-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, g7uRi/oaLwS/v0tutlxAr5H52iC2SeV1h9XgLGjrrO8+SMIR1TQCEajROyXn4L4W BO9Kuzvsbxx15C3+IJaXyQ== 0000950123-95-000938.txt : 19950414 0000950123-95-000938.hdr.sgml : 19950414 ACCESSION NUMBER: 0000950123-95-000938 CONFORMED SUBMISSION TYPE: 10-K405/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19941231 FILED AS OF DATE: 19950407 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: RPS REALTY TRUST CENTRAL INDEX KEY: 0000842183 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 136908486 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405/A SEC ACT: SEC FILE NUMBER: 001-10093 FILM NUMBER: 95527494 BUSINESS ADDRESS: STREET 1: 733 THIRD AVE CITY: NEW YORK STATE: NY ZIP: 10017 BUSINESS PHONE: 2123708585 MAIL ADDRESS: STREET 1: 733 THIRD AVE STREET 2: 24TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10017 10-K405/A 1 AMENDMENT TO ANNUAL REPORT ON FORM 10-K 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ______________________________ FORM 10-K / A1 AMENDMENT TO APPLICATION OR REPORT FILED PURSUANT TO SECTION 12, 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 RPS REALTY TRUST (Exact name of registrant as specified in charter) The undersigned registrant hereby amends the following items, financial statements, exhibits or other portions of the Annual Report on Form 10-K for the fiscal year ended December 31, 1994 as set forth in the pages attached hereto: Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K (a)(3) Exhibits 10.28 Indenture of Lease, dated March 2, 1995 between Sage Realty Corporation and RPS Realty Trust together with related side letters. 10.29 Agreement, dated as of March 1, 1995, between RPS Realty Trust and Herbert Liechtung Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this amendment to be signed on its behalf by the undersigned, thereunto duly authorized. RPS REALTY TRUST (Registrant) Date: April 6, 1995 By: /s/Edwin R. Frankel --------------------------- Edwin R. Frankel Senior Vice President, Treasurer (Principal Financial and Accounting Officer) 2 PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K. Financial Statements, Schedules and Exhibits (a)(1) Financial Statements See pages FS-2 through FS-21, which are included herein. (a)(2) Financial Statement Schedules All schedules have been omitted because they are inapplicable, not required, or the information is included in the financial statements or notes thereto. (a)(3) Exhibits Sequential Page No. ---------- 3.1 Amended and Restated Declaration of Trust of the Trust, dated October 14, 1988, incorporated by reference to Exhibit 3, 4(a) to the Trust's Registration Statement on Form S-4, File No. 33-25272. 3.2 By-Laws of the Trust adopted December 6, 1989, incorporated by reference to Exhibit 4.2 to the Trust's Current Report on Form 8-K, dated December 6, 1989. 4. Rights Agreement dated as of December 6, 1989 between the Trust and American Stock Transfer & Trust Company, incorporated by reference to Exhibit 1 to the Trust's Registration Statement on Form 8-A, File No. 1-10093, for the registration of Share Purchase Rights. 10.1 Exchange Agreement, dated as of November 1, 1988 between the Trust and RPS 1, incorporated by reference to Exhibit 2A to the Trust's Current Report on Form 8-K, dated December 28, 1988. 10.2 Exchange Agreement dated as of November 1, 1988 between the Trust and RPS 2, incorporated by reference to Exhibit 2B to the Trust's Current Report on Form 8-K, dated December 28, 1988. 10.3 Exchange Agreement, dated as of November 1, 1988 between the Trust and RPS 3, incorporated by reference to Exhibit 2C to the Trust's Current Report on Form 8-K, dated December 28, 1988. 10.4 Exchange Agreement, dated as of November 1, 1988 between the Trust and RPS 4, incorporated by reference to Exhibit 2D to the Trust's Current Report on Form 8-K, dated December 28, 1988. 10.5 Asset and Stock Purchase Agreement dated as of November 1, 1988 among Integrated, RPS Advisory Corp., Resources Pension Advisory Corp. and the Trust, including as exhibits: (i) Note Issuance Agreement, dated as of December 28, 1988, by and between Integrated, Resources Pension Advisory Corp., and the Trust; and (ii) Note of the Trust dated December 28, 1988, incorporated by reference to Exhibit 2E to the Trust's Current Report on Form 8-K, dated December 28, 1988. 3 10.6 Employment Agreement, dated October 24, 1988, between Resources Pension Advisory Corp. and Joel Pashcow, incorporated by reference to Exhibit 10.6 to the Trust's Annual Report on Form 10-K for the year ended December 31, 1988. 10.7 Employment Agreement, dated October 24, 1988, between Resources Pension Advisory Corp. and Herbert Liechtung, incorporated by reference to Exhibit 10.7 to the Trust's Annual Report on Form 10-K for the year ended December 31, 1988. 10.8 1989 Trustees' Stock Option Plan, incorporated by reference to Exhibit A to the Trust's Proxy Statement dated October 18, 1989. 10.9 1989 Employees' Stock Option Plan, incorporated by reference to Exhibit B to the Trust's Proxy Statement dated October 18, 1989. 10.10 Retirement Savings Plan of the Trust dated September 13, 1989 incorporated by reference to the Trust's Annual Report on Form 10-K for the year ended December 31, 1989. 10.11 Secured Promissory Note, dated February 23, 1990, executed by Rector Hylan Corporation, incorporated by reference to Exhibit 10.1 to the Trust's Current Report on Form 8-K dated February 23, 1990. 10.12 Collateral Assignment of Mortgage and Security Agreement, dated February 23, 1990, between Rector Hylan Corporation and the Trust, incorporated by reference to Exhibit 10.2 to the Trust's Current Report on Form 8-K dated February 23, 1990. 10.13 Note Purchase Agreement, dated December 27, 1991, between the Trust and The Capitol Life Insurance Company, incorporated by reference to Exhibit 10.13 to the Trust's Annual Report on Form 10-K for the year ended December 31, 1991. 10.14 Reissued Note Number 5, dated December 28, 1992, executed by the Trust in favor of Anchor National Life Insurance Company, incorporated by reference to Exhibit 10.14 to the Trust's Annual Report on Form 10-K for the year ended December 31, 1993. 10.15 Loan Purchase Agreement dated December 3, 1993 between the Trust and Merged Centers, incorporated by reference to Exhibit 10.15 to the Trust's Annual Report on Form 10-K for the year ended December 31, 1993. 10.16 Agreement dated as of January 25, 1994, among the Trust, Rector Hylan Corporation, Rector Acquisition Corp. and Shalva Company, Inc., incorporated by reference to Exhibit 10.16 to the Trust's Annual Report on Form 10-K for the year ended December 31, 1993. 4 10.17 Assignment of Mortgages dated January 25, 1994 between Rector Hylan Corporation and the Trust. 10.18 Certificate of Reduction of Debt dated January 25, 1995, executed by the Trust. 10.19 Agreement of Sale dated May 20, 1993 between Morristown-Chester Plaza Associates, L.P. and Chester Plaza Shops, Inc., as contemplated by an amendment thereto dated July 11, 1994. 