to Company’s
central Facility located in Alsdorf, Germany or to the extent that Company
elects to re-locate such Facility, then to such other new Facility.  Company shall also be solely responsible for
the cost and expense of any shipping between any of Company’s Facilities, so
long as such movement is at the direction of Company in its own discretion.  Except as otherwise specifically provided
herein, WMI shall be responsible for the cost and expense of all other shipments
hereunder.  To the extent that any
shipping costs hereunder are to be borne by WMI but are actually paid by
Company, WMI shall only be required to pay Company’s actual, documented,
out-of-pocket costs charged by such shipping agent for the shipment of units of
Products and/or other materials hereunder and, such costs shall be reimbursed
to Company by WMI within [*] following Company’s rendition of such invoice to
WMI (but in no event shall WMI
be required to make any such payment of such invoice prior to Company’s payment
of such invoice to such shipping agent). 
If WMI is responsible for shipping expenses, should WMI so elect, WMI
shall have the right to: (i) select the shipping agent(s) utilized by Company
for shipping of units of Products and/or other materials hereunder (and, in
doing so, assume the risk of loss for such units

 

6

 

of Products in transit); or (ii) in lieu of selecting such shipping
agent(s), require that Company submit to WMI any proposed shipping agent(s)
which Company wishes to utilize hereunder for WMI’s prior written approval. 
If, in a particular instance, WMI is not responsible for shipping
expenses or WMI does not exercise its rights pursuant to the preceding
sentence, Company shall utilize the same shipping agent(s) utilized by Company
for the shipping of a majority of the other products shipped by or on behalf of
Company.

 

(j)  No
Unauthorized Manufacture.  Company
acknowledges that WMI may suffer substantial damages as a result of the
unauthorized manufacture of Components or Products.  Therefore, Company agrees that: (i) Company
shall produce only those quantities of units of Components and Products as are
specified in a written Order issued by WMI and subject to the terms set forth
herein; (ii) Company shall deliver the units of Components and Products
specified in each Order only to the recipient and location designated by WMI in
such order; and (iii) upon WMI’s request from time to time, Company shall
deliver to WMI separate written confirmation of each manufacturing run made of
each Product and Component pursuant to each Order, including the date of the
manufacturing run and the number of units produced during the run.

 

(k)  Additional
Services.  At WMI’s reasonable
request, Company shall provide WMI with manufacturing and packaging services
for “point of sale,” promotional and merchandising materials to be utilized in
connection with Products.  Such services
shall be provided by Company to WMI on a non-exclusive basis only (and only to
the extent that WMI so requests any such services) and, to the extent so
requested, shall be provided to WMI [*]. 
Notwithstanding this Paragraph
3(k), Company shall only be required to provide such services if either
WMI (either itself or through any of its affiliates) provided such services on
its own behalf prior to the commencement of the Term or Company then-currently
provides such services to any party (in which case, if WMI requests such
services and Company is not contractually prohibited from providing such
services to WMI, they shall be provided to WMI on the same terms and conditions
as are provided to such other party).  If
Company provides any Services to WEA under the US Manufacturing Agreement, then
Company shall provide such Services to WMI hereunder but only to the extent
that it is reasonably feasible for Company to do so at the WMI Facilities.

 

4.                                  Company’s
Financial Obligations.  WMI shall not
be responsible for payment of any of Company’s (or Company’s affiliates’)
indirect or general overhead charges or the salaries of Company’s (or Company’s affiliates’) employees or
agents.  All costs associated with the
rendering of Services shall be borne by Company.  Such costs to be borne by Company include any
patent royalties or other similar royalties or license fees payable in
connection with the manufacture of Products and Components (subject to the
provisions of Paragraph 3(c)(i)), which costs, for the avoidance of doubt,
exclude mechanical royalties, record royalties and copy protection and digital
rights management (i.e., DRM) technology license fees.

 

7

 

5.                                  Other
Obligations.  (a)  Storage of Source Materials and Components.  Company shall accept and store all Source
Materials and units of Components delivered to or otherwise held by Company
hereunder at no charge; provided, however, that with respect to
any particular Product, Company shall not be required to store more Source
Materials or units of Components than is necessary to satisfy the next [*]
demand (such determination as to what constitutes [*] demand shall be made
jointly by WMI and Company based, where possible, upon actual, gross units
ordered during the prior [*] period and shall be made for all Source Materials
and Components no more frequently than semi-annually during the Term commencing
no sooner than [*] after the commencement of the Term).  With respect to Source Materials and units of
Components so determined to be in excess of a [*] demand therefor, Company
shall notify WMI of the specific Source Materials and/or units of Components
constituting such excess and within [*] following WMI’s receipt of such notice,
WMI shall (in WMI’s sole discretion) either: (i) remove such excess Source
Materials and/or units of Components (at WMI’s expense); (ii) direct Company to
destroy such excess Source Materials and/or units of Components (at WMI’s
expense); or (iii) direct Company to store such excess: either (x) at a
Facility at a cost to WMI of [*] or (y) offsite at Company’s or Company’s
affiliates’ leased facility approved in advance, in writing by WMI and the
actual, documented, out-of-pocket expense charged by such facility to Company
for such storage shall be reimbursed to Company by WMI.  Amounts owing under this Paragraph 5(a) shall
be invoiced by Company at month end and shall be payable [*] from the date of
the rendition of such invoice; [*]. All Source Materials and all units of
Components shall be WMI’s property and shall be kept segregated from any other
property.  Upon receipt of a written
request from WMI, Company shall return to WMI, at WMI’s cost, any materials
supplied by WMI which have not been utilized in the manufacture or packaging of
units of Components or Products or otherwise pursuant to this Agreement and which
are then in Company’s possession or control. 
The risk of loss, due to any reason, of Source Materials or units of
Components in Company’s possession or control shall be borne by Company, as
further described herein; provided, however, that to the extent
any such loss was directly caused by a WMI Employee, Company shall not bear the
risk of loss, except to the extent such loss is or would have been covered by
Company’s property insurance as required under this Agreement as set forth on Schedule G
hereto.  WMI shall own all manufacturing
parts (for Components and Products) and all derivatives and/or duplicates
thereof fabricated in connection with the production process, including all
Components, photographic films and color keys, if any, duplicate audio tapes
(analog or digital), glass Masters and running Masters and all digital files
derived from any of the foregoing.  Company
shall not destroy any of the Source Materials, units of Components or elements
derived therefrom without prior written authorization from WMI; provided,
however, that Company may destroy certain such derived elements (i.e.,
glass Masters and metal parts) to the extent that such elements are generally
destroyed by Company in the ordinary course of production.  Company shall also, at Company’s cost,
maintain, protect and backup any and all Source

 

8

 

Materials and derivatives in an organized environment to allow for easy
access by both Company and WMI.

 

(b)  Insurance.  During the Term, Company shall: (i) comply
with all provisions set forth on Schedule G hereto; and (ii) at Company’s
sole cost and expense, maintain adequate insurance coverage for: (A) all Source
Materials and Inventory while such items are in Company’s possession, under Company’s
control or in transit to or from Company or its designees to any Facility; and
(B) the other matters set forth on Schedule G hereto.  The insurance required under this Paragraph 5(b) is not intended to
limit Company’s liability as otherwise provided in this Agreement.

 

(c)  Computer
Access.  In order that WMI and its
affiliates are able to monitor daily shipments, receipt, production and
inventory activity in connection with Components and Products, Company shall
give WMI access to Company’s computer system for the purpose of providing WMI
with real-time information stored therein relating to Components and Products
at Company’s expense (but no access shall be allowed to information relating to
any other party’s products or any personal data possessed by Company).  Such system shall provide WMI with all of the
same types of reports and information currently provided by, and as may be
available from Company’s computer systems in connection with other products and
components manufactured and/or packaged by Company.  In connection therewith, Company shall work
with WMI to ensure that WMI is provided with at least the same level of reports
and information that WMI’s own systems provided as of the commencement of the
Term.  Nothing in such reports or information
provided shall impart any competitively-sensitive information about Company,
Company’s affiliates or any third parties for which Company renders any
services or any personal data possessed by Company.  Such access shall be available to WMI [*] at
all times during the Term.  Notwithstanding
anything herein to the contrary, Company may perform system maintenance and
upgrades during which such systems may not be available; provided, however,
that such downtime does not exceed [*]

 

(d)  Inspection.  Subject to the provisions set forth below,
during the Term and for a period of [*] following the expiration or termination
of the Term, WMI shall have the right to inspect each WMI Facility and any
other facility utilized by Company in connection with Components or Products or
the provision of Services hereunder, during regular business hours (utilizing
either WMI’s own employees, third party advisers or representatives, insurers,
or other experts retained by WMI).  WMI
may conduct such inspections of each WMI Facility or such other facility up to [*].

 

9

 

[*] During any such inspection, WMI may conduct physical inventories of
units of Components and Products in Company’s possession or control.  WMI shall not have access to any
competitively-sensitive information relating to any other party’s products, or
any personal data possessed by Company, during the inspections permitted under
this Paragraph 5(d).

 

(e)  Security.  Company shall maintain security standards that
are at least equivalent to those provided by other “first-class” manufacturers
and packagers in the Territory, both in the segregated area of the WMI
Facilities for property of WMI and throughout the WMI Facilities, and shall at
all times employ the utmost care and diligence to prevent loss, damage, theft,
disappearance, unauthorized destruction or usage of such property of WMI.  Company’s security procedures shall be
subject to WMI’s prior written approval. 
Company shall maintain such procedures as approved by WMI and as may
reasonably be given to Company from time to time throughout the Term.  Notwithstanding the foregoing, Company’s
security measures (which shall include closed-circuit television monitoring,
pass-protected access, employee checking and spot searching, etc.) shall be
sufficient to ensure that all Source Materials and Inventory and the
intellectual property embodied in such Source Materials and Inventory are in no
way compromised, stolen, “leaked” to the public (e.g., copying of
recordings embodied on Products which may lead to the availability of such
recordings to the public via the Internet or similar means) or otherwise made
available to any unauthorized parties; provided, however, that
for a period of [*] from the commencement of the Term, such security measures
need be no more stringent than those currently in place at the Acquired
Facilities.  Upon discovery of: (i) loss,
damage, theft, disappearance, or destruction of Source Materials or Inventory
exceeding [*] or (ii) any unauthorized usage of Inventory, Company shall notify
WMI as soon as reasonably possible, and in any event within [*] following such
discovery, and shall include in such notification sufficient detail to allow
WMI to investigate such discovery (each, a “Security Breach Notice”).  Regardless of Company’s compliance with all
security measures set forth herein or with procedures approved by WMI, Company
shall be liable as provided herein
for the loss, damage, theft, disappearance, destruction or unauthorized usage
of any property of WMI.

 

(f)  Salvage.  At all times and regardless of whether
Company or its insurers are required to compensate WMI for loss as required
under this Agreement, WMI shall retain the sole right to salvage for damaged
Inventory.  Company shall not surrender
damaged Inventory to insurers or any other party for destruction or disposal
without obtaining WMI’s prior written consent.

 

(g)  WMI
Employees.  Company shall throughout
the Term, at the request of WMI, provide up to a maximum of [*] full-time
employees of WMI or its affiliates (the “WMI Employees”) with, at
Company’s expense: (i) reasonable office accommodations at such Facilities of
Company utilized for manufacturing and/or

 

10

 

packaging in the Territory as may be specified from time to time by
WMI; (ii) individual computers; (iii) copy services and any other similar
office services in order to permit them to carry out their functions; (iv)
office meal/pantry/refreshment and recreational and similar facilities similar
to those provided to Company’s employees at such facilities; and (v) all other
reasonable support functions as provided to them as of the date of this
Agreement.  Company shall also provide
telephone, Internet and fax access for each WMI Employee, and WMI shall
reimburse Company for Company’s actual, documented, out-of-pocket costs
therefor.  Amounts owing under this
Paragraph 5(g) shall be invoiced by Company at month end and shall be payable [*]
from the date of the rendition of such invoice; [*]  WMI shall be responsible for the direction
of, and all compensation and related obligations for, the WMI Employees.  The WMI Employees shall operate in accordance
with WMI’s code of conduct and Company’s standard code of conduct contained in
its employee policy manual at the applicable WMI Facility (which code of
conduct shall be subject to WMI’s reasonable approval) and all other lawful
policies adopted by Company from time to time governing the conduct of all of
its employees and contractors.  In the
performance of their tasks, the WMI Employees shall not have access to any
competitively-sensitive information relating to any other party’s products or
any personal data possessed by Company.

 

[*]

 

6.                                       Technology.  Throughout
the Term, Company shall reasonably update its manufacturing and
packaging lines at the WMI Facilities at Company’s cost to keep up with new
technology requirements and to maintain at least the same level of technology
utilized by other “first-class” manufacturers and packagers of Records in the
Territory, including machinery and equipment that is reasonably available to
provide automated assembly of packaging, inclusion of inserts and application
of stickers, shrinkwrap and security materials. 
Company shall maintain and update its information and technology
capabilities at the WMI Facilities, at Company’s cost, to meet reasonable WMI
requirements and maintain competitive services for WMI and its customers.  [*]

 

7.                                       Invoices
and Payments.  (a)  Rendition of Invoices.  Except with respect to shipping charges to be
borne by WMI as provided
in Paragraph 3(i), in the
case of WMI affiliates and licensees for each month of the Term, Company shall
prepare and render invoices in Euros to such WMI affiliates and licensees on
the [*] of each such month setting forth all Fees owed by WMI hereunder with
respect to such affiliates and

 

11

 

licensees.  The amount due to Company pursuant to each
such invoice shall be due and payable in Euros by the WMI affiliates and
directly by licensees to Company on or before [*] following Company’s rendition
of such invoices [*]. At WMI’s sole election, Company shall prepare and render
invoices in Euros to such nominated WMI affiliates and licensees with respect
to each completed and shipped Order of Products setting forth all Fees owed by
WMI hereunder with respect to such nominated affiliates and licenses.  The amount due to Company pursuant to each
such invoice shall be due and payable in Euros by the WMI affiliates and
directly by licensees to Company on or before [*] following Company’s rendition
of such invoices [*]. If any WMI affiliate or licensee disputes an amount
contained in an invoice but has already paid to Company such amount, the WMI
affiliate or licensees may withhold the disputed amount from amounts otherwise
owed to Company hereunder during the pendency of such dispute.  The invoices for all units hereunder will
follow the same format as current invoices but at a minimum shall contain “per
SKU” line item detail with special handling or other miscellaneous charges
indicated separately in the form and manner consistent with Company’s general
form of invoice.  Company shall submit
all such invoices to WMI electronically pursuant to instructions given by WMI
to Company from time to time (and in paper form, to the extent WMI so requests)
and to the extent that Company’s and WMI’s computer systems do not already
provide for the electronic submission of all such invoices, Company shall use
Company’s reasonable efforts to work with WMI starting upon the commencement of
the Term to create a system whereby all such invoices can be submitted
electronically to WMI.  For the avoidance
of doubt, WMI affiliates shall only be liable for any payments hereunder provided that they have received the
complete Orders for the relevant finished units of Components and Products
reflected in such invoice.

 

(b)  Audits.  WMI shall have the right, at WMI’s sole
expense, to examine (and/or to appoint representatives to examine) Company’s
(and Company’s affiliates’) books and records in order to: (i) verify the
correctness of any invoice prepared and rendered by Company in accordance with Paragraph 7(a); (ii) establish the
applicability of the provisions contained in Paragraphs 10, 12 and/or 15; or
(iii) otherwise establish compliance by Company with its obligations under this
Agreement; provided, however, that only independent, third-party
auditors (i.e., auditors other than WMI’s then-current outside auditor) shall
be utilized for the review of Company’s books and records.  Independent third party auditors shall have
access to all information necessary to perform their duties, however nothing in
any report provided to WMI or its affiliates by any such independent third
party auditors shall impart to WMI or its affiliates any
competitively-sensitive information about Company, Company’s affiliates or any
third parties for which Company renders any services.  If any such audit reveals that WMI and/or WMI’s
affiliates have been overcharged, Company shall reimburse WMI in the amount of
the overcharge.  If any such audit
reveals that WMI or WMI’s affiliates have been overcharged by an amount
exceeding three percent (3%) for the audit period, Company shall reimburse WMI
in the amount of the overcharge plus all fees paid by WMI to the

 

12

 

auditors concerned in connection with such audit and any other actual,
documented, out-of-pocket expense incurred by WMI in connection with such audit.  [*] Regardless of the number of audits
conducted hereunder revealing the same specific overcharge to WMI, Company
shall not be required to repay WMI the amount of any such overcharge more than
once.  WMI’s audit right shall survive
the expiration or termination of the Term for [*]. Company shall retain all
books and records related to the performance of Services hereunder after the
expiration or termination of the Term for so long as WMI or its affiliates may
need to perform audits hereunder, but in no event for more than [*] the
rendition of the invoice with respect to the Services to which such invoice
relates, provided, however, that before Company destroys any
books or records, Company shall deliver written notice of such intent to
destroy to WMI [*] before the intended date of destruction.  WMI shall [*] after receipt of such notice to
request copies of the books and records to be destroyed, in which case Company
shall make copies of such books and records and deliver the same to WMI (but
excluding information related to other customers of Company) at WMI’s expense
(but at Company’s expense if such copies are of electronic files).  As used herein, “books and records” shall
include, without limitation, physical data and data stored in any electronic,
magnetic or optical format.

 

8.                                  Post-Term
Procedures.  (a)  Upon the expiration or termination of the
Term, Company shall immediately cause the cessation of all Services and shall
have no further rights or obligations with respect to Products except as
provided herein; provided, however, that upon WMI’s request,
Company shall fill any then-currently outstanding orders for units of
Components and Products pursuant to the terms of this Agreement.  Within [*] following the expiration or
termination of the Term, Company shall provide WMI with a list of all Source
Materials and units of Components and Products in Company’s possession or
control on such date.  The mere
expiration or termination of the Term shall not affect any obligation of WMI to
pay for Services rendered by Company prior to such expiration or termination or
any other obligation that is expressly provided herein to survive the
expiration or termination of the Term.

 

(b)  Within
[*] following the expiration of the Term or [*] following the early termination
of the Term, WMI shall remove from the Facilities, at WMI’s expense, or order
at WMI’s expense the destruction of: (i) all units of Components and Products
in Company’s possession or control; and (ii) all Source Materials in Company’s
possession or control.  The determination
whether to remove or

 

13

 

destroy such items shall be made by WMI in WMI’s sole discretion.  Any Source Materials to be returned shall be
returned to WMI, at WMI’s cost, and the cost of any return of any Components to
be returned shall be the subject of negotiation between the parties hereto
unless such Components were supplied by WMI,
in which case such Components shall be returned without charge.

 

9.                                  Warranties,
Representations, Covenants and Indemnities. 
(a)  Company warrants, represents
and/or covenants, as the case may be, that: (i) Company has the right, power
and authority to enter into and fully perform this Agreement; (ii) no agreement
of any kind heretofore entered into by Company shall interfere in any manner
with the complete performance of this Agreement; and (iii) subject to WMI’s
rights in the Products and Components and WMI’s warranties and representations
set forth below, any items prepared by or otherwise furnished by Company in
connection with Components or Products and Company’s performance of the
Services hereunder will not violate any law or infringe upon the rights of any
party.

 

(b)  Company
agrees to and does hereby indemnify, save and hold WMI and its affiliates, and
each of their respective officers, directors and employees (collectively, for
the purposes of this Paragraph 9(b)
only, “WMI”) harmless to the maximum extent permitted by law from any
and all loss and damage (including court costs and reasonable attorneys’ fees
as and when incurred) arising out of, connected with or as a result of: (i) any
inaccuracy, inconsistency with, failure of, or breach or threatened breach by
Company of any warranty, representation, agreement, undertaking or covenant
contained in this Agreement; and/or (ii) any and all damages or injuries of any
kind or nature whatsoever (including death resulting therefrom) to any persons,
whether employees of Company or otherwise, and to any property caused by,
resulting from, arising out of or occurring in connection with the execution of
the work under this Agreement (including as a result of products liability
claims), whether such damages or injuries are or are alleged to be based upon
Company’s active or passive negligence or participation in the wrong or upon
any breach of any statutory duty or obligation on the part of Company (except
to the extent such damages or injuries directly result from any act of WMI’s
employees located at Company’s facilities and are not otherwise covered by the
property insurance Company is required to maintain hereunder as set forth on Schedule G
hereto, or result from a breach of any warranty, representation, agreement,
undertaking or covenant of WMI contained herein).  The foregoing indemnity shall be applicable
only to such claims as have been reduced to judgment or settled with Company’s
written approval.  WMI shall give Company
prompt notice of any claim to which the foregoing indemnity applies and Company
shall assume the defense of any such claim through counsel of Company’s choice
and at Company’s sole expense; provided, however, that the
relevant law on Civil Procedure provides for this procedure.  WMI shall have the right to participate in
such defense through counsel of WMI’s choice and at WMI’s expense; provided,
however, that the relevant law on Civil Procedure provides for this
procedure.

 

(c)  WMI
warrants, represents and/or covenants, as the case may be, that: (i) WMI has
the right, power and authority to enter into and fully perform this Agreement;

 

14

 

(ii) no agreement of any kind heretofore entered into by WMI shall
interfere in any manner with the complete performance of this Agreement; and
(iii) Material embodied in Products and Components as supplied by WMI shall not
violate any law or infringe upon the rights of any third party.  As used herein “Material” shall include all
musical compositions, names, biographical materials and likenesses,
photographic, video or motion picture images, sound recordings, intellectual
properties, packaging and artwork.

 

(d)  WMI
agrees to and does hereby indemnify, save and hold Company and its affiliates,
and each of their respective officers, directors and employees (collectively,
for the purposes of this Paragraph 9(d) only, “Company”) harmless to the
maximum extent permitted by law from any and all loss and damage (including
court costs and reasonable attorneys’ fees as and when incurred) arising out
of, connected with or as a result of: (i) any inaccuracy, inconsistency with,
failure of, or breach or threatened breach by WMI of any warranty,
representation, agreement, undertaking or covenant contained in this Agreement;
and/or (ii) any and all damages or injuries of any kind or nature whatsoever
(including death resulting therefrom) to any persons, whether employees of
Company or otherwise, and to any property caused by, resulting from, arising
out of or occurring in connection with any act of WMI’s employees located at
Company’s facilities, except to the extent such damages and injuries are
covered by the property insurance Company is required to maintain hereunder at
set forth on Schedule G hereto.  The
foregoing indemnity shall be applicable only to such claims as have been
reduced to judgment or settled with WMI’s written approval.  Company shall give WMI prompt notice of any
claim to which the foregoing indemnity applies and WMI shall assume the defense
of any such claim through counsel of WMI’s choice and at WMI’s sole expense; provided,
however, that the relevant law on Civil Procedure provides for this
procedure.  Company shall have the right
to participate in such defense through counsel of Company’s choice and at
Company’s expense; provided, however, that the relevant law on
Civil Procedure provides for this procedure.

 

10.                            Breach,
Cure and Termination.  (a)  WMI may terminate the Term by written notice
to Company following either: (i) a breach of this Agreement by Company that is
specified in Paragraph 10(b); or (ii) any other material breach of this Agreement
by Company.  [*]  There shall be a cure period of [*] following
written notice to Company, for any breach referred to in Paragraph 10(a)(ii) .

 

(b)  The
breaches of this Agreement referred to in Paragraph 10(a)(i) are any of the
following:

 

[*]

 

15

 

 

[*]

 

(viii)  any willful and malicious breach by Company
of any material provision hereof.

 

(c) In addition, WMI may terminate the Term:

 

(i)  by written notice to Company within [*]
following the later of: (A) a Change of Control; and (B) written notice to WMI
from Company that a Change of Control has occurred;

 

(ii)  by written notice to Company following an
Insolvency Event; and

 

(iii)  by written notice to Company following
either: (A) the termination of the term of the International PP&S Agreement
or the International Administrative Services Agreement, other than (x) as a
result

 

16

 

of a breach by WMI or the expiration of the
term thereunder by passage of time or (y) the termination of the term of the
International PP&S Agreement under Paragraph 11(c)(iv) thereof; or (B) any
material breach by Company under the International PP&S Agreement (i.e., a
breach which would then-currently permit WMI to terminate the term thereof and
with respect to which WMI’s right to terminate has not been waived).

 

(d)  Any
termination of this Agreement under this Paragraph 10 will not relieve Company
of liability for breaches hereof arising prior to such termination nor shall it
relieve WMI from any liability to pay for Services rendered prior to such
termination.

 

(e)

 

(i)  If because of an “act of God”, inevitable
accident, fire, lockout, strike or other labor dispute, riot or civil
commotion, act of public enemy or other cause of a similar nature not
reasonably within Company’s control (a “Force Majeure Event”), Company
is materially hampered in the performance of its obligations under this
Agreement, or its normal business operations are delayed or become impossible
or commercially impracticable, then Company shall have the option, by giving
WMI written notice, to suspend its obligations under this Agreement affected by
such Force Majeure Event, effective upon receipt by WMI of such notice, for the
duration of any such contingency.  Should
Company suspend its obligations under this Agreement pursuant to this Paragraph
10(e), such suspension shall not constitute a breach hereunder and Company
shall not be subject to price rebates under Paragraph 15 with respect to any
occurrences during the pendency of such suspension.  Immediately upon Company’s assertion of its
right to suspend its obligations under this Agreement, WMI shall have the right
to manufacture and/or package Products itself or through third parties during
the pendency of such suspension.  Further,
should Company suspend its obligations under this Agreement, WMI shall, on and
from the date which is [*] after the occurrence of (which may be earlier than
Company’s assertion of suspension under) a Force Majeure Event, have the right,
in its sole discretion, to: (i) terminate the Term of this Agreement by notice
in writing to Company; or (ii) require Company to implement its Disaster
Recovery Plan; in each case unless Company has previously by notice in writing
to WMI ended the suspension of Company’s obligations under this Agreement.  For the avoidance of doubt, should WMI
exercise its right of termination under this Paragraph 10(e), no cure period
shall be associated with Company’s failure to perform its obligations hereunder.  No liability or obligation of Company under
any provision hereof, other than those affected by a Force Majeure Event
hereunder, shall be in any way limited or forgiven as a result of any Force
Majeure Event.

 

17

 

(ii)  In addition, [*] of becoming aware of any
circumstance or event which may reasonably be anticipated to cause or
constitute a Force Majeure Event, Company shall notify WMI of such circumstance
or event.  For the avoidance of doubt,
such notice shall not constitute an assertion by Company of its right to
suspend its obligations hereunder.

 

(iii)  If for any reason, Company is unable to
provide any Services hereunder in connection with any Order(s) for a period
exceeding [*] and such inability is reasonably likely to result in Company
being unable to meet the Service Level Requirements set forth herein, WMI shall
have the right to immediately contract with a third party to provide all or any
portion of such services for such period of time as may be reasonably necessary
for WMI to obtain the services required to fulfill any such Order(s).  Once WMI is reasonably satisfied that Company
is again able to provide the required Services, WMI shall return the contracted
Services to Company as soon as it is reasonably able to do so; provided,
however, that the return of such Services to Company shall be subject to
any reasonable commitment WMI has made to the applicable third party that such
Services would remain with such third party for a period of time.  Company shall reimburse WMI upon demand for
any and all incremental out-of-pocket charges that WMI reasonably incurs as a
result of transferring its Services under this Paragraph 10(e)(iii).

 

(f)  If
WMI purports to terminate this Agreement under this Paragraph 10, each party
hereto shall have the right to seek any remedy or other relief available under
applicable law (except as limited by Paragraph 16(n)), and each party hereto
shall have the right to assert any defenses available under applicable law; provided,
however, that under no circumstances shall any party from whom WMI
obtains services in substitution for any or all Services to be provided
hereunder have any liability whatsoever to Company arising out of or related to
any actual or purported termination of this Agreement by WMI, even if in
violation of this Agreement and Company shall take no action against any such
party in connection with the provision of such services by such party to WMI.

 

11.                            Anti-Piracy
Activities.  Company (and WMI, to the
extent applicable to a content provider) shall at all times use commercially
reasonable efforts to comply with industry standard procedures associated with
anti-piracy activities including: (i) the IRMA anti-piracy compliance program;
(ii) the IFPI anti-piracy compliance program; and (iii) all other measures and
procedures described in the RIAA Draft CD Plant Good Business Practices set
forth therein.

 

12.                            Adjustments.  (a)  [*]

 

18

 

[*]

 

(b)  [*]

 

(c)  [*]

 

19

 

[*]

 

20

 

conditions applicable to such other party (e.g., order volumes,
quality requirements and materials used).

 

(e)  Each
of WMI and Company agrees to negotiate in good faith to attempt to resolve any
disagreement which may arise in connection with the implementation or
interpretation of the terms and provisions of this Paragraph 12.  In the event that such good faith negotiation
does not result in the resolution of any such disagreement within a fifteen
(15)-day period, the parties shall retain an arbitrator to make a fair and
reasonable determination as to any such disagreement (the “Arbitrator”).  The Arbitrator shall be a retired executive
or attorney with substantial experience in the field of manufacturing,
preferably in the manufacturing of Optical Discs, shall be independent of each
of WMI and Company, and shall endeavor to provide a determination of any
dispute among the parties within thirty (30) days of being retained, but in
each case, as quickly as possible.  The
parties shall jointly appoint the Arbitrator and the identity of the Arbitrator
shall be satisfactory to each of the parties. 
The parties shall share equally in the cost and expense of retaining the
Arbitrator.  If the parties cannot agree
upon a person to act as the Arbitrator within thirty (30) days of the expiry of
the fifteen (15)-day negotiation period specified in this Paragraph 12(e), then
the Arbitrator shall be selected by the American Arbitration Association.  Any arbitration hereunder shall be conducted
in conformance with the rules established by the American Arbitration
Association.  Any determination made by
the Arbitrator shall be final and binding on each of the parties.

 

13.                            Confidentiality.  (a)  Each
of Company and WMI shall, and shall cause its affiliates, and its and its
affiliates’ directors, officers, employees and agents (each, a “Recipient”)
to, maintain in confidence the material terms of this Agreement, except that
WMI may disclose this Agreement on a confidential basis in connection with a
potential Recorded Music Major Transaction, to a potential assignee under
Paragraph 16(c) or to third parties and WMI affiliates as may be necessary in
the ordinary course of business (provided, that any such disclosure shall be
limited to those persons who agree to be bound by the provisions of this
Paragraph).  The restriction in the
preceding sentence shall not apply to information that: (i) becomes generally
available to the public other than as a result of disclosure by such Recipient
contrary to this Agreement; (ii) was available to such Recipient on a
non-confidential basis prior to its disclosure to such Recipient; (iii) becomes
available to such Recipient on a non-confidential basis from a source other
than any other Recipient unless such Recipient knows that such source is bound
by a confidentiality agreement or is otherwise prohibited from transmitting the
information to such Recipient by a contractual obligation; (iv) is
independently developed by such Recipient without reference to confidential
information received from any other party; (v) is required to be disclosed by
applicable law or legal process, provided that any Recipient disclosing
pursuant to this clause (v) shall notify the other party at least five (5) days
prior to such disclosure so as to allow such other party an opportunity to
protect such information through protective order or otherwise; (vi) is
required to be disclosed by any listing agreement with, or the rules or
regulations of, any security exchange on which securities of such Recipient or
any of its affiliates are listed or traded; or (vii) is required to be
disclosed by a party in order to perform its obligations under the Agreement; provided,
that any such disclosure shall be limited to those persons

 

21

 

who have a need to know such information and who agree to be bound by
the provisions of this Paragraph 13.  No
party hereto shall make a press release or public announcement concerning this
Agreement without the prior written consent of the other party hereto.

 

(b)  Company
shall, and shall cause its affiliates, and its and its affiliates’ directors,
officers, employees and agents to, maintain in confidence all information that:
(i) is in its or their possession by reason of Company’s performance of
Services hereunder; and (ii) relates to the Products.  WMI shall, and shall cause its affiliates,
and its and its affiliates’ directors, officers, employees and agents to,
maintain in confidence all information that: (x) is in its or their possession
by reason of Company’s performance of Services hereunder; and (y) relates to
the pricing, methods of manufacture or other proprietary information of Company.  The restrictions in the two preceding
sentences shall not apply to information that: (A) becomes generally available
to the public other than as a result of disclosure by such Recipient contrary
to this Agreement; (B) was available to such Recipient on a non-confidential
basis prior to its disclosure to such Recipient; (C) becomes available to such
Recipient on a non-confidential basis from a source other than any other
Recipient unless such Recipient knows that such source is bound by a
confidentiality agreement or is otherwise prohibited from transmitting the
information to such Recipient by a contractual obligation; (D) is independently
developed by such Recipient without reference to confidential information
received from any other party; (E) is required to be disclosed by applicable
law or legal process, provided that any Recipient disclosing pursuant to this
clause (E), shall notify the other party at least five (5) days prior to such
disclosure so as to allow such other party an opportunity to protect such
information through protective order or otherwise; or (F) is required to be
disclosed by any listing agreement with, or the rules or regulations of, any
security exchange on which securities of such Recipient or any of its
affiliates are listed or traded.  Notwithstanding
anything to the contrary above, WMI and its affiliates shall be permitted to
disclose any information on a confidential basis in connection with a potential
Recorded Music Major Transaction, to a potential assignee under Paragraph 16(c)
or to third parties and WMI affiliates as may be necessary in the ordinary
course of business (provided,  that any such  disclosure shall  be
limited to those persons who  agree to be  bound by the
provisions of this Paragraph).