10.20 Bargain and Sale Deed dated July 11, 1994 between Morristown-Chester Plaza Associates, L.P. and Chester Plaza Shops, Inc. 10.21 Settlement Agreement dated as of June, 1994 between the Trust and Norgate Plaza Limited Partnership. 10.22 Addendum to Settlement Agreement dated June, 1994 between the Trust and Norgate Plaza Limited Partnership. 10.23 Purchase Agreement dated June, 1994 between Norgate Plaza Limited Partnership and Norgate Shops Corp. 10.24 Addendum to Purchase Agreement dated June, 1994 between Norgate Shops Corp. and Norgate Plaza Limited Partnership. 10.25 Quitclaim Deed dated June 13, 1994 between Norgate Plaza Limited Partnership and Norgate Shops Corp. 10.26 Letter of Intent dated July 14, 1994 between the Trust and Ramco-Gershenson, Inc. (incorporated by reference to Exhibit 99 to the Trust's Current Report on Form 8-K dated July 28, 1994). 10.27 Letter Agreement dated as of June 8, 1994 between the Trust and Dean Witter Reynolds, Inc. 10.28 Indenture of Lease, dated March 2, 1995 between Sage Realty Corporation and RPS Realty Trust together with related side letters.* _________________ * Filed with this amendment. 5 10.29 Agreement, dated as of March 1, 1995, between RPS Realty Trust and Herbert Liechtung.* 23.1 Consent of Independent Auditors with respect to the Trust's Registration Statement on Form S-3, filed with the Commission on April 25, 1989. 23.2 Consent of Independent Auditors with respect to the Trust's Registration Statement on Form S-8, filed with the Commission on November 22, 1990. 28.1 Distribution Reinvestment and Trust Agreement, including Distribution Reinvestment Plan, made as of January 1, 1991 between the Trust and American Stock Transfer and Trust Company, incorporated by reference to Exhibit 28.1 to the Trust's Annual Report on Form 10-K for the year ended December 31, 1990. 28.2 Description of Rector Hylan loan, incorporated by reference into Item 1. of this Report from the Trust's Current Report on Form 8-K dated February 23, 1990. (b) Reports on Form 8-K filed during the last quarter of the fiscal year: None. ____________________ * Filed with this amendment. 6 EXHIBIT INDEX Sequential Number Exhibit Page No. - ------ ------- ---------- 3.1 Amended and Restated Declaration of Trust of the Trust, dated October 14, 1988, incorporated by reference to Exhibit 3, 4(a) to the Trust's Registration Statement on Form S-4, File No. 33-25272. 3.2 By-Laws of the Trust adopted December 6, 1989, incorporated by reference to Exhibit 4.2 to the Trust's Current Report on Form 8-K, dated December 6, 1989. 4. Rights Agreement dated as of December 6, 1989 between the Trust and American Stock Transfer & Trust Company, incorporated by reference to Exhibit 1 to the Trust's Registration Statement on Form 8-A, File No. 1-10093, for the registration of Share Purchase Rights. 10.1 Exchange Agreement, dated as of November 1, 1988 between the Trust and RPS 1, incorporated by reference to Exhibit 2A to the Trust's Current Report on Form 8-K, dated December 28, 1988. 10.2 Exchange Agreement dated as of November 1, 1988 between the Trust and RPS 2, incorporated by reference to Exhibit 2B to the Trust's Current Report on Form 8-K, dated December 28, 1988. 10.3 Exchange Agreement, dated as of November 1, 1988 between the Trust and RPS 3, incorporated by reference to Exhibit 2C to the Trust's Current Report on Form 8-K, dated December 28, 1988. 10.4 Exchange Agreement, dated as of November 1, 1988 between the Trust and RPS 4, incorporated by reference to Exhibit 2D to the Trust's Current Report on Form 8-K, dated December 28, 1988. 10.5 Asset and Stock Purchase Agreement dated as of November 1, 1988 among Integrated, RPS Advisory Corp., Resources Pension Advisory Corp. and the Trust, including as exhibits: (i) Note Issuance Agreement, dated as of December 28, 1988, by and between Integrated, Resources Pension Advisory Corp., and the Trust; and (ii) Note of the Trust dated December 28, 1988, incorporated by reference to Exhibit 2E to the Trust's Current Report on Form 8-K, dated December 28, 1988. 7 Sequential Number Exhibit Page No. - ------ ------- ---------- 10.6 Employment Agreement, dated October 24, 1988, between Resources Pension Advisory Corp. and Joel Pashcow, incorporated by reference to Exhibit 10.6 to the Trust's Annual Report on Form 10-K for the year ended December 31, 1988. 10.7 Employment Agreement, dated October 24, 1988, between Resources Pension Advisory Corp. and Herbert Liechtung, incorporated by reference to Exhibit 10.7 to the Trust's Annual Report on Form 10-K for the year ended December 31, 1988. 10.8 1989 Trustees' Stock Option Plan, incorporated by reference to Exhibit A to the Trust's Proxy Statement dated October 18, 1989. 10.9 1989 Employees' Stock Option Plan, incorporated by reference to Exhibit B to the Trust's Proxy Statement dated October 18, 1989. 10.10 Retirement Savings Plan of the Trust dated September 13, 1989 incorporated by reference to the Trust's Annual Report on Form 10-K for the year ended December 31, 1989. 10.11 Secured Promissory Note, dated February 23, 1990, executed by Rector Hylan Corporation, incorporated by reference to Exhibit 10.1 to the Trust's Current Report on Form 8-K dated February 23, 1990. 10.12 Collateral Assignment of Mortgage and Security Agreement, dated February 23, 1990, between Rector Hylan Corporation and the Trust, incorporated by reference to Exhibit 10.2 to the Trust's Current Report on Form 8-K dated February 23, 1990. 10.13 Note Purchase Agreement, dated December 27, 1991, between the Trust and The Capitol Life Insurance Company, incorporated by reference to Exhibit 10.13 to the Trust's Annual Report on Form 10-K for the year ended December 31, 1991. 10.14 Reissued Note Number 5, dated December 28, 1992, executed by the Trust in favor of Anchor National Life Insurance Company, incorporated by reference to Exhibit 10.14 to the Trust's Annual Report on Form 10-K for the year ended December 31, 1993. 8 Sequential Number Exhibit Page No. - ------ ------- ---------- 10.15 Loan Purchase Agreement dated December 3, 1993 between the Trust and Merged Centers, incorporated by reference to Exhibit 10.15 to the Trust's Annual Report on Form 10-K for the year ended December 31, 1993. 10.16 Agreement dated as of January 25, 1994, among the Trust, Rector Hylan Corporation, Rector Acquisition Corp. and Shalva Company, Inc., incorporated by reference to Exhibit 10.16 to the Trust's Annual Report on Form 10-K for the year ended December 31, 1993. 10.17 Assignment of Mortgages dated January 25, 1994 between Rector Hylan Corporation and the Trust. 10.18 Certificate of Reduction of Debt dated January 25, 1995, executed by the Trust. 10.19 Agreement of Sale dated May 20, 1993 between Morristown- Chester Plaza Associates, L.P. and Chester Plaza Shops, Inc., as amended by an amendment thereto dated July 11, 1994. 