 

(c)  The
obligations of WMI and Company under Paragraphs 13(a) and 13(b) shall survive
for [*] following the expiration or termination of the Term.

 

(d)

 

(i)  Notwithstanding anything to the contrary set
forth in this Paragraph 13, the parties hereby agree that, as of the earliest
of: (A) the date of the public announcement of discussions relating to the
transactions contemplated by the Stock Purchase Agreement (the “Transaction”);
(B) the date of the public announcement of the Transaction; and (C) the date of
the execution of an agreement (with or without conditions) to enter into the
Transaction, each party (and each employee, representative or other agent of
such party) may disclose to any and all persons, without

 

22

 

limitation of any kind, the tax treatment and
tax structure of the Transaction and all materials of any kind (including
opinions or other tax analyses) that are provided to such party relating to
such tax treatment and tax structure.

 

(ii)  The parties acknowledge that: (A)(x) the
identity of any existing or future party (or any affiliate of such party) to
the Transaction; and (y) any specific pricing information or other commercial
terms, including the amount of any fees, expenses, rates or payments arising in
connection with the Transaction, are not included in the meaning of the terms “tax
treatment” and “tax structure” as referred to in clause (i) of this Paragraph
13(d); and (B) nothing in this Agreement shall in any way limit any party’s
ability to consult any tax advisor (including a tax advisor independent from
all other entities involved in the Transaction) regarding the tax treatment or
tax structure of the Transaction.

 

14.                            Definitions.  (a)  Certain Terms.

 

(i)  “Acquired Facility” shall mean any of
the facilities located in Alsdorf, Germany which are being acquired by  Company
in connection with the Stock Purchase Agreement.

 

(ii)  “Catalog Titles” shall mean any
Product (or Component thereof) following such Product’s “street date.”

 

(iii)  “CD Discs” shall mean Optical Discs
which are in the CD format.

 

(iv)  “Change of Control” shall mean (i) any
merger or consolidation of Company or Parent with a Major or its affiliates or
any sale, transfer, issuance or other disposal (in one transaction or in a
series of transactions) of all or more than [*] of the shares of capital stock,
partnership interests, membership interests in a limited liability company or
other equity ownership interests (“Equity Interests”) of Parent or
Company (or any subsidiary of Parent or Company engaged in the business of
providing M&P Services, whether now owned or hereafter acquired) to a Major
or its affiliates; (ii) the failure by Parent to own, directly or indirectly,
beneficially and of record, Equity Interests in Company representing at least [*]
of each of the aggregate ordinary voting power and aggregate equity value
represented by the issued and outstanding Equity Interests in Company; (iii)
Parent or Company sells all or substantially all of its assets; or (iv) any
other event which results in Parent no longer controlling the direction or
management of Company.

 

(v)  “Combined Entity” shall mean the
entity or entities formed as a result of any Recorded Music Major Transaction.

 

23

 

(vi)  “Components” shall
mean the packaging or promotional elements included in the Containers or
utilized in connection therewith, including inserts, booklets and inlay cards
and stickers.

 

(vii)  “Containers”
shall mean the containers (e.g., jewel boxes and snapper boxes) into
which Records are collated.

 

(viii) 
“Contract Year” shall mean each separate, consecutive one
(1)-year period of the Term, the first such period to commence on the first day
of the Term.

 

(ix)  “Excluded Products” shall mean the
following Products:

 

(a)  single and maxi single configurations in all
formats, and

 

(b)  premium configurations in all formats.

 

(x)  “Facility”
shall mean any facility owned and/or leased and controlled by Company or one of
Company’s affiliates.

 

(xi)  “Hit
Titles” shall mean Catalog Titles designated by WMI as such based upon
current or anticipated sales and delivery requirements.

 

[*]

 

(xiii)  “International Administrative Services
Agreement” shall mean the International Administrative Services Agreement
between WMI and Company dated as of the date hereof.

 

24

 

(xiv)  “International PP&S Agreement”
shall mean the International Pick, Pack and Shipping Services Agreement between
WMI and Company dated the date hereof.

 

(xv)  “Inventory” shall
mean all inventory of units of Components and finished units of Products stored
in any Facility.

 

(xvi)  “Key Release” shall
mean a New Release of which greater than two hundred and fifty thousand
(250,000) units and less than five hundred thousand (500,000) units have been
Ordered.

 

(xvii)  “Key Release Date”
shall mean the date by which the Orders for a Key Release are required to be
shipped pursuant to Schedule A hereto.

 

(xviii) “M&P Services” shall mean Manufacturing Services and
Packaging  Services.

 

(xix)  “Major” shall mean
any one of the following companies: Sony Music Entertainment Inc., Bertelsmann
Music Group, EMI Group plc or Universal Music Group (or their successors).

 

(xx)  “Manufacturing Services”
shall mean: (i) selected pre-production services (as detailed on Schedule A);
(ii) selection of suppliers; (iii) ordering raw materials (including
Components) from various suppliers such as pressing plants, duplicators and
printers; (iv) assembly; (v) arranging shipment of Components to various
points; (vi) arranging shipment of finished units from point of manufacture to
WMI’s distributor and to other shipment locations identified by WMI; and (vii)
inventory control with respect to the foregoing, all of the foregoing for Optical
Discs only.

 

(xxi)  “Manufacturing Source
Materials” shall mean, collectively, all materials (other than raw
materials such as plastic) necessary to manufacture finished units including  Masters
and Components, whether  in physical or electronic form (as
determined by WMI).

 

(xxii)   “Master” shall mean any recording
embodied in any form from which Records may be derived.

 

(xxiii)  “New Release” shall mean any Product
(or Component thereof) prior to and including such Product’s “street date.”

 

(xxiv)  “Optical Disc” shall mean any kind of
optical disc now known or hereafter devised, including a compact disc in any of
its forms and a Digital Versatile Disc in any of its forms and any other
high-density optical disc.  For the
purposes of this definition, a compact disc includes

 

25

 

audio CD,
CD-ROM, Video CD, CD-I, CD-R, CD-RW, Photo CD, Enhanced CD and CD+G, as each
such term is commonly used and understood. 
For the purposes of this definition, a Digital Versatile Disc includes
DVD-Audio, DVD-Video, DVD-ROM, DVD-R, DVD-RW and DVD-RAM, as each such term is
commonly used and understood.  “Optical
Disc” shall not include so-called “high definition” Digital Versatile Discs (“HD-DVDs”);
provided, however, that if WMI’s total production of units of
Products in HD-DVD format for any Contract Year exceeds [*] of WMI’s total
production of units of Products in all formats for such Contract Year
(including units of Products in HD-DVD format), then thereafter during the Term,
on a prospective basis, HD-DVDs shall be deemed to be “Optical Discs”
hereunder.

 

(xxv)   “Order” shall
mean a request made by WMI for the manufacture and/or packaging of units of
Products, Components or any other materials hereunder.  An “Order” may be for individual Products,
Components or other materials, may be for multiple Products, Components or
other materials and may specify multiple quantities of the same Product,
Component or other materials to be produced for delivery to single and/or multiple
locations.  An “Order” shall wherever
possible include a “bill of materials” or “BOM” as said term is utilized in the
manufacturing industry.

 

(xxvi)  “Packaging Services”
shall mean (i): selected pre-production services (as detailed on Schedule A);
(ii) selection of raw material suppliers; (iii) ordering raw materials from
various suppliers; (iv) assembly; (v) arranging shipment of finished units of
Components from point of manufacture to shipment locations identified by WMI;
and (vi) inventory control with respect to the foregoing, all of the foregoing
for Optical Discs only.

 

(xxvii)  “Packaging Source
Materials” shall mean, collectively, all materials (other than raw
materials such as ink and  paper) necessary to manufacture
Components, whether in physical or electronic form (as determined by WMI).

 

(xxviii) “Parent” shall mean
Cinram International Inc.

 

(xxix) 
“Platinum Release” shall mean a New Release for which greater
than [*] units have been Ordered.

 

(xxx)  “Platinum
Release Date” shall mean the date by which the Orders for a Platinum
Release are required to be shipped pursuant to Schedule A hereto.

 

(xxxi)  “Products” shall mean all Records
intended for sale in the Territory for which WMI requires M&P Services to
be performed during the Term and for which WMI has the unilateral right to
control the identity

 

26

 

of the party who renders such M&P
Services.  Following a Recorded Music
Major Transaction, “Products” shall mean all Records intended for sale in the
Territory for which the Combined Entity requires M&P Services to be
performed during the Term in the Territory and for which the Combined Entity
has the unilateral right to control the identity of the party who renders such
M&P Services.  “Products” shall be
deemed to include Hybrid CD/DVD configurations or any other new physical
formats of Optical Discs; provided, however, [*].  It has been WMI’s general custom to use its
commercially reasonable efforts to acquire the unilateral right to control the
identity of the party who renders M&P Services in connection with Records.  WMI shall continue to do so during the Term,
in accordance with past practice.  To the
extent that WMI or WMI’s affiliates request M&P Services hereunder for
Records intended for sale outside the Territory pursuant to Paragraph 1(a)(i)
hereof, such Records shall also constitute “Products” hereunder.  In every instance, “Products” shall not
include the “Excluded Products”.  Records
sold through so-called “kiosks” shall not constitute “Products” hereunder.

 

(xxxii)  “Recorded Music Major Transaction”
shall mean a joint venture, merger, or other combination of all or a
substantial portion of the recorded music businesses of Warner Music Group with
all or a substantial portion of the recorded music businesses of any Major.

 

(xxxiii)  “Records” shall mean all physical
forms of recording and reproduction by which sound may be recorded now known or
which may hereafter become known, manufactured or sold primarily for home use,
jukebox use, or use on or in means of transportation, including magnetic
recording tape, film, electronic video recordings and any other physical medium
or device for the production of artistic performances manufactured or sold
primarily for home use, jukebox use or use on or in means of transportation,
whether embodying: (i) sound alone; or (ii) sound synchronized with visual
images, e.g., “sight and sound” devices, but only so long as such forms
of recording and reproduction  contain performances of works by
recording artists.

 

(xxxiv)  “Services” shall mean the M&P
Services and all other services to be provided by Company under this Agreement.

 

(xxxv)  “Source Materials” shall mean
Manufacturing Source Materials and Packaging Source Materials.

 

(xxxvi)  “Stock Purchase Agreement” shall mean
the Stock Purchase Agreement among AOL Time Warner Inc., Parent and Company
dated as of July 18, 2003.

 

27

 

(xxxvii)  “Term” shall mean the [*] commencing
on the Closing Date, as such term is defined in the Stock Purchase Agreement,
subject to earlier termination in accordance with Paragraph 10.

 

(xxxviii)  “Territory”
shall mean wholly-owned WMI affiliate companies located in Austria, Belgium,
Denmark, Eire, Finland, France, Germany, Greece, Italy, Netherlands, Norway,
Portugal, Spain, Sweden, Switzerland and the United Kingdom.

 

(xxxix)  “Turnaround Times”
shall mean the elapsed time between receipt of an order for a workable product
and the time of receipted delivery of all the finished units of the complete
order by the delivery point designated by WMI.

 

(xl)  “Unit” shall mean a
finished product in a form that is delivered to end consumers, carries a unique
identifier code (UPC/EAN/promo no.) and is warehoused as a Stock Keeping Unit
(SKU).

 

(xli)  “US Manufacturing
Agreement” shall mean the US Manufacturing and Packaging Agreement between
WEA and Company dated as of the date hereof.

 

(xlii) 
“US PP&S Agreement” shall mean the US Pick, Pack and Shipping
Services Agreement between WEA and Company dated as of the date hereof.

 

(xliii)  “WEA” shall mean
Warner-Elektra-Atlantic Corporation.

 

(xliv)  “WHV” shall mean Warner Home Video
Inc.

 

(xlv)  “WMI Facility”
shall mean any Facility at which Company provides or has provided Services to WMI
hereunder.

 

(xlvi)  “WMME” shall mean
Warner Music Manufacturing Europe GmbH.

 

(xlvii) “Workable” shall mean:
(i) for orders of Manufacturing Services, an Order for which all of the items
to be furnished by WMI (such as Source Materials and similar materials)
reasonably necessary to complete manufacturing of finished units of Products
have been received by Company in reasonably  sufficient quantities; and (ii) for
orders of Packaging Services, an Order for which all of the items to be
furnished by WMI (such as Source Materials and similar materials) reasonably
necessary to complete manufacturing of Components have been received by Company
in reasonably sufficient quantities.

 

(b)  Other
Definitional and Interpretative Provisions.

 

28

 

(i)  The words “hereof”, “herein” and “hereunder”
and words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement, and
Paragraph and Schedule references are to this Agreement unless otherwise
specified.

 

(ii)  The meanings given to terms defined herein
shall be equally applicable to both the singular and plural forms of such
terms.

 

(iii)  Unless the context requires otherwise, other
grammatical forms of defined words or expressions used herein have
corresponding meanings.

 

15.                            [*]

 

(b)  [*]
This Paragraph 15 shall not limit WMI’s other rights against Company for breach
hereof, but any amounts paid by Company pursuant to this Paragraph 15 shall reduce
any amounts otherwise payable by Company with respect to such breach.

 

16.                            Miscellaneous.  (a)  Entire
Agreement, Modification.  This
Agreement contains the entire understanding of the parties hereto relating to
the subject matter hereof and supersedes all previous agreements or
arrangements between the

 

29

 

parties, both written and oral, hereto relating to the subject matter
hereof, except that nothing in Paragraph 3 shall limit the obligations of Company
under the International PP&S Agreement. 
This Agreement cannot be changed except by an instrument signed by the
authorized signatories of the parties hereto.

 

(b)  Waiver.  Any party to this Agreement may: (i) extend
the time for the performance of any of the obligations or other acts of the
other party hereto; (ii) waive any inaccuracies in the representations and
warranties of the other party contained herein or in any document delivered by
the other party pursuant hereto; or (iii) waive compliance with any of the
agreements or conditions of the other party hereto contained herein.  Any such extension or waiver shall be valid
only if set forth in an instrument in writing signed by the party to be bound
thereby.  Any waiver of any term or
condition shall not be construed as a waiver of any subsequent breach or
subsequent waiver of the same term or condition, or a waiver of any other term
or condition of this Agreement.  The
failure of either hereto party to assert any of its rights hereunder shall not
constitute a waiver of any of such rights.

 

(c)  Assignment.  Company shall not have the right without WMI’s
prior written consent (which consent may be granted or withheld in the sole
discretion of WMI) to assign this Agreement or any of the rights granted to
Company hereunder; provided, however, that Company shall be
permitted to assign this Agreement to its Parent or any wholly owned subsidiary.  WMI shall have the right without Company’s
consent to assign this Agreement, in whole or in part, to any subsidiary,
parent company or affiliate of WMI, or to any third party acquiring all or
substantially all of WMI’s assets or equity; provided, however,
that in each case, notwithstanding such assignment, WMI at all times shall
remain directly and fully liable to Company for the performance of the
obligations of WMI hereunder.

 

(d)  Further
Assurances.  Company and WMI each
agree to execute and deliver all such other and additional instruments and
documents and to do such other acts and things as may be necessary to more
fully effectuate this Agreement.

 

(e)  Successors
and Assigns.  This Agreement shall be
binding upon and inure to the benefit of, and shall be enforceable by, each of
the parties hereto and their respective permitted assigns.

 

(f)  Notices.  All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given or made
(and shall be deemed to have been duly given or made upon receipt) by delivery
in person, by courier service, by telecopy or by registered or certified mail
(postage prepaid, return receipt requested) to the respective parties at the
following addresses (or at such other address for a party as shall be specified
in a notice given in accordance with this Paragraph 16(f)):

 

30

 

	
  WMI:

  	
   

  	
  WEA
  International Inc.

  
	
   

  	
   

  	
  c/o Warner
  Music Group Inc.

  
	
   

  	
   

  	
  75
  Rockefeller Plaza

  
	
   

  	
   

  	
  New York,
  New York 10019

  
	
   

  	
   

  	
  Attn: EVP
  & General Counsel

  
	
   

  	
   

  	
  Fax: (212)
  258-3092

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  with a copy
  to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Warner Music
  International Services Ltd.

  
	
   

  	
   

  	
  83 Baker
  Street

  
	
   

  	
   

  	
  London W1U
  6LA

  
	
   

  	
   

  	
  Attention:
  SVP of Business & Legal Affairs

  
	
   

  	
   

  	
  Fax: 44 207
  535 9050

  
	
   

  	
   

  	
   

  
	
  Company:

  	
   

  	
  Cinram
  International Inc.

  
	
   

  	
   

  	
  2255 Markham
  Road

  
	
   

  	
   

  	
  Scarborough,
  Ontario M1B 2W3

  
	
   

  	
   

  	
  Canada

  
	
   

  	
   

  	
  Attn: Dave
  Rubenstein, President

  
	
   

  	
   

  	
  Fax: (416)
  298-0612

  
	
   

  	
   

  	
   

  
	
  with a copy
  to

  	
   

  	
   

  
	
   

  	
   

  	
  Ervin, Cohen
  & Jessup LLP

  
	
   

  	
   

  	
  9401
  Wilshire Boulevard, 9th Floor

  
	
   

  	
   

  	
  Beverly
  Hills, California 90212

  
	
   

  	
   

  	
  Attn: Howard
  Z. Berman, Esq.

  
	
   

  	
   

  	
  Fax: (310)
  859-2325

  
	
   

  	
   

  	
   

  

 

(g)  Headings.  The descriptive headings contained in this
Agreement are for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.

 

(h)  Severability.  If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any federal,
state, local or foreign statute, law, ordinance, regulation, code, order, other
requirement or rule of law or by public policy, all other terms and provisions
of this Agreement shall nevertheless remain in full force and effect so long as
the economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party hereto.  Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties hereto as closely as possible in an
acceptable manner in, order that the transactions contemplated hereby are
consummated as originally contemplated to the greatest extent possible.

 

31

 

(i)  No Agency.  WMI and Company each shall have the status of
an independent contractor and nothing herein contained shall contemplate or
constitute WMI as Company’s agent or employee or Company as WMI’s agent or
employee.  This Agreement does not
constitute or acknowledge any partnership or joint venture between WMI and
Company.

 

(j)  No
Third Party Beneficiaries.  Except
for the provisions of Paragraphs 9(b) and 9(d) relating to indemnified parties,
this Agreement shall be binding upon and inure solely to the benefit of the
parties hereto and their permitted assigns and nothing herein, express or
implied, is intended to or shall confer upon any other party any legal or equitable
right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement.

 

(k)  GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, APPLICABLE TO
CONTRACTS EXECUTED IN AND TO BE PERFORMED ENTIRELY WITHIN THAT STATE.  EXCEPT AS PROVIDED IN PARAGRAPH 12(e) OR SCHEDULE G
HERETO, ALL ACTIONS AND PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
AGREEMENT SHALL BE HEARD AND DETERMINED IN ANY NEW YORK STATE OR FEDERAL COURT
SITTING IN THE CITY OF NEW YORK, AND THE PARTIES HERETO HEREBY IRREVOCABLY
SUBMIT TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS IN ANY SUCH ACTION OR
PROCEEDING AND IRREVOCABLY WAIVE THE DEFENSE OF AN INCONVENIENT FORUM TO THE
MAINTENANCE OF ANY SUCH ACTION OR PROCEEDING. 
EACH PARTY HERETO IRREVOCABLY CONSENTS TO THE SERVICE OF ANY AND ALL
PROCESS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES OF SUCH
PROCESS TO SUCH PARTY AT ITS ADDRESS SPECIFIED IN PARAGRAPH 16(f).  THE PARTIES HERETO AGREE THAT A FINAL
JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE
ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER
PROVIDED BY LAW.  NOTHING IN THIS
PARAGRAPH 16(k) SHALL AFFECT THE RIGHT OF EITHER PARTY HERETO TO SERVE LEGAL
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW. 
THE CONSENTS TO JURISDICTION SET FORTH IN THIS PARAGRAPH 16(k) SHALL NOT
CONSTITUTE GENERAL CONSENTS TO SERVICE OF PROCESS IN THE STATE OF NEW YORK AND
SHALL HAVE NO EFFECT FOR ANY PURPOSE EXCEPT AS PROVIDED IN THIS PARAGRAPH 16(k)
AND SHALL NOT BE DEEMED TO CONFER RIGHTS ON ANY PARTY OTHER THAN THE PARTIES
HERETO.

 

(l)  WAIVER OF
JURY TRIAL.  EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY
HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY
ARISING OUT OF, UNDER OR IN

 

32

 

CONNECTION WITH THIS AGREEMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY.  EACH
PARTY HERETO: (i) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER;
AND (ii) ACKNOWLEDGES THAT IT AND THE OTHER PARTY HERETO HAVE BEEN INDUCED TO
ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS PARAGRAPH 16(l).

 

(m)  Consents.  Except as specifically provided to the
contrary herein, if any consent, approval or authority is required from either
party hereto, such consent, approval or authority shall not be unreasonably
withheld or delayed.

 

[*]

 

(o)  Counterparts.  This Agreement may be executed in one or more
counterparts, and by the parties hereto in separate counterparts, each of which
when executed shall be deemed to be an original but all of which taken together
shall constitute one and the same agreement.

 

33

 

If the foregoing is acceptable, please
acknowledge the same by signing in the appropriate places below.

 

	
   

  	
  WEA INTERNATIONAL INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David H. Johnson

  	
   

  
	
   

  	
  Name:

  	
  David H. Johnson

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WARNER MUSIC MANUFACTURING

  EUROPE GMBH (TO BE RENAMED
CINRAM GMBH)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Lewis Ritchie

  	
   

  
	
   

  	
  Name:

  	
  Lewis Ritchie

  
	
   

  	
  Title:

  	
  Authorized Signatory

  
					

 

 

List of Attached Schedules

 

 

	
  Schedule A:

  	
  Service Level Requirements

  
	
  Schedule B:

  	
  Technical Specifications

  
	
  Schedule C:

  	
  Additional Printing and Packaging Charges

  
	
  Schedule D:

  	
  Manufacturing Charges

  
	
  Schedule E:

  	
  Approved Subcontractors

  
	
  Schedule F:

  	
  Code of Conduct for Manufacturers

  
	
  Schedule G:

  	
  Insurance Coverage

  

 

34

 

Schedule A

 

[*]

 

 

[*]

 

2

 

[*]

 

3

 

[*]

 

4

 

[*]

 

5

 

[*]

 

6

 

[*]

 

7

 

[*]

 

8

 

[*]

 

9

 

[*]

 

10

 

[*]

 

11

 

Schedule B

Technical Specifications

 

 

 

WIMME Technical Standards &
Specifications

 

CD / DVD

 

 

V1.0   July 2003

 

 

A)           CD - Formats

 

AA)                         Discs

 

AA 1)     5” (12cm) Ø CD

 

1.     Physical dimensions discs

 

	
  Diameter

  	
  120 mm

  	
  + 0,3

  	
  mm

  
	
  Centerhole

  	
  15 mm

  	
  + 0,1/- 0

  	
  mm

  
	
  Thickness

  	
  1,2 mm

  	
  + 0,3 / - 0,1

  	
  mm

  
	
   

  
	
  Disc shape
  see technical standards

  

 

2.     Materials

 

Standard

 

	
  a)

  	
  Carrier

  	
  :

  	
  clear
  polycarbonate

  	
  dimensions
  see 1.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  b)

  	
  reflective
  layer

  	
  :

  	
  Aluminium

  	
  Inner Ø

  	
  38

  
	
   

  	
   

  	
   

  	
   

  	
  outer Ø

  	
  118

  
	
  c)

  	
  protective
  layer 

  	
  :

  	
  clear
  coating lacquer

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Specials

  
	
   

  
	
  a)

  	
  carrier

  	
  :

  	
  coloured
  polycarbonate

  	
  • on
  specific request

  
	
  b)

  	
  reflective
  layer

  	
  :

  	
  •

  	
  other
  materials

  	
  • on
  specific request

  
	
   

  	
   

  	
   

  	
  •

  	
  different
  masking shapes

  	
  • on
  specific request

  
								

 

3.     Technical
Specifications

 

	
  CD Audio

  	
  =>

  	
  see SONY / PHILIPS

  	
   Red Book

  
	
  CD ROM

  	
  =>

  	
   “

  	
  “

  	
   Yellow Book

  
	
  Enhanced CD-Audio

  	
  =>

  	
   “

  	
  “

  	
   Enhanced Music CD Specs.

  

 

2

 

4.     Maximum
Playing time

 

	
  Standard

  	
   

  	
   

  
	
  CD-Audio

  	
  :

  	
  78 min

  
	
  CD-ROM

  	
  :

  	
  850 MByte

  
	
   

  	
   

  	
   

  
	
  Specials

  	
   

  	
   

  
	
  CD-Audio

  	
  :

  	
  extended playing time up to max. 79:30 min

  

 

5.     Copy
Control Technologies

 

Application of copy control technologies technically means leaving the
SONY / PHILIPS Red Book standard for CD-Audio and depending on applied
technology entering into mixed CD-Audio / CD-ROM formats    =>
Enhanced CD-Audio

 

Copy control technologies are subject to specific license agreements /
fees available copy control technologies and max.  playing times for CD-Albums:

	
  •

  	
  MACROVISION CDS 200 69 min + 128 k bit
  quality compressed audio

  
	
  •

  	
  MACROVISION CDS 100 74 min

  	
  (without compressed audio for PC
  playability)

  
	
   

  	
   

  	
   

  
	
  other copy control technologies

  	
  • on
  specific request

  
				

 

5.    Labelartwork

 

	
  Surface for labelartwork

  	
   

  
	
  inner Ø

  	
  21 mm

  
	
  outer Ø

  	
  116 mm

  
	
  with
  non-printed ring-shaped segment (stacking ring area)

  
	
  Ø min.

  	
  33,9 mm

  
	
  Ø max.

  	
  35,2 mm

  
	
   

  	
   

  
	
  Standard Labelprint

  	
   

  
	
  a)screen print

  	
  4 standard colours PANTONE

  
	
  b)offset print

  	
  white ground + 4 standard CMYK offset
  colours

  

 

Specials

•              5th
colour

•              6th
colour (screen print only)

•              special
colours                 (i.e.  metallic, dayglow)

•              varnish

•              special
requests

 

3

 

AA 2) 3” (8 cm) Ø CD

 

NOT AVAILABLE

 

B)            DVD - Formats

 

BA)         Discs

 

BA 1) 5” (12 cm) Ø DVD

 

1.     Physical
dimensions discs

 

	
  Diameter

  	
  120

  	
  mm

  	
  + 0,3

  	
  mm

  
	
  Centerhole

  	
  15

  	
  mm

  	
  + 0,1/ - 0 

  	
  mm

  
	
  Thickness

  	
  1,2

  	
  mm

  	
  + 0,3/ - 0,1

  	
  mm

  
	
   

  
	
  Disc shape

  	
  see DVD physical specifications

  	
   

  
							

 

2.     Materials

 

	
  Standard

  	
   

  	
   

  
	
  carrier

  	
  :

  	
  clear polycarbonate

  
	
  reflective layer

  	
  :

  	
  dimensions

  	
  inner Ø

  	
  38

  
	
   

  	
   

  	
   

  	
  outer  Ø

  	
  118

  
	
   

  	
   

  	
  material

  	
  DVD5

  
	
   

  	
   

  	
   

  	
  DVD10

  
	
   

  	
   

  	
   

  	
  DVD9

  	
  aluminium / silver or silicon

  (semi-reflective layer)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Specials

  	
   

  	
   

  
	
  NOT YET AVAILABLE

  	
   

  
							

 

3.     Technical
Specifications

 

	
  DVD physical specification

  	
  =>

  	
  DVD specifications for Read only discs, Part 1

  
	
  DVD logical specification

  	
  =>

  	
  DVD-Video / DVD-Audio / DVD-ROM Specifications

  

 

4

 

4.     Max.  Data Capacity

 

	
  DVD5

  	
  4,7 GByte

  
	
  DVD10

  	
  2 x 4,7GByte

  
	
  DVD9

  	
  8,5 GByte

  

 

5.     Copy
Control Technologies

 

copy control technologies are subject to specific license agreements /
fees 

	
  Standard

  	
   

  
	
  •

  	
  MACROVISION

  	
  analog  video copy protection for
  DVD-Video

  
	
  •

  	
  CSS

  	
  digital content copy protection for DVD-Video

  
	
  •

  	
  CPPM

  	
  digital content copy protection for DVD-Audio

  
	
   

  
	
  Specials 

  	
   

  
	
  NOT YET AVAILABLE

  	
   

  
				

 

5.     Labelartwork

 

	
  a) surface / dimensions for labelartwork

  
	
  DVD5 and DVD9

  	
  Ø inner

  	
  18 mm

  
	
   

  	
  Ø outer

  	
  116 mm

  
	
  DVD10

  	
  Ø inner

  	
  38 mm

  
	
   

  	
  Ø outer

  	
  44 mm

  
	
   

  
	
  b) labelartwork technologies

  

 

	
  Standards

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  DVD5

  	
  :

  	
  -

  	
  pitart

  
	
   

  	
   

  	
  or

  	
   

  
	
   

  	
   

  	
  -

  	
  screen print

  	
  4 standard colours PANTONE

  
	
   

  	
   

  	
  or

  	
   

  
	
   

  	
   

  	
  -

  	
  offset print

  	
  white ground +4 standard offset
  CMYK colours

  
	
   

  	
   

  	
   

  	
   

  
	
  DVD10

  	
  :

  	
  -

  	
  screen print ‘donut type’ on
  both sides max. 3 colours/side, standard colours PANTONE

  
	
   

  	
   

  	
   

  	
   

  
	
  DVD9

  	
  :

  	
  -

  	
  screen print

  	
  4 standard colour PANTONE

  
	
   

  	
   

  	
  or

  	
   

  
	
   

  	
   

  	
  -

  	
  offset print

  	
  white ground + 4 standard offset
  CMYK colours

  

 

5

 

	
  Specials

  
	
  •

  	
  5th colour

  
	
  •

  	
  6th colour

  	
  (screen print only)

  
	
  •

  	
  special colours

  	
  (i.e. metallic, dayglow)

  
	
  •

  	
  varnish

  
	
  •

  	
  special requests

  

 

BA 2) 3” (8 cm) Ø DVD

 

NOT AVAILABLE

 

AB)        Printcomponents

 

all print
component dimensions + 0,5 mm printing / finishing tolerances

 

AB 1)      “CD Audio Single”

 

	
  Cardboard sleeve (as combined print and packaging component)

  
	
  Dimensions

  	
  :

  	
  123,0 x 123,0 mm

  
	
  Paper

  	
  :

  	
  250 g/m2

  
	
  colours

  	
  :

  	
  4 colours, CMYK + waterbased varnish

  

 

AB 2)      “CD Audio MaxiSingle”

 

	
  Insert

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  dimensions

  	
  :

  	
  120,5 x 155,0 mm

  	
  without flap

  
	
  Paper

  	
  :

  	
  160 g/m2

  
	
  colours

  	
  :

  	
  4/4, CMYK

  	
  (without varnish)

  

 

AB 3) “CD Audio Album”

 

	
  a) 

  	
  inlay

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  dimensions

  	
  :

  	
  117,5 x 151,0 mm

  
	
   

  	
  paper

  	
  :

  	
  160 g/m2

  
	
   

  	
  colours

  	
  :

  	
  4/4, CMYK

  	
  (without varnish)

  

 

6

 

b)
booklet

 

	
  dimensions

  	
  :

  	
  119,5
  x 120,5 mm

  
	
  standard productsfor machine packaging

  
	
  pages

  	
  :

  	
  up
  to 32 pages, stapled

  
	
  paper

  	
  :

  	
  outer
  pages

  	
  :

  	
  160
  g/m2, coated paper

  
	
   

  	
   

  	
  inner
  pages

  	
  :

  	
  100
  g/m2, coated paper

  
	
  colours

  	
  :

  	
  4/4,
  CMYK (without varnish)

  
	
   

  	
   

  	
   

  
	
  special products

  	
  folded

  
	
  paper

  	
  :

  	
   

  	
  160
  g/m2, 135 g/m2,100 g/m2 

  
	
   

  	
   

  	
   

  	
  depending
  on specific type of folding

  
	
   

  	
   

  	
   

  	
  (i.e.
  concertina fold, cross fold, ...)

  
	
  colours

  	
  :

  	
   

  	
  4/4,
  CMYK (without varnish)

  
	
   

  	
   

  	
   

  	
   

  
	
  other specials

  	
  •              more than 32 pages

  
	
   

  	
   

  	
   

  	
  •              special
  colours

  
	
   

  	
   

  	
   

  	
  •              hot
  foil

  
	
   

  	
   

  	
   

  	
  •              varnish

  
	
   

  	
   

  	
   

  	
  •              special
  paper quality

  
						

 

AB
4) “CD Audio Double Album”

 

	
  print
  components

  	
  see
  AB 3)

  

 

BB)   Printcomponents

 

	
  BB  1) “DVD Audio” in SJB Plus

  	
  (manual
  packaging)

  

 

	
  a)

  	
  inlay

  	
  dimensions

  	
  151,6 x 162,6 mm

  
	
   

  	
   

  	
  paper

  	
  160
  g/m2 coated paper

  
	
   

  	
   

  	
  colours

  	
  4/4,
  CMYK

  
	
   

  	
   

  	
   

  	
   

  
	
  b)

  	
  booklet

  	
  dimensions

  	
  140,5
  x 120,0 mm

  
	
   

  	
   

  	
  paper

  	
  outer
  pages 160 g/m2

  
	
   

  	
   

  	
   

  	
  inner
  pages min. 100 g/m2, coated

  
	
   

  	
   

  	
  pages

  	
  max.
  32, stapled

  
	
   

  	
   

  	
  colours

  	
  4/4,
  CMYK

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  special products

  	
  folded

  	
   

  
	
   

  	
  paper

  	
  :

  	
  160
  g/m2, 135 g/m2,100 g/m2

  
	
   

  	
   

  	
  depending
  on specific type of folding

  
	
   

  	
   

  	
  (i.e.  concertina fold, cross fold, ...)

  
	
   

  	
  colours

  	
  :

  	
  4/4, CMYK (without varnish)

  

 

7

 

	
   

  	
  specials

  	
  •              more
  than 32 pages

  	
   

  
	
   

  	
   

  	
  •              special
  colours

  	
   

  
	
   

  	
   

  	
  •              hot
  foil

  	
   

  
	
   

  	
   

  	
  •              varnish

  	
   

  
	
   

  	
   

  	
  •              special
  paper quality

  	
   

  

 

BB  2) “DVD Video in Amaray style box”

 

	
  a)

  	
  slipsheet

  	
  dimensions

  	
  183
  x 272 mm

  
	
   

  	
   

  	
  paper

  	
  160 g/m2

  
	
   

  	
   

  	
  colours

  	
  up
  to 4/4, CMYK

  
	
   

  	
   

  	
   

  	
   

  
	
  b)
  

  	
  booklet

  	
  dimensions

  	
  120
  x 178 mm

  
	
   

  	
  standard products

  	
  for machine packaging

  	
   

  
	
   

  	
   

  	
  pages

  	
  up
  to 32, stapled

  
	
   

  	
   

  	
  paper

  	
  outer
  pages 160 g/m2 

  
	
   

  	
   

  	
   

  	
  inner
  pages min 100 g/m2

  
	
   

  	
   

  	
  colours

  	
  up
  to 4/4, CMYK

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  special products

  	
  folded

  	
   

  
	
   

  	
  paper

  	
   

  	
  :

  	
  160
  g/m2, 135 g/m2,100 g/m2

  
	
   

  	
   

  	
   

  	
  depending
  on specific type of folding

  
	
   

  	
   

  	
   

  	
  (i.e.  concertina fold, cross fold, ...)

  
	
   

  	
  colours

  	
   

  	
  :

  	
  4/4,
  CMYK (without varnish)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  specials

  	
   

  	
  •              more
  than 32 pages

  
	
   

  	
   

  	
   

  	
  •              special  colours

  
	
   

  	
   

  	
   

  	
  •              hot
  foil

  
	
   

  	
   

  	
   

  	
  •              varnish

  
	
   

  	
   

  	
   

  	
  •              special
  paper quality

  
						

 

BB  3) Cardboards for Snapper Type Packaging

 

	
   

  	
  4 panel

  	
  dimensions

  	
  187,5
  x 289,5 mm

  
	
   

  	
   

  	
  paper

  	
   

  	
  330
  g/m2

  
	
   

  	
   

  	
  colours

  	
   

  	
  4/0,
  CMYK

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6 panel

  	
  dimensions

  	
  187,5 x 289,5 mm

  
	
   

  	
   

  	
  paper

  	
   

  	
  330
  g/m2

  
	
   

  	
   

  	
  colours

  	
   

  	
  4/4, CMYK

  

 

8

 

C)
Packaging Element Standards for machine packaging

 

all products
to be assembled by machine can be supplied with / without 25 m
foil thickness cellophane wrap.

 

	
  C
  1) 2-piece Jewelbox

  	
  typically
  for CD-Audio Maxi

  

 

	
   

  	
   

  	
   

  	
   

  
	
   

  	
  material

  	
   

  	
  polystyrene

  
	
   

  	
  dimensions

  	
   

  	
  142
  x 125 x 7 mm

  
	
   

  	
  colours

  	
  standard

  	
  clear

  
	
   

  	
   

  	
  special

  	
  other
  colours– on specific request

  

 

C
2) Standard Jewelbox

 

	
   

  	
  material

  	
   

  	
  polystyrene

  
	
  a) box

  	
  dimensions

  	
   

  	
  142
  x 125 x 10 mm

  
	
   

  	
  colours

  	
  standard

  	
  clear

  
	
   

  	
   

  	
   

  	
  with
  / without - Logo

  
	
   

  	
   

  	
  special

  	
  other
  colours – on specific request

  
	
   

  	
   

  	
   

  	
   

  
	
  b) tray

  	
   

  	
  standard

  	
  black
  or clear

  
	
   

  	
   

  	
   

  	
  with
  / without - Logo

  
	
   

  	
   

  	
  special

  	
  other
  colours – on specific request

  

 

C
3) Slimline Double Jewelbox

 

	
   

  	
  material

  	
   

  	
  polystyrene

  
	
  a) box

  	
  dimensions

  	
   

  	
  142
  x 125 x 10 mm

  
	
   

  	
  types

  	
   

  	
  hinge
  right or left

  
	
   

  	
   

  	
   

  	
  with
  / without - Logo

  
	
   

  	
  colours

  	
  standard

  	
  clear

  
	
   

  	
   

  	
  special

  	
  other
  colours – on specific request

  
	
   

  	
   

  	
   

  	
   

  
	
  b) tray

  	
  colours

  	
  standard

  	
  black
  or clear

  
	
   

  	
   

  	
   

  	
  with
  / without imprint “2 CD”

  
	
   

  	
   

  	
  special

  	
  other
  colours – on specific request

  

 

	
  C 4) Soft Box

  	
  (Amaray
  Style Box)

  

 

	
   

  	
  material

  	
   

  	
  polypropylene

  
	
   

  	
  dimensions

  	
   

  	
  190
  x 135 x 14 mm

  
	
   

  	
  colours

  	
  standard

  	
  grey
  or clear

  
	
   

  	
   

  	
  special

  	
  other
  colours– on specific request

  

 

9

 

C
5) Double Slim Soft Box (Amaray Style Box)

 

	
   

  	
  material

  	
   

  	
  polypropylene

  
	
  a)
  box

  	
  dimensions

  	
   

  	
  190
  x 135 x 14 mm

  
	
   

  	
  colours

  	
  standard

  	
  grey
  or clear

  
	
   

  	
   

  	
  special

  	
  other
  colours – on specific request

  
	
   

  	
   

  	
   

  	
   

  
	
  b)
  tray

  	
  to
  be inserted in hinge, box spine

  
	
   

  	
  colours

  	
  standard

  	
  grey
  or clear

  
	
   

  	
   

  	
  special

  	
  other
  colours – on specific request

  

 

C
6) Tray for Snapper Packaging

 

	
   

  	
  material

  	
   

  	
  polypropylene

  
	
   

  	
  dimensions

  	
   

  	
  190
  x 141 x 113 mm

  
	
   

  	
  colours

  	
  standard

  	
  grey
  or clear

  
	
   

  	
   

  	
  special

  	
  other
  colours – on specific request

  

 

10

[*]

 

 

[*]

 

2

 

Schedule E

 

Approved Subcontractors

 

Denon

JVC

Sony

Sonopress

Deluxe/Disctronics

MPO

OK
Media

Universal

 

Schedule F

 

Code Of Conduct For Manufacturers

 

At Warner Music International, we are committed to:

 

•                  a
standard of excellence in every aspect of our business and in every corner of
the world;

•                  ethical
and responsible conduct in all of our operations;

•                  respect
for the rights of all individuals; and

•                  respect
for the environment.

 

We expect these same commitments to be shared by all manufacturers of
Warner Music’s products and merchandise. 
At a minimum, we require
that all manufacturers of WMI products and merchandise meet the following
standards:

 

	
  Child Labor

  	
  Manufacturers will not use child labor.

  
	
   

  	
   

  
	
   

  	
  The Term “child” refers to a person younger than 15 (or 14 where
  local law allows) or, if higher, the local legal minimum age for employment
  or the age for completing compulsory education.

  
	
   

  	
   

  
	
   

  	
  Manufacturers employing young persons who do not fall within the
  definition of “children” will also comply with any laws and regulations
  applicable to such persons.

  
	
   

  	
   

  
	
  Involuntary Labor

  	
  Manufacturers will not use any forced or involuntary labor, whether
  prison, bonded, indentured or otherwise.

  
	
   

  	
   

  
	
  Coercion and Harassment

  	
  Manufacturers will treat each employee with dignity and respect, and
  will not use corporal punishment, threats
  of violence or other forms of physical,
  sexual, psychological or verbal harassment or abuse.

  
	
   

  	
   

  
	
  Nondiscrimination

  	
  Manufacturers will not discriminate in hiring and employment
  practices, including salary, benefits, advancement, discipline, termination
  or retirement, on the basis of race, religion, age, nationality, social or
  ethnic origin, sexual orientation, gender, political opinion or disability.

  
	
   

  	
   

  
	
  Association

  	
  Manufacturers will respect the rights of employees to associate,
  organize and bargain collectively in a lawful and peaceful manner, without
  penalty or interference.

  

 

 

	
  Health and Safety

  	
  Manufacturers
  will provide employees with a
  safe and healthy workplace in
  compliance with all applicable laws and regulations, ensuring at a minimum
  reasonable access to potable water and sanitary facilities; fire safety; and
  adequate lighting and ventilation. Manufacturers will also ensure that the
  same standard of health and safety are applied in any housing
  that they provide for employees.

  
	
   

  	
   

  
	
  Compensation

  	
  We expect
  manufacturers to recognize that wages are essential to meeting employees’
  basic needs. Manufacturers will, at a minimum, comply with all applicable
  wage and hour laws and regulations, including those relating to a minimum
  wages, overtime, maximum hours, piece rates and other elements of
  compensation, and provide legally mandated benefits. Except in extraordinary
  business circumstances, manufacturers will not require employees to work more
  than the lesser of (a) 48 hours per week and 12 hours overtime or (b) the
  limits on regular and overtime hours allowed by local law or, where local law
  does not limit the hours of work, the regular work week plus 12 hours
  overtime. In addition, except in extraordinary business circumstances,
  employees will be entitled to at least one day off in every seven-day period.

  
	
   

  	
   

  
	
   

  	
  Manufacturers will compensate employees for overtime hours at such premium rate
  as is legally required or, if
  there is no legally prescribed premium rate, at a rate at least equal to the
  regular hourly compensation rate.

  
	
   

  	
   

  
	
   

  	
  Where local
  industry standards are higher than applicable legal requirements, we expect
  manufacturers to meet the higher standards.

  
	
   

  	
   

  
	
  Protection of the Environment

  	
  Manufacturers will comply with all applicable environmental laws and
  regulations

  
	
   

  	
   

  
	
  Other Laws

  	
  Manufacturers
  will comply with all applicable laws and regulations, including those
  pertaining to the manufacture, pricing, sale and distribution of merchandise.
  All references to “applicable laws and regulations” in this Code of Conduct
  include local and national codes, rules and regulations as well as applicable
  treaties and voluntary industry standards.

  
	
   

  	
   

  
	
  Subcontracting

  	
  Manufacturers
  will not use subcontractors for the

  

 

2

 

	
   

  	
  manufacture
  of Warner Music products and merchandise or components thereof without Warner
  Music International’s express written consent, and only after the
  subcontractor has entered into a written commitment with Warner Music
  International to comply with this Code of Conduct.

  
	
   

  	
   

  
	
  Monitoring and Compliance

  	
  Manufacturers
  will authorize Warner Music International and its designated agents
  (including third parties) to engage in monitoring activities to confirm
  compliance with this Code of Conduct, including unannounced on-site
  inspections of manufacturing facilities and employer-provided housing;
  reviews of books and records relating to employment matters; and private
  interviews with employees. Manufacturers will maintain on site all
  documentation that may be needed to demonstrate compliance with this Code of
  Conduct.

  
	
   

  	
   

  
	
  Publication

  	
  Manufacturers
  will take appropriate steps to ensure that the provisions of this Code of Conduct are communicated to
  employees, including the prominent posting of a copy of this Code of Conduct,
  in the local language and in a place readily accessible to employees, at all
  times.

  

 

3

 

Schedule G

 

Insurance Coverage

 

NOTE: The following insurance requirements are intended to provide
insurance coverage under this Agreement and each of the other service
agreements being entered into between the parties hereto and their affiliates
as of the date hereof.  Accordingly, to
the extent any such other agreements require insurance coverage thereunder that
is duplicative of the insurance coverage provided for below, such insurance
coverage need not be duplicated under such other agreements.

 

Property Insurance, Including Extra Expense
and Business Interruption: Company at all times and at
its own cost and expense shall insure WMI’s property as defined and required in
this Agreement under so-called “all risk” policies of insurance, including but
not limited to coverage for extended perils, earthquake, windstorm, flood, and
collapse; open cargo, war risk cargo and terrorism.  Company shall purchase an insurance policy
that indemnifies WMI for non-physical damage to source material, if available
on a commercially reasonable basis and is warranted by the risk profile of the
Company.  WMI’s property shall consist of
and not be limited to source material, finished goods and inventory, returned
stock, master recordings, digital files, DVDs, CDs and all printing and
packaging material.

 

Either dedicated policies or portfolio (blanket) coverage forms may
provide the “all risk” property insurance, providing that the per occurrence
limit of insurance available with respect to the WMI property at any Company
location for property damage, business interruption, and extra expense shall
not be less than five hundred million dollars ($500,000,000) except, that
coverage for California Earthquake shall be no less than one hundred fifty
million ($150,000,000) per occurrence and in aggregate; and Terrorism for WMI
Manufacturing Alsdorf shall be no less than two hundred fifty-five million
($255,000,000) per occurrence and in aggregate. 
Further, the limits of insurance applicable to the extended perils and
the perils of earthquake, flood and terrorism shall be an annual aggregate.  The deductible on said policies shall be the
sole responsibility of Company and be of no greater amount than is commercially
reasonable for a company of its financial standing.  These policies shall be primary to any policy
maintained by or on behalf of WMI.  WMI
may, at any time, review the amount of insurance required hereunder, and may,
from time to time, but in no event more than annually, require a lower or
higher amount depending on the best available estimate of the aggregate
exposure to loss arising from damage to WMI’s property under this Agreement.

 

The open cargo and war risk cargo insurance policies shall provide per
shipment limits of indemnity of no less than five million dollars ($5,000,000)
and contain a warehouse coverage endorsement. 
In the event that the five million dollars ($5,000,000) limit of
insurance is not adequate to fully insure any given shipment under this
Agreement, Company shall purchase additional insurance to cover the full
replacement cost of the shipment.  The
deductible on these policies shall be no greater than what is commercially
reasonable for an enterprise with Company’s financial standing.  The

 

 

deductible shall be the responsibility of Company and this coverage
shall be primary to any coverage maintained by WMI.

 

All policies shall provide for a reimbursement value with respect to
WMI’s property at replacement cost for new property of like kind and quality,
with no deduction for depreciation, and shall include WMI, its partners,
officers, employees, and affiliates as loss payees under the policies as their
interest may appear, and shall provide that no act or omission on the part of
Company as the title insured shall prejudice a direct claim by the additional
insured.  All property policies shall
include a waiver of subrogation in favor of WMI.  Further, Company agrees to secure terms with
its insurer that in the event that Company fails to pay premium resulting in a
cancellation of coverage that WMI will be given the opportunity to maintain
coverage for its insured property under the policy; and Company will reimburse
WMI within ten (10) days of notice for the expense incurred.

 

Public Liability Insurance:
Company shall also be required to obtain and maintain comprehensive general
liability insurance and a follow-form “umbrella liability” policy, providing
insurance against claims for bodily injury, including death, property damage,
personal and advertising injury, blanket contractual liability, broad form
property damage liability, explosion, collapse and underground hazard, and
products and completed operations, for such claims occurring or alleged to have
occurred in the course of any operations or activities contemplated by this
Agreement, in such amounts as from time to time are carried by prudent owners
of comparable operations, but in no event less than twenty five million dollars
($25,000,000) per occurrence and one hundred million dollars ($100,000,000) in
the annual aggregate, and covering as additional insureds all the WMI
individuals and entities for which and to the extent it is responsible under
this Agreement.

 

Workers’ Compensation and Employers’
Liability Insurance:

 

The Workers’ Compensation policy shall include the following coverage:

 

	
  1.

  	
  Coverage A

  	
  Statutory

  
	
  2.

  	
  Coverage B

  	
  Employers’ Liability

  
	
   

  	
   

  	
   

  
	
  Bodily Injury by Accident

  	
  $

  	
  1,000,000 each accident

  	
   

  
	
  Bodily Injury by Disease

  	
  $

  	
  1,000,000 policy limit

  	
   

  
	
  Bodily Injury by Disease

  	
  $

  	
  1,000,000 each employee

  	
   

  

 

Company shall maintain any other employment related insurance coverage
required by any jurisdiction having control over any employees or operations
used in connection with this Agreement.

 

Automobile Liability Insurance:
Company shall purchase and maintain automobile liability and follow-form
“umbrella liability” insurance for all owned, non-owned and hired vehicles with
limits of not less than one hundred million dollars ($100,000,000) combined
single limit for bodily injury and property damage.  This insurance coverage must include all
automotive and truck equipment used in the

 

2

 

performance of the work under this Agreement, and must include the
loading and unloading of same.

 

Environmental Liability Insurance:
In the event Company encounters and must perform or engage a contractor to
perform work related to the remediation or abatement of “hazardous material”
which includes, without limitation, any flammable explosives, radioactive
materials, hazardous materials, hazardous waste, hazardous or toxic substances,
or related materials defined in the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended (42 U.S.C.  Section 9601, et seq.), the Superfund
Amendments and Reauthorization Action of 1986 (Pub.  L.  No.
99-499, 100 stat. 1613 (1986)), the Hazardous Material Transportation Act, as
amended (49 U.S.C.  Section 1801, et
seq.) and in the regulations adopted and publications promulgated pursuant
thereto, or any other federal, state or local environmental law, ordinance,
rule, or regulation (or applicable law in any jurisdiction outside the US),
Company, or any contractor performing such work on behalf of Company, shall
provide “contractor’s pollution liability” insurance, as applicable to the work
to be performed, covering claims from third party injury and property damage as
a result of pollution conditions emanating from on-site, under the site, or off
the site arising out of its operations and completed operations.  Completed operations coverage shall remain in
effect for no less than five (5) years after final completion.  Minimum liability limits, including excess
liability coverage, shall be five million dollars ($5,000,000) each occurrence
and ten million dollars ($10,000,000) in the aggregate.

 

The automobile liability insurance must contain provisions for thirty
(30) days prior written notice of cancellation, nonrenewal, material change or
reduction of insurance sent by certified mail return receipt requested, and
waiver of subrogation in favor of WMI, additional insureds and all other such
entities, as may be reasonably requested by WMI.

 

3

 

Provisions Applicable to All Policies of
Insurance Required Hereunder: Policies of insurance
shall be underwritten by an insurer with an AM Best rating of no less than A-
and a financial size class of VII or better (or an equivalent rating from an
alternate rating agency), and may be an admitted or non-admitted carrier.  Any insurer not meeting these criteria must
be approved in writing by WMI’s risk management department whose authorization
shall not be unreasonably withheld.  Satisfactory
evidence of insurance shall be provided before the commencement of this
Agreement and shall be evidenced at each renewal by a binder and certificate of
insurance at least ten (10) days before expiration of coverage and upon request
of WMI, on an annual basis or as necessitated by a material change in coverage
or legal action.  Company shall forward
to WMI a copy of all required policy forms upon request.  With respect to property located outside the
U.S, any loss payable to WMI shall be adjusted and paid in the currency of the
United States of America, subject to the rate of exchange published in The Wall
Street Journal on the date of the loss.  If
Company elects to maintain insurance for property located outside the US, where
the policy is denominated in a currency other than the US dollar, such policy
limits and deductibles shall at all times be sufficient to meet the US dollar
denominated requirements set forth on this Schedule G.

 

Each of WMI and Company agrees to negotiate in good faith to attempt to
resolve any disagreement which in any way affects any insurance required to be
carried hereunder.  In the event that
such good faith negotiation does not result in the resolution of any such
disagreement within a fifteen (15) day period, the parties shall retain an
arbitrator to make a fair and reasonable determination as to any such
disagreement (the “Insurance Arbitrator”). 
The Insurance Arbitrator shall be a retired executive or attorney with
substantial experience in the insurance industry, preferably in the field of
manufacturing, shall be independent of each of WMI and Company, and shall
endeavor to provide a determination of any dispute among the parties within
thirty (30) days of being retained, but in each case, as quickly as possible.  The parties shall jointly appoint the
Insurance Arbitrator and the identity of the Insurance Arbitrator shall be
satisfactory to each of the parties.  The
parties shall share equally in the cost and expense of retaining the Insurance
Arbitrator.  If the parties cannot agree
upon a person to act as the Insurance Arbitrator within thirty (30) days of the
expiry of the fifteen (15) day negotiation period specified in this Paragarph
6, then the Arbitrator shall be selected by the American Arbitration
Association.  Any arbitration hereunder
shall be conducted in conformance with the rules established by the American
Arbitration Association.  Any
determination made by the Insurance Arbitrator shall be final and binding on
each of the parties.  For the avoidance
of doubt, Company shall at all times including during the pendency of any
dispute and until such time as such dispute is resolved be required to continue
to procure insurance policies as its sole expense in full force and effect as
required in this Agreement and as specified herein.

 

4Exhibit 10.32

 

 

HISTORIC TW INC.,

 

 

Landlord

 

 

and

 

 

WARNER MUSIC GROUP INC.,

 

 

Tenant

 

 

 

LEASE

 

 

 

Dated: as of February 29, 2004

 

75 Rockefeller Plaza 

New York, New York

 

 

TABLE OF CONTENTS

 

	
  ARTICLE
  1

  	
  DEMISE,
  RENT AND DEFINITIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  2

  	
  USE,
  COMPLIANCE AND SIGNS

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  3

  	
  CONDITION
  OF PREMISES

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  4

  	
  TAX
  PAYMENTS

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  5

  	
  OPERATING
  PAYMENTS

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  6

  	
  SUBORDINATION
  TO MORTGAGES, LEASES AND DECLARATION OF RESTRICTIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  7

  	
  QUIET
  ENJOYMENT

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  8

  	
  ASSIGNMENT,
  SUBLETTING AND MORTGAGING

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 9

  	
  COMPLIANCE WITH LEGAL AND INSURANCE
  REQUIREMENTS

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 10

  	
  INSURANCE

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 11

  	
  RULES AND REGULATIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 12

  	
  ALTERATIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 13

  	
  LANDLORD’S AND TENANT’S PROPERTY; REMOVAL
  AT END OF TERM

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 14

  	
  REPAIRS AND MAINTENANCE

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 15

  	
  ELECTRIC ENERGY

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 16

  	
  HEAT, VENTILATION AND AIR CONDITIONING

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 17

  	
  OTHER SERVICES, SERVICE INTERRUPTION AND
  BUILDING DIRECTORY

  	
   

  

 

i

 

	
  ARTICLE 18

  	
  ACCESS, NOTICE OF OCCURRENCES, WINDOWS,
  NAME OF BUILDING AND NO DEDICATION

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 19

  	
  NON-LIABILITY AND INDEMNIFICATION

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 20

  	
  DAMAGE OR DESTRUCTION

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 21

  	
  EMINENT DOMAIN

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 22

  	
  SURRENDER AND HOLDING OVER

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 23

  	
  DEFAULT

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 24

  	
  RE-ENTRY BY LANDLORD

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 25

  	
  DAMAGES

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 26

  	
  WAIVERS

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 27

  	
  CURING TENANT’S DEFAULTS AND COSTS OF
  ENFORCEMENT

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 28

  	
  BROKER

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 29

  	
  NOTICES

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 30

  	
  ESTOPPEL CERTIFICATES AND MEMORANDUM OF
  LEASE

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 31

  	
  FORCE MAJEURE

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 32

  	
  CONSENTS

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 33

  	
  RENT CONTROL

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 34

  	
  MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 35

  	
  SIGNAGE

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 36

  	
  [INTENTIONALLY OMITTED.]

  	
   

  

 

ii

 

	
  ARTICLE 37

  	
  ADDITIONAL SPACE .

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 38

  	
  LANDLORD RELOCATION OPTION

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 39

  	
  SUPERIOR LEASE

  	
   

  

 

iii

 

EXHIBITS:

 

	
  Exhibit A - FLOOR PLANS OF PREMISES

  
	
   

  
	
  Exhibit B - LAND

  
	
   

  
	
  Exhibit C - [Intentionally omitted]

  
	
   

  
	
  Exhibit D - RULES AND REGULATIONS

  
	
   

  
	
  Exhibit E - CURRENT OVERTIME CHARGES

  
	
   

  
	
  Exhibit F - CLEANING SPECIFICATIONS

  
	
   

  
	
  Exhibit G - [INTENTIONALLY OMITTED]

  
	
   

  
	
  Exhibit H - ADDITIONAL FLOORS

  

 

iv

 

EXECUTION
VERSION

 

LEASE, dated
as of February 29, 2004, between HISTORIC TW INC. (f/k/a Time Warner
Inc.), a Delaware corporation, having its principal office at 75 Rockefeller
Plaza, New York, New York 10019 (“Landlord”) and WARNER MUSIC GROUP INC.,
having an office at 75 Rockefeller Plaza, New York, New York 10019 (“Tenant”).

 

W  I  T  N
E  S  S  E  T  H :

 

ARTICLE 1

 

DEMISE, RENT AND DEFINITIONS

 

1.1                                 Landlord
hereby leases to Tenant, and Tenant hereby hires from Landlord, upon and
subject to all of the terms and conditions of this Lease, floors 7, 8, 12, 30
and 31 and the space in the concourse of the Building (the “Concourse Space”),
substantially as shown (by diagonal lines or shading) on the floor plans
attached hereto as Exhibit A (the “Premises”), in the building (the “Building”)
known by the street numbers 75 Rockefeller Plaza and 15 West 51st Street, New
York, New York, together with the non-exclusive right to use the common areas
of the Building for ingress to and egress from the Premises. The Building and
the land described in Exhibit B attached hereto (the “Land”) are collectively
called the “Property”. The parties agree that for all purposes of this Lease,
the Building shall be deemed to have a rentable area of 582,428 square feet and
the Premises other than the Concourse Space shall be deemed to have a total
rentable area of 82,266 square feet (the “Rentable Square Footage”), subject to
adjustment as provided in Article 37 hereof.

 

1.2                                 The
term of this Lease (“Term”) shall commence on the date hereof (“Commencement
Date”) and shall end at 11:59 p.m. July 30, 2014 (the

 

 

“Expiration Date”) or on such
earlier date upon which this Lease shall terminate for any reason.

 

1.3                                 The
rents shall consist of:

 

(a)                                  fixed
rent (“Fixed Rent”) at the annual rate of:

 

(i)                                     for
the Concourse Space the product of 2,500 square feet (subject to adjustments as
provided in this subsection) and Fifteen and 00/100 ($15.00) Dollars from the
Commencement Date through and including the Expiration Date. Landlord and
Tenant agree that they will equally share the cost to have the Concourse Space
measured based on the standard in effect on the date hereof of the Real Estate
Board of New York and based on such measurement, the 2,500 square feet of the
Concourse Space will be adjusted and the Fixed Rent payable under this
subsection (i) will also be adjusted.

 

(ii)                                  the
product of the Rentable Square Footage and Thirty-Four and 42/100 ($34.42)
Dollars from the Commencement Date through and including December 31, 2008, and

 

(iii)                               the
product of the Rentable Square Footage and Thirty-Nine and 42/100 ($39.42)
dollars from January 1, 2009 through and including the Expiration Date, which
amounts shall be payable in equal monthly installments in advance on the first
day of each and every calendar month during the Term. Landlord and Tenant
acknowledge that the Rentable Square Footage will be subject to adjustment pursuant
to Article 37 hereof. Any references herein to the Square Footage or Rentable
Square Footage of the Premises or the Building, Tenant’s Tax Percentage (as
defined herein) or Wage Rate Multiple (as defined herein), are otherwise for
purposes of

 

2

 

arbitrary formulas only, and not a representation as to the actual
square footage or actual percentage interest in the Building.

 

(b)                                 additional rent (“Additional
Charges”) consisting of all other sums of money that become due from Tenant and
payable to Landlord hereunder.

 

(c)                                  Tenant shall pay all
Fixed Rent and Additional Charges in lawful money of the United States to
Landlord and at the election of Landlord by (i) wire transfer to an account
designated by Landlord or (ii) by good and sufficient check (subject to
collection) drawn on a bank which is a member of the New York Clearinghouse at
Landlord’s address set forth above (attention: Accounts Receivable Department),
or such other place as Landlord shall hereafter designate by notice to Tenant.

 

1.4                                 Tenant
shall pay Fixed Rent and Additional Charges promptly when due without notice or
demand therefor and without any abatement, deduction or setoff for any reason
except as otherwise expressly provided in this Lease. Landlord shall have the
same remedies for default in payment of Additional Charges as Landlord has for
default in payment of Fixed Rent. If the Commencement Date or Expiration Date
occurs on a day other than the first or last day of a calendar month, as
applicable, Fixed Rent for the partial calendar month shall be prorated.

 

1.5                                 No
payment by Tenant or receipt or acceptance by Landlord of a lesser amount than
the correct Fixed Rent or Additional Charges shall be deemed to be other than a
payment on account, nor shall any endorsement or statement on any check or any
letter accompanying any check or payment be deemed an accord and satisfaction,
and

 

3

 

Landlord may accept such check or payment without prejudice to Landlord’s
right to recover the balance or pursue any other remedy provided in this Lease
or at law.

 

1.6                                 If
Tenant fails to make any payment of Fixed Rent or Additional Charges within
five (5) days after the due date thereof, such unpaid amount shall bear interest
from the due date at a rate (“Lease Interest Rate”) equal to the lesser of (a) the rate announced by JPMorgan Chase Bank, or its
successor, from time to time as its prime or base rate (“Prime Rate”) plus 4%,
or (b) the maximum applicable rate allowed by law, from the date such amount
became due and payable to the date of payment thereof by Tenant. Such interest
shall be due and payable on demand.

 

1.7                                 The
following terms, whenever used in this Lease (including all Exhibits attached
hereto, all of which shall be deemed to be a part of this Lease), shall have
the meanings indicated:

 

(a)                                  The
term “Business Days” shall mean such Mondays, Tuesdays, Wednesdays, Thursdays
and Fridays that do not fall on the days celebrated as New Year’s Day, Martin
Luther King Day, Presidents’ Day, Memorial Day, Independence Day, Labor Day,
Columbus Day, Veterans Day, Thanksgiving Day, day after Thanksgiving or
Christmas Day, or on such other days as may now or hereafter be celebrated as
holidays under the contract from time to time in effect between Locals 32B and
32J of the Building Service Employees Union AFL-CIO (or any successor thereto)
and the Real Estate Advisory Board of New York, Inc. (or any successor thereto)
or on which there is no regular United States postal service and the New York
Stock Exchange (or any successor thereto) is closed.

 

4

 

(b)                                 The term “Business
Hours” shall mean 8:00 a.m. to 6:00 p.m. but only on Business Days.

 

(c)                                  The term “Calculation
Rate” shall mean the yield on U.S. Treasury Bonds with a maturity
closest to 10 years after the date on which a particular expense is incurred,
plus 2%.

 

(d)                                 The term “Insurance
Requirements” shall mean rules, regulations, orders and requirements of the New
York Board of Fire Underwriters, the New York Fire Insurance Rating
Organization and any other similar body performing the same or similar
functions, whether now or hereafter in force, and requirements of any insurance
policy maintained by Landlord at any time or of the issuer of such policy.

 

(e)                                  The term “Landlord”
shall mean only the owner at the time in question of the Building or of a lease
of the Building, so that in the event of any transfer or transfers of title to
the Building or of Landlord’s interest in a lease of the Building (as tenant
thereunder),whether by assignment or sublease of all or substantially all of
the Building, the transferor shall be relieved and freed of all obligations of
Landlord under this Lease accruing after such transfer, and such transferee
shall be deemed to have assumed and agreed to perform and observe all
obligations of Landlord under this Lease during the period it is the holder of
Landlord’s interest under this Lease, subject, however, to the provisions of
Article 19 and any other provisions of this Lease.

 

(f)                                    The term “Landlord-Related
Occupant” shall mean any one or more of (i) Landlord; (ii) any corporation or
other business entity which controls, is controlled by, or is under common
control with Landlord (a “Landlord Affiliate”); (iii) any corporation,
partnership, joint venture, or other entity in which Landlord or a

 

5

 

Landlord Affiliate has an interest of 50% or more (other than Tenant),
or which has an interest of 50% or more in Landlord or a Landlord Affiliate;
and (iv) a person or entity unrelated to Landlord but with which Landlord or a
Landlord Affiliate has an ongoing business relationship.

 

(g)                                 The term “Legal
Requirements” shall mean laws and ordinances of federal, state, city, town,
county, borough and village governments and rules, regulations, orders and
directives of all departments, subdivisions, bureaus, agencies or offices
thereof, and of any other governmental, public or quasi-public authorities, and
the directions of any public officers pursuant to law, whether now or hereafter
in force.

 

(h)                                 The term “Tenant”
shall mean the original Tenant herein or any permitted assignee or other
successor in interest (immediate or remote) of the original Tenant herein named
that at the time in question is the owner of Tenant’s interest in this Lease.

 

(i)                                     The term “Tenant’s
Affiliate” shall mean any corporation or other business entity which controls,
is controlled by, or is under common control with Tenant.