10.20 Bargain and Sale Deed dated July 11, 1994 between Morristown- Chester Plaza Associates, L.P. and Chester Plaza Shops, Inc. 10.21 Settlement Agreement dated as of June, 1994 between the Trust and Norgate Plaza Limited Partnership. 10.22 Addendum to Settlement Agreement dated June, 1994 between the Trust and Norgate Plaza Limited Partnership. 10.23 Purchase Agreement dated June, 1994 between Norgate Plaza Limited Partnership and Norgate Shops Corp. 10.24 Addendum to Purchase Agreement dated June, 1994 between Norgate Shops Corp. and Norgate Plaza Limited Partnership. 10.25 Quitclaim Deed dated June 13, 1994 between Norgate Plaza Limited Partnership and Norgate Shops Corp. 10.26 Letter of Intent dated July 14, 1994 between the Trust and Ramco-Gershenson, Inc. (incorporated by reference to Exhibit 99 to the Trust's Current Report on Form 8-K dated July 28, 1994). 10.27 Letter Agreement dated as of June 8, 1994 between the Trust and Dean Witter Reynolds, Inc. 9 Sequential Number Exhibit Page No. - ------ ------- ---------- 10.28 Indenture of Lease, dated March 2, 1995 between Sage Realty Corporation and RPS Realty Trust together with related side letters.* 10.29 Agreement, dated as of March 1, 1995, between RPS Realty Trust and Herbert Liechtung.* 23.1 Consent of Independent Auditors with respect to the Trust's Registration Statement on Form S-3, filed with the Commission on April 25, 1989. 23.2 Consent of Independent Auditors with respect to the Trust's Registration Statement on Form S-8, filed with the Commission on November 22, 1990. 28.1 Distribution Reinvestment and Trust Agreement, including Distribution Reinvestment Plan, made as of January 1, 1991 between the Trust and American Stock Transfer and Trust Company, incorporated by reference to Exhibit 28.1 to the Trust's Annual Report on Form 10-K for the year ended December 31, 1990. 28.2 Description of Rector Hylan loan, incorporated by reference into Item 1. of this Report from the Trust's Current Report on Form 8-K dated February 23, 1990. ___________________________ * Filed with this amendment. EX-10.28 2 INDENTURE OF LEASE 1 EXHIBIT 10.28 2 SAGE REALTY CORPORATION, AGENT LANDLORD and RPS REALTY TRUST TENANT INDENTURE OF LEASE PREMISES: Part of the 10th Floor 747 Third Avenue New York, New York 10017 3 TABLE OF CONTENTS Article Page - ------- ---- 1 DEFINITIONS, TERM . . . . . . . . . . . . . . . . . . . . . . . . . 1 2 COMMENCEMENT OF TERM . . . . . . . . . . . . . . . . . . . . . . . . 2 3 FIXED RENT, ADDITIONAL RENTS AND RENT ADJUSTMENTS . . . . . . . . . 3 A. Operating Expense Adjustment . . . . . . . . . . . . . . . 5 B. Real Estate Tax Adjustment . . . . . . . . . . . . . . . . 5 4 ELECTRICITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 5 USE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 6 REPAIRS, ALTERATIONS AND LIENS . . . . . . . . . . . . . . . . . . . 12 7 FLOOR LOAD, NOISE, WINDOW CLEANING . . . . . . . . . . . . . . . . . 17 8 LAWS, ORDINANCES, REQUIREMENTS OF PUBLIC AUTHORITIES . . . . . . . . 17 9 INSURANCE, PROPERTY LOSS, REIMBURSEMENT . . . . . . . . . . . . . . 18 10 DAMAGE OR DESTRUCTION BY FIRE OR OTHER CAUSE . . . . . . . . . . . . 21 11 ASSIGNMENT, SUBLETTING, MORTGAGING . . . . . . . . . . . . . . . . . 23 12 NO LIABILITY ON LANDLORD . . . . . . . . . . . . . . . . . . . . . . 27 13 MOVING OF HEAVY EQUIPMENT . . . . . . . . . . . . . . . . . . . . . 28 14 CONDEMNATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 15 ENTRY, RIGHT TO CHANGE PUBLIC PORTIONS OF THE BUILDING . . . . . . . 29 16 BANKRUPTCY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 17 DEFAULTS AND REMEDIES AND WAIVER OF REDEMPTION . . . . . . . . . . . 32 18 LANDLORD'S RIGHT TO PERFORM TENANT'S OBLIGATIONS . . . . . . . . . . 35 19 COVENANT OF QUIET ENJOYMENT . . . . . . . . . . . . . . . . . . . . 35 20 EXCAVATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 21 SERVICES AND EQUIPMENT . . . . . . . . . . . . . . . . . . . . . . . 36 22 DEFINITION OF LANDLORD . . . . . . . . . . . . . . . . . . . . . . . 40 23 INVALIDITY OF ANY PROVISION . . . . . . . . . . . . . . . . . . . . 41 24 BROKER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 25 SUBORDINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 4 26 ESTOPPEL CERTIFICATE . . . . . . . . . . . . . . . . . . . . . . . . 43 27 LEGAL PROCEEDINGS, WAIVER OF JURY TRIAL . . . . . . . . . . . . . . 43 28 SURRENDER OF PREMISES/HOLDOVER . . . . . . . . . . . . . . . . . . . 44 29 RULES AND REGULATIONS . . . . . . . . . . . . . . . . . . . . . . . 45 30 NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 31 NO WAIVER: ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . 46 32 CAPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 33 INABILITY TO PERFORM . . . . . . . . . . . . . . . . . . . . . . . . 47 34 NO REPRESENTATION BY LANDLORD . . . . . . . . . . . . . . . . . . . 47 35 NAME OF BUILDING . . . . . . . . . . . . . . . . . . . . . . . . . . 48 36 SUCCESSORS AND ASSIGNS . . . . . . . . . . . . . . . . . . . . . . . 48 37 DEFERRED COLLECTIONS . . . . . . . . . . . . . . . . . . . . . . . . 48 38 FEES/INTEREST/LATE CHARGES . . . . . . . . . . . . . . . . . . . . . 48 39 ABATEMENT OF RENT . . . . . . . . . . . . . . . . . . . . . . . . . 49 40 TENANT'S EXTENSION OPTION . . . . . . . . . . . . . . . . . . . . . 49 Schedule A Floor Plan Schedule B Intentionally Omitted Schedule C Rules and Regulations ii 5 INDENTURE OF LEASE made as of this ____ day of February, 1995, between SAGE REALTY CORPORATION, a New York corporation having its principal office at 777 Third Avenue, New York, New York 10017, Agent for the owner of the Building hereinafter mentioned (herein "Landlord"), and RPS REALTY TRUST, a Massachusetts business trust having its office at 733 Third Avenue, New York, New York 10017 (herein "Tenant"). W I T N E S S E T H: ARTICLE 1 DEFINITIONS, TERM Section 1.01. The terms defined in this Article shall, for all purposes of this Lease and all agreements supplemental thereto, have the meanings herein specified unless the context otherwise requires. (a) "Building" shall mean the office building known as 747 Third Avenue, in the Borough of Manhattan, City and State of New York. The plot of land on which the Building is erected is hereinafter called the "Land." (b) "Business Days" shall mean all days excluding Saturdays, Sundays and days observed by the State of New York or Federal Government as legal holidays, and further excluding holidays established by any union contract applicable to employees at the Building. (c) "Commencement Date" shall have the meaning set forth in Section 2.02. (d) "Demised Premises" shall mean a portion of the tenth (10th) floor of the Building, as shown on the Floor Plan annexed hereto as Schedule A and made a part of this Lease, including all fixtures and equipment which at the Commencement Date or during the Term of this Lease are attached thereto and which become a part thereof. (e) "Expiration Date" shall mean April 30, 1996 or any sooner date of termination pursuant to the provisions