 

(j)                                     The words “Tenant
indemnifies Landlord against liability,” “Tenant shall indemnify Landlord
against liability,” “Landlord indemnifies Tenant against liability” or “Landlord
shall indemnify Tenant against Liability” and words of similar import shall
mean that the indemnifying party agrees to indemnify, hold and save harmless
the indemnified party, each Superior Lessor and Superior Mortgagee (where
Landlord is the indemnified party), and their respective partners, directors,
officers,

 

6

 

agents and employees from and against all loss, cost, liability, claim,
damage, fine, penalty and expense, including reasonable attorneys’ fees and
disbursements (whether incurred in resisting and defending any action or proceeding
or incurred in enforcing the indemnification rights of the indemnified party
against the indemnifying party), and that in case any action or
proceeding is brought against the indemnified party or any indemnified
person, the indemnifying party shall resist and defend such action or
proceeding by attorneys reasonably satisfactory to the indemnified party (it
being agreed that the attorney for the indemnifying party’s
insurers shall be deemed satisfactory to the indemnified party). The
indemnified party shall notify the indemnifying party promptly of any claim for
which indemnification may be sought, and will cooperate with the indemnifying
party and its insurers in the defense of any such claim. The indemnifying party
shall pay to the indemnified party upon rendition of bills or statements
therefor, an amount equal to all losses, costs, liabilities, claims, damages,
fines, penalties and expenses (i) incurred by the indemnified party or any
other indemnified person and (ii) for which the indemnifying party has
indemnified the indemnified party or any other indemnified person, but the
indemnified party shall in no event settle any third party claim without the
prior written consent of the indemnifying party, such consent not to be
unreasonably withheld. Nothing herein contained shall be deemed to require any
party to indemnify any other party against its own negligence or willful
misconduct, or against any consequential damages.

 

(k)                                  The term “untenantable”
shall mean a condition resulting in Tenant being unable to use all or a portion
of the Premises for the normal conduct of Tenant’s business.

 

7

 

ARTICLE 2

 

USE, COMPLIANCE AND SIGNS

 

2.1                                 The
Premises shall be used and occupied by Tenant (and its permitted subtenants and
Tenant’s Affiliates) solely as general and executive offices, uses ancillary thereto and Identified Ancillary Uses.
All such uses must be in compliance with Legal Requirements. The Premises may
be used only for the benefit of Tenant’s employees or the employees of Tenant’s
permitted subtenants and Tenant’s Affiliates, in each case occupying any part
of the Premises and reasonable numbers of guests, of the foregoing.
Notwithstanding any provision herein to the contrary, the Concourse Space may
only be used for storage of files, records and office furniture. In no event
shall any of such uses be made available to employees of Tenant or Tenant’s
Affiliates who are not located at the Building (other than reasonable numbers
of senior executives) or to the general public. The following uses are intended
to benefit and to be ancillary to the use of the Premises and not to benefit
persons not located in the Premises, other than incidentally and in limited
numbers): (i) a dining facility located on the 32nd floor of the Premises (the “Dining
Room”); provided, that if cooking will be done (other than only
microwave cooking) (A) Tenant shall install all flues, vents, grease traps and
ansul systems and other similar items reasonably requested by Landlord, (B) Tenant
shall install an exhaust system that, in Landlord’s reasonable judgment, is
consistent with the standards of a first class office building in midtown
Manhattan, (C) all ducts and flues shall be installed within the Premises and
shall exit the Building from a location reasonably acceptable to Landlord, (D)
Tenant shall clean all grease traps as appropriate, (E) Tenant shall bag all
wet garbage, place such garbage in containers that prevent the escape of odors,
and provide for a refrigerated waste facility to store such garbage

 

8

 

pending disposal and (F)
Landlord shall cause such Dining Room to be serviced on a regular basis by
the Building’s exterminator, and Tenant shall pay to Landlord within thirty (30)
days after demand, the cost of providing any additional extermination service
required by reason of such Dining Room; and further  provided
(whether or not cooking will be done), (v) Tenant shall not
allow any odors to escape from the Premises to other portions of the Building,
(w) Tenant shall otherwise maintain and operate the Dining Room
consistent with the standards of a first class office building in midtown
Manhattan, and (x) the entire floor on which such Dining Room is located and
the entire floor immediately above and the entire floor immediately below the
floor on which such Dining Room is located shall be fully leased by Tenant or
Tenant’s Affiliates; and (ii) Tenant may install music, sound or video
demonstration areas (a “Music  Room”) provided that (A) the entire
floor on which any music, sound or video demonstration areas of Tenant, its
subtenants or Tenant’s Affiliates are located and the entire floor immediately
above and the entire floor immediately below shall be fully leased by Tenant, its
subtenants or Tenant’s Affiliates and (B) no sound or vibration from such space
is detected elsewhere in the Building other than the Premises (the ancillary
uses described in clauses (i)-(ii) above are called the “Identified
Ancillary Uses”)). Notwithstanding anything in this Lease to the contrary,
Tenant shall be responsible for complying with all Legal Requirements
applicable to the use of the Premises for the Identified Ancillary Uses
(including, without limitation, any structural and nonstructural alterations to
the Premises or Building required by such Legal Requirements) and for
obtaining, at Tenant’s sole cost and expense, all consents, approvals and
permits (including, without limitation, any amendment to the certificate of
occupancy for the

 

9

 

Building and any public assembly permit) required by reason of any such
use and Landlord makes no representation to Tenant as to the suitability of the
Premises for any of the Identified Ancillary Uses. Landlord, at Tenant’s
expense, shall cooperate with Tenant’s efforts to obtain any such consents,
approvals and permits, including, without limitation, executing and delivering
any documents or instruments reasonably required by Tenant in connection
therewith. Nothing in this Section which permits the Premises or any part
thereof to be used for Identified Ancillary Uses shall be interpreted to mean
that Tenant is permitted to make any Alterations other than in compliance with
all of the terms and conditions set forth in this Lease including the
requirement to obtain Landlord’s prior consent, where required.

 

2.2                                 If
any governmental license or permit is required for the proper and lawful
conduct of Tenant’s business in the Premises, Tenant, at its expense, shall procure
and maintain such license or permit and submit the same to Landlord for
inspection. Tenant shall at all times comply with the terms and conditions of
each such license or permit. Tenant shall not use, or suffer or permit any
person to use, the Premises, or any part thereof, in any manner which (a)
violates the certificate of occupancy for the Premises or for the Building or
any other permit or license issued pursuant to any Legal Requirements, (b)
causes injury to the Building, (c) constitutes a violation of the Legal
Requirements or Insurance Requirements pursuant to Article 9 hereof, (d)
impairs the character, reputation or appearance of the Building as a
first-class office building, (e) impairs the proper and economic maintenance,
operation and repair of the Building, or (f) annoys or inconveniences other
tenants of the Building.

 

10

 

2.3                                 In
addition to the limitations set forth in Section 2.2, Tenant shall not use,
suffer or permit any person to use the Premises or any part thereof for: sale
or rental to the public of any products or materials; financial services to the
public such as those provided by a commercial bank, trust company, savings
bank, safe deposit or savings and loan association or other lender; issuance or
sale to the public of traveller’s checks, foreign drafts, letter of credit,
foreign exchange or domestic money orders; receipt of money for transmission
from the public; data processing services rendered primarily to others than
Tenant and which are not strictly ancillary to Tenant’s business; stock
brokerage board room; school; broadcasting center for communications firms;
reservation center for airlines or for travel agencies; public auction; or as
an office for any of the following: (a) employment agency, (b) foreign
government or political subdivision thereof, (c) governmental bureau or agency
of the United States or any state or political subdivision thereof, (d) health
care professional, (e) clerical support business, or (f) union; nor shall
Tenant use, suffer or permit any person to use the Premises or any part thereof
for any other use or purpose that (i) in the reasonable judgment of Landlord is
not in keeping with the character and dignity of the Building or (ii)
predominantly involves direct patronage of the general public not incidental to
the Tenant’s business.

 

Unless it is an affiliate of Historic TW Inc., neither Tenant nor any
occupant of the Premises shall use the words “Time Warner”, “Historic TW Inc.”,
“Warner Bros.”, “Time”, “Warner”, “AOL”, or “America Online”, or any
combination or simulation thereof, or any other business or trade name from
time to time used by Time Warner Inc. or its subsidiaries, for any purpose
whatsoever, including (but not limited to) as or for any corporate, firm or
trade name, trademark or designation or description of

 

11

 

merchandise or services, or as Tenant’s business address; provided that
the foregoing restriction shall not be deemed to apply to (i) any trade name
currently used by Tenant which is hereafter adopted by Landlord and (ii) Tenant’s
current name “Warner Music Group, Inc.” Neither Tenant nor any occupant of the
Premises shall use the words “Rockefeller”, “Center” or “Radio City”, or any
combination or simulation thereof, for any purpose whatsoever, including (but
not limited to) as or for any corporate, firm or trade name, trademark or
designation or description of merchandise or services, or as Tenant’s business
address; provided that the foregoing restriction shall not be deemed to apply
to any trade name currently used by Tenant which is hereafter adopted by
Landlord. Notwithstanding the foregoing, Tenant may use “75 Rockefeller Plaza”
as its business address so long as Landlord is permitted to use such
designation for the Building by Rockefeller Center, Inc. and its successors and
by the City of New York and the United States Postal Service, provided that (a)
Tenant will not use the words “Rockefeller Plaza” except in a conventional
manner and without emphasis as part of its business address, and (b) whenever
such address is used by Tenant other than on stationery, Tenant will also
indicate that the other address for the Building is 15 West 51st Street.
Notwithstanding any provision herein to the contrary, Tenant may utilize such
trade names as are permitted under the WCI Trademark Agreement between Warner
Communications Inc. and WMG Acquisition Corp.

 

2.4                                 Subject
to Article 35 hereof, Tenant may not place signs anywhere in the Property,
including on the exterior of the Building, without the prior consent of
Landlord, except for a sign on Tenant’s interior entry doors which shall be
approved by Landlord in advance of the placement thereof, such approval not to
be unreasonably

 

12

 

withheld or delayed. Consent will not be required for signs within the
Premises which are not visible from outside the Premises.

 

ARTICLE 3

 

CONDITION OF PREMISES

 

3.1                                 Tenant
hereby agrees to accept the Premises in its current condition, “as is,” without
requiring any improvements or decorations to be made by Landlord. Tenant
acknowledges that it has been in occupancy of the Premises prior to the date
hereof and is fully familiar with the condition of the Premises.

 

ARTICLE 4

 

TAX PAYMENTS

 

4.1                                 For
the purposes of this Article and other provisions of this Lease:

 

(a)                                  (1)                                  The term “Taxes”
shall mean the aggregate amount of all real estate and personal property taxes
and any general or special assessments (excluding penalties and late interest
thereon but including interest on assessments payable in installments) assessed
or imposed upon or in respect of the Property, including (i) taxes and
assessments in respect of any air rights or development rights now or hereafter
appurtenant to, or used in connection with the construction of, the Building,
(ii) fees, taxes and charges in respect of any vaults, vault space or other
space within or outside the boundaries of the Land, (iii) Business Improvement
District assessments and other assessments for public improvements or benefits
to the Building, the Land, or the locality in which the Land is situated, and
(iv) taxes, assessments and charges in respect of any fixtures, equipment,
facilities, systems or personal property of Landlord serving or

 

13

 

used exclusively in connection with the Building or the Land, and shall
also include all Tax Expenses (as hereinafter defined).

 

(2)                                  All income, estate,
succession, inheritance, gift, transfer, franchise profit, use, occupancy,
gross receipts, rental, capital gains, capital stock and income taxes of
Landlord shall be excluded from Taxes; provided, however, that if the method of
taxation of real estate is changed and as a result thereof any other tax or
assessment, however denominated, including any franchise, income, profit, use,
occupancy, gross receipts or rental tax, shall be imposed upon Landlord or the
owner of the Property or the rents or income there from, in substitution for or
in addition to, in whole or in part, any of the taxes or assessments listed in
the preceding sentence, such other tax or assessment shall be included in and
deemed part of Taxes, but calculated for this purpose as if the Property and
all appurtenances thereto (including development rights) were the only property
of Landlord.

 

(3)                                  The amount of any
special assessments for public improvements or benefits to be included in Taxes
for any year (and such installments shall be the maximum permissible amount
thereof), in the case where the same may at the option of the taxpayer be paid
in installments, shall be limited to the amount of the installment due in
respect of such year, together with any interest payable in connection
therewith (other than interest or penalties payable by reason of the delinquent
payment of such installments).

 

14

 

(b)                                 The term “Tax Year”
shall mean each period from July 1 through June 30 (or such other fiscal period
as may hereafter be adopted by the City of New York as the fiscal year for any
tax, levy or charge included in Taxes).

 

(c)                                  The term “Base Tax
Year” shall mean the Tax Year July 1, 2004 through June 30, 2005.

 

(d)                                 The term “Tax Expenses”
shall mean all reasonable expenses, including attorneys’ fees and disbursements
and experts’ and other witnesses’ fees and disbursements, incurred by Landlord
in seeking to reduce the amount of any assessed valuation of the Land and/or
the Building, in contesting the amount or validity of any Taxes, or in seeking
a refund of any Taxes.

 

(e)                                  The term “Tenant’s
Tax Percentage” shall mean 14.12466%, subject to adjustment as provided in
Article 37 hereof.

 

4.2                                 If
Taxes for any calendar year during the Term are greater than Taxes for the Base
Tax Year, Tenant shall pay to Landlord Tenant’s Tax Percentage of such excess.
Such payments shall be made as provided in Section 4.3. Payments with respect
to any partial Tax Year which falls within the Term shall be appropriately pro
rated.

 

4.3                                 Landlord
shall give Tenant, prior to or after commencement of each calendar year, a
notice setting forth Landlord’s reasonable estimate of the payments to be made
by Tenant on account of Taxes during such year. Tenant shall make such payments
in installments in the same manner that Taxes for such Tax Year are due and
payable by Landlord, whether to the City of New York or to a Superior Lessor or
Superior Mortgagee. Such payment will be retroactive to the later to occur of
the

 

15

 

Commencement Date or the first
month of such calendar year if Landlord’s notice is given after the
commencement of such calendar year, provided, however, that if payments to be
made by Tenant on account of Taxes are retroactive to the Commencement Date and
the Commencement Date is other than the first day of the month in which the
same occurs, then any such payments in respect of the month in which the
Commencement Date occurs shall be prorated). Landlord may amend such estimate
by notice given to Tenant from time to time to reflect additional information
about Taxes that comes to Landlord’s attention or to correct any error made in
any prior estimate; said notice may require an increase in monthly payments or
a separate individual payment and Tenant’s payments shall be adjusted or made
as provided in said notice. Promptly after receipt by Landlord of bills for
such Taxes, Landlord shall give Tenant copies thereof and the computation of
Tenant’s payment on account thereof, and (i) in the event of a deficiency,
Tenant shall pay to Landlord the amount thereof within fifteen (15) Business
Days after demand therefor, or (ii) in the event of an overpayment, Landlord
shall promptly refund to Tenant the amount thereof.

 

4.4                                 If
Landlord receives a refund of Taxes for any Tax Year, Landlord shall either pay
to Tenant Tenant’s Tax Percentage of the net refund after deducting from such
refund the costs and expenses of obtaining same (to the extent that such costs
and expenses were not included in Tax Expenses); provided, however, such
payment or credit to Tenant shall in no event exceed Tenant’s Tax Payment paid
for such Tax Year. Only Landlord shall be authorized to contest Taxes.
Notwithstanding any provision herein to the Contrary, Tenant shall not be
responsible for any Tax Payment payable under this

 

16

 

Article that is not billed to Tenant within two (2) years after
Landlord makes the corresponding payment of taxes.

 

ARTICLE 5

 

OPERATING PAYMENTS

 

5.1                                 For
each Operating Year (as hereinafter defined) during the Term of this Lease,
Tenant shall pay, as additional rent, the Operating Payment (as hereinafter
defined) for such Operating Year, in accordance with the further provisions of
this Section.

 

(a)                                  For purposes hereof
the following definitions shall apply:

 

(i)                                     The term “Operating
Year” shall mean the calendar year in which the Term of this Lease
commences and each succeeding calendar year thereafter.

 

(ii)                                  The term “Wage
Rate” shall mean the undiscounted regular hourly wage rate payable to or in
respect of Porters (as hereinafter defined) of Class A office buildings in New
York County, in effect as of January 1 of the Operating Year in question,
pursuant to agreement(s) (herein individually or collectively called “Agreement”)
between the Real Estate Advisory Board on Labor Relations, Incorporated (“RAB”)
and Local 32B-32J of the Service Employees International Union, AFL-CIO (“Local
32B-32J”) (or, if either or both of such entities is not in existence or
acting in respect of such matters, then, by any successor(s) or substitute(s)
performing similar functions).

 

(iii)                               The term “Class A
office buildings” shall mean the class of office buildings defined as such
under the current Agreement with Local 32B-32J.

 

17

 

(iv)                              The term “regular
hourly wage rate” shall include all payments of every kind (excluding,
however, fringe benefits) then payable to or in respect of Porters, computed on
the basis of the total undiscounted annual amount payable to or in respect of
Porters pursuant to the Agreement, provided, however, if any union agreement
shall require the regular employment of Porters on days or during hours when
overtime or other premium pay rates are in effect, then the “regular hourly
wage rate,” as used above and subject to the other adjustments provided for
herein, shall be deemed to mean the actual weekly wage rate, divided by the
actual hours in a calendar week during which Porters are required to be
employed (if, for example, as of the Commencement Date, an agreement between
RAB and Local 32B-32J shall require the regular employment of Porters for forty
(40) hours during a calendar week at a minimum hourly wage rate of $3.00 for
the first thirty (30) hours, and premium or overtime hourly wage rate of $4.50
for the remaining ten (10) hours, the minimum regular hourly wage rate under
this Article 38B, as of the Commencement Date, shall be deemed to be the total
weekly wage rate of $135.00 divided by the total number of required hours of
employment, forty (40), or $3.375). If no Agreement shall be in effect as of
any such January 1 with reference to which the regular hourly wage rate for
Porters is to be determined, then the applicable computations and payments
under this Lease shall be made upon the basis of the regular hourly wage rate
(determined in accordance with the preceding provisions of this Article) being
paid by Landlord or by the contractor performing the cleaning services for
Landlord on such January 1 to or in respect of Porters, and thereafter
appropriate retroactive adjustment shall be made when the regular hourly wage
rate payable to or in respect of such Porters is determined pursuant to

 

18

 

Agreement. For the purposes hereof, if the regular hourly wage rate of
Porters shall increase during
any Operating Year the regular hourly wage rate “in effect as of January 1” of
such Operating Year shall be adjusted for the portion of the year for which the increase shall be effective.
The Wage Rate and Base Wage Rate shall be calculated by dividing the annual
undiscounted cost for a Porter receiving the regular hourly wage rate, by the
number of hours that a Porter is expected to work in the calendar year
involved. In determining said number of hours, Landlord’s management may make
reasonable estimates of the average number of days or hours not worked by an
average Porter, where such days or hours are not specified by, or vary with
individual circumstances pursuant to, the union contract. In calculating the
regular hourly wage rate Landlord shall apply such procedures and practices as
are generally applied in such calculations by the owners of Class A office
buildings in the midtown area of the Borough of Manhattan, City and State of
New York, and any dispute or controversy as to or relating to the calculation
of the “Wage Rate” shall be determined by arbitration, which arbitration shall
be by three arbitrators each of whom shall have at least ten years’ experience
in the supervision of the operation and management of Class A office buildings
in Manhattan.

 

(v)                                 The term “Porters”
shall mean that classification of employee engaged in the general maintenance
and operation of office buildings classified as “others” in the current Agreement,
or failing such classification in any subsequent Agreement, the most nearly
comparable classification in such Agreement.

 

(vi)                              The term “Base Wage
Rate” shall mean the Wage Rate in effect as of January 1, 2004.

 

19

 

(b)                                 The term “Wage Rate
Multiple” shall mean 82,266, but subject to adjustment as provided in
Article 37 hereof.

 

(c)                                  In the event that the
Wage Rate in effect as of the January 1 of any Operating Year shall exceed the
Base Wage Rate, Tenant shall pay to Landlord, as Additional Charges for such
Operating Year, an amount (the “Operating Payment”) equal to the
product obtained by multiplying (a) the number of cents (including any fraction
of a cent) by which the Wage Rate exceeds the Base Wage Rate, by (b) the Wage
Rate Multiple. By or after the start of the Operating Year commencing January
1, 2003 and by or after the start of each Operating Year thereafter, Landlord
shall furnish to Tenant an Escalation Statement relating to such Operating Year
and a statement of the Base Wage Rate, showing the escalation, if any, which
shall be due hereunder from Tenant to Landlord and the additional rent then
payable by Tenant to Landlord shall be paid as provided below. The obligation
of Tenant to pay additional rent pursuant to this Section is not predicated
upon the rendition by Landlord of any cleaning service to the Premises or upon
the employment by Landlord of Porters or cleaners or by the application to
Landlord or to the Building of the collective bargaining agreements referred to
above. Tenant acknowledges that the payment of Additional Charges to Landlord
pursuant to the provisions of this Section is intended to be an escalation
payment to provide additional rent to Landlord and is not a measurement of
actual increased costs incurred by Landlord in the operation of the Building.

 

5.2                                 Any
such adjustment payable by reason of the provisions of this Section shall
commence to be payable in equal monthly installments, as of the first day of
the period for which the Wage Rate shall exceed the Base Wage Rate, and after
Landlord

 

20

 

shall furnish Tenant with an Escalation Statement relating to such
Operating Year, all monthly installments of rental shall reflect one-twelfth of
the annual amount of such adjustment until a new adjustment becomes effective
pursuant to the provisions of this Section; provided, however, that if said
Escalation Statement is furnished to Tenant after the commencement or effective
date of any change in the Wage Rate, there shall be promptly paid by Tenant to
Landlord, an amount equal to the portion of such adjustment allocable to the
period prior to the date upon which said Escalation Statement is furnished to
Tenant. In the event that the Wage Rate shall be changed or shall change more
frequently than once a year, the adjustment hereunder shall similarly be made
by Landlord in a supplemental Escalations Statement furnished by Landlord to
Tenant, so as to reflect such change in the monthly installments due hereunder,
and the effective date of each such change. Notwithstanding anything herein to
the contrary, Tenant shall not be responsible for payment of any Operating
Payment payable under this Article that is not billed to Tenant within one (1)
years after the expiration of the appropriate calendar year.

 

ARTICLE 6

 

SUBORDINATION TO MORTGAGES, 

LEASES AND DECLARATION OF RESTRICTIONS

 

6.1                                 (a)                                  This
Lease and all rights of Tenant hereunder shall be subject and subordinate to
all ground leases, overriding leases and underlying leases of the Land and/or
the Building now or hereafter existing and to all mortgages now or hereafter
existing affecting the Land and/or the Building and/or any of such leases,
whether or not such mortgages also cover other lands and/or buildings and/or
leases, to each and every advance made or hereafter to be made under such
mortgages, and to all

 

21

 

renewals, modifications, replacements and extensions of such leases and
mortgages, and spreaders and consolidations of such mortgages. This Section
shall be self-operative and no further instrument of
subordination or priority (as described in the first sentence of this Section)
shall be required. In confirmation of such subordination or priority Tenant
shall promptly execute, acknowledge and deliver any instrument that Landlord,
the Lessor under any such lease or the holder of any such mortgage may
reasonably request to evidence such subordination or
priority; and if Tenant fails to execute, acknowledge or deliver any such
instrument within ten (10) days after request therefor, Tenant hereby
irrevocably constitutes and appoints Landlord as Tenant’s attorney-in-fact,
coupled with an interest, to execute and deliver such instrument on behalf of
Tenant. Any lease to which this Lease is subject and subordinate is herein
called a “Superior Lease,” and the Lessor of a Superior Lease is herein called
a “Superior Lessor.” Any mortgage to which this Lease is subject and
subordinate is herein called a “Superior Mortgage” and the holder of a Superior
Mortgage is herein called a “Superior Mortgagee.”

 

(b)                                 Landlord agrees to
make a reasonable effort to obtain from the Superior Lessor and the Superior
Mortgagee for the benefit of Tenant an agreement, in recordable form, to the
effect that if such Superior Lessor or Superior Mortgagee or any successor or
assign of such Superior Lessor or Superior Mortgagee shall take any action to
enforce it’s rights, or if such Superior Lease shall terminate or be terminated
by reason of a default by the tenant thereunder, then, provided no Event of
Default shall have occurred and then be continuing hereunder, such Superior
Lessor, Superior Mortgagee, or such successor or assign, as the case may be,
will not make Tenant a party defendant to, or otherwise name or join Tenant in,
such action and, upon termination of

 

22

 

such Superior Lease, will recognize Tenant as the direct tenant of such
landlord or such successor or assign, as the case may be, on the same terms and
conditions as are contained in this Lease, except that such Superior Lessor,
Superior Mortgagee or successor or assign shall not be (i) liable for any
previous act or omission of Landlord under this Lease, (ii) subject to any
offsets or defenses, not expressly provided in this Lease, which theretofore
accrued to the Tenant against Landlord, (iii) liable for any security deposited
by Tenant which has not been transferred to such holder, (iv) bound by any previous
prepayment of more than one month’s rent, other than overpayments in respect of
Taxes or Operating Expenses, (v) bound by any covenant to undertake or complete
any construction of the Premises or any portion thereof demised by this Lease,
(vi) bound by an obligation to make any payment to, or on behalf of, the Tenant
or provide any services or perform any repairs, maintenance or restoration
provided for under this Lease to be performed before the date that such holder
succeeded to the interest of Landlord under this Lease or bound by any
obligation to make any payment to Tenant with respect to construction performed
by, or on behalf of, Tenant at the Premises, and (vii) bound by any obligation
to repair, replace, rebuild or restore the Premises demised in the event of
damage by fire or other casualty, or in the event of partial condemnation, in
any such case in excess of the insurance proceeds or condemnation award
actually collected by such holder.

 

6.2                                 If any act or omission
of Landlord would give Tenant the right, immediately or after lapse of a period
of time, to cancel or terminate this Lease, or to claim a partial or total
eviction, Tenant shall not exercise such right until (a) Tenant gives notice of
such act or omission to Landlord and to each Superior Mortgagee and Superior

 

23

 

Lessor whose name and address were previously furnished to Tenant, and (b) a reasonable period of time for
remedying such act or omission elapses following the time when such Superior
Mortgagee or Superior Lessor becomes entitled under such Superior Mortgage or
Superior Lease to remedy same (which reasonable period shall in no event be less than the period to
which Landlord is entitled under this Lease or otherwise, after similar notice,
to effect such remedy). Tenant is hereby advised that the Superior Lessor is 75
Plaza LLC, with an address c/o Park Lane Investments LLC, 240 Greenwich Avenue,
Greenwich, Connecticut 06830 and the Superior Mortgagee is German American Capital
Corporation with an address at 31 West 52nd Street, New York, New York 10019.

 

6.3                                 Tenant
covenants and agrees that if for any reason a Superior Lease (including a
Superior Lease through which Landlord derives its leasehold estate in the
Premises) is terminated, or if the holder of a Superior Mortgage succeeds to
the interest of Landlord hereunder, then at the option of the then holder of
the reversionary interest in the Premises demised by this Lease, Tenant will
attorn to such holder and will recognize such holder as the Tenant’s Landlord
under this Lease, except that such holder shall not be (i) liable for any
previous act or omission of Landlord under this Lease, (ii) subject to any
offsets or defenses, not expressly provided in this Lease, which theretofore
accrued to the Tenant against Landlord, (iii) liable for any security deposited
by Tenant which has not been transferred to such holder, (iv) bound by any
previous prepayment of more than one month’s rent, other than overpayments in
respect of Taxes or Operating Expenses, (v) bound by any covenant to undertake
or complete any construction of the Premises or any portion thereof demised by
this Lease, (vi) bound by

 

24

 

any obligation to make any payment to, or on behalf of, the Tenant or
provide any services or perform any repairs, maintenance or restoration
provided for under this Lease to be performed before the date that such holder
succeeded to the interest of Landlord under this Lease or bound by any
obligation to make any payment to Tenant with respect to construction performed
by, or on behalf of, Tenant at the Premises, and (vii) bound by any obligation
to repair, replace, rebuild or restore the Premises demised in the event of
damage by fire or other casualty, or in the event of partial condemnation, in
any such case in excess of the insurance proceeds or condemnation award
actually collected by such holder. Tenant agrees to execute and deliver, at any
time and from time to time, upon the request of Landlord or of the Lessor under
any such Superior Lease or holder of any Superior Mortgage any instrument which
may be necessary or appropriate to evidence such attornment and Tenant hereby
appoints Landlord or such Lessor under such Superior Lease or holder of a
Superior Mortgage the attorney-in-fact, irrevocable, of the Tenant to execute
and deliver for and on behalf of Tenant any such instrument. Tenant further
waives the provision of any statute or rule of law now or hereafter in effect
which may give or purport to give the Tenant any right of election to terminate
this Lease or to surrender possession of the Premises in the event any
proceeding is brought by the Lessor under any Superior Lease or holder of a
Superior Mortgage to terminate the same, and agrees that unless and until such
Lessor, in connection with any such proceeding, shall elect to terminate this
lease and the rights of Tenant hereunder, this Lease shall not be affected in
any way whatsoever by any such proceeding.

 

6.4                                 If
any prospective or actual Superior Mortgagee or Superior Lessor requires any
modification of this Lease, Tenant shall, upon notice thereof from Landlord,

 

25

 

promptly execute and deliver to Landlord the instrument accompanying
said notice from Landlord to effect such modification if such instrument does
not except to a de minimis extent adversely affect Tenant’s rights under this
Lease and does not increase except to a de minimis extent Tenant’s obligations
under this Lease.

 

6.5                                 Tenant
hereby irrevocably waives all rights it has, if any, in connection with any
zoning lot merger or transfer of development rights in respect of the Property,
including any rights it has to be a party to, to contest, or to execute, any
declaration of restrictions which would cause the Property to be merged with
any other zoning lot. This Lease shall be subject and subordinate to any
declaration of restrictions or any other document of similar nature and purpose
now or hereafter affecting the Property. In confirmation of such waiver and
subordination, Tenant shall promptly execute, acknowledge and deliver any
instrument that Landlord reasonably requests.

 

ARTICLE 7

 

QUIET ENJOYMENT

 

7.1                                 So
long as Tenant pays all Fixed Rent and Additional Charges and performs all of
Tenant’s other obligations under this Lease, in each case within the periods
after notice (if any) and grace provided for in this Lease, Tenant shall
peaceably and quietly have, hold and enjoy the Premises without hindrance,
ejection or molestation by Landlord or any person lawfully claiming through or
under Landlord, subject to the provisions of this Lease and to any Superior
Leases and Superior Mortgages. This covenant shall be construed as a covenant
running with the Land and shall not be construed as a personal covenant of
Landlord except to the extent of Landlord’s interest in this Lease.

 

26

 

7.2                                 Landlord
shall indemnify Tenant against any loss,
damage or expense which
Tenant may suffer or incur if Tenant is evicted from the Premises as the result
of Landlord’s default under any Superior Lease not caused by a default by Tenant under this Lease.

 

ARTICLE 8

 

ASSIGNMENT, SUBLETTING AND
MORTGAGING

 

8.1                                 Tenant
shall not, voluntarily, involuntarily, by operation of law or otherwise, except
as provided in Article 8 hereof: (a) assign or otherwise transfer this Lease,
(b) sublet the Premises or any part thereof, or allow same to be used, occupied
or utilized by any person other than Tenant or (c) mortgage, pledge, encumber
or otherwise hypothecate this Lease. Notwithstanding the foregoing, Tenant may
permit Tenant’s Affiliates to occupy portions of the Premises, subject to all
applicable provisions of this Lease. Tenant will promptly advise Landlord in
writing of the identity of all Tenant’s Affiliates who begin or terminate
occupancy of any portion of the Premises.

 

8.2                                 (a)

 

(i)                                     If
and so long as Tenant is a corporation, a partnership, a limited liability
company or other entity, the following shall be deemed to be an assignment of
this Lease under Section 8.1, prohibited by said Section: one or more sales or
transfers of stock, partnership interests, membership interests or equity
interests, voluntarily, involuntarily, by operation of law or otherwise, or the
issuance of new stock, partnership interests, membership interests or equity
interests, by which an aggregate of more than 49% of Tenant’s stock,
partnership interests, membership interests or equity interests, directly or
indirectly, by sale of an interest in Tenant or that of any of Tenant’s
Affiliates, shall be vested in a party or parties who are not

 

27

 

stockholders, partners or members as of the date hereof; provided
however, that if following such transaction, Tenant will meet the Financial
Test (as defined herein), Landlord’s consent thereto will not be unreasonably
withheld or delayed.

 

(ii)                                  The
sale of all or substantially all of Tenant’s assets which results in a Tenant
failing to meet the Financial Test, notwithstanding that the Tenant under this
Lease after such sale is the same Tenant under this Lease as prior to such
sale, shall be deemed an assignment of this Lease whether such sale is made by
one or more transactions.