hereof. (f) "Fixed Rent" shall mean the annual rental payable by Tenant for the Demised Premises in equal monthly installments as provided for in Article 3 of this Lease. (g) "Interest Rate" shall mean the lesser of (i) 2% above the prime commercial lending rate of Marine Midland Bank, N.A. in effect from time to time or (ii) the maximum applicable legal rate, if any. (h) "Lease" shall mean this Indenture of Lease and any and all Schedules annexed hereto. (i) "Lease" shall mean this Indenture of Lease and any and all Schedules annexed hereto. (j) "Term of this Lease" and "Term" shall mean the term of years commencing on the Commencement Date and expiring on the Expiration Date, subject to the terms and conditions hereinafter set forth. Section 1.02. Landlord hereby leases to Tenant, and Tenant hereby rents from Landlord, the Demised Premises, subject to the provisions hereinafter set forth, together with appurtenances, including the right to use in common with others the lobbies, elevators and other public portions of the Building. TO HAVE AND TO HOLD unto Tenant, its successors and permitted assigns, for the Term of this Lease or until the Term of this Lease sooner terminates as hereinafter provided. 6 - 2 - ARTICLE 2 COMMENCEMENT OF TERM Section 2.01. Tenant acknowledges that it has examined the Demised Premises and is taking same "as is" as of the Commencement Date. Tenant acknowledges that Landlord is not required to do any work with respect thereto. Section 2.02. The Term of this Lease and the payment of rent (subject to the terms of Article 39 hereof) shall commence on April 1, 1995 (herein the "Commencement Date"). The taking of possession by Tenant of the Demised Premises shall be deemed an acceptance of same by Tenant. Such taking of possession shall also be conclusive evidence, as against Tenant, that the Demised Premises and the Building of which the same form a part were in good and satisfactory condition at the time of such occupancy and that the Demised Premises were substantially as shown on Schedule A. Section 2.03. If Landlord shall be unable to give possession of the Demised Premises on the date anticipated for the commencement of the Term hereof for any reason whatsoever, Landlord shall not be subject to any liability, nor shall the validity of this Lease nor the obligations of Tenant hereunder be thereby affected. Without limiting the foregoing, the parties hereto expressly negate the provisions of Section 223-a of the Real Property Law and agree that such Section shall be inapplicable hereto. Tenant agrees that the provisions of this Article are intended to constitute "an express provision to the contrary" within the meaning of Section 223-a. If by reason of such delay, the Term of this Lease shall commence subsequent to such anticipated date, the Term of this Lease shall be deemed extended for the same period. ARTICLE 3 FIXED RENT, ADDITIONAL RENTS AND RENT ADJUSTMENTS Section 3.01. During the Term of this Lease, Tenant shall pay, at Landlord's address as herein set forth, or at such other address that Landlord may from time to time designate, a Fixed Rent payable in lawful money of the United States of America (by check of Tenant drawn on a bank that is a member of the New York Clearinghouse Association) in equal monthly installments in advance on the first day of each calendar month, without notice or demand, and without setoff or deduction whatsoever at the annual rate (subject to adjustment pursuant to Article 4 hereof) of $159,992.70 during the period beginning on the Commencement Date and continuing through the balance of the Term. If Tenant's obligation to pay Fixed Rent shall commence on a date other than the first day of a calendar month, the first installment of Fixed Rent shall be in an amount equal to that required to cover the period up to and including the last day of the month wherein the obligation to pay Fixed Rent occurs, computed on a per diem basis. Section 3.02. The Fixed Rent does not take into account increases of real estate taxes and/or expenses during the Term of this Lease or other adjustments in rent, or other payments to be made by Tenant, during the Term of this Lease. Provision therefor is hereinafter made. Section 3.03. All costs, expenses, adjustments and payments which Tenant is obligated to pay to Landlord pursuant to this Lease and/or its Schedules shall be deemed additional rent whether or not denominated as such and, in the event of nonpayment thereof, Landlord shall have all rights and remedies with respect thereto as herein provided for in case of nonpayment of Fixed Rent. Tenant covenants and agrees to pay the Fixed Rent and additional rent as in this Lease provided, when due. Section 3.04. For the purposes of this Section 3.04, the following definitions shall apply: 7 - 3 - (a) The term "Base Tax Year" as hereinafter set forth for the determination of real estate tax escalation shall mean the period commencing on July 1, 1995 and ending on June 30, 1996. (b) The term "the Percentage" shall mean 1.35%. (c) The term "Real Estate Taxes" shall mean all real estate taxes, assessments, water and sewer rents, governmental levies, county taxes or any other governmental charges, general or special, ordinary or extraordinary, unforeseen as well as foreseen, of any kind or nature whatsoever, which are or may be assessed or imposed upon the Land, the Building and the sidewalks, plazas or streets in front of or adjacent thereto, including any tax, excise or fee measured by or payable with respect to any rent, and levied against Landlord and/or the Land and/or Building, under the laws of the United States, the State of New York, or any political subdivision thereof, or by the City of New York, or any political subdivision thereof. If, due to a future change in the method of taxation or in the taxing authority, a franchise, income, transit, profit or other tax or governmental imposition, however designated, shall be levied against Landlord, and/or the Land and/or the Building, in substitution in whole or in part for said Real Estate Taxes, or in lieu of additional real estate taxes, then such franchise, income, transit, profit or other tax or governmental imposition shall be deemed to be included within the definition of "Real Estate Taxes" for the purposes hereof. (d) The term "Tax Year" shall mean every twelve-month consecutive period commencing each July 1st during the Term of this Lease. (e) The term "Wage Rate" shall mean the minimum regular hourly wage rate plus all other sums, including, but not limited to, sums paid for pensions, welfare funds, vacations, bonuses, social security unemployment, disability benefits, health, life, accident and other type of insurance required to be paid to or for the benefit of employees engaged in the general maintenance and operation of office buildings of the type in the vicinity of the Building pursuant to a collective bargaining agreement (designated as "Others" in said agreement) between Realty