 

(iii)                               This
Section shall not apply to transactions with a corporation, partnership,
limited liability company or entity into or with which Tenant is merged or
consolidated or to which substantially all of Tenant’s assets are transferred
or to any corporation, partnership or limited liability company which controls
or is controlled by Tenant or is under common control with Tenant if (x) the
successor to Tenant meets the Financial Test, and (y) proof satisfactory to
Landlord that Tenant meets the Financial Test is delivered to Landlord at least
ten (10) days prior to the effective date of any such transactions. The
provisions of this Section shall not apply to and Landlord’s consent shall not
be required in connection with, sales or transfers by persons other than “insiders”
in the shares of any corporation all the outstanding voting stock of which is
listed on a national securities exchange (as defined in the Securities Exchange
Act of 1934, as amended) or is traded in the over-the-counter market with
quotations reported by the National Association of Securities Dealers through
its automated system for reporting quotations.

 

28

 

(b)                                 (i)                                     As
used herein the term “Financial” Test shall mean a Leverage Ratio (as defined
herein) of less than 3.5.

 

(ii)                                  “Leverage
Ratio” of Tenant or Qualified Guarantor (as defined herein), as the case might
be, means a ratio, determined as of the end of the most recent fiscal period
for such entity for which financial statements prepared in accordance with GAAP
(as defined herein), certified by a financial officer of such entity as fairly
presenting the financial condition and results of operations of such entity have been
delivered to Landlord, of: (x) consolidated indebtedness (including, without
limitation, all guarantees, capital leases and mandatorily redeemable preferred
stock, but excluding undrawn letters of credit) net of aggregate unrestricted
cash and cash equivalents of Tenant or Qualified Guarantor and its Subsidiaries
in excess of $50,000,000; provided  that in no event shall
indebtedness determined pursuant to this clause (x) in respect of any
calculation of the Leverage Ratio be reduced by more than $200,000,000 on the
basis of unrestricted cash and cash equivalents, to (y) the sum of (a) net
income for such entity for the latest 12 months or four quarters reflected in
such certified financial statements and, to the extent reflected as a charge in
the calculation of such net income, (b) interest expense, (c) provisions for
taxes, and (d) depreciation and amortization expense.

 

8.3                                 If
this Lease is assigned, whether or not in violation of the provisions of this
Lease, Landlord may collect rent from the assignee. If the Premises or any part
thereof is sublet or occupied by any person other than Tenant, whether or not
in violation of this Lease, Landlord may, after default by Tenant and
expiration of Tenant’s time to cure such default, collect rent from the
subtenant or occupant. In either event,

 

29

 

Landlord may apply the net amount collected to Fixed Rent and
Additional Charges herein reserved, but no such assignment, subletting,
occupancy or collection shall be deemed a waiver of any of the provisions of
this Article, or the acceptance of the assignee, subtenant or occupant as
Tenant, or a release of Tenant from the performance by Tenant of Tenant’s
obligations under this Lease. The consent by Landlord to any assignment,
mortgaging, subletting or occupancy by others shall not relieve Tenant of the
obligation to obtain the consent of Landlord to any other or further
assignment, mortgaging, subletting or occupancy by others not expressly
permitted by this Article.

 

8.4                                 Any
assignment or transfer, whether or not Landlord’s consent is required, shall be
made only if and shall not be effective until the assignee executes,
acknowledges and delivers to Landlord an agreement in form and substance
reasonably satisfactory to Landlord whereby the assignee assumes the
obligations of Tenant under this Lease and whereby the assignee agrees that the
provisions of this Article shall, notwithstanding such assignment or transfer,
continue to be binding upon it in respect of all future assignments and
transfers. Notwithstanding any assignment or transfer, whether or not in
violation of the provisions of this Lease, and notwithstanding the acceptance
of Fixed Rent or Additional Charges by Landlord from an assignee, transferee,
or any other person, the original Tenant herein named and any and all
successors in interest of the original Tenant herein named shall remain fully
liable (jointly and severally with any immediate or remote successor in
interest, including the then Tenant) for the payment of Fixed Rent and
Additional Charges and for the other obligations of Tenant under this Lease.

 

30

 

8.5                                 The
liability under this Lease of the original Tenant herein named and any
immediate or remote successor in interest of the original Tenant herein named
shall not be discharged, released or impaired in any respect by any agreement
or stipulation made by Landlord with the then Tenant extending the time of, or
modifying any of the obligations under, this Lease, or by any waiver or failure
of Landlord to enforce any of the obligations of Tenant under this Lease.

 

8.6                                 Neither
the listing of any name other than that of Tenant, whether on the door of the
Premises or the Building directory, or otherwise, nor the acceptance by
Landlord of any check drawn by a person other than Tenant in payment of Fixed
Rent or Additional Charges, shall operate to vest in any person any right or
interest in this Lease or in the Premises, nor shall same be deemed to be the
consent of Landlord to any assignment or transfer of this Lease or to any
sublease of the Premises or to the occupancy thereof by any person other than
Tenant.

 

8.7                                 Except
as specifically provided to the contrary in this Article, if Tenant desires to
assign this Lease or sublet all or any part of the Premises, including any
assignment or sublet in connection with any proceeding under the United States
Bankruptcy Code or any federal, state or foreign law of like impact
(collectively, “Insolvency Laws”), Tenant shall give notice thereof to
Landlord, which notice shall be accompanied by a term sheet setting forth the
material business terms of such proposed assignment or sublease. (i) If such
notice is given in connection with a proposed assignment of this Lease, other
than an assignment of the type referred to in Section 8.2 hereof, then such
notice shall be deemed an offer from Tenant to Landlord whereby Landlord may,
at Landlord’s option, terminate this Lease. (ii) If such notice is given in

 

31

 

connection with a proposed sublease of a portion of the Premises to a
party other than a Tenant’s Affiliate, then such notice shall be deemed an
offer from Tenant to Landlord whereby Landlord (or Landlord’s designee) may, at
its option, sublease such space (hereinafter referred to as the “Leaseback Space”)
from Tenant upon the terms and conditions hereinafter set forth. The option in
question may be exercised by Landlord by notice to Tenant at any time within
thirty (30) days after such notice given by Tenant to Landlord, and during such
30-day period Tenant shall not assign this Lease or sublet such space to any
person.

 

8.8                                 If
Landlord exercises its option to sublet the Leaseback Space, such sublease to
Landlord or its designee (as subtenant) (“Landlord’s Sublease”) shall be at the
rentals and for the same term as set forth in the term sheet described in
Section 8.7 hereof, and such Landlord’s Sublease shall:

 

(a)                                  be expressly subject
to all of the covenants, agreements, terms, provisions and conditions of the
Lease except such as are irrelevant or inapplicable, and except as otherwise
expressly set forth to the contrary in this Article;

 

(b)                                 be upon terms and
conditions consistent with those contained in the term sheet described in
Section 8.7 hereof, except such as are irrelevant or inapplicable and except as
otherwise expressly set forth to the contrary in this Article.

 

(c)                                  give the sublessee
the unqualified and unrestricted right, without Tenant’s permission, to assign
such Landlord’s Sublease or any interest therein and/or to sublet the Leaseback
Space or any part or parts of the Leaseback Space and to make any and all
changes, alterations, and improvements in the space covered by such Landlord’s
Sublease as Landlord deems necessary or desirable;

 

32

 

(d)                                 provide that any
assignee or further subtenant of Landlord may, at the election of Landlord, be
permitted to make alterations, decorations and installations in the Leaseback
Space or any part thereof as Landlord deems necessary or desirable and shall
also provide in substance that any such alterations, decorations and
installations in the Leaseback Space therein made by any assignee or subtenant
of Landlord may be removed, in whole or in part, by such assignee or subtenant,
at its option, prior to or upon the expiration or other termination of such
assignment or sublease provided that such assignee or subtenant, at its
expense, shall repair any damage and injury to that portion of the Leaseback
Space so sublet caused by such removal; provided, however, that if the proposed
sublease delivered to Landlord sets forth that the subtenant named therein
shall use the space “as is” and make no alterations throughout the term of the
sublease, or is required to restore the space to its pre-existing condition,
then Landlord shall, or shall cause its assignee or subtenant to, restore the
Leaseback Space substantially to its pre-existing condition to the extent
required under the proposed sublease unless the term of such proposed sublease
expires within the last year of the term of this Lease;

 

(e)                                  also provide that (i)
the parties to a Landlord’s Sublease expressly negate any intention that any
estate created under such Landlord’s Sublease be merged with any other estate
held by either of said parties, (ii) occupancy of the Premises by Landlord or
its assignee or subtenant shall be for a use in conformance with Section 2.1 of
this Lease (except that occupancy of the Premises pursuant to a Landlord’s
Sublease may be for any lawful purpose, if such Landlord’s Sublease is for all
or a portion of the Premises, provided such portion of the Premises constitutes
at a full floor,

 

33

 

(iii) Tenant, at Tenant’s expense, shall and will at all times provide
and permit reasonably appropriate means of ingress to and
egress from the Leaseback Space so sublet by. Tenant to Landlord,
(iv) Landlord shall make such alterations as shall be reasonably required or deemed
necessary by Landlord to physically separate the Leaseback Space from the balance
of the Premises and to comply with any laws and requirements of public
authorities relating to such separation, and Tenant will promptly reimburse
Landlord for the reasonable cost thereof on demand, and (v) at the expiration
of the term of a Landlord’s Sublease, Tenant will accept the space covered by
such Landlord’s Sublease in its then existing condition, subject to the
obligations of the Landlord as tenant under such Landlord’s Sublease to make
such repairs thereto as may be necessary to preserve the premises demised by
such Landlord’s Sublease in reasonable order and condition, and subject to the
condition as to restoration set forth in (d) above; and

 

(f)                                    Tenant shall have
no obligation, at the expiration or earlier termination of the term of this Lease,
to remove any alteration, installation or improvement made in the Leaseback
Space by Landlord or its assignee or subtenant. Performance by Landlord, under
a Landlord’s Sublease, shall be deemed performance by Tenant of any similar
obligation under this Lease and any default under any such Landlord’s Sublease
shall not give rise to a default under a similar obligation contained in this
Lease, nor shall Tenant be liable for any default under this Lease or deemed to
be in default hereunder if and to the extent such default arises directly from
any act or omission of the tenant under such Landlord’s Sublease or arises
directly from any act or omission of any occupant holding under or pursuant to
any such Landlord’s Sublease (including, without limitation, as to payment of
Fixed Rent and/or Additional Charges), and

 

34

 

Landlord shall indemnify and hold harmless Tenant from any loss, damage
or expense which Tenant may suffer or incur arising out of the leasing or
occupancy of the space demised under a Landlord’s Sublease, except to the
extent the same arises from any act or omission of Tenant.

 

8.9                                 If
Landlord exercises its option pursuant to Section 8.7 to terminate this Lease,
then this Lease shall terminate on the date that the assignment was to be
effective or the sublet was to commence, and Fixed Rent and Additional Charges
shall be apportioned as of such date.

 

8.10                           If
Landlord does not exercise an option provided to it pursuant to Section 8.7 and
Tenant is not in default of any of its obligations under this Lease beyond the
applicable period after notice (if any) and grace provided for herein,
Landlord’s consent (which shall be in form reasonably satisfactory to Landlord)
to the proposed assignment or sublease shall not be unreasonably withheld,
provided and upon condition that:

 

(a)                                  Tenant
has complied with the provisions of this Article,

 

(b)                                 in
Landlord’s judgment the proposed assignee or subtenant is a reputable person of
good character and is engaged in a business and the Premises will be used in a
manner which (i) is in keeping with the then standards of the Building, (ii) is
limited to the use expressly permitted under Section 2.1, and (iii) will not
violate any negative covenant as to use contained in any other lease of space
in the Building,

 

(c)                                  neither
the proposed assignee or subtenant nor any person that, directly or indirectly,
controls, is controlled by, or is under common control with, the proposed
assignee or subtenant or any
person who controls the proposed assignee or

 

35

 

subtenant, is then an occupant of any part of the Building, and
Landlord has other space in the
Building available to let to such proposed assignee or subtenant that is substantially
comparable in square footage to the space covered by this Lease or the space
proposed to be sublet by Tenant, as applicable,

 

(d)                                 the
proposed assignee or subtenant is not a person with whom Landlord is then
actively negotiating or in the prior six-month period was negotiating to lease
space in the Building, and

 

(e)                                  there
shall not be more than two subtenants (excluding Tenant’s Affiliates) on each
floor of the Premises that is 20,000 square feet or less and no more than four
subtenants (excluding Tenant’s Affiliates) on each floor of the Premises that
is more than 20,000 square feet, at any time.

 

8.11                           Except
to the extent the same are incurred by Landlord as subtenant under a Landlord’s
Sublease, Tenant shall reimburse Landlord on demand for any reasonable costs
incurred by Landlord in connection with any proposed assignment or sublease,
whether or not consented to by Landlord, including the cost of making
investigations as to the acceptability of the proposed assignee or subtenant,
and reasonable attorneys’ fees and disbursements in connection with the
granting of any requested consent.

 

8.12                           Except
as provided in Section 8.8(f) as to any subletting to Landlord or its designee,
with respect to any subletting to any other subtenant and/or acceptance of rent
or additional rent by Landlord from any other subtenant, (a) Tenant shall
remain fully liable for the payment of Fixed Rent and Additional Charges due
and to become due hereunder and for all of the other obligations of Tenant
under this Lease

 

36

 

and (b) Tenant shall remain fully liable for all acts and omissions of
any licensee or subtenant or any person claiming through or under any licensee
or subtenant that are in violation of any of the obligations of Tenant under
this Lease, and any such violation shall be deemed to be a violation by Tenant.
Notwithstanding any such subletting, no other or further subletting of the
Premises by Tenant or any person claiming through or under Tenant shall be made
except in compliance with and subject to the provisions of this Article. If
Landlord declines to give its consent to any proposed assignment or sublease,
or if Landlord exercises its option under Section 8.7, Tenant shall indemnify
Landlord against liability in connection with any claims made against Landlord
by the proposed assignee or subtenant or by any brokers or other persons
claiming a commission or similar compensation in connection with the proposed
assignment or sublease.

 

8.13                           If (a)
Landlord does not exercise an option provided to it under Section 8.7 and
Landlord consents to a proposed assignment or sublease and (b) Tenant fails to
execute and deliver the assignment or sublease to which Landlord consented
within one hundred eighty (180) days after the giving of such consent, then
Tenant shall again be required to comply with the provisions of this Article
(as if Tenant had not requested such consent) before assigning this Lease or
subletting all or any part of the Premises.

 

8.14                           In
respect of every permitted sublease (except a Landlord’s Sublease):

 

(a)                                  no
sublease shall be for a term ending later than the day before the Expiration
Date,

 

37

 

(b)                                 no
sublease shall be valid, and no subtenant shall take possession of the Premises
or any part thereof, until an executed counterpart of such sublease has been
delivered to Landlord,

 

(c)                                  each
sublease shall provide that it is subject and subordinate to this Lease and to
the matters to which this Lease is or shall be subordinate, and that in the
event of termination, reentry or dispossess by Landlord under this Lease,
Landlord may, at its option, take over all of the right, title and interest of
Tenant, as sublessor, under such sublease, and such subtenant shall, at
Landlord’s option, attorn to Landlord pursuant to the then executory provisions
of such sublease and execute and deliver such instruments as Landlord may
reasonably request to evidence and confirm such attornment, except that
Landlord shall not be (i) liable for any previous act or omission of Tenant
under such sublease, (ii) subject to any offset which had accrued to such
subtenant against Tenant, (iii) bound by any previous modification of such
sublease not consented to by Landlord or by any prepayment of more than one
month’s rent or additional rent, (iv) obligated to make any payment to or on
behalf of such subtenant or to perform any repairs or other work in the
subleased space or the Building beyond Landlord’s obligations under this Lease,
or (v) required to account for any security deposit other than any actually
delivered to Landlord,

 

(d)                                 the
rental and other terms and conditions of each sublease shall be substantially
the same as those contained in the proposed sublease furnished to Landlord pursuant
to Section 8.7 (except that the rental may deviate by up to 5%), and

 

(e)                                  Tenant
shall not publicly advertise the rental rate or any description thereof to be
paid by the proposed subtenant or assignee.

 

38

 

8.15                           If
Landlord does not exercise an option provided to it under Section 8.7 and
Landlord gives its consent to any assignment of this Lease (other than an
assignment pursuant to Section 8.2 hereof) or to any sublease (other than to a
Tenant’s Affiliate), Tenant shall in consideration therefor pay to Landlord:

 

(a)                                  in
the case of an assignment, an amount equal to 50% of all sums and other
consideration paid to Tenant by the assignee or any other person for or in
connection with such assignment (including sums paid for the sale of Tenant’s
fixtures, leasehold improvements, equipment, furniture, furnishings or other
personal property, less the then net unamortized or undepreciated cost thereof
determined on the basis of Tenant’s federal income tax return, but excluding
the obligations assumed by the assignee to pay all rent and other sums and
charges due under this Lease from and after the effective date of such
assignment), less reasonable expenses incurred by Tenant for legal expenses,
brokerage and fix-up in connection with such assignment,

 

(b)                                 in
the case of a sublease, an amount equal to 50% of all rents, additional charges
or other consideration payable to Tenant, plus any sums paid for the sale or
rental of Tenant’s fixtures, leasehold improvements, equipment, furnishings or
other personal property, less the then net unamortized or undepreciated cost
thereof determined on a straight line basis over the term of the Lease to the
extent that the sum thereof is in excess of the Fixed Rent and Additional
Charges accruing during the term of the sublease in respect of the subleased
space (at the rate per square foot payable by Tenant hereunder), less
reasonable expenses incurred by Tenant for legal expenses, brokerage and fix-up
in connection with such sublease. The deduction for the net unamortized or
undepreciated cost of Tenant’s fixtures, etc. and sublessee’s expenses

 

39

 

shall be made in equal monthly installments over the term of the
sublease. The sums payable under this subsection shall be paid to Landlord as
and when paid by the subtenant or any other person to Tenant. For the purpose
of this subsection 8.15(b), the determination of amounts due Landlord in
connection with a sublease shall be made in respect of each sublease on an
individual basis.

 

8.16                           If
Tenant at any time requests Landlord to sublet the Premises for Tenant’s
account, Landlord is authorized to receive keys for such purpose without
releasing Tenant from any of its obligations under this Lease, and Tenant
hereby releases Landlord of and from any liability for loss or damage to any
Tenant’s Property in connection with such subletting, provided Landlord
exercises reasonable care to prevent damage to Tenant’s Property.

 

8.17                           Landlord
shall, at Tenant’s request and expense execute and deliver to a Major Subtenant
(as defined herein), a nondisturbance and attornment agreement; provided, that
(I) Tenant is not then in default under this Lease after notice and beyond
applicable grace period, (II) the sublease with the Major Subtenant is a
Qualifying Major Sublease (as defined herein), (III) Tenant has furnished
evidence to Landlord’s reasonable satisfaction that the subtenant is a Major
Subtenant and will continue to be a Major Subtenant after execution and
delivery of the sublease and (IV) such Major Subtenant executes and delivers to
Landlord the subordination and nondisturbance agreement reasonably satisfactory
to Landlord and consistent with this Section 8.17. A “Qualifying Major Sublease”
shall mean a sublease from Tenant to a Major Subtenant to which Landlord shall
have actually given its consent (not including where Landlord’s consent is not
required) and which (A) consists of a full floor or

 

40

 

multiple full floors in the Building, (B) provides that, at the time
when the attornment provided for in the non-disturbance and attornment
agreement hereinafter referred to becomes effective between Landlord and the
Major Subtenant following the termination of this Lease, the rental payable
thereunder, after taking into account any free rent periods, credits, offsets
or deductions to which the subtenant may be entitled thereunder, will be equal
to or in excess (on a per rentable square foot basis) of the greater of (ww)
the Fixed Rent and the recurring Additional Charges payable by Tenant under
this Lease with respect to such space and (xx) rent provided for in the
Qualifying Major Sublease, and (C) provides for other obligations of the Major
Subtenant at least substantially identical to the obligations of Tenant under
this Lease. A “Major Subtenant” shall mean a subtenant with an aggregate
tangible net worth which is reasonably satisfactory to Landlord.
Notwithstanding anything to the contrary set forth in this clause, any
non-disturbance and attornment agreement delivered by Landlord pursuant to this
clause shall, pursuant to this Lease, be conditional and by its terms expressly
contain the condition such that, in the event of any termination of this Lease
(x) other than by reason of (1) Tenant’s default, (2) a rejection in bankruptcy
by Tenant or (3) a voluntary surrender of this Lease by Landlord and Tenant,
but (y) including a termination of this Lease by reason of casualty or
condemnation, hereof, then any non-disturbance and attornment agreement to a
Major Subtenant shall, automatically and without further act of the parties,
terminate and be of no further force or effect from and after the applicable
termination date.

 

41

 

ARTICLE 9

 

COMPLIANCE WITH LEGAL AND INSURANCE
REQUIREMENTS

 

9.1                                 Tenant
shall give prompt notice to Landlord of any notice it receives of the violation
of any Legal Requirements or Insurance Requirements in respect of the Premises
or the use or occupancy thereof. Tenant shall, at Tenant’s expense, comply with
all Legal Requirements and Insurance Requirements relating to the Premises or
the use or occupancy thereof, except that Tenant shall not be required to
comply with any Legal Requirement or Insurance Requirement requiring structural
alteration of the Premises unless the necessity therefor results from (a)
Alterations, (b) Tenant’s specific manner of use of the Premises (as opposed to
general office use), (c) the specific manner of conduct of Tenant’s business or
operation of its installations, equipment or other property therein, (d) any
cause or condition created by or at the instance of Tenant, or (e) the breach
of any of Tenant’s obligations under this Lease. Tenant shall pay all the
costs, expenses, fines, penalties and damages imposed upon Landlord or any
Superior Lessors or Superior Mortgagees by reason of or arising out of Tenant’s
failure to fully and promptly comply with and observe the provisions of this
Section. However, Tenant need not comply with any Legal Requirement so long as
Tenant is contesting the validity thereof or the applicability thereof to the
Premises in accordance with Section 9.2. Landlord shall comply with or cause
compliance with all Legal Requirements and Insurance Requirements affecting the
Building and all other Legal Requirements and Insurance Requirements affecting
the Premises but may similarly defer compliance so long as Landlord is
contesting the validity or applicability thereof. If any public authority or
insurance body requires or recommends any additional sprinkler heads or changes
to the sprinkler system in or serving the Premises, Tenant shall, at its
expense, promptly

 

42

 

make and supply such additional sprinkler heads or changes, except that
if prior to the date hereof a violation has been issued against the Premises
with respect to the sprinkler heads or sprinkler system in the Premises,
Landlord at its expense will be responsible for curing such violation.

 

9.2                                 Tenant,
at its expense, after notice to Landlord, may contest by appropriate
proceedings prosecuted diligently and in good faith the validity or
applicability to the Premises of any Legal Requirements provided that (a)
neither Landlord nor any Superior Lessor or Superior Mortgagee is subject to
criminal penalty or to prosecution for a crime, and neither the Building nor
any part thereof is subject to being condemned or vacated, by reason of
noncompliance or otherwise by reason of such contest, (b) before the
commencement of such contest, Tenant furnishes to Landlord either (i) a
completion bond of a corporate surety licensed to do business in the State of
New York and reasonably satisfactory to Landlord, which bond shall be, as to
its provisions and form, reasonably satisfactory to Landlord, in an amount at
least equal to 110% of the cost of such compliance (as estimated by a reputable
and experienced contractor selected by Tenant and reasonably satisfactory to
Landlord), or (ii) other security in place of such bond reasonably satisfactory
to Landlord, and (c) such noncompliance or contest does not constitute or
result in any violation of any Superior Lease or Superior Mortgage (or if any
Superior Lease and/or Superior Mortgage permits such noncompliance or contest
only if Landlord takes some specified action or furnishes security, such action
is taken and/or such security is furnished at the expense of Tenant). Tenant
shall keep Landlord advised as to the status of such proceedings and Tenant
shall indemnify Landlord against liability in connection with such contest or
noncompliance.

 

43

 

Without limiting the application of the above, Landlord, any Superior
Lessor and any Superior Mortgagee shall be deemed subject to prosecution for a
crime if Landlord or any Superior Lessor or Superior Mortgagee, or any managing
agent for the Building, or any officer, director, partner, shareholder or
employee of Landlord or of any managing agent for the Building or of any Superior
Lessor or Superior Mortgagee, is charged with a crime of any kind or degree,
whether by service of a summons or otherwise.

 

ARTICLE 10

 

INSURANCE

 

10.1                           Tenant
shall not violate or permit the violation of any Insurance Requirements and
shall not do, or permit anything to be done, or keep or permit anything to be
kept in the Premises which would subject Landlord or any Superior Lessor or
Superior Mortgagee to liability or responsibility for bodily injury or death or
property damage, or which would increase any insurance rate in respect of
insurance maintained by Landlord over the rate which would otherwise then be in
effect, or which would result in an insurance company refusing to insure all or
any part of the Property or any contents thereof in amounts reasonably
satisfactory to Landlord, or which would result in the cancellation of or the
assertion of any defense by the insurer in whole or in part to claims under any
policy of insurance maintained by Landlord.

 

10.2                           If, by
reason of (a) any failure of Tenant to comply with the provisions of Section
9.1 or Section 10.1, (b) Tenant’s use of the Premises, or (c) any cause or
condition created by or at the instance of Tenant, including, without
limitation, the making of or failure to make any Alterations or repairs, the
premiums on any insurance maintained by Landlord shall be higher than they
otherwise would be, Landlord shall give Tenant notice of such occurrence, and
Tenant shall reimburse

 

44

 

Landlord on demand for that part of such premiums attributable to such
failure on the part of Tenant. A schedule or “make up” of rates for any
insurance maintained by Landlord issued by the New York Fire Insurance Rating
Organization or other similar body making rates shall be conclusive evidence of
the facts therein stated and of the several items and charges in the insurance
rate then applicable to such insurance.

 

10.3                           Tenant,
at its expense, shall maintain Commercial General Liability insurance,
including but not limited to a contractual liability endorsement, in respect of
the Premises and the conduct or operation of business therein, with Landlord
and its managing agent, if any, and any Superior Lessors and Superior
Mortgagees whose names and addresses were furnished to Tenant, as additional
insureds, with limits of not less than $10,000,000 per occurrence and
$10,000,000 annual aggregate Bodily Injury and Property Damage liability. The
limits of such insurance shall not limit the liability of Tenant hereunder.
Tenant shall deliver to Landlord and all additional insureds certificates of
insurance evidencing all coverages issued by the insurance company or its
authorized agent prior to the Commencement Date. All such policies shall
include 30 days written notice of cancellation or material change. Tenant shall
procure and pay for renewals of such insurance from time to time before the
expiration thereof. Tenant shall deliver to Landlord and all additional
insureds certificates of insurance at least 30 days prior to the expiration of
said policies. All such policies shall be issued by a licensed insurance
companies with an A.M. Best’s (or its successor) rating of A-VIII or better or
the then equivalent of such rating. Tenant is hereby advised that as of the
date hereof the Superior Lessor and the Superior Mortgagee are as provided in
Section 6.2 hereof.

 

45

 

10.4                           Tenant
shall maintain in full force and effect a policy of All Risk Property covering
the Tenant’s furniture, fixtures, improvements and betterments in an amount not
less than 100% of the total cost of all Tenant’s property. All such policies
shall be issued by a licensed insurance company with an A.M. Best’s rating of
A-VIII or better or the then equivalent of such rating. A certificate of
insurance evidencing coverage shall be issued to Landlord prior to the
Commencement date and Tenant shall deliver to Landlord and all additional
insureds certificates of insurance at least 30 days prior to the expiration of
said policies.

 

10.5                           Each
party shall have included in each of its All Risk Property insurance policies
(insuring the Building and Landlord’s property therein in the case of Landlord,
and insuring Tenant’s Property in the case of Tenant) a waiver of the insurer’s
right of subrogation against the other party or, if such waiver is unobtainable
or unenforceable, (a) an express agreement that such policy shall not be
invalidated if the insured waives the right of recovery against any party
responsible for a loss covered by the policy before the loss, or (b) any other
form of permission for the release of the other party. If such waiver,
agreement or permission is not, or ceases to be, obtainable from either party’s
then current insurance company, the insured party shall so notify the other
party promptly after learning thereof, and shall use its best efforts to obtain
same from another insurance company, without thereby incurring any liability or
expense not expressly provided for in this Lease. If such waiver, agreement or
permission is obtainable only by payment of an additional charge, the insured
party shall so notify the other party promptly after learning thereof, and the
insured party shall not be required to obtain said waiver, agreement or
permission unless the other party pays the additional

 

46

 

charge therefor. Each party hereby releases the other in respect of any
claim which it might otherwise have against the other for loss, damage or
destruction of or to its property to the extent to which it is insured under a
policy containing a waiver of subrogation or express agreement that such policy
shall not be invalidated or permission to release liability, as provided above
in this Section. If notwithstanding the recovery of insurance proceeds by
either party for loss, damage or destruction of or to its property, the other
party is liable to the first party in respect thereof or is obligated under
this Lease to make replacement, repair, restoration or payment, then, provided
the first party’s right of full recovery under its insurance policy is not
thereby prejudiced or otherwise adversely affected, the amount of the net
proceeds of the first party’s insurance against such loss, damage or
destruction shall be offset against the second party’s liability to the first
party therefor, or shall be made available to the second party to pay for
replacement, repair or restoration, as the case may be. Nothing contained in
this Section shall be deemed to (i) relieve either party of any duty imposed
elsewhere in this Lease to repair, restore or rebuild or (ii) nullify any
abatement or reduction of rents provided for elsewhere in this Lease.

 

10.6                           Landlord
may from time to time, but not more frequently than once every year, require that
the amount of Commercial General Liability insurance to be maintained by Tenant
under Section 10.3 be reasonably increased to an amount not in excess of the
amount then customarily required by owners of comparable first class office
buildings in Manhattan to be maintained by tenants of space similar in size,
location and construction to the Premises.

 

47

 

10.7                           The
insurance required to be carried by Tenant pursuant to the provisions of this
Article 10 may, at Tenant’s option, be effected by blanket and/or umbrella
policies issued to Tenant covering the Premises and other properties owned or
leased by Tenant or any Tenant’s Affiliate, provided such policies otherwise
comply with the provisions of this Lease and allocate to the Premises the
specified coverage, including, without limitation, the specified coverage for
all insureds required to be named as insureds hereunder, without possibility of
reduction or coinsurance by reason of, or because of damage to, any other
properties named therein.

 

10.8                           Landlord
shall, throughout the term, maintain in effect, such insurance with respect to
the Building and Landlord’s property against loss due to fire and such other
casualties, and such comprehensive general liability insurance, as are required
by the Master Lease.

 

ARTICLE 11

 

RULES AND REGULATIONS

 

11.1                           Tenant
shall and shall cause its subtenants and licensees, and its and their
respective directors, officers, partners, employees, agents, contractors and
invitees, to observe and comply with the rules and regulations attached hereto
as Exhibit D, and such reasonable changes therein (whether by
modification, elimination or addition) as Landlord at any time or times makes
and notifies Tenant of which in Landlord’s reasonable judgment are necessary or
desirable for the reputation, safety, care or appearance of the Building, or
the preservation of good order therein, or the operation or maintenance of the
Building. Such rules and regulations as changed from time to time are herein
called the “Rules and Regulations.” In case of any conflict or inconsistency

 

48

 

between the provisions of this Lease and any of the Rules and
Regulations, the provisions of this Lease shall control.

 

11.2                           The
Rules and Regulations shall be uniformly applied and enforced against the tenants of the Building other than
Landlord-Related Occupants.

 

ARTICLE 12

 

ALTERATIONS

 

12.1                           Tenant
may from time to time, at its expense, make such alterations (“Alterations”) to
the Premises as Tenant reasonably considers necessary for the conduct of its
business in the Premises, provided and upon condition that: (a) the Alterations
are non-structural and the structural integrity of the Building is not
affected, (b) the Alterations are to the interior of the Premises, no part of
the Building outside of the Premises is affected, and the outside appearance of
the Building is not affected, (c) the proper functioning of the mechanical,
electrical, sanitary and other service systems of the Building is not adversely
affected, and (d) no change in the Certificate of Occupancy for the Building
will result from the Alterations or be required as a result thereof. Before
proceeding with any Alteration (other than painting and other strictly
decorative work), Tenant shall submit to Landlord for Landlord’s approval
(which shall not be unreasonably withheld or delayed) a description of such
Alteration and if such Alteration will cost more than $200,000 or require the
issuance of a building permit Tenant shall also supply scaled and dimensioned
plans and specifications for the work to be done prepared by a registered
architect or licensed professional engineer, and Tenant shall not proceed with
such work until it obtains such approval. Tenant shall pay to Landlord on
demand the reasonable out-of-pocket costs and expenses of any outside architect
or engineer hired by Landlord for the purpose of (i) reviewing said plans and

 

49

 

specifications and (ii) inspecting the Alterations to determine whether
the same are being performed in accordance with the approved plans and
specifications and all Legal Requirements and Insurance Requirements including
the fees or cost of any architect, engineer or draftsman for such purposes.
Before proceeding with any Alteration that will cost more than $200,000
(exclusive of the cost of decorating work and items constituting Tenant’s
Property), as estimated, at Tenant’s expense, by a reputable and experienced
contractor reasonably satisfactory to Landlord, Tenant shall obtain and deliver
to Landlord either, at Landlord’s option, (x) a performance bond and a labor
and materials payment bond reasonably satisfactory to Landlord issued by a
corporate surety licensed to do business in the State of New York and
reasonably satisfactory to Landlord, each in an amount equal to 125% of such
estimated cost and in form reasonably satisfactory to Landlord, or (y) such
other security as shall be reasonably satisfactory to Landlord. Tenant shall
fully and promptly comply with and observe the Rules and Regulations then in
force in respect of making Alterations. Any review or approval by Landlord of
any plans or specifications in respect of any Alterations is solely for
Landlord’s benefit and without any representation or warranty to Tenant as to
the adequacy, correctness or efficiency thereof or as to the compliance of such
plans and specifications with Legal Requirements or Insurance Requirements.

 

12.2                           Tenant,
at its expense, shall obtain all necessary governmental permits and
certificates for the commencement and prosecution of Alterations and for final
approval thereof upon completion, and shall cause Alterations to be performed
in compliance therewith and with all applicable Legal Requirements and
Insurance Requirements. Landlord, upon the request of Tenant, shall join in any
applications for

 

50

 

any permits, approvals or certificates
required to be obtained by Tenant in connection with any Alteration approved by
Landlord, if such approval is required hereunder, (including requesting the
Superior Lessor so to join in) and shall otherwise cooperate with Tenant in
connection therewith, and Tenant shall pay any out-of-pocket expenses incurred
by Landlord in connection therewith. Alterations shall be diligently performed
in a good and workmanlike manner, using new materials and equipment at least
equal in quality and class to the then standards for the Building established
by Landlord. Alterations shall be performed by contractors first approved by
Landlord, such approval not to be unreasonably withheld or delayed unless such
Alteration affects the base building system, in which case Tenant must use the
Building designated contractors. Alterations shall be performed in such a
manner as not to violate union contracts affecting the Property, or to create
any work stoppage, picketing, labor disruption or dispute or any interference
with the business of Landlord or any tenant of the Building. In addition,
Alterations shall be performed in such a manner as not to otherwise
unreasonably interfere with or delay and as not to impose any additional
expense upon Landlord in the construction, maintenance, repair, operation or
cleaning of the Building, and if any such additional expense is incurred by
Landlord as a result of Tenant’s performance of Alterations, Tenant shall pay
such additional expense to Landlord on demand. Throughout the performance of
Alterations, Tenant shall carry, or cause its contractors to carry, workers’
compensation insurance in statutory limits, “Builder’s Risk” insurance
reasonably satisfactory to Landlord, and comprehensive general liability
insurance, with completed operations endorsement, for any occurrence in or
about the Building, under which Landlord and its managing agent and any
Superior Lessors and

 

51

 

Superior Mortgagees whose names and addresses were furnished to Tenant
shall be named as additional insureds, in such limits as Landlord may
reasonably require, with insurers reasonably satisfactory to Landlord. Tenant
shall furnish Landlord with reasonably satisfactory evidence that such
insurance is in effect before the commencement of Alterations and, on request,
at reasonable intervals during the continuance of Alterations. If any
Alterations involve the removal of any fixtures, equipment or other property in
the Premises which are not Tenant’s Property, such fixtures, equipment or other
property shall be promptly replaced at Tenant’s expense with new fixtures,
equipment or other property of like utility and at least equal value. Upon completion
of any Alterations (other than mere decorations) Tenant shall deliver to
Landlord scaled and dimensioned reproducible mylars of “as-built” plans for
such Alteration and a copy on a diskette format.

 

12.3                           Tenant,
at its expense, shall promptly procure the cancellation or discharge of all
notices of violation arising from or otherwise connected with Alterations, or
any other work, labor, services or materials done for or supplied to Tenant or
any person claiming through or under Tenant which are issued by the Department
of Buildings of the City of New York or any other public authority having or
asserting jurisdiction. Tenant shall indemnify Landlord against liability in
connection with any and all mechanics’ and other liens and encumbrances filed
in connection with Alterations, or any other work, labor, services or materials
done for or supplied to Tenant or any person claiming through or under Tenant,
including security interests in any materials, fixtures or articles so
installed in the Premises. Tenant, at its expense, shall

 

52

 

procure the satisfaction or discharge of record of all such liens and
encumbrances within 30 days after the Tenant receives notice of the filing
thereof.

 

ARTICLE 13

 

LANDLORD’S AND TENANT’S PROPERTY;

REMOVAL AT END OF TERM

 

13.1                           All
fixtures, equipment, improvements and appurtenances, including utility lines
and equipment, attached to or built into the Premises before or after the
Commencement Date, whether by or at the expense of Landlord or Tenant, shall be
and remain a part of the Premises, shall be deemed the property of Landlord and
shall not be removed by Tenant except as provided in Section 13.2.

 

13.2                           All movable partitions,
business and trade fixtures, machinery and equipment, communications equipment
and office equipment, whether or not attached to or built into the Premises,
which are, or were, installed in the Premises by Tenant, or any predecessor in
interest thereto, without expense to Landlord and which can be removed without
structural damage to the Building, and all furniture, furnishings and other
articles of movable personal property owned by Tenant, or any predecessor in
interest thereto, and located in the Premises (collectively, “Tenant’s Property”)
shall be and shall remain the property of Tenant and may be removed by Tenant
at any time during the Term, provided that if any Tenant’s Property is
installed or removed, Tenant shall repair or pay the cost of repairing any
damage to the Premises or to the Building resulting from the installation
and/or removal thereof, other than repainting and purely decorative repairs. At
or before the Expiration Date, or within 15 days after an earlier termination
date, Tenant, at its expense, shall remove from the Premises all Tenant’s
Property, and Tenant shall repair any damage to the Premises and the Building
resulting from any installation

 

53

 

and/or removal of Tenant’s
Property. Any other items of Tenant’s Property
which remain in the Premises after the Expiration Date, or after 15 days
following an earlier termination, may, at the option of Landlord, be deemed to
have been abandoned, and in such case such items may be retained by Landlord as
its property or disposed of by Landlord
without accountability in such manner as Landlord shall determine at Tenant’s
expense.

 

13.3                           At
the time of Landlord’s approval of Tenant’s plans and specifications for any
Alterations, Landlord may include in its approval a requirement that any
Alterations which are of a structural nature and/or are of a type not normally
found in Manhattan general business offices shall, at Landlord’s option, be
removed from the Premises by the Tenant at the end of the Term. If Landlord
notifies Tenant at any time prior to or not more
than 45 days after the Expiration Date or date or sooner termination of this
Lease that any such Alterations are to be removed, Tenant shall remove such
Alterations not later than such Expiration Date or date of sooner termination
unless such request is made after such Expiration Date or date of sooner
termination (or is made prior to such Expiration Date or date of sooner
termination and the Tenant acting with reasonable promptness is not able to so
remove the same prior to the Expiration Date or date of sooner termination), in
which event the same shall be so removed by the Tenant with reasonable
promptness after the receipt of such request. The cost and expense of any such
removal (including removal by Landlord upon Tenant’s failure to do so as
provided herein) and the cost of repairing any damage to the Premises or the
Building arising from such removal, shall be paid by the Tenant upon demand.

 

54

 

ARTICLE 14

 

REPAIRS AND MAINTENANCE

 

14.1                           Tenant
shall, at its expense, take good care of the Premises, the fixtures and
appurtenances therein and any Tenant’s Property. Tenant shall be responsible
for and shall promptly make all repairs, interior and exterior, structural and
nonstructural, ordinary and extraordinary, in and to the Premises and the
Building the need for which arises out of (a) the performance by Landlord or
others or existence of any Work or installations in and to the Premises to
prepare the Premises for occupancy by Tenant, or any predecessor in interest
thereto, Alterations or other work by Tenant, (b) the installation, use or
operation of Tenant’s Property, (c) the moving of Tenant’s Property in or out
of the Premises or the Building, or (d) the act, omission, misuse or neglect of
or by Tenant or any subtenant or licensee, or their respective employees,
agents, contractors or invitees. Tenant, at its expense, shall promptly repair
or replace all scratched, damaged or broken doors and glass in and about the
Premises and shall, subject to the terms of this Lease, be responsible for all
repairs, painting, maintenance and replacement of wall and floor coverings in the
Premises and for the repair and maintenance of all fixtures and equipment
therein. Any repairs required to be made by Tenant to the mechanical,
electrical, sanitary, heating, ventilating, air-conditioning or other systems
shall be performed only by contractors approved by Landlord. Notwithstanding
the foregoing, Tenant shall not be required to make any repairs or replacements
necessitated by, or repair any damage caused by the negligence or willful
misconduct of Landlord and/or Landlord’s servants, contractors, employees or
representatives.

 

55

 

14.2                           Landlord
shall make all repairs, structural and otherwise, interior and exterior, as and
when needed in or to the Building and the systems servicing the Building as a whole (including the
Premises) and including the mechanical, electrical, heating, ventilating, air
conditioning, elevator, plumbing, sanitary, life-safety and other service
systems of the Building providing Building-wide services and the public portions
of the Building, both exterior and interior) in conformity with standards
applicable to first-class office
buildings in Manhattan, City, State and County of New York of comparable age
and quality, except for those repairs for which Tenant or any other tenant is
responsible.

 

14.3                           Except
as otherwise expressly provided in this Lease, Landlord shall have no liability
to Tenant, nor shall Tenant’s obligations under this Lease be reduced or abated in any manner, by
reason of any inconvenience, annoyance, interruption or injury to Tenant’s
business arising from Landlord’s making any repairs or changes which Landlord
is required or permitted to make. In making any such repairs or changes,
Landlord shall use reasonable efforts to limit the duration of any such interruptions.

 

ARTICLE 15

 

ELECTRIC ENERGY

 

15.1                           (a)                                  Landlord,
at Landlord’s expense, shall furnish electrical energy in the Premises for
Tenant’s reasonable use of normal office equipment and such lighting,
electrical appliances, general office computers, fax machines, photocopiers and
other machines and equipment as are reasonably incidental thereto, or as
Landlord shall otherwise permit to be installed in the Premises, through the
feeders, wiring installations and facilities heretofore installed in the Building
and, to the extent not previously

 

56

 

installed, shall install at Landlord’s cost and expense at least one
(1) submeter on each floor of the Premises to measure Tenant’s consumption of
electrical energy. Tenant shall pay to Landlord, as Additional Charges
hereunder, on demand made from time to time but no more frequently than
monthly, for its use of electrical energy in the Premises as evidenced by the
aforesaid submeter(s), based upon both consumption and demand factors, at the
seasonally adjusted rate then payable by Landlord to the utility company
providing service to the Building (net of any energy rebates or energy cost
savings received by Landlord with respect to the Building), plus an amount equal
to three percent (3%) thereof to reimburse Landlord for its overhead,
administration, and supervision in connection therewith. For purposes of this
Article, the rate to be paid by Tenant shall include any taxes, energy charges,
demand charges, fuel adjustment charges, rate adjustment charges, or other
charges actually imposed in connection therewith. If any tax is imposed upon
Landlord’s receipts from the sale or resale of electrical energy to Tenant by
any federal, state, city or local authority, the pro-rata share of such tax
allocable to the electrical energy service received by Tenant shall be passed
onto and paid by Tenant as Additional Charges if and to the extent permitted by
law. Upon request, Landlord shall make available to Tenant a copy of its bill
from the Utility Company and any other documentation reasonably requested by
Tenant in order to confirm the charges billed to Tenant pursuant to this
Section. Notwithstanding any provision herein to the contrary, Landlord will
only provide sufficient electricity to the Concourse Space for lighting.

 

(b)                                 Landlord’s
failure during the term of this Lease to prepare and deliver any statements or
bills under this Article or Landlord’s failure to make a demand under this
Article or any other provisions of this Lease, shall not in any way be

 

57

 

deemed to be a waiver of, or cause Landlord to forfeit or surrender its
rights to collect, any amount of Additional Charges which may have become due
pursuant to this Article during the term of this Lease. Tenant’s liability for
any amounts due under this Article shall continue unabated during the remainder
of the term of this Lease and shall survive
the expiration or sooner termination of this Lease, provided, that Tenant
shall not be responsible for
payment of any of Additional Charges payable under this Article that are not
billed to Tenant within one (1) year after the expiration of the calendar year
in which such costs were incurred.

 

(c)                                  In
order that Landlord may at all times have all necessary information which it
requires in order to maintain and protect its equipment, Tenant agrees that
Tenant will not make any material alteration or material addition to the
electrical equipment and/or appliances in the Premises without the prior
written consent of Landlord in each instance (which consent will not be
unreasonably withheld or delayed) and will promptly advise Landlord of any
other alteration or addition to such electrical equipment and/or appliances; provided,
however, that Tenant shall not be required to advise Landlord of any de
minimis alterations or additions, such as the installation of additional
personal computers, lamps and other ordinary office equipment of low energy
usage, unless, if taken in the aggregate, such alterations and additions are no
longer de  minimis.

 

(d)                                 Landlord
may, at its option, upon not less than ninety (90) days’ prior written notice
to the Tenant (or such longer time as may be required to make arrangements with
the electric utility for direct service provided Tenant exercises its best
efforts to complete said arrangements as soon as possible), discontinue the

 

58

 

furnishing of electric current to the Premises or any part thereof and,
in such event, the Tenant shall
contract for the supplying of such electric current thereto with the public
service company supplying electric current to the neighborhood and the Landlord
shall supply its suitable and safely cable risers, conduits and feeders to
serve the Premises available, for the purpose of supplying such electric
current. Landlord agrees that it will not discontinue the furnishing of
electric current to the Premises in the manner provided herein unless required
to do so by a Legal Requirement, or in connection with a program to convert all
or substantially all of the office space in the Building not occupied by Landlord or Landlord Affiliates to
an alternate form of electrical supply.

 

(e)                                  Except
as may be otherwise provided in this Lease, the Tenant shall, at its own
expense, purchase and install all lamps, starters and ballasts (including
replacements thereof) used in the lighting fixtures in the Premises.

 

15.2                           In the
event that Tenant shall require electric current for use in the Premises in
excess of such reasonable quantity to be furnished as provided in this Lease
and if, in the Landlord’s reasonable judgment, such excess requirements cannot
be furnished unless additional risers, conduits, feeders, switchboards and/or
appurtenances are installed in the Building, Landlord, upon written request of
the Tenant, will proceed with reasonable diligence to install such additional
risers, conduits, feeders, switchboards and/or appurtenances provided the same
and the use thereof shall be permitted by applicable Legal Requirements and
Insurance Requirements and shall not cause permanent damage or injury to the
Building or the Premises or cause or create a dangerous or hazardous condition
or entail excessive or unreasonable alterations or repairs or interfere with or
disturb other tenants or occupants of the Building, and the

 

59

 

Tenant agrees to pay all direct costs and expenses incurred by the
Landlord in connection with such installation and to maintain on deposit with
the Landlord such security for the payment by the Tenant of all such costs and
expenses as the Landlord shall from time to time reasonably request.

 

15.3                           Landlord
shall not be liable or responsible to Tenant for any loss, damage or expense
that Tenant sustains or incurs if either the quantity or character of electric
service is changed or interrupted or is no longer available or suitable for
Tenant’s requirements unless due to the negligence or willful misconduct of
Landlord, its agents, employees or contractors.

 

ARTICLE 16

 

HEAT, VENTILATION AND AIR
CONDITIONING

 

16.1                           Landlord
shall, subject to energy conservation requirements of governmental authorities,
supply during Business Hours of Business Days heat, air conditioning (including
such cooling during the period from April 15 to October 15 (the “AC  Season”),
as is comparable to other first-class office buildings in Manhattan) and
ventilation to all portions of the Premises, if any, which are served by the
Building’s air conditioning and ventilation systems, but the electric current
consumed in furnishing air conditioning and ventilation to such portions of the
Premises shall be paid for by the Tenant in the manner provided in Article 15
hereof. Landlord will, subject to energy conservation requirements or
governmental authorities, provide such heating, air conditioning and
ventilation to meet substantially the same specifications with respect to air
temperature and air volume as has been provided to Tenant during calendar years
to 2002 and 2003. Landlord will promptly furnish to Tenant a schedule of such
specifications. Notwithstanding the foregoing, Landlord will not be required to
provide

 

60

 

heating, ventilation or air conditioning during non-Business Hours, on
non-Business Days or during the non-AC Season unless Tenant pays the charges as
otherwise provided herein.
Tenant agrees to lower and close the venetian blinds on all windows of the
Premises facing the sun whenever said air conditioning system is in operation
and Tenant will at all times abide with all regulations and requirements which
Landlord may reasonably prescribe for the proper functioning and protection of
said air conditioning system. Landlord will, when and to the extent reasonably
requested by Tenant, furnish additional heat, air conditioning and ventilation
services and Tenant will pay to the Landlord its building standard charge
therefor (which charges will, if applicable, be pro rated as reasonably determined by Landlord among all
tenants requesting such service), a schedule of such charges in effect on the
date hereof being attached hereto as Exhibit E. No representation is made by
Landlord with respect to the adequacy or fitness of such air conditioning or
ventilation to maintain temperatures as may be required for, or because of, the
operation of any computer, data processing or other equipment of Tenant, and
where air conditioning or ventilation is required for any such purpose,
Landlord assumes no responsibility, and shall have no liability, for any loss
or damage, however sustained, in connection therewith.

 

16.2                           The
performance by Landlord of its obligations under Section 16.1 is conditioned
upon Tenant’s connected load not exceeding five watts per rentable square foot
of the Premises (which Landlord represents is available at the Premises) and
upon the occupancy of the Premises not exceeding one individual per 125 square
feet of rentable area in the Premises. Landlord covenants and agrees that in
the event Tenant on the date hereof has and is utilizing more than five watts
per rentable square foot,

 

61

 

Landlord will not reduce such excess capability without first obtaining
Tenant’s consent thereto, which consent will not be unreasonably withheld or
delayed. Use of the Premises or any part thereof in a manner exceeding the
heating, ventilating and/or air-conditioning design conditions (including
occupancy and connected electrical load), or rearrangement of partitioning which
interferes with normal operation of the heating, ventilating and/or air
conditioning in the Premises, or the use of computer or data processing
machines or other machines or equipment, may require changes in the heating,
ventilating and/or air-conditioning systems servicing the Premises in order to
provide comfortable occupancy. Such changes shall be made at Tenant’s expense
as Alterations in accordance with the provisions of Article 12, but only to the
extent permitted and upon the conditions set forth in that Article. In
furtherance thereof, if Tenant installs a supplemental cooling system to
service the Premises, said system shall be installed and maintained at the sole
cost and expense of Tenant and Tenant shall pay to Landlord, as Additional Charges,
a per ton hook-up fee and an annual per ton charge for condenser water at
Landlord’s building standard charges therefor.

 

ARTICLE 17

 

OTHER SERVICES, SERVICE INTERRUPTION

AND BUILDING DIRECTORY

 

17.1                           Landlord
shall furnish adequate hot and cold water to the Premises for drinking,
lavatory and normal cleaning purposes. If Tenant uses water for any other
purpose, Landlord may install and maintain, at Tenant’s expense, meters to
measure Tenant’s consumption of cold water and/or hot water for such other purpose.
Tenant shall reimburse Landlord on demand for the cost of cold water and hot
water shown on such meters, which cost will also include any sewer rents or
charges imposed thereon.

 

62

 

17.2                           Landlord
shall cause the common area and sidewalks of the Building to be kept reasonably
clean and free from snow and ice, and shall cause the Premises, including the
exterior and interior of the exterior windows, to be cleaned in a manner
standard to the Building pursuant to the specifications attached hereto as
Exhibit F. Landlord shall not be required to clean (x) any portions of the
Premises used for preparation, serving or consumption of food or beverages,
training rooms, data processing or reproducing operations or private lavatories
or toilets or (y) the Concourse Space. Tenant shall pay to Landlord on demand
the costs incurred by Landlord for (a) extra cleaning work in the Premises
required because of (i) the act, omission, misuse or neglect of the Premises or
any portion thereof Tenant or any subtenant or licensee, or their respective
employees, agents, contractors or invitees, (ii) use of portions of the
Premises for special purposes requiring greater or more difficult cleaning work
than required in normal office areas, (iii) unusual quantity of interior glass
partitions or unusual quantity of interior glass surfaces, and (iv) special
materials or finishes (other than carpet) installed by Tenant, any predecessor
in interest thereto, or its subtenants, (b) collection and removal from the
Premises and the Building of any refuse or rubbish of Tenant in excess of that
ordinarily accumulated in general office occupancy.

 

17.3                           Landlord
shall provide passenger elevator service to the Premises during Business Hours,
and Landlord shall have at least one passenger elevator subject to call at all
other times. It Tenant requires freight elevator service at any times, or more
than one passenger elevator at any time other than during Business Hours,
Landlord shall furnish such service upon not less than one Business Day’s
advance notice from Tenant, and Tenant shall pay to Landlord on demand Landlord’s
then established building-wide

 

63

 

charges therfor, a schedule of such charges in effect on the date
hereof being attached hereto as Exhibit E. The use of the elevators shall be
subject to the Rules and Regulations. It is understood and agreed that Landlord
may remove elevators from service for upgrading and/or repairs, but that unless
required to do so by conditions beyond the Landlord’s reasonable control, no
more than two (2) elevators in the elevator bank now servicing Tenants will be
removed from service at any particular time. Subject to the Rules and
Regulations, Tenant may have access to the Building at all times.

 

17.4                           Landlord
shall have the right, without affecting Tenant’s obligations under this Lease,
to temporarily stop or interrupt or reduce service of any of the heating,
ventilating, air conditioning, electric, sanitary, elevator, sprinkler, water
or other Building systems, or to temporarily stop or interrupt or reduce any
other services required or Landlord under this Lease (whether or not specified
in Article 16 or in this Article), whenever and for so long as may be necessary,
by reason of (a) Force Majeure Events or (b) the making of repairs, additions,
changes or replacements which Landlord is required or permitted to make or in
good faith deems necessary.

 

17.5                           Landlord
will, at the written request of Tenant, maintain listings on the Building
directory, if any, of the names of Tenant and any other person, firm or
corporation in occupancy of the Premises or any part thereof as permitted
hereunder, and the names of any officers or employees of any of the foregoing,
provided that the names so listed shall not use more than Tenant’s Operating
Percentage of the space in the Building directory system. If Landlord maintains
a concierge desk and/or a pass/I.D. card entry system in the Building lobby,
Tenant will be incorporated into any such system.

 

64

 

17.6                           Tenant,
provided it complies with the other provisions of the Lease with respect to an
Alteration, may install an electronic key card lock system on the entrances to
the Premises provided that Landlord is provided, at no charge, with a
sufficient number of access cards or keys to allow Building personnel to access
the Premises in accordance with the terms of this Lease.

 

17.7                           Landlord
at its cost will maintain the central Class E System in the Building lobby
required by the applicable Legal Requirements. Tenant will be responsible for
the Class E System in the Premises and for the connection to the central Class
E System in the Building lobby.

 

17.8                           Landlord
will 24 hours a day 7 days a week maintain an attendant in the lobby of the
Building. Landlord will maintain the present card key access system located in
the lobby of the Building. During Non-Business Hours and on Non-Business Days
Landlord may limit access to the Building to only one of the entrances on the
West 51st or West 52nd Street. Landlord will maintain and monitor the existing
closed circuit television system that monitors public area at the Building.
Landlord at its election may replace or upgrade any of the foregoing security
systems, but Landlord will not be required to make such upgrades. If Tenant
requests that Landlord provide additional security and Tenant agrees to pay the
reasonable cost therefore, Landlord shall provide such additional security.

 

ARTICLE 18

 

ACCESS, NOTICE OF OCCURENCES, WINDOWS,

NAME OF BUILDING AND NO DEDICATION

 

18.1                           Except
for the space below the hung ceiling and above the floor and bounded by the
interior surfaces of the walls, windows and doors bounding the

 

65

 

Premises, all of the Building, including exterior Building walls, core
corridor walls and doors and any core corridor entrances, any terraces or roofs
adjacent to the Premises and any space in or adjacent to the Premises used for
shafts, stacks, pipes, conduits, fan rooms, ducts, electric or other utilities,
sinks or other Building facilities, and the use thereof, as well as access
thereto through the Premises for the purposes of operation, maintenance,
decoration and repair, are reserved to Landlord. Landlord shall have the right,
at any time, without affecting any of Tenant’s obligations under this Lease, to
install, erect, use and maintain pipes, ducts and conduits in and through the
Premises (provided that any such pipes, ducts or conduits are either located
within walls or placed adjacent to walls and appropriately furred), and to make
such changes, alterations, additions and improvements in or to the Building and
common areas as Landlord deems necessary or desirable.

 

18.2                           Landlord
and its agents shall have the right to enter and/or pass through and/or be on
the Premises at any time or times to examine the Premises and to show it to
actual or prospective Superior Lessors or Superior Mortgages or prospective
purchasers of the Building or prospective tenants during the six months of the
term hereof or during the 30-day period during which Landlord is considering to
terminate the Lease or enter into a Landlord Sublease as provided in Article 8
hereof or at any time with respect to the 12th floor if Landlord is considering
to exercise its options pursuant to Article 38 hereof. Landlord, its agents and
contractors (including cleaning contractors), and their respective employees,
(a) shall have the right to enter and/or pass through and/or be on the Premises
to clean the Premises and to make such repairs, alterations and improvements in
or to the Building as Landlord is required or desires to make (except

 

66

 

that access for Landlord’s cleaning contractor and its employees to
clean the Premises on Business Days shall be only from 5:00 p.m. to 8:00 a.m.)
and (b) shall have the right to use, without charge therfor, all light, power,
and water in the Premises while cleaning or making repairs or alterations in
the Premises. Landlord shall have the right to take all materials into and on
the Premises that may be required in connection therewith and such acts shall
not be deemed an actual or constructive eviction and shall have no effect upon
Tenant’s obligations under this Lease. If during the last thirty (30) days of
the Term, Tenant has removed all or substantially all Tenant’s Property from
the Premises, Landlord may, without notice to Tenant, immediately enter the
Premises and alter, renovate and decorate the Premises, and such acts shall not
be deemed an actual or constructive eviction and shall have no effect upon
Tenant’s obligations under this lease.

 

18.3                           If
at any time any windows of the Premises are temporarily darkened or obstructed
by reason of any repairs, improvements, maintenance and/or cleaning in or about
the Building, or are permanently darkened or obstructed due to Legal
Requirements or Insurance Requirements, or if any part of the Building other
than the Premises is temporarily or permanently closed or inoperable, any such
occurrence shall not be deemed an actual or constructive eviction and shall
have no effect upon Tenant’s obligations under this Lease.

 

18.4                           Landlord
may adopt any name for the Building, and Landlord shall have the right to
change the name and/or address of the Building at any time and from time to
time. Notwithstanding the foregoing, the Building shall not be named for a
Tenant Competitor (as defined herein) for as long as no Event of Default has
occurred and is continuing. Tenant continues to rent and occupy at least 80,000
square feet in the

 

67

 

Premises and Tenant maintains either its headquarters or principal
offices of its music business in the Premises. The term “Tenant Competitor”
shall mean a company whose primary business is the music industry and Tenant’s
principal business continues to be in the music industry.

 

18.5                           Landlord
and its agents shall have the right to permit access to the Premises at any
time, whether or not Tenant shall be present, (a) by any receiver, trustee,
sheriff, marshal, or other public official entitled to, or purporting to be
entitled to, such access (i) for the purpose of taking possession of or
removing any property of Tenant or of any other occupant of the Premises, or
(ii) for any other lawful purpose, or (b) by any representative of the fire,
police, building, sanitation or other department of instrumentality of any
borough, city, state, or federal government. Nothing contained in, nor any
action taken by Landlord under this Section, shall be deemed to constitute
recognition by Landlord that any person other than Tenant has any right or
interest in this Lease or the Premises.

 

18.6                           Tenant
shall give prompt notice to Landlord of any of the following of which Tenant
becomes aware: (a) any occurrence in or about the Premises for which Landlord
might be liable, (b) any fire or other casualty in the Premises, (c) any damage
to or defect in the Premises, including the fixtures, equipment and
appurtenances therof, for the repair of which Landlord might be responsible,
and (d) any damage to or defect in any part of the Building’s sanitary,
electrical, sprinkler, heating, ventilation, air conditioning, plumbing,
elevator or other systems in or passing through the Premises.

 

18.7                           If
an excavation is made upon land adjacent to or under the Building, or is
authorized to be made, Tenant shall afford to the person causing or

 

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authorized to cause such work as said person deems necessary or
desirable to preserve and protect the Building from injury or damage and to
support same by proper foundations, and same shall not be deemed an actual or
constructive eviction and shall have no effect on Tenant’s obligations under
this Lease.

 

18.8                           Prior
to any entry by Landlord into the Premises (other than routine cleaning, and
except emergency situations), Landlord shall use reasonable efforts to give
reasonable advance notice thereof to Tenant (which may be by telephone, email,
or fax), and Tenant shall have the right to have a representative accompany
Landlord’s personnel during the course of any such entry. If Tenant is not
present when for any reason entry into the Premises is necessary or
permissible, Landlord or Landlord’s agents may enter same by a master key, or
may forcibly enter same, without rendering Landlord or such agents liable
therefore (if during such entry Landlord or such agents accord reasonable care
to Tenant’s Property), and such entry shall not be deemed an actual or
constructive eviction and shall have no effect upon Tenant’s obligations under
this Lease.

 

18.9                           In
exercising its rights under this Article 18, Landlord shall use reasonable
efforts under the circumstances to avoid undue disruption of Tenant’s business.
However, Landlord shall not be required to do work in and about the Premises
during non-Business Hours in other Class A office buildings in Midtown
Manhattan.

 

ARTICLE 19

 

NON-LIABILITY AND INDEMNIFICATION

 

19.1                           Neither
Landlord nor any Superior Lessor or Superior Mortgagee shall be liable to
Tenant for any loss, injury or damage to Tenant or to any other person,

 

69

 

or to its or their property, irrespective of the cause of such injury,
damage or loss, unless caused by or resulting from the negligence of willful
misconduct of Landlord, its agents, contractors, employees or the Superior
Lessor or Superior Mortgagee, in the operation or maintenance of the Premises
or the Building. Neither Landlord nor any Superior Lessor or Superior Mortgagee
shall be liable (a) for any damage caused by other tenants or persons in, on or
about the Building, or (b) even if resulting from negligence or willful
misconduct, for consequential damages of Tenant or any subtenant or licensee or
Tenant.

 

19.2                           Notwithstanding
any provision to the contrary, Tenant shall look solely to the estate and
property of Landlord in and to the property in the event of any claim against
Landlord or any partner, director, officer, agent or employee of Landlord
arising out of or in connection with this Lease, the relationship of Landlord
and Tenant or Tenant’s use of the Premises, and the liability of Landlord
arising out of or in connection with this Lease, the relationship of Landlord
and Tenant or Tenant’s use of Premises, shall be limited to such estate and
property of Landlord. No other properties or assets of Landlord or any partner,
director, officer, agent or employee or Landlord shall be subject to levy,
execution or other enforcement procedures for the satisfaction of any judgment
(or other judicial process) or for the satisfaction of any other remedy of
Tenant arising out of or in connection with this Lease, the relationship of
Landlord and Tenant or Tenant’s use of the Premises, and if Tenant acquires a
lien on or interest in any other properties or assets by judgment or otherwise,
Tenant shall promptly release such lien or interest in such other properties
and assets by executing, acknowledging and delivering to Landlord an instrument
to that effect prepared by Landlord’s attorneys.

 

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19.3                           Tenant
shall indemnify Landlord against liability in connection with (a) the conduct
or management of the Premises or of any business therein, or any work or thing
done, or any condition created (other than by Landlord, Superior Landlord or
Superior Mortgagee) in or about the Premises during the Term or during the
period of time, if any, prior to the Commencement Date that Tenant is given
access to the Premises, including, without limitations, the performance of any
Alterations by or on behalf of Tenant, (b) any act, omission or negligence of
Tenant or any subtenant or licensee or their respective employees, agents
contactors, or invitees, (c) any accident, injury or damage, (unless caused
solely by the negligence or willful misconduct of Landlord, Superior Landlord
or Superior Mortgagee) occurring in, at or upon the Premises, (d) the failure
of Tenant or any subtenant or licensee or their respective employees, agents,
contractors, or invitees to comply with those Legal Requirements and Insurance
Requirements which are to be complied with by Tenant pursuant to the terms of
this Lease, or (e) any other breach of default by Tenant under this Lease.

 

19.4                           Landlord
shall indemnify Tenant against liability in connection with (a) Landlord’s
operation or management of the Building (other than the Premises), or any work
or thing done, or any condition created, by Landlord in or about the Building during
the Term, (b) any act, omission or negligence of Landlord or its employees,
agents, contractors or invitees, (c) the failure of Landlord or its employees,
agents, contractors or invitees to comply with those Legal Requirements and
Insurance Requirements which are to be complied with by Landlord pursuant to
the terms of this Lease, or (d) any other breach or default by Landlord under
this Lease.

 

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19.5                           If any
claim, action or proceeding is made or brought against a party indemnified
under Section 19.3 or 19.4 hereof (“Indemnitee”), then upon demand by
Indemnitee, the indemnifying party (“Indemnitor”), at Indemnitor’s sole cost
and expense, shall resist or defend such claim, action or proceeding in Indemnitee’s
name, if necessary, by the attorneys for Indemnitor’s insurance carrier (if
such claim, action or proceeding is covered by insurance), or otherwise by such
attorneys as Indemnitee shall approve, which approval shall not be unreasonably
withheld or delayed, and Indemnitee shall cooperate, at no cost to itself
unless reimbursed by Indemnitor, with Indemnitor’s counsel or such insurance
carrier, in the defense of such claim. Indemnitee shall not enter into any
settlement of any such claim without the prior written consent of Indemnitor,
such consent not to be unreasonably withheld. Indemnitee shall notify
Indemnitor promptly of any claim, action or proceeding made or brought against
Indemnitee as to which indemnification may be sought hereunder. If Indemnitee
shall fail to timely notify Indemnitor of a claim and, as a result of such
failure, Indemnitor’s insurance coverage is prejudiced, or Indemnitor is
otherwise materially prejudiced in the defense of such claim, Indemnitor shall
be released from its obligation to indemnify Indemnitee, but only to the extent
of such prejudice.