Advisory Board on Labor Relations, Inc. (or any successor thereto) and Local 32B/32J of the Building Service Employees International Union AFL-CIO (or any successor thereto). The Wage Rate is intended to be an index in the nature of a cost of living index, and is not intended to reflect the actual costs of wages or expenses for the Building. If any such agreement is not entered into, or such parties or their successors shall cease to bargain collectively, then the Wage Rate shall be the minimum regular hourly wage rate and other sums as aforesaid payable to or for the benefit of employees engaged in the maintenance and operation of first class office buildings of the same general type as the Building in the Manhattan area. (f) The term "Base Wage Rate" shall mean the Wage Rate in effect on January 1, 1995. (g) The term "Wage Rate Factor" shall mean 4,863. A. Operating Expense Adjustment It is agreed that if at any time the Wage Rate shall be greater than the Base Wage Rate, Tenant shall be required to pay to Landlord as additional rent an "Operating Expense Adjustment" in an annual sum equal to the product obtained by multiplying (i) the number of cents (including any fraction of a cent) by which the Wage Rate exceeds the Base Wage Rate by (ii) the Wage Rate Factor by (iii) 80%. Such Operating Expense Adjustment shall be payable to Landlord together with Fixed Rent in equal monthly installments on the first day of each calendar month commencing with the first month during the Term of this Lease in which the Wage Rate shall be greater than the Base Wage Rate and, as billed by Landlord, continuing thereafter until a new adjustment in the additional rent shall be established and become effective in accordance with the provisions of this paragraph. Notwithstanding any change in Wage Rate downwards, the Fixed Rent shall not be reduced. In the event any change in the Wage Rate shall be made retroactive, Tenant shall pay Landlord the amount of any resulting retroactive adjustment in such additional rent within fifteen (15) days after being billed therefor. Notwithstanding the foregoing, Tenant's obligation to pay any installment of the Operating Expense Adjustment as provided herein shall not commence until April 1, 1996. 8 - 4 - B. Real Estate Tax Adjustment In the event that the Real Estate Taxes payable for any Tax Year shall exceed the amount of such Real Estate Taxes, as finally determined, payable with respect to the Base Tax Year, Tenant shall pay to Landlord, as additional rent ("Tenant's Tax Payment") for such Tax Year, an amount equal to the Percentage of the excess. By or after the start of the Tax Year following the Base Tax Year, and by or after the start of each Tax Year thereafter, Landlord shall furnish to Tenant a statement of the Real Estate Taxes payable with respect to such Tax Year, and a statement of the Real Estate Taxes payable during the Base Tax Year. Within thirty (30) days after the issuance by the governmental authority having jurisdiction thereover of tax bills for Real Estate Taxes assessed, levied and/or imposed upon the Land and Building for any Tax Year, Landlord shall submit to Tenant a photostatic copy of such bill and/or bills and thereafter on or about each respective anniversary date shall submit a copy of the tax bill and/or bills for the Real Estate Taxes assessed, levied or imposed upon the Land and Building for such Tax Year, together with a statement which shall indicate the amount, if any, of Tenant's Tax Payment. Landlord's failure to submit copies of bills as aforesaid shall not be considered a default by Landlord or a defense by Tenant to such tax payment. Within thirty (30) days after the issuance of the statement, Tenant shall pay Tenant's Tax Payment in the amount set forth on such statement. Such statement shall be conclusively deemed binding upon Tenant unless Tenant shall have objected thereto in writing within thirty (30) days of receipt thereof. Notwithstanding the foregoing provisions of this paragraph, Tenant's Tax Payment shall be payable in the same number of installments as Real Estate Taxes are payable to the taxing authority and shall be payable not less than thirty (30) days in advance of the date on which the corresponding installment is due such taxing authority without incurring any penalty, interest or late charge. In the event Landlord shall receive a final reduction or refund of Real Estate Taxes for any Tax Year for which Tenant is obligated to pay any additional rent under the provisions of this subsection B of Section 3.04, the amount or the proceeds of such reduction or refund, less legal fees and other expenses incurred in collecting the same or achieving such reduction, shall be applied and allocated to the periods for which such final reduction or refund was obtained, and proper adjustment shall be made between Landlord and Tenant. Tenant has been advised that proceedings to protest the Real Estate Tax Assessment for the Base Tax Year may have been filed and may result in a reduction of Real Estate Taxes for the Base Tax Year. Any payments or refunds due hereunder for any period of less than a full Tax Year at the commencement or end of the Term of this Lease shall be equitably prorated to reflect such event. In addition to Tenant's obligation to pay Tenant's Tax Payment as aforesaid, Tenant shall pay to Landlord as additional rent payable upon demand, any occupancy tax or rent tax now in effect or hereafter enacted, if payable by Landlord in the first instance or hereafter required to be paid by Landlord. Section 3.05. Upon the date of the expiration or any sooner termination of this Lease, whether the same be the date hereinabove set forth as the expiration of the Term of this Lease or any prior or subsequent date, a proportionate share of the Fixed Rent, adjustments and additional rents for the year (calendar or fiscal) in which such expiration or termination occurs, shall immediately become due and payable by Tenant to Landlord as hereinafter provided, if not theretofore already billed and paid. Such proportionate share shall be based upon the length of time that this Lease shall have been in existence during such year. Promptly after any such expiration or termination, Landlord shall compute the amounts due from Tenant, as aforesaid, which computations shall either be based on that year's actual figures or be an estimate based on the most recent statements theretofore prepared by Landlord and furnished to Tenant pursuant to this Lease. If an estimate is used, then Landlord shall promptly cause statements to be prepared on the basis of the comparative year's actual figures as soon as they are available, and within ten (10) days after such statement or statements are prepared by Landlord and furnished to Tenant, Landlord and Tenant shall make appropriate adjustments of any estimated payments theretofore made. Tenant's obligation to pay any and all rents, adjustments and additional rents under this Lease shall continue and shall cover all periods up to the Expiration Date. Landlord's and Tenant's obligations to make 9 - 5 - the adjustments hereinabove referred to shall survive any expiration or termination of this Lease. Any delay or failure of Landlord in billing any Fixed Rent or additional rent herein provided for shall not constitute a waiver of or in any way impair the continuing obligation of Tenant to pay such rent adjustments hereunder. Section 3.06. Landlord and Tenant hereby agree that there shall be no additional rent due under Section 3.04 hereof during the initial Term of this Lease. ARTICLE 4 ELECTRICITY Section 4.01. The Fixed Rent reserved in this Lease includes the agreed sum of $14,102.70 per annum in consideration of which Landlord, as an additional service, will supply Tenant with electricity for normal use in the Demised Premises between the hours 9:00 A.M. and 5:30 P.M. on Business Days. If Landlord's electric rates (i.e., the public utility rate schedule at the time in question, including all surcharges, taxes, fuel adjustments, taxes regularly passed on to consumers by the public utility, and other sums payable in respect thereof for the supply of electric energy to Landlord for the Building) are increased, the Fixed Rent reserved in this Lease shall be adjusted by applying to the sum specified above, the same percentage as such rate increase, and such adjusted Fixed Rent shall be billed by Landlord to Tenant, with effect as of the date of the increase of Landlord's electric rate. Landlord shall not be liable in any way to Tenant for any failure or defect in the supply or character of electric energy furnished to the Demised Premises by reason of any requirement, act or omission of the public utility serving the Building with electricity or for any other reason not attributable to the Landlord. At Landlord's option, Tenant shall purchase from the Landlord or Landlord's agent all lighting tubes, lamps, bulbs and ballasts used in the Demised Premises and Tenant shall pay Landlord's reasonable charges for providing and installing same on demand, as additional rent. Section 4.02. Tenant's use of electric energy in the Demised Premises shall not at any time exceed the capacity of any of the electrical conductors, machinery and equipment in or otherwise serving the Demised Premises. In order to insure that such capacity is not exceeded and to avert possible adverse effect upon the Building electric service, Tenant shall not, without Landlord's prior written consent in each instance, connect any additional fixtures, machinery, appliances or equipment to the Building electric distribution system or make any alteration or addition to Tenant's machinery, appliances or equipment, or the electric system of the Demised Premises existing on the Commencement Date other than lamps, typewriters, copiers, computer terminals, copying machines, communications equipment such as telephones, fax machines, appliances, and other small office machines that consume comparable or less amounts of electricity. Should Landlord grant such consent, all additional risers or other equipment required therefor shall be provided by Landlord, and the cost thereof shall be paid by Tenant upon Landlord's demand. As a condition to granting such consent, Landlord may require Tenant to agree to an increase in the Fixed Rent by an amount which will reflect the value to Tenant of the additional service to be furnished by Landlord, that is, the potential additional electrical energy to be made available to Tenant based upon the estimated additional capacity of such additional risers or other equipment. If Landlord and Tenant cannot agree on the amount of such increase, Tenant shall nevertheless pay the same as billed until such amount shall be determined by an independent utility consultant to be selected by Landlord and paid by Tenant. The determination of the consultant shall be binding upon the parties. When the amount of such increase is so determined, the parties shall execute an agreement supplementary hereto to reflect such increase in the amount of the Fixed Rent stated in this Lease and in the amount set forth in Section 4.01, effective from the date such additional service is made available to Tenant, but such increase shall be effective from such date even if such supplementary agreement is not executed. Section 4.03. If there shall be an increase in the space constituting the Demised Premises, or if Tenant's failure to maintain its machinery and equipment in good order and repair causes greater consumption of electrical current, or if Tenant uses electricity on days or hours other than those specified in Section 4.01, or if Tenant adds any machinery, appliances or equipment requiring additional electrical current, the Fixed Rent herein reserved shall be increased accordingly. The amount of such increase shall be billed by Landlord to Tenant, effective as of the date of the increased usage. Such sum shall be due, and shall be paid by Tenant, as additional rent hereunder at the time billed. If Tenant disputes the amount of such increase, Tenant shall nevertheless pay the same as billed, and the amount shall be determined by an independent utility 10 - 6 - consultant to be selected by Landlord and paid by Tenant. The determination of the consultant shall be binding upon the parties. Section 4.04. Landlord reserves the right to discontinue furnishing electric energy to Tenant in the Demised Premises at any time upon not less than one hundred twenty (120) days prior written notice to Tenant provided that Landlord shall have made such election as to the majority of all tenants occupying the Building and further provided that electric service is available directly from the public utility servicing the Building (Landlord hereby agreeing, unless otherwise required by law, not to discontinue furnishing electricity to Tenant until such time as Tenant is able to obtain same directly from the public utility). If Landlord exercises such right of termination, this Lease shall continue in full force and effect and shall be unaffected thereby, except only that, from and after the effective date of such termination, Landlord shall not be obligated to furnish electric energy to Tenant and the Fixed Rent under this Lease shall be reduced by the amount set forth in Section 4.01, plus or minus the amount of any change pursuant to Sections 4.01, 4.02, 4.03 and 4.05. If Landlord so discontinues furnishing electric energy to Tenant, Tenant shall arrange to obtain electric energy directly from the public utility company furnishing electric service to the Building. Such electric energy may be furnished to Tenant by means of the then existing building system feeders, risers and wiring to the extent that the same are available, suitable and safe for such purposes. All meters and additional panel boards, feeders, risers, wiring and other conductors and equipment which may be required to obtain electric energy directly from such public utility company