 

ARTICLE 20

 

DAMAGE OR DESTRUCTION

 

20.1                           If the
Building is partially or totally damaged or destroyed by fire or other casualty
(and this Lease is not terminated as provided in this Article), Landlord shall,
at Landlord’s cost and expense, repair the damage and restore and rebuild the
Building (except for Tenant’s Property) with reasonable diligence after notice
to it of the damage or destruction.

 

72

 

20.2                           If all
or part of the Premises is damaged or destroyed or rendered completely or
partially untenantable by fire or other casualty, Fixed Rent and any Additional
Charges payable under Article 4 and Article 5 shall be reduced in the proportion
that the untenantable area of the Premises bears to the total rentable square
feet of the Premises for the period from the date of the damage or destruction
to (a) the date the damage to the Premises is substantially repaired and
possession thereof is tendered to Tenant or (b) if the Building and not the
Premises is so damaged or destroyed, the date on which the Premises is made
tenantable; provided, however, should Tenant reoccupy a portion
of the Premises during the period in which repair work is taking place and
prior to the date the Premises is substantially repaired or made tenantable,
Fixed Rent and any Additional Charges payable under Article 4 and Article 5
allocable to such reoccupied portion, based upon the proportion which area of
the reoccupied portion of the Premises bears to the total rentable square feet
of the Premises, shall be payable by Tenant from the date of such occupancy.

 

20.3                           If
the Premises is materially (i.e., 50% or more) damaged or destroyed by
fire or other casualty, or if the Building is so damaged or destroyed by fire
or other casualty (whether or not the Premises is damaged or destroyed) that
its repair or restoration requires the expenditure (as reasonably estimated by
a reputable contractor or architect designated by Landlord) of more than 40% of
the full insurable value of the Building immediately prior to the fire or other
casualty (each a “Substantial Casualty”), then in either such case Landlord may
terminate this Lease by giving Tenant notice to such effect within one hundred
eighty (180) days after the date of the fire or other

 

73

 

casualty and Fixed Rent and any Additional Charges payable under
Article 4 and Article 5 shall be prorated and adjusted as of the date of such
damage or destruction.

 

20.4                           If a
Substantial Casualty shall occur and Landlord shall not elect to terminate this
Lease under Section 20.3 hereof, Landlord shall send a notice to Tenant within
ninety (90) days thereafter setting forth Landlord’s estimate of the length of
time necessary to restore the Premises to a tenantable condition. If Landlord’s
estimate exceeds eighteen (18) months from the date of the Substantial
Casualty, then Tenant may elect to terminate this Lease upon written notice to
Landlord within fifteen (15) days after receipt of Landlord’s notice. If Tenant
does not elect to terminate this Lease, and the restoration of the Premises is
not substantially completed within such 18-month period, then Tenant shall have
the right to terminate this Lease upon notice to Landlord effective as of the
sixtieth day following Tenant’s termination notice, provided the restoration
has not been substantially completed by such sixtieth day.

 

20.5                           Tenant
shall not be entitled to terminate this Lease except as set forth in Section
20.4, and 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 the Premises or of the Building pursuant to this
Article. Landlord shall use reasonable efforts to make such repair or
restoration in such manner as not unreasonably to interfere with Tenant’s use
and occupancy of the Premises, but Landlord shall not be required to do such
repair or restoration work at times other than during Business Hours, except
for work of a type which is customarily done during non-Business Hours in other
Class A office buildings in midtown Manhattan.

 

74

 

20.6                           Landlord
will not carry insurance of any kind on Tenant’s Property and shall not be
obligated to repair any damage to or replace Tenant’s Property.

 

20.7                           The
provisions of this Article shall be deemed an express agreement governing any
case of damage or destruction of the 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
and are hereby waived by the parties hereto.

 

ARTICLE 21

 

EMINENT DOMAIN

 

21.1                           Except
as otherwise provided in Section 21.5, if all or substantially all of the
Building or the Premises is taken by condemnation or in any other manner for
any public or quasi-public use or purpose, this Lease shall terminate as of the
date of vesting of title on such taking (“Date of Taking”), and Fixed Rent and
any Additional charges payable under Article 4 and Article 5 shall be prorated
and adjusted as of such date.

 

21.2                           Except
as otherwise provided in Section 21.5, if any material part (but less than all
or substantially all) of the Building or the Land is so taken, this Lease shall
be unaffected by such taking, except that (a) Landlord may, at its option, terminate
this Lease by giving Tenant notice to that effect within ninety (90) days after
the Date of Taking, and (b) if 25% or more of the Premises is so taken and the
remaining area of the Premises is not reasonably sufficient for Tenant to
continue feasible operation of its business, Tenant may terminate this Lease by
giving Landlord notice to that effect within ninety (90) days after the Date of
Taking. This Lease shall terminate on the date that

 

75

 

such notice from Landlord or Tenant to the other shall be given, and Fixed Rent and Additional Charges
shall be prorated and adjusted as of such termination. Upon such partial taking and this Lease continuing in force as to
any part of the Premises, Fixed Rent and Tenant’s Tax Percentage and Tenant’s
Operating Percentage shall be equitably adjusted according to the rentable area
remaining.

 

21.3                           Except
as otherwise provided in Section 21.5, Landlord shall be entitled to receive
the entire award or payment in connection with any taking without deduction
therefrom for any estate vested in Tenant by this Lease or otherwise and Tenant
shall receive no part of such award. Tenant hereby assigns to Landlord all of
Tenant’s right, title and interest in and to all such awards or payments. The
foregoing, however, shall not preclude Tenant from recovering a separate award
for Tenant’s moving expenses and Tenant’s Property if such award does not
reduce and is not payable out of the award for the Property.

 

21.4                           Except
as otherwise provided in Section 21.5, in the event of any taking of less than
the whole of the Building and/or Land which does not result in termination of
this Lease, Landlord, whether or not any award or awards shall be sufficient
for the purpose, shall proceed with reasonable diligence to repair the
remaining parts of the Building (other than Tenant’s Property) to substantially
their former condition to the extent that same is feasible (subject to
reasonable changes which Landlord deems desirable) and so as to constitute the
Building complete and tenantable.

 

21.5                           If the
temporary use or occupancy of all or any part of the Premises is taken by
condemnation or in any other manner for any public or quasi-public use or
purpose for a duration of one year or less, this Lease and the Term shall
remain

 

76

 

unaffected by such taking and Tenant shall continue to be responsible
for all of its obligations under this Lease (except to the extent prevented
from so doing by reason of such taking). In such event Tenant shall be entitled
to claim, prove and receive the entire award for such taking unless the period
of temporary use or occupancy extends beyond the Expiration Date, in which
event Landlord shall be entitled to claim, prove and receive that portion of
the award attributable to the restoration of the Premises and the balance of
such award shall be apportioned between Landlord and Tenant as of the
Expiration Date. If such temporary use or occupancy terminates prior to the Expiration
Date, Tenant, at its own expense, shall restore the Premises as nearly as
possible to its condition prior to the taking.

 

ARTICLE 22

 

SURRENDER AND HOLDING OVER

 

22.1                           On the
Expiration Date or on any earlier termination of this Lease or on any reentry
by Landlord on the Premises, Tenant shall quit and surrender the Premises to
Landlord “broom clean” and in good order, condition and repair, except for
ordinary wear and tear, damage or destruction by fire and other casualty and
such other damage as Landlord is required to repair or restore under this
Lease, and Tenant shall remove all Tenant’s Property therefrom except as
otherwise expressly provided in this Lease. No act or thing done by Landlord or
its agents or employees shall be deemed an acceptance of a surrender of this
Lease or the Premises, and no agreement to accept such surrender shall be valid
unless in writing and signed by Landlord.

 

22.2                           If
Tenant remains in possession of the Premises after the termination of this
Lease without the execution of a new lease, Tenant, at the option of Landlord,
shall be deemed to be occupying the Premises as a Tenant from month to

 

77

 

month, subject to all of the other terms and conditions of this Lease
insofar as the same are applicable to a month-to-month tenancy, but at a
monthly rental equal to 150% of the monthly Fixed Rent last payable by
Tenant hereunder, plus all Additional Charges payable hereunder. In addition,
Tenant will indemnify, and hold Landlord harmless from all loss, damage or
expense that Landlord may suffer or incur (including, without limitation,
losses resulting from Landlord’s inability to give possession of the Premises
to another tenant or to any owner in fee of the Property or any Superior
Landlord) resulting from such holding over by Tenant. Nothing contained in this
Section shall (i) imply any right of Tenant to remain in the Premises after the
termination of this Lease without the execution of a new lease, (ii) imply any
obligation of Landlord to grant a new lease or (iii) be construed
to limit any right or remedy that Landlord has against Tenant as a holdover
tenant or trespasser.

 

22.3                           Tenant
expressly waives, for itself and for any person claiming through or under
Tenant, any rights which Tenant or any such person may have under the
provisions of Section 2201 of the New York Civil Practice Law and Rules and of
any similar or successor law of same import then in force, in connection with
any holdover proceedings which Landlord may institute to enforce the terms and
conditions of this Lease.

 

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ARTICLE 23

 

DEFAULT

 

23.1                           This
Lease is subject to the limitations that whenever Tenant makes an assignment
for the benefit of creditors, or files a voluntary petition under the U.S.
Bankruptcy Code or any successor thereto or any state law dealing with relief
of debtors (collectively the “Insolvency Laws”), or an involuntary petition
alleging an act of bankruptcy or insolvency is filed against Tenant under any
Insolvency Laws, or whenever a petition is filed by or against Tenant under the
reorganization provisions of any Insolvency Laws, or whenever a petition is
filed by Tenant under the arrangement provisions of any Insolvency Laws, or
whenever a receiver of Tenant or of or for the property of Tenant is appointed,
then Landlord (a) if such event occurs without the acquiescence of Tenant, at
any time after the event continues for sixty (60) days, or (b) in any other
case at any time after the occurrence of any such event, may give Tenant a
notice of intention to terminate this Lease at the expiration of five days from
the date of service of such notice of intention, and upon the expiration of
said five-day period this Lease, whether or not the Term had 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 25.

 

23.2                           This
Lease is subject to the further limitations that:

 

(a)                                  if
Tenant defaults in the payment of any Fixed Rent or Additional Charges and such
default continues for ten (10) days after notice thereof from Landlord to
Tenant, or

 

(b)                                 if
Tenant, whether by action or inaction, is in default of any of its obligations
under this Lease (other than a default in the payment of Fixed Rent or

 

79

 

Additional Charges) and such default continues and is not remedied
within thirty (30) days after Landlord gives to Tenant a notice specifying the
same, or, in the case of a default which with due diligence cannot be cured
within a period of thirty (30) days and the continuance of which for the period
required for cure will not (i) subject Landlord or any Superior Lessor or
Superior Mortgagee to prosecution for a crime (as more particularly described
in Section 9.2) or (ii) result in a default under any Superior Lease or any
Superior Mortgage, if Tenant does not, (x) within said 30-day period advise
Landlord of Tenant’s intention to take all steps necessary to remedy such
default, (y) duly commence within said 30-day period and thereafter diligently
prosecute to completion all steps necessary to remedy the default, and (z)
complete such remedy within a reasonable time after the date of said notice
from Landlord, or

 

(c)                                  if
any event occurs or any contingency arises whereby this Lease, by operation of
law or otherwise, devolves upon or passes to any person other than Tenant,
except as expressly permitted by Article 8, or

 

(d)                                 if
Tenant vacates and abandons the Premises without properly securing the same,

 

then in any of said cases Landlord may give to Tenant a notice of intention
to terminate this Lease at the expiration of ten (10) days from the date of the
service of such notice of intention, and upon the expiration of said ten-day
period this Lease, whether or not the Term had 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 25.

 

80

 

ARTICLE 24

 

RE-ENTRY BY LANDLORD

 

24.1                           If
Tenant defaults in the payment of any Fixed Rent or Additional Charges and such
default continues for ten (10) days after notice thereof from Landlord to
Tenant, or if this Lease terminates as provided in Article 23, Landlord or
Landlord’s agents may immediately or at any time thereafter re-enter the
Premises, or any part thereof, either by summary dispossess proceedings or by
any suitable action or proceeding at law, or by force or otherwise, without
being liable for indictment, prosecution or damages therefor, and may repossess
same, and may remove any person therefrom, to the end that Landlord may have,
hold and enjoy the Premises. The word “re-enter” as used herein, is not
restricted to its technical legal meaning. If this Lease is terminated under
the provisions of Article 23, or if Landlord re-enters the Premises under the
provisions of this Article, 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, Tenant shall thereupon pay to Landlord Fixed Rent and Additional
Charges payable to the time of such termination of this Lease, or of such
recovery of possession of the Premises by Landlord, as the case may be, and
shall also pay to Landlord damages as provided in Article 25.

 

24.2                           In the
event of a breach or threatened breach by Tenant of any of its obligations
under this Lease, Landlord shall have the right of injunction to enjoin such
breach or threatened breach. The special remedies to which Landlord may resort
hereunder are cumulative and are not intended to be exclusive of any other
remedies to which Landlord may lawfully be entitled at any time and such party
may invoke any remedy allowed at law or in equity as if specific remedies were
not provided for herein.

 

81

 

24.3                           If this
Lease is terminated under the provisions of Article 23, or if Landlord
re-enters the Premises under the provisions of this Article, 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 monies, if any, paid by Tenant to Landlord, whether as advance rent,
security or otherwise, but such monies shall be credited by Landlord against
any Fixed Rent or Additional Charges due from Tenant at the time of such
termination or re-entry or, at Landlord’s option, against any damages payable by Tenant under Article 25 or pursuant
to law.

 

ARTICLE 25

 

DAMAGES

 

25.1                           If this
Lease is terminated under the provisions of Article 23, or if Landlord
re-enters the Premises under the provisions of Article 24, 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, Tenant shall pay to Landlord as
damages, at the election of Landlord, either:

 

(a)                                  a
sum which at the time of such termination of this Lease or at the time of any
such re-entry by Landlord, as the case may be, represents the then value of the
excess, if any, of (i) the aggregate amount of Fixed Rent and Additional
Charges which would have been payable by Tenant (conclusively presuming the
average monthly Additional Charges to be the same as were payable for the
twelve-month period, or if less than twelve (12) months have then elapsed since
the Commencement Date, the partial year, immediately preceding such termination
or re-entry) for the period commencing with such earlier termination of this
Lease or the date of any such re-entry,

 

82

 

as the case may be, and ending with the date that would have been the
Expiration Date if this Lease had not so terminated or if Landlord had not so
re-entered the Premises, over (ii)
the aggregate rental value of the Premises for the same period, both discounted
to their present value at the
rate of 4% per annum, or

 

(b)                                 sums
equal to the Fixed Rent and Additional Charges
which would have been payable by Tenant had this Lease not so
terminated, or had Landlord not
so re-entered the Premises, payable upon the due dates therefor (as provided in
this Lease) following such termination or such re-entry until the date that
would have been the Expiration Date if this Lease had not so terminated or if
Landlord had not so re-entered the Premises, provided however, that if Landlord
shall relet the Premises during said period, Landlord shall credit Tenant with
the net rents received by Landlord from such reletting, such net rents to be
determined by first deducting from the gross rents as and when received by
Landlord from such reletting the expenses incurred by Landlord in terminating
this Lease or in re-entering the Premises and in securing possession thereof,
as well as the expenses of reletting, including altering and preparing the
Premises for new Tenants, brokers’ commissions, reasonable attorneys’ fees and
disbursements, and all other expenses, it being understood that any such
reletting may be for a period shorter or longer than what would have been the
unexpired portion of the Term if this Lease had not so terminated or if
Landlord had not so re-entered the Premises, 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 subdivision to a credit in respect of any
net rents from a reletting, except to the extent that such net rents are
actually received by Landlord. If the

 

83

 

Premises or any part thereof is relet in combination with other space,
then proper apportionment on a per square foot basis shall be made of the rent
received from such reletting and of the expenses of reletting. If the Premises
or any part thereof is relet by Landlord for what would have been the unexpired
portion of the Term if this Lease had not so terminated, or if Landlord had not
so re-entered the Premises, before presentation of proof of such damages to any
court, commission or tribunal, the amount of rent set forth in any lease(s) in
connection with such reletting shall, prima  facie, be the fair
and reasonable rental value for the Premises, or part thereof, so relet during
the term of the reletting. Landlord shall have the right to relet the Premises
or any part thereof at such rental or rentals and upon such other terms and
conditions, which may include concessions and free rent periods, as Landlord,
in its sole discretion, shall determine. Landlord shall not be liable in any
way for its failure or refusal to relet the Premises or any part thereof, or if
the Premises or any part thereof is relet, for its failure to collect the rent
under such reletting, and no such refusal or failure to relet or failure to
collect rent shall release or affect Tenant’s liability for damages or
otherwise under this Lease.

 

25.2                           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 would have expired if this Lease had not so terminated or had Landlord
not so re-entered the 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 may
lawfully be entitled by reason of any default of Tenant hereunder. Nothing
herein contained shall be construed to limit or

 

84

 

prejudice the right of Landlord to prove for and obtain as damages by
reason of the termination of
this Lease or re-entry on the Premises for 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 is greater than, equal to, or less
than any of the sums referred to in Section 25.1.

 

25.3                           In
addition, if this Lease is terminated under the provisions of Article 23, or if
Landlord re-enters the Premises under the provisions of Article 24, Tenant
agrees that:

 

(a)                                  the
Premises then shall be in the same condition as that in which Tenant has agreed
to surrender the same to Landlord on the Expiration Date,

 

(b)                                 Tenant
shall have performed prior to any such termination or re-entry any obligation
of Tenant contained in this Lease for the making of any Alteration or for
restoring or rebuilding the Premises or the Building, or any part thereof, and

 

(c)                                  for
the breach of any obligation of Tenant set forth above in this Section,
Landlord shall be entitled immediately, without notice or other action by Landlord, to recover, and Tenant
shall pay as and for liquidated damages therefor the cost of performing such
obligation (as estimated by an independent contractor selected by Landlord).

 

ARTICLE 26

 

WAIVERS

 

26.1                           Tenant,
on behalf of itself and any and all persons claiming through or under Tenant,
does hereby waive and surrender all right and privilege which

 

85

 

it, they or any of them might have under or by reason of any present or
future law, to redeem the
Premises or to have a continuance of this Lease after being dispossessed or ejected therefrom by process of law
or under the terms of this Lease or after the termination of this Lease.

 

26.2                           If
Tenant is in arrears in payment of Fixed Rent or Additional Charges, Tenant
waives its right, if any, to designate the items to which any payments made by
Tenant are to be credited, and Landlord may apply any payments made by Tenant to such items as Landlord
sees fit, irrespective of any designation or request by Tenant as to the items to which any such payments shall be
credited.

 

26.3                           To the
maximum extent permitted by law, Landlord and Tenant hereby waive trial by jury
in any action, proceeding or counterclaim brought by either against the other
on any matter arising out of or in any way connected with this Lease, the
relationship of Landlord and Tenant, Tenant’s use or occupancy of the Premises,
including any claim of injury or damage, and any emergency and other statutory
remedy in respect thereof.

 

26.4                           Tenant
shall not interpose any counterclaim in any summary proceeding commenced by
Landlord to recover possession of the Premises (other than mandatory
counterclaims) and shall not seek to consolidate such proceeding with any
action which may have been or will be brought by Tenant or any other person.

 

26.5                           The
failure of either party to insist in any one or more instances upon the strict
performance of any one or more of the obligations contained in this Lease, or
to exercise any election herein contained, shall not be construed as a waiver
or relinquishment for the future of the performance of such one or more
obligations

 

86

 

contained in this Lease or of the right to exercise such election, but
same shall continue and remain in full force and effect in respect of any
subsequent breach, act or omission. The receipt by Landlord of Fixed Rent or
Additional Charges with knowledge of breach by Tenant of any obligation
contained in this Lease shall not be deemed a waiver of such breach.

 

ARTICLE 27

 

CURING TENANT’S DEFAULTS AND

COSTS OF ENFORCEMENT

 

27.1                           If
Tenant defaults in the performance of any of Tenant’s obligations under this Lease,
Landlord, without thereby waiving such default, may (but shall not be obligated
to) perform same for the account and at the expense of Tenant, without notice
in case of emergency, and in any other case only if such default continues
after the expiration of thirty (30) days from the date Landlord gives Tenant
notice of the default. Bills for any expenses incurred by Landlord in
connection with any such performance by it for the account of Tenant, and bills
for all costs, expenses and disbursements of every kind and nature, including
reasonable attorneys’ fees and disbursements, involved in collecting or
endeavoring or endeavoring to enforce any rights against Tenant, under or in
connection with this Lease or pursuant to law, including any such cost, expense
and disbursement involved in instituting and prosecuting summary proceedings or
in recovering possession of the Premises after default by Tenant or upon the
Expiration Date or sooner termination of this Lease, and interest on all sums
advanced by Landlord under this Section at the Lease Interest Rate, may be sent
by Landlord to Tenant monthly, or immediately, at Landlord’s option, and such
amounts shall be due and payable in accordance with the terms of such bills.

 

87

 

ARTICLE 28

 

BROKER

 

28.1                           Tenant
represents and warrants that no broker procured this Lease and that Tenant had
no conversations or negotiations with any broker concerning the leasing of the
Premises. Tenant shall indemnify Landlord against liability in connection with
a breach of Tenant’s representation and warranty in this Section and in
connection with any claim for a brokerage commission arising out of any
conversations or negotiations had by Tenant with any broker. Landlord
represents and warrants that no broker procured this Lease. Landlord shall
indemnify Tenant against liability in connection with a breach of Landlord’s
representation and warranty in this Section and in connection with any claim
for a brokerage commission arising out of any conversations or negotiations had
by Landlord with any broker.

 

ARTICLE 29

 

NOTICES

 

29.1                           Any
notice, consent, approval or other communication required or permitted to be
given by either party to the other or to any Superior Lessor or Superior Mortgagee
(collectively, “Notices” and individually, “Notice”) must be in writing and,
except as otherwise provided in the succeeding Sections, shall be deemed to
have been properly given only if sent by registered or certified mail, return
receipt requested, posted in a United States post office station or letter box
in the continental United States, addressed to Landlord or Tenant as the
receiving party at its address set forth at the head of this Lease (Attention:
Director of Real Estate Services in the case of Notices to Landlord), and
addressed to any Superior Lessor or Superior Mortgagee to it at the last
address of which Landlord or Tenant (whichever may be giving the Notice) was
notified.

 

88

 

A Notice shall be deemed to have been given on the third business day
after the day so mailed. Either party may, by notice as aforesaid, designate a
different address for Notices intended for it. At any time that Tenant consists
of more than one person, a Notice of Tenant shall be effective if given to any
one of said persons.

 

29.2                           Notwithstanding
the provisions contained in Section 29.1, any Notice from Landlord to Tenant of
a default by Tenant hereunder may be given by hand delivery, with a concurrent
copy of such Notice sent to Tenant by mail as provided in Section 29.1; such
Notice of default given in that manner will be deemed given when hand
delivered.

 

29.3                           Notwithstanding
the provisions contained in Section 29.1, (a) Notices from Tenant to Landlord
requesting after-hours or special services pursuant to Article 16 or Article 17
shall be given by hand delivery to the Building manager or any other person in
the Building designated by Landlord to receive such Notices, and (b) any Notice
may be given by telefax or hand delivery either in case of an emergency or in
case United States certified and registered mail are both not then operating.
Such Notices will be deemed given on the date so sent by telefax or hand
delivery.

 

29.4                           Landlord
shall have the right to assume that any Notice from Tenant signed by any person
purporting to be an officer of Tenant if Tenant is a corporation, member of
Tenant if Tenant is a limited liability company or a partner in Tenant if
Tenant is a partnership is duly authorized and approved by and binding on
Tenant, and Tenant shall be bound by such Notice whether or not the person
signing the Notice was actually authorized and approved by Tenant.

 

89

 

ARTICLE 30

 

ESTOPPEL CERTIFICATES AND

MEMORANDUM OF LEASE

 

30.1                           Each
party shall, at any time and from time to time, as requested by the other
party, execute and deliver to the other party within ten (10) days after
receipt of such request a statement (a) certifying that this Lease is
unmodified and in full force and effect (or if modified, that same is in full
force and effect as modified and stating the modifications), (b) certifying the
dates to which Fixed Rent and Additional Charges have been paid, (c) stating
whether or not, to the best knowledge of the signing party, the other party is
in default in performance of any of its obligations under this Lease, and, if
so, specifying each such default of which the signing party has knowledge, and
(d) stating whether or not, to the best knowledge of the signing party, any
condition or event exists which with the giving of notice or passage of time,
or both, would constitute such a default, and, if so, specifying each such
condition or event. Any statement delivered pursuant to this Section shall be
deemed a representation and warranty that may be relied upon by the party
requesting the statement and by others with whom such party may be dealing,
regardless of independent investigation. Tenant also shall include in any such
statement such other information concerning this Lease as any prospective
Superior Mortgagee or Superior Lessor may require or as Landlord may reasonably
request.

 

30.2                           Tenant
shall not record this Lease nor any short form or memorandum of lease, nor any
amendment or modification of this Lease.

 

ARTICLE 31

 

FORCE MAJEURE

 

31.1                           The
obligations of Tenant or Landlord under this Lease (other than the obligation
to pay Fixed Rent and Additional Charges) shall not be affected, impaired

 

90

 

or excused and neither party shall have any liability to the other
(regardless of whether such party is required to proceed with reasonable
diligence or to use reasonable efforts), because such party is unable to
fulfill, or is delayed in fulfilling, any of its obligations under this Lease
by reason of any of the following (“Force Majeure Events”): fire or other
casualty; acts of God; war; riot or other civil disturbance; accident;
emergency; strike or other labor trouble; governmental preemption of priorities
or other controls in connection with a national or other public emergency;
difficulty in securing proper amounts of or failure or defect in the supply or
quality of fuel, gas, steam, water, electricity, supplies or labor; or any
other event preventing or delaying Landlord from fulfilling any obligation,
whether similar or dissimilar, beyond such party’s reasonable control.

 

ARTICLE 32

 

CONSENTS

 

32.1                           If
Tenant requests Landlord’s consent and Landlord fails or refuses to give such
consent, Tenant shall not be entitled to any damages for any withholding by
Landlord of its consent. Tenant’s sole remedy for Landlord’s refusal to give
the requested consent shall be an action for specific performance or
injunction. Furthermore, Tenant shall be entitled to seek specific performance
an injunction only in those cases where this Lease provides that Landlord shall
not unreasonably withhold its consent or where as a matter of law Landlord may
not unreasonably withhold its consent.

 

ARTICLE 33

 

RENT CONTROL

 

33.1                           If any
Fixed Rent or Additional Charges shall become uncollectible, reduced or
required to be refunded because of any Legal Requirements,

 

91

 

Tenant shall enter into such agreements and take such other steps
(without additional expense to
Tenant) as Landlord requests and as may be legally permissible to permit Landlord
to collect the maximum rents which from time to time during the continuance of
such legal rent restriction may be legally permissible (but not in excess of
the amounts reserved therefor under this Lease). Upon the termination of such
legal rent restriction, whether during the Term or after the Expiration Date,
(a) Fixed Rent and Additional Charges shall be payable in accordance with the
amounts reserved herein for the periods following such termination and (b)
Tenant shall pay to Landlord, to the maximum extent legally permissible, an
amount equal to (i) the Fixed Rent and Additional Charges that would have been
paid pursuant to this Lease but for such legal rent restriction, less (ii) the
rent and additional rent actually paid by Tenant during the period such legal
rent restriction was in effect.

 

ARTICLE 34

 

MISCELLANEOUS

 

34.1                           Tenant
expressly acknowledges and agrees that Landlord has not made and is not making,
and Tenant, in executing and delivering this Lease, is not relying upon, any
warranties, representations, promises or statements except to the extent that
they are expressly set forth in this Lease. All prior understandings and
agreements between the parties are merged in this Lease, which alone fully and
completely expresses the agreement of the parties and which are entered into
after full investigation.

 

34.2                           No
agreement shall be effective to change, modify, waive, release, discharge,
terminate or effect an abandonment of this Lease, in whole or in part, unless
such agreement is in writing, refers expressly to this Lease and is signed by
the party

 

92

 

against whom enforcement of the change, modification, waiver, release,
discharge, termination or effectuation of the abandonment is sought.

 

34.3                           Except
as otherwise expressly provided in this Lease, the obligations under this Lease
shall bind and benefit the successors and assigns of the parties hereto with
the same effect as if mentioned in each instance where a party is named or
referred to; provided, however, that (a) no violation of the provisions of
Article 8 shall operate to vest any rights in any successor or assignee of
Tenant and (b) the provisions of this Section shall not be construed as
modifying the conditions of limitation contained in Article 23. No provision in
this Lease shall be construed for the benefit of any third party except as
expressly provided herein.

 

34.4                           Submission
by Landlord of this Lease or other documents pertaining to the subject matter
hereof for review and/or execution by Tenant shall not confer any rights or
impose any obligations on either party unless and until both Landlord and
Tenant execute this Lease and duplicate originals thereof are delivered to the
respective parties.

 

34.5                           Irrespective
of the place of execution or performance, this Lease shall be governed by and
construed in accordance with the laws of the State of New York. If any
provision of this Lease or the application thereof to any person or
circumstance, for any reason and to any extent, is invalid or unenforceable,
the remainder of this Lease and the application of that provision to other
persons or circumstances shall not be affected but rather shall be enforced to
the extent permitted by law. The table of contents, captions, headings and
titles in this Lease are solely for convenience of reference and shall not
affect its interpretation. This Lease shall be construed without

 

93

 

regard to any presumption or other rule requiring construction against
the party causing this Lease to be drafted. Each obligation of Tenant under
this Lease shall be deemed and construed as a separate and independent covenant
of Tenant, not dependent on any other provision of this Lease.

 

34.6                           All
terms and words used in this Lease, regardless of the number or gender in which
they are used, shall be deemed to include any other number and any other gender
as the context may require.

 

34.7                           This
Lease may be executed in counterparts and shall constitute the agreement of
Landlord and Tenant whether or not their signatures appear in a single copy
hereof.

 

34.8                           If
Landlord (i) fails for any reason to provide heat, water, elevator, electric
and/or other services required to be furnished by Landlord under this Lease, or
(ii) fails to complete repairs or other necessary work required to be performed
by Landlord pursuant to this Lease, (and such failure shall not have been
caused by a casualty, condemnation, force majeure, the negligence or default of
Tenant, or any subtenant or occupant of the Premises or portion thereof (other
than a Recapture Subtenant), or any agents or employees of the foregoing) and,
in either such case, such failure substantially and materially interferes with
Tenant’s use of all or any portion of the Premises thereby requiring, as would
be determined by using commercially reasonable standards, Tenant to discontinue
such use for more than five (5) consecutive business days (an “Interruption”),
and such failure shall not have been caused by the negligence or default of
Tenant, or any subtenant or occupant of the Premises or portion thereof, (other
than a Recapture Subtenant), or any agents or employees of the foregoing,

 

94

 

then and in that event, following written notice to Landlord thereof,
the Fixed Annual Rent and Additional Charges hereunder allocable to such
portion or portions of the Premises shall abate (pro rata according to the
duration of the interference and the proportion of the total usable floor area
of the disruption.

 

34.9                           Tenant
presently has data closets located on the 9th floor and concourse of the
Building (the “Data Closets”). Provided that this Lease is in full force and
effect, Tenant during the term of this Lease may access the Data Closets or any
Replacement Data Closet (as defined herein) on reasonable advance notice to
Landlord. Tenant with respect to the Data Closets shall comply with all other terms
of this Lease. Landlord, at its cost, may relocate (a “Replacement Data Closet”)
the Data Closets or a Replacement Data Closet to other locations in the
Building provided such Replacement Data Closet is of substantially equal
quality and size as the one it is replacing, Landlord will not disconnect the
Data Closets or a Replacement Data Closets until the Replacement Data Closets
have been completed.

 

ARTICLE 35

 

SIGNAGE

 

35.1                           Subject
to the provisions of Section 35.2, Tenant shall have the right to place signs (“Upper
Bank  Sign”) containing Tenant’s name, or, subject to the
reasonable consent of Landlord, any Affiliate of Tenant which is in occupancy
of a material portion of the Premises, on the interior Building wall adjacent
to the upper bank elevator lobby; provided, that such signage shall be
installed only in the locations on such wall reasonably acceptable to Landlord,
shall meet the design criteria then in effect for the Building and does not
exceed 12 by 36 inches. Tenant may place signage in 14.12466% of the shadow
boxes in the Building lobby, containing Tenant’s name or

 

95

 

subject to the reasonable consent of Landlord any Affiliate of Tenant
which is in occupancy of a material portion of the Premises, provided that
Landlord may reasonably designate the shadow boxes, and the signage will meet
the design criteria then in effect for the Building. All such signage shall be
installed, maintained and repaired by Landlord at Tenant’s reasonable expense.
During such periods that Tenant has installed an Upper Bank Sign, Landlord
agrees that it will not allow any other tenant of the building to place in the
same vicinity of the Upper Bank Sign a sign that is equal to or larger than
Tenant’s unless such tenant is in occupancy in the Building of 100,000 or more
square feet.