shall be installed and maintained by Tenant at its expense. Section 4.05. Tenant covenants and agrees that at no time will the connected electrical load serving the Demised Premises exceed 5 watts per square foot. Should Landlord consent to an increase in the connected electrical load, as a condition to granting such consent, Landlord may require Tenant to agree to an increase in the Fixed Rent by an amount which will reflect the value to Tenant of the additional connected electrical load. If Tenant disputes the amount, Tenant shall nevertheless pay the same as billed, and the amount shall be determined by an independent utility consultant to be selected by Landlord and paid by Tenant. The determination of the consultant shall be binding upon the parties. Section 4.06. If any tax is imposed upon Landlord with respect to electrical energy furnished as a service to Tenant by any Federal, State or Municipal Authority, Tenant covenants and agrees that where permitted by law or applicable regulations, Tenant's pro rata share of such taxes shall be reimbursed by Tenant to Landlord. Section 4.07. Landlord shall have the right to procure periodic surveys made by an independent utility consultant selected by Landlord and if such utility consultant determines that there has been (i) an increase in Tenant's use of electrical current or (ii) the amount set forth in Section 4.01 is insufficient, then, the amount set forth in Section 4.01 shall be adjusted and in addition to the other requirements and obligations imposed on Tenant in this Article, Tenant shall pay the fees of the utility consultant making such survey. The findings of such utility consultant shall be binding and conclusive upon the parties. Section 4.08. Notwithstanding the aforesaid provisions of this Article, if, pursuant to an action of the Public Service Commission of the State of New York, or otherwise, submetering of electricity is permitted at the Building, then Landlord shall have the option, at Landlord's sole cost and expense, of installing submeters to measure Tenant's electricity consumption. Upon installation of the submeters, Tenant's electricity consumption and demand shall be measured by said submeters, and Tenant agrees to purchase such electricity from Landlord or Landlord's designated agent at Landlord's electric rates, plus twelve (12%) percent thereof to reimburse Landlord for administrative services in connection with supplying and billing such electricity and two and one-half (2-1/2%) percent for line loss. All such sums shall be paid by Tenant to Landlord as additional rent hereunder. If more than one meter measures the electricity consumption and demand of Tenant in the Building, the service rendered through each meter shall be aggregated and billed in accordance with the above rate classification, unless Landlord shall elect separate billing on a per-meter basis. Landlord may at any time render bills for Tenant's consumption and demand and Tenant shall pay the same within thirty (30) days following the date the same are rendered. If Landlord exercises such right of submetering, this Lease shall continue in full force and effect and shall be unaffected thereby, except only that, from and after the effective date of such submetering, Landlord shall not be obligated to furnish electric energy to Tenant and the Fixed Rent 11 - 7 - under this Lease shall be reduced by the amount set forth in Section 4.01, plus or minus the amount of any change pursuant to Sections 4.01, 4.02, 4.03 and 4.05. ARTICLE 5 USE Section 5.01. Tenant shall use and occupy the Demised Premises for administrative, executive and general business office purposes only and for no other purposes. Section 5.02. Tenant shall not suffer or permit the Demised Premises or any part thereof to be used in any manner, or suffer or permit anything to be done therein, or suffer or permit anything to be brought into or kept in the Demised Premises which would in any way (i) violate any law or requirement of public authorities, (ii) cause structural injury to the Building or any part thereof, (iii) interfere with the normal operation of the heating, air-conditioning, ventilating, plumbing or other mechanical or electrical systems of the Building or the elevators installed therein, (iv) constitute a public or private nuisance, or (v) alter the appearance of the exterior of the Building or of any portion of the interior thereof other than the Demised Premises. Section 5.03. Tenant shall not, without the prior written consent of Landlord (which shall not be unreasonably withheld or delayed), allow a "Servicing Company" (defined below) to install any telephone, data, information or other communications equipment in the Demised Premises to service premises occupied by persons other than Tenant and/or its affiliates. For example, the Demised Premises may not be used as a so-called "switching" or "relay" station serving third parties (that is, parties other than Tenant and its affiliates) without such consent by Landlord. In granting such consent, Landlord may require that the Servicing Company enter into a license agreement with Landlord confirming that the Servicing Company shall have no independent rights in the Demised Premises and that upon termination of this Lease, for whatever reason, the Servicing Company will have no right to leave its equipment in the Demised Premises. Landlord may make a reasonable charge to the Servicing Company for allowing it to install its equipment in the Demised Premises. A "Servicing Company" shall mean a person, firm, corporation or other entity other than Tenant whose equipment services not only the Demised Premises, but other premises or parties as well. ARTICLE 6 REPAIRS, ALTERATIONS AND LIENS Section 6.01. Tenant shall take good care of the Demised Premises and the fixtures and appurtenances and equipment therein and, at its sole cost and expense, make all repairs thereto as and when needed to preserve the aforesaid in good working order and condition. All damage or injury to the Demised Premises and to its fixtures, appurtenances and equipment or to the Building of which the same form a part, or to its fixtures, appurtenances and equipment caused by Tenant moving property, or resulting from any air-conditioning unit or system, any short circuit, flow or leakage of water, steam, illuminating gas, sewer gas, sewerage or odors, or by frost or by bursting or leaking of pipes or plumbing works or gas, or from any other cause of any other kind or nature whatsoever due to carelessness, omission, neglect, improper conduct or other cause of Tenant, its servants, employees, agents, visitors or licensees, shall be repaired, restored or replaced promptly by Tenant, at its sole cost and expense, to the satisfaction of Landlord. If Tenant fails to make such repairs, restorations or replacements, same may be made by Landlord at the expense of Tenant and any costs therefor shall be collectible as additional rent or otherwise, and shall be paid by Tenant within five (5) days after rendition of a bill or statement therefor. Section 6.02. Landlord shall, at its expense, make all repairs and replacements, structural and otherwise, necessary in order to keep in good order and repair the exterior of the Building and the public portions of the Building, the need for which Landlord shall have knowledge (including the public halls and stairways, plumbing, wiring and other Building equipment for the general supply of water, heat, air-conditioning, gas and electricity) except repairs hereinabove provided to be made by Tenant and repairs, the need for which Tenant has not reported to Landlord. 