 

35.2                           The
provisions of Section 35.1 shall be null and void and of no further force and
effect, and Landlord shall have the right to remove any signage theretofore
installed pursuant to Section 35.1, at the cost of Tenant, (i) during any
period that Tenant together with its Affiliates in the Premises shall be in
occupancy (x) of less than 20,000 rentable square feet in the Building or (y)
between 20,000 and 80,000 square feet and the Premises is not the principal
executive offices of Warner Music Group Inc. (which right to install such sign
as provided in Section 35.1 shall be reinstated when and if such occupancy
requirement is satisfied) or (ii) if the Term shall expire or terminate.

 

35.3                           If a
tenant has a sign (the “Large Tenant Sign”) in the upper bank elevator
lobby and such tenant is in occupancy of more than 100,000 square feet in the
Building, then provided that (i) this Lease is still in full force and effect,
and (ii) Tenant still continues to occupy at least 50,000 square feet and the
Building is the worldwide headquarters for Warner Music Group Inc., then as
long as Tenant continues to meet conditions (i) and (ii); Tenant at its
election, can maintain a sign in the upper bank

 

96

 

elevator lobby that is proportional to the Large Tenant Sign. This
signage right is in lieu of the Upper Bank Sign. This can be
illustrated by the following example: If a Large Tenant Sign is 1,000 square
inches and such tenant is in occupancy of 160,000 square feet and Tenant is in
occupancy of 80,000 square feet, then Tenant if it elects may maintain a sign
of 500 square inches in the upper bank elevator lobby.

 

ARTICLE 36

 

[INTENTIONALLY OMITTED.]

 

ARTICLE 37

 

ADDITIONAL SPACE

 

37.1                           Landlord
agrees, subject to the terms of this Article 37, to deliver to Tenant and
Tenant agrees to accept and lease on or after May 1, 2004 the entire rentable
portion of the 32nd floor and the 33rd floor (collectively, the “Additional
Floors” and individually an “Additional Floor”).

 

37.2                           Landlord
shall not be required to perform any work to the Additional Floors except that
it shall deliver such to Tenant in vacant and broom clean condition. In the
event Tenant is in default hereunder or this Lease is no longer in full force
and effect, then Landlord at its option will not be required to deliver the
Additional Floors. Landlord may deliver the Additional Floors on separate
dates.

 

37.3                           If
Landlord fails to deliver either or both of the Additional Floors the term of
this Lease shall not be extended nor will Tenant have a right to cancel this
Lease. Tenant’s sole remedy will be if an Additional Floor has not been
delivered to Tenant by May 1, 2005 (as such date may be extended due to a Force
Majeure Event or for any delay caused by Tenant) is to deliver a notice to
Landlord that Tenant is electing to cancel its obligation to accept delivery of
such Additional Floor. If Landlord fails to

 

97

 

deliver such Additional Floor within 30 days after Tenant delivers such
notice, then Tenant’s obligation to accept and Landlord’s obligation to deliver
such Additional Floor shall be terminated. This Section shall be an express
provision to the contrary for purposes of Section 223-a of the New York Real
Property Law and any other law of like import now or hereafter in effect.

 

37.4                           Promptly
after the delivery of each Additional Floor, Landlord and Tenant shall execute
a confirmatory instrument acknowledging the modification of the pertinent terms
of this Lease, including, without limitation, modifying the Rentable Square
Footage of the Premises, Tenant’s Tax Percentage and the Wage Rate Multiple as
a result of Landlord’s delivery of the Additional Floor. Exhibit H designates
Rentable Square Footage, Tenant’s Tax Percentage and Wage Rate Multiple for
each of the Additional Floors pursuant to this Article.

 

ARTICLE 38

 

LANDLORD RELOCATION OPTION

 

38.1                           Landlord
may, at its option, on only one occasion, elect by notice to Tenant to
substitute for all or part of the 12th Floor of the Premises other office space
in the Building (the “Substitute Space”) provided that such Substitute Space is
on a higher floor in the Building. Landlord will identify in a notice the
portion of the Premises it has elected to recapture (the “Recapture Space”) and
the Substitute Space. To exercise the foregoing right Landlord, at its sole
cost and expense, must relocate Tenant’s installations from the Recapture Space
to the Substitute Space. The Substitute Space shall contain at least 100% of
the useable square foot area of the Recapture Space. Landlord’s notice shall be
accompanied by a plan of the Substitute Space, such notice or

 

98

 

the plan shall set forth the usable square feet of the Substitute Space
and the anticipated date of relocation.

 

38.2                           Tenant
shall vacate and surrender the Recapture Space and occupy the Substitute Space
promptly (and, in any event, no later than five (5) days) after notice that
Landlord has substantially completed (including telephone and data lines, to
the extent existing in the Recapture Space) the work to be performed by
Landlord in the Substitute Space pursuant to this Article, provided that, in
either case, the work shall have been substantially completed on the date
Landlord’s notice states such substantial completion has occurred. In any such
event, from and after the earlier of the date on which Tenant vacates and
surrenders the Recapture Space or the date which is 5 days after notice that
Landlord has substantially completed the work to be performed by Landlord
in the Substitute Space pursuant to this Section, this Lease shall no longer
apply to the Recapture Space, except with respect to obligations which accrued
on or prior to such surrender date, and shall apply to the Substitute Space,
and otherwise Tenant shall pay the same Fixed Rent and Additional Charges with
respect to the Substitute Space as was payable with respect to the Recapture
Space.

 

38.3                           Landlord
shall have no liability to Tenant with respect to such Substitute Space other
than Landlord shall (a) promptly reimburse Tenant for Tenant’s reasonable
out-of-pocket expenses (taking into account the nature of the move) of moving
from the Recapture Space to the Substitute Space and (b) at Landlord’s sole
expense, prepare the Substitute Space in substantially the same manner as the
Recapture Space including any Alterations made to such space but taking into
account the condition

 

99

 

of the Recapture Space on the
date Landlord gives such notice to Tenant that it seeks to relocate Tenant.

 

38.4                           Tenant
shall cooperate with Landlord so as to facilitate the prompt completion by
Landlord of its obligations under this Article and the prompt surrender by
Tenant of the Recapture Space and to relocate to the Substitute Space. Without
limiting the generality of the preceding sentence, Tenant shall provide to
Landlord promptly any approvals or instructions and any plans and
specifications or any other information reasonably requested by Landlord.
Landlord shall have the right to remove any floor covering, wall covering,
cabinet work, decoration and any Tenant’s property, to the Substitute Space.

 

ARTICLE 39

 

SUPERIOR LEASE

 

39.1                           Landlord
represents and warrants that (i) the Superior Lease currently in effect is that
certain Indenture of Lease dated March 11, 1993 originally between 75
Plaza/West 51st Associates and Time Warner Inc. (the “Master Lease”), (ii) the Master
Lease is in full force and effect, (iii) Landlord has furnished to Tenant a
full and complete copy of the Master Lease and all modifications and amendments
thereto, (iv) Landlord has not heretofore assigned, mortgaged, pledged,
encumbered or otherwise transferred any interest in the Master Lease or sublet
the Premises, which sublease is still in effect, (v) the basic term of the
Master Lease (exclusive of any extensions or renewals of the term thereof)
expires after the Expiration Date, (vi) Landlord received no notice from the
Superior Lessor of default by Landlord which remains uncured, and (vii) no
consent of the Superior Lessor under the Master Lease is required in connection
with the execution and delivery of this Lease.

 

100

 

39.2                           Landlord
agrees to use its good faith efforts (short of litigation or arbitration
or payment of any sum of money not required to be paid pursuant to the Master
Lease) to obtain from the Superior Lessor any required approvals or consents
reasonably requested by Tenant, and Landlord shall forward to the Superior
Lessor without delay any requests as Tenant may submit for approval and/or
consent from the Superior Lessor to which the Landlord has consented.

 

39.3                           Landlord
covenants and agrees that (except for those matters which arise and Tenant’s
default hereunder) it shall not, by any act or omission, do or permit to be
done anything that would cause the Master Lease to be amended (which amendment
adversely affects Tenant’s interest under this Lease), cancelled, terminated
(except as a result of a casualty or condemnation) or forfeited, shall pay when
due to the Superior Lessor all rent and additional rent that is payable
pursuant to the terms of the Master Lease and shall perform all the other
terms, covenants and conditions contained in the Master Lease (including,
without limitation, the maintenance of the insurance on the Building required
thereunder), subject to the obligation of Tenant to observe and perform the
terms, covenants and conditions of this Lease.

 

101

 

IN WITNESS
WHEREOF, Landlord and Tenant have duly executed this Lease as of the day and
year first above written.

 

	
   

  	
  Landlord:

  
	
   

  	
   

  
	
   

  	
  HISTORIC TW INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Philip R. Pitruzzello

  	
   

  
	
   

  	
   

  	
  Name: Philip R. Pitruzzello

  
	
   

  	
   

  	
  Title: Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Tenant:

  
	
   

  	
   

  
	
   

  	
  WARNER MUSIC GROUP INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Janice Cannon

  	
   

  
	
   

  	
   

  	
  Name: Janice Cannon

  
	
   

  	
   

  	
  Title:  Assistant Secretary

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Tenant’s Federal Tax Identification Number:

  
	
   

  	
   

  
	
   

  	
  13 - 356 5869

  	
   

  
					

 

 

EXHIBIT A

 

FLOOR PLANS OF PREMISES

 

 

EXHIBIT B

 

LAND

 

All that real property situated in the Borough of Manhattan, City,
County and State of New York, more particularly described as follows:

 

ALL that certain plot, piece or parcel of land, situate, lying and
being in the Borough of Manhattan, County of New York, City and State of New
York, bounded and described as follows:

 

BEGINNING at a point on the northerly side of West 51st Street, distant
three hundred feet westerly along the same from the corner formed by the
intersection of the said northerly side of West 51st Street with the westerly
side of Fifth Avenue; running thence westerly along the northerly side of West
51st Street, one hundred feet; running thence northerly parallel with the
westerly side of Fifth Avenue, one hundred feet five inches to the center line
of the block between West 51st Street and West 52nd Street; running thence
westerly along said center line of the block, seventy-four feet; running thence
northerly and again parallel with the westerly side of Fifth Avenue, one
hundred feet-five inches to the southerly side of West 52nd Street; running
thence easterly along the southerly side of West 52nd Street, two hundred
seventy-four feet; running thence easterly along the southerly side of West
52nd Street, two hundred seventy-four feet; running thence southerly again
parallel with the westerly side of Fifth Avenue, one hundred feet five inches
to the center line of the block aforementioned; running thence westerly along
said center line of the block, one hundred feet; running thence southerly and
again parallel with the westerly side of Fifth Avenue, one hundred feet five
inches to the northerly side of West 51st Street, at the point or place of
BEGINNING.

 

TOGETHER with easements of light, air and view set forth in an
agreement dated August 29, 1945, recorded in the Office of the Register of the
City of New York, New York County on February 8, 1946 in Liber 4409 of
Conveyances at page 518, and in an agreement dated July 17, 1945 recorded in
said Register’s Office on April 10, 1946 in Liber 4424 of Conveyances at page
206, subject to the terms of said agreements and all other easements, licenses,
privileges, rights and appurtenances related thereto.

 

TOGETHER with all easements, licenses and
privileges hereafter granted to Landlord to use the tunnel connecting the land
and the building to the Rockefeller Center concourse, subject to the terms of
said easements, licenses and privileges.

 

 

EXHIBIT C

 

[Intentionally omitted.]

 

 

EXHIBIT D

 

RULES AND REGULATIONS

 

A.1.                          The
rights of each tenant in the common areas of the Building are limited to
ingress to and egress from such tenant’s premises for the tenant and its
employees, subtenants, licensees and invitees, and no tenant shall use, or
permit the use of, the common areas for any other purpose. No tenant shall
invite to the tenant’s premises, or permit the visit of, persons in such
numbers or under such conditions as to interfere with the use and enjoyment of
any of the common areas by any other tenants. Fire exits and fire tower
stairways are for emergency use only, and they shall not be used for any other
purpose by any tenant or any subtenant or licensee of such tenant, or their
respective employees, agents, contractors or invitees. No tenant shall
obstruct, or permit the obstruction of any of the common areas. Landlord
reserves the right to control and operate the common areas and the other public
facilities, as well as any other facilities furnished for the common use of the
tenants, in such manner as Landlord in its reasonable judgment deems best for
the benefit of the tenants generally, including the right to allocate certain
elevators for delivery service and the right to designate which Building
entrances shall be used by persons making deliveries in the Building. No
doormat of any kind whatsoever shall be placed or left in any public hall or
outside any entry door of any tenant’s premises.

 

A.2.                          Landlord
may refuse admission to the Building outside of Business Hours to any person
not known to the watchman or other person in charge or not having a pass issued
by Landlord or the tenant whose premises are to be entered. Landlord may
require all persons admitted to or leaving the Building to provide appropriate

 

 

identification, in which case Landlord shall supply identification
cards and be reimbursed by the tenant for its identification cards at Landlord’s
cost plus 5%. Each tenant shall be responsible for all persons for whom it
issues any such pass and shall be liable to Landlord for all acts or omissions
of such persons. Each tenant shall promptly notify Landlord of any lost
identification cards and will reimburse Landlord at cost plus 5% for
replacement of identification cards. Landlord shall have the right but shall
not be obligated to require all persons entering the Building to sign a
register, to be announced to the tenant such person is visiting, and/or to be
accepted as a visitor by such tenant or to be otherwise properly identified
(and, if not so accepted or identified, Landlord may exclude such persons from
the Building) and Landlord shall have the right but shall not be obligated to
require persons leaving the Building to sign a register or to surrender the
pass given to such person. Any person whose presence in the Building at any
time shall, in the judgment of the Landlord, be prejudicial to the safety,
character or reputation of the Building or of its tenants may be denied access
to the Building or may be ejected therefrom. During the continuance of any
Force Majeure Events, Landlord may prevent all access to the Building by
closing the doors or otherwise if and to the extent required for the safety of
the tenants and protection of property in the Building. Landlord may institute,
revise and discontinue such security measures, systems and requirements as
Landlord deems appropriate.

 

A.3.                          No
tenant shall obtain or accept for use in its premises drinking water, food,
beverage, towel, barbering, bootblacking, floor polishing, cleaning or other
services from any persons prohibited by Landlord from furnishing such services.
Such

 

2

 

services shall be furnished only at such hours, and under such
reasonable regulations, as may be fixed by Landlord from time to time.

 

A.4.                          The cost
of repairing any damage to the common areas or to any other public facilities
or to any equipment or other facilities used in common with other tenants, or
to any adjoining building or property, or to any other parts of the Building or
to any equipment or facilities therein, caused by a tenant, subtenant or
licensee of such tenant or their respective employees, agents, contractors or
invitees, shall be paid by such tenant.

 

A.5.                          No
awnings or other projections shall be attached to the outside of the Building.
No curtains, blinds, shades or screens which are different from the standards
adopted from time to time by Landlord for the Building shall be attached to or
hung in, or used in connection with, any exterior window or door of the premises
of any tenant without the prior consent of Landlord. Such curtains, blinds,
shades or screens must be of a quality, type, design and color, and attached in
the manner approved by Landlord. Lighting which is visible
from the outside of the Building shall be in accordance with the standards
adopted from time to time by Landlord for the Building.

 

A.6.                          No
lettering, sign, advertisement, notice or object shall be displayed in or on
the exterior windows or doors, or on the outside of any tenant’s premises, or
at any point inside any tenant’s premises where the same might be visible
outside of such premises, without the prior consent of Landlord. Interior
signs, elevator cab designations and lettering on doors and the Building
directory shall, if and when approved by Landlord, be inscribed, painted or
affixed for each tenant by Landlord at the expense of such tenant, and shall be
of a size, color and style acceptable to Landlord.

 

3

 

A.7.                          The
sashes, sash doors, skylights, windows and doors that reflect or admit light
and air into the halls, passageways or other common areas shall not be covered or obstructed by any
tenant, nor shall any bottles, parcels or other articles be placed on the window sills or on the
peripheral heating or air conditioning enclosures, if any.

 

A.8.                          No
showcases or other articles shall be put in front of or affixed to any part of
the exterior of the Building or of any tenant’s premises or placed in the
common areas.

 

A.9.                          No noise
which in the judgment of Landlord might disturb other tenants in the Building
shall be made or permitted by any tenant. Nothing shall be done or permitted in
the premises of any tenant which would impair or interfere with the use or
enjoyment by any other tenant in the Building.

 

A.10.                    No additional
locks or bolts of any kind shall be placed upon any of the doors or windows by
any tenant, nor shall any changes be made in locks or the mechanism thereof,
except where keys therefor are given to Landlord. Additional keys for a tenant’s premises and
toilet rooms located outside the tenant’s premises shall be procured only from
Landlord who may make a reasonable charge therefor. Each tenant shall, upon the
termination of its lease, turn over to Landlord all keys to the Building and
any facilities therein, either furnished to, or otherwise procured by, such
tenant, and in the event of the loss of any keys furnished by Landlord, such
tenant shall pay to Landlord the cost thereof. Notwithstanding the foregoing, a
tenant may, subject to obtaining Landlord’s prior consent, install a security
system in its premises which uses master codes or cards instead of keys,
provided that such tenant provides Landlord with the

 

4

 

master code or card for such system. No tenant shall lend or furnish to
any public messenger the keys to any toilet rooms.

 

A.11.                    All removals,
or the carrying in or out of any safes, freight, furniture, packages, boxes,
crates or any other object or matter of any description must take place during
such hours and in such elevators, and in such manner as Landlord or its agent
may determine from time to time are appropriate. No persons shall be employed
to move safes or other heavy objects unless reasonably acceptable to Landlord
and, if so required by law, unless such persons hold a Master Rigger’s license.
Arrangements must be made by each tenant with Landlord for moving large
quantities of furniture and equipment into or out of the Building. All labor
and engineering costs incurred by Landlord in connection with any moving
specified in this Rule, including a reasonable charge for overhead and profit,
and the cost of overtime or extra work for Landlord’s or Landlord’s agent’s
employees, shall be paid by the tenant to Landlord, on demand.

 

A.12.                    Landlord
reserves the right to inspect all objects to be brought into the Building and
to exclude from the Building all objects which violate any of these Rules and
Regulations or this Lease. Landlord shall have the right but shall not be
obligated to require any person leaving the Building with any package or other
object to submit a pass, listing such package or object, from the tenant from
whose premises the package or object is being removed, but the establishment
and enforcement of such requirement shall not impose any responsibility on
Landlord for the protection of any tenant against the removal of property from
the premises of such tenant. Landlord shall in no way be liable to any tenant
for damages or loss arising from the admission, exclusion or ejection of any
person to or from the premises or the Building under the

 

5

 

provisions of this Rule or of
Rule 2 hereof. Landlord shall have the right but shall not be obligated to institute a package acceptance
system whereby all packages intended for tenants of the Building are delivered
to a central location designated by Landlord and are thereafter called for by
tenants or redistributed by Landlord’s employees, as Landlord may elect.

 

A.13.                    No tenant
shall occupy or permit any portion of its premises to be occupied for (a) the
possession, storage, manufacture or sale of liquor, narcotics or tobacco in any
form, (b) gambling activities, (c) the conduct of obscene, pornographic or similar
disreputable activities, (d) public assembly purposes, (e) lodging or sleeping,
or (f) any immoral or illegal purpose.

 

A.14.                    Landlord shall
have the right to prohibit any tenant’s advertising or identifying sign which,
in Landlord’s reasonable judgment, tends to impair the reputation of the
Building or its desirability, and upon notice from Landlord such tenant shall
refrain from and discontinue such advertising or identifying sign.

 

A.l5.                       No tenant
shall place a load upon any floor that exceeds the floor load per square foot
that such floor was designed to carry. Landlord shall have the right to
prescribe the weight and position of safes and other objects of excessive
weight, and no safe or other object whose weight exceeds the lawful load for the
area upon which it would stand shall be brought into or kept upon any tenant’s
premises. If in the judgment of Landlord the concentrated weight of any heavy
object should be distributed, the work involved in such distribution shall be
done at the expense of the tenant and in such manner as Landlord shall
determine.

 

6

 

A.16.                    No machinery
or mechanical equipment other than ordinary portable business machines may be
installed or operated in any tenant’s premises without Landlord’s prior consent
which consent shall not be unreasonably withheld, and in no case (even where
same are of a type so excepted or as so consented to by Landlord) shall any
machines or mechanical equipment be so placed or operated as to disturb other
tenants. Machines and mechanical equipment permitted to be installed and used
in a tenant’s premises shall be so equipped, installed and maintained by such
tenant as to prevent any disturbing noise, vibration or electrical or other
interference from being transmitted from such premises to any other area of the
Building.

 

A.17.                    The
requirements of tenants will be attended to only upon application at the office
of the Building. Employees of Landlord or its managing agent shall not perform
any work or do anything outside of their regular duties unless under special
instructions from Landlord.

 

A.18.                    Canvassing,
soliciting and peddling in the Building are prohibited and each tenant shall
cooperate to prevent same.

 

A.19.                    No tenant
shall cause or permit any unusual or objectionable odors to emanate from its
premises which would annoy other tenants or create a public or private
nuisance. No cooking shall be done in the premises of any tenant except as is
expressly permitted in such tenant’s lease.

 

A.20.                    Nothing shall
be done or permitted in any tenant’s premises, and nothing shall be brought
into or kept in any tenant’s premises, which would impair or interfere with any
of the Building’s services or the proper and economic heating, ventilating, air
conditioning, cleaning or other servicing of the Building, or the use or

 

7

 

enjoyment by any other tenant
of its premises, nor shall any tenant install any ventilating,
air-conditioning, electrical or other equipment of any kind which in the
reasonable judgment of Landlord might cause any such impairment or
interference.

 

A.21.                    No acids,
vapors or other materials shall be discharged or permitted to be discharged into the waste lines, vents or flues
of the Building. The water and wash closets and other plumbing fixtures in or
serving any tenant’s premises shall not be used for any purpose other than the
purposes for which they were designed or constructed, and no sweepings,
rubbish, rags, acids or other foreign substances shall be deposited therein.
Nothing shall be swept or thrown into the common areas or into or on any heating or ventilating vents or
registers or plumbing apparatus in the Building, or on adjoining buildings or
land or the street. Any cuspidors or containers or receptacles used as such or
for garbage or similar refuse in the premises of any tenant shall be emptied,
cared for and cleaned by and at the expense of such tenant.

 

A.22.                    All entrance
doors in each tenant’s premises shall be left locked and all windows shall be
left closed by the tenant when the tenant’s premises are not in use. Entrance
doors shall not be left open at any time. Each tenant, before closing and
leaving its premises at any time, shall turn out all lights.

 

A.23.                    Hand trucks
not equipped with rubber tires, side guards and such other safeguards as
Landlord may require shall not be used within the Building. No hand trucks
shall be used in passenger elevators.

 

A.24.                    All windows in
each tenant’s premises shall be kept closed, and all blinds therein above the
ground floor shall be lowered as reasonably required because of the position of
the sun, during the operation of the Building air-conditioning system to

 

8

 

cool or ventilate the tenant’s
premises. If Landlord elects to install any energy saving film on the windows
of the Building or to install energy saving windows in place of the present
windows, each tenant shall cooperate with the reasonable requirements of
Landlord in connection with such installation and thereafter the maintenance
and replacement of the film and/or windows and shall permit Landlord to have
access to the tenant’s premises at reasonable times during Business Hours to
perform such work.

 

A.25.                    Each tenant at
its own expense shall cause all portions of its premises used for the storage,
preparation, service or consumption of food or beverages to be cleaned daily in
a manner satisfactory to Landlord, and to be exterminated against infestation
by vermin, rodents or roaches regularly and, in addition, whenever evidence of
any infestation is discovered. No tenant shall permit any person to enter its
premises or the Building for the purpose of providing such extermination
services other than persons first approved by Landlord, such approval not to be
unreasonably withheld.

 

A.26.                    No tenant,
subtenant or licensee, or any contractor, employee, agent or invitee of any
tenant, subtenant or licensee shall at any time bring into or keep upon any
premises or the Building any inflammable, combustible, explosive, hazardous,
toxic or otherwise dangerous fluid, chemical or substance other than customary
office cleaning products.

 

A.27.                    No tenant
shall mark, paint, drill into, or in any way deface, any part of its premises
or the Building. No boring, cutting or stringing of wires or instruments shall
be permitted except with the prior consent of, and as directed by, Landlord. No
telephone, cable or other wires shall be installed by any tenant except in a
manner reasonably approved by Landlord. No tenant shall lay linoleum, or other
similar

 

9

 

floor covering so that the same
shall come in direct contact with the floor of its 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 expresslyprohibited.

 

A.28.                    No bicycles,
vehicles, animals (except seeing eye dogs), fish or birds of any kind shall be
brought into or kept in or about the premises of any tenant.

 

A.29.                    All paneling,
doors, trim or other wood products not considered furniture shall be of
fire-retardant materials. Before installation of any such materials,
certification of the materials’ fire-retardant characteristics shall be
submitted to Landlord, and such materials shall be installed in a manner
approved by Landlord.

 

A.30.                    Whenever any
tenant submits to Landlord any plan, agreement or other document for the
consent or approval of Landlord, such tenant shall pay to Landlord, on demand,
a processing fee in the amount of the reasonable fees for the review thereof,
including the services of any architect, engineer or attorney employed by Landlord to review such plan,
agreement or documents.

 

A.31.                    Landlord
reserves the right to rescind, alter, waive or add any rule or regulation at
any time when, in Landlord’s judgment, Landlord deems it necessary, desirable
or proper for the best interest of the Building or for the best interest of the
tenants generally. No alteration, rescission, waiver or addition of any rule or
regulation in favor of one tenant shall operate as an alteration, rescission,
waiver or addition in favor of any other tenant. Landlord shall not be
responsible to any tenant for the nonobservance or violation by any other
tenant of any of the Rules and Regulations.

 

10

 

EXHIBIT E

 

CURRENT OVERTIME CHARGES

 

	
  Overtime Air Conditioning

  	
  $110.00 per hour per floor

  
	
  Overtime Heating

  	
  $45.00 per hour per floor

  
	
   

  	
   

  
	
  Engineer:

  	
  Straight Time

  	
  $49.24 per hour

  
	
   

  	
  Overtime

  	
  $62.40 per hour

  
	
   

  	
   

  
	
  *Porter:

  	
  Straight Time

  	
  $26.90 per hour (one hour minimum)

  
	
   

  	
  Overtime

  	
  $34.93 per hour

  
	
   

  	
   

  
	
  *Security Guard:

  	
   

  
	
   

  	
  Straight Time

  	
  $26.90 per hour (one hour minimum)

  
	
   

  	
  Overtime

  	
  $34.93 per hour

  
	
   

  	
   

  
	
  *Service Elevator Overtime

  	
  $99.43 per hour (includes elevator operator and security)

  
	
   

  	
   

  
	
  Keys

  	
  $3.00 each

  

 

* There is a 4-hour minimum charge for Saturdays, Sundays and Holidays.

 

Charges are subject to change from time to time in a manner generally
reflective of changes in Landlord’s costs in providing the services in
question.

 

 

EXHIBIT F

 

CLEANING SPECIFICATIONS

 

75 ROCKEFELLER PLAZA

BUILDING STANDARD CLEANING

OFFICE AREAS

 

A.                                   Nightly

 

1.                           All
stone, ceramic, tile, marble, terrazzo and other unwaxed flooring to be swept
damp and/or mopped nightly, using approved dust-down preparations; wash
flooring weekly, scrub when necessary.

 

2.                           All
linoleum, vinyl, rubber, asphalt tile and other similar types of flooring (that
may be waxed) to be swept damp and/or mopped nightly using approved dust-down
preparation. Mop up and wash floors for spills, smears as required.

 

3.                           All
carpeting and rugs shall be vacuum cleaned once a week, moving light furniture
other than desks, file cabinets, etc.

 

4.                           Hand
dust with treated cloth and wipe clean all furniture, fixtures and custom
wooden window enclosures, nightly.

 

5.                           Empty and clean as needed
all waste receptacles nightly and remove from the demised premises wastepaper
and/or other debris to an area designated by the Landlord. Install liners in
all waste receptacles supplied by Tenant. Supply liners for recycling as
required at no charge.

 

6.                           Empty and clean all waste
disposal cans and baskets weekly; damp-dust as necessary.

 

8.                           Wash clean all water
fountains and coolers nightly.

 

9.                           Dust all floor and other
ventilating louvers within reach weekly; damp wipe as necessary.

 

10.                     Dust all telephones weekly.

 

11.                     Keep locker and slop sink rooms in
a clean, neat and orderly condition at all times.

 

12.                     Wipe clean and polish all brass
and other bright work nightly.

 

13.                     Sweep and/or vacuum all private
staircases nightly.

 

14.                     Metal doors of all elevator cars
to be properly maintained.

 

 

15.                     Remove all gum and foreign matter
on sight.

 

16.                     Clean all glass furniture tops
nightly.

 

17.                     Collect and remove wastepaper,
cardboard boxes (which CONTRACTOR will flatten) and waste materials to a
designated area within the building.

 

18.                     Dust and wash closet and coat room
shelving, coat racks and flooring weekly.

 

B.                                     Periodic
Cleaning

 

(To be performed as needed unless otherwise
specified but not less than once each month or as hereinafter provided).

 

1.                                       Wash and remove
all finger marks, ink stains, smudges, scruff marks and other marks from metal
partitions, sills, all vertical surfaces (doors, walls, window sills) including
elevator doors and other surfaces as necessary.

 

2.                                       Dust and clean
electric fixtures, all baseboards and other fixtures or fittings as necessary, but not less than once each month.

 

C.                                     High Dusting

 

1.                                       Do all high
dusting every three (3) months, unless otherwise specified, including, but not
limited to, the following:

 

a.                                       Vacuum and dust
all pictures, frames, charts, graphs and similar wall hangings not reached in
nightly cleaning. Damp dust as required.

 

b.                                      Vacuum and dust
all vertical surfaces such as walls, partitions, doors, bucks and ventilating
louvers, grills, high moldings and other surfaces not reached in a nightly
cleaning.

 

c.                                       Dust all
overhead pipes, sprinklers, ventilating and air conditioning louvers, ducts,
high moldings and other high areas not reached in nightly cleaning.

 

d.                                      Dust all venetian
blinds. Dust all window frames.

 

e.                                       Dust exterior of
lighting fixtures.

 

f.                                         Wash all
furniture glass as needed.

 

g.                                      Vacuum and dust
ceiling tiles around ventilators and clean air conditioning diffusers as
required.

 

2

 

PUBLIC LAVATORIES

 

A.                                   Nightly

 

1.                                       Scour, wash and
disinfect all toilet seats (both sides), basins, bowls, urinals and tile walls
near urinals throughout.

 

2.                                       Sweep and wash
all lavatory floors using proper disinfectants.

 

3.                                       Wash and polish
all minors, powder shelves, bright work and enameled surfaces in all lavatories.

 

4.                                       Hand dust and
clean, washing where necessary, all partitions, dispensers and receptacles in
all lavatories and restrooms.

 

5.                                       Service sanitary
napkin dispensers (napkin supplied by Tenant).

 

6.                                       Empty paper
towel and sanitary napkin disposal receptacles and remove paper to designated
areas.

 

7.                                       Fill toilet
tissue holders (tissue supplied by Tenant).

 

8.                                       Fill and
maintain mechanical operation of all toilet tissue holders, soap dispensers,
towel dispensers and sanitary napkin vending dispensers. (Materials supplied by
Tenant.)

 

9.                                       Empty and clean
sanitary disposal receptacles.

 

10.                                 Clean and wash all
receptacles and dispensers.

 

11.                                 Remove fingermarks
from painted surfaces.

 

12.                                 Day personnel to
inspect all toilets and rest rooms during the day and keep them in a neat and
clean condition at all times and replace supplies as necessary.

 

B.                                     Periodic

 

1.                                       Clean and wash
all partitions once every two weeks.

 

2.                                       Scrub floors as
necessary but not less than once each week.

 

3.                                       Hand dust, clean
and wash all tile walls and ceilings, including washable acoustical tile, once
each month, more, if necessary.

 

4.                                       High dusting
shall be done once each month, which will include lights, walls and grills.

 

5.                                       Wash all
lighting fixtures as necessary.

 

3

 

Elevator Lobbies and Public Corridors (Multi-Tenant Floors)

 

1.                                       Sweep, wash
floor nightly and machine scrub floors as necessary. Wash down all metal
surfaces in the lobby and polish as required, but not less than every two
weeks.

 

2.                                       Wipe down all
metal surfaces in the lobby and polish as required.

 

3.                                       High dust and
wash, if necessary, all electrical and air conditioning ceiling fixtures at
least once per month.

 

4.                                       Dust walls
nightly and wash as required.

 

5.                                       Clean and dust
mail depository in lobby.

 

4

 

EXHIBIT G

 

[Intentionally Omitted]

 

 

EXHIBIT H

 

ADDITIONAL FLOORS

 

	
  Floor Number

  	
   

  	
  Rentable Square Feet

  	
   

  	
  Tenant’s Tax Percentage

  	
   

  	
  Wage Rate Multiple

  	
   

  
	
  32

  	
   

  	
  7,024

  	
   

  	
  1.20598

  	
   

  	
  7,024

  	
   

  
	
  33

  	
   

  	
  2,373

  	
   

  	
  .40743

  	
   

  	
  2,373

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  9,397

  	
   

  	
  1.61341

  	
   

  	
  9,397

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