12 - 8 - Section 6.03. All repairs, restorations or replacements by either party shall be of first-class quality and done in good and workmanlike manner. Tenant shall, and shall include in all contracts, subcontracts and purchase orders, a requirement that such contractors, subcontractors or materialmen, as the case may be, shall, cause all workers at the Demised Premises to work harmoniously with each other and with Building personnel and in a manner which will not disrupt access to or use of the common areas of the Building, cause inconvenience to the other tenants in the Building or interfere with the conduct of other tenants' business. Tenant agrees that should Tenant, its agents and/or contractors, enter upon the Demised Premises for the purpose of performing any work, the labor employed by Tenant or anyone performing such work, for or on behalf of Tenant, shall always be harmonious and compatible with the labor employed by Landlord or any contractors or subcontractors of Landlord. Should such labor be unharmonious or incompatible, Landlord may require Tenant to withdraw such labor from the Demised Premises. In the event Tenant or Tenant's contractor shall enter upon the Demised Premises or any other part of the Building, Tenant agrees to indemnify and save Landlord free and harmless, from and against any and all claims whatsoever arising out of said entry or such work. Tenant's agents and contractors and their employees shall comply with the special rules, regulations and requirements of Building management with respect to the performance and coordination of said agents, contractors and their employees so as to avoid intrusion into the operation of the Building and to avoid disturbing the quiet enjoyment of other tenants. Section 6.04. Tenant shall not store or place any materials or other obstructions in the lobby or other public portions of the Building, or on the sidewalk adjacent to the Building. Section 6.05. Tenant shall do no work and shall make no alterations, decorations, installations, additions or improvements in or to the Demised Premises, including, but not limited to, installation of a water cooler, an air-conditioning or cooling system unit or part thereof, or other apparatus of like or other nature without Landlord's prior written consent which consent shall not be unreasonably withheld or delayed in the case of alterations, decorations, installations, additions or improvements in the Demised Premises which are non-structural in nature and do not materially, adversely affect the structure, exterior or common areas of the Building or materially, adversely affect the functioning of the heating, ventilating or air- conditioning, electrical, mechanical, plumbing or elevator systems of the Building or other tenants' use thereof, and then only by contractors or mechanics approved by Landlord. Such approval must be obtained prior to any bidding for said work. All such work, alterations, decorations, installations, additions or improvements shall be done at Tenant's sole expense and at such times and in such manner as Landlord may from time to time designate and in full compliance with all governmental bodies having jurisdiction thereover. Tenant's work, alterations, decorations, installations, additions or improvements shall be completed free of all liens and encumbrances and, as a condition precedent to Landlord's consent to the making by Tenant of alterations, decorations, installations, additions or improvements to the Demised Premises, Tenant shall obtain, and deliver to Landlord, at the earliest opportunity permitted by applicable law, written and unconditional waivers of mechanics' liens upon the real property in which the Demised Premises are located, for all work, labor and services to be performed and materials to be furnished by them in connection with such work, signed by all contractors, subcontractors, materialmen and laborers to become involved in such work. As a condition to Landlord's permission to Tenant to make any of Tenant's installations in the Demised Premises, Landlord may require that Tenant agree with Landlord to fixing the Commencement Date of this Lease. Landlord shall not be liable for any failure of the air-conditioning and ventilating equipment in the Demised Premises installed by Landlord caused by any work, alterations, decorations, installations, additions or improvements by Tenant, and Tenant shall correct any such condition causing such failure promptly upon notice from Landlord of the need therefor. If Tenant shall fail to correct same, Landlord may make such correction and charge Tenant for the cost thereof. Such sum due Landlord shall be deemed additional rent and shall be paid by Tenant promptly upon being billed therefor. Section 6.06. Prior to commencing any work pursuant to the provisions of Section 6.05, Tenant shall furnish to Landlord: (i) Copies of all governmental permits and authorizations which may be required in connection with such work. 13 - 9 - (ii) A certificate evidencing that Tenant (or Tenant's contractors) has (have) procured workers' compensation insurance covering all persons employed in connection with the work who might assert claims for death or bodily injury against Landlord, "Overlandlord" (as hereinafter defined), Tenant or the Building. (iii) Such additional personal injury and property damage insurance (over and above the insurance required to be carried by Tenant pursuant to the provisions of Article 9) as Landlord may reasonably require because of the nature of the work to be performed by Tenant. Section 6.07. All work, alterations, decorations, installations, additions or improvements upon the Demised Premises made by either party, including all paneling, decorations, partitions, railings, mezzanine floors, galleries and the like, affixed to the realty or for which Tenant shall have received a credit or contribution shall, unless Landlord elects otherwise (which election shall be made by giving a notice pursuant to the provisions of Article 30 not less than thirty (30) days prior to the expiration or other termination of this Lease or any renewal or extension thereof) become the property of Landlord and shall remain upon, and be surrendered with the Demised Premises as a part thereof at the end of the Term or renewal or extension term, as the case may be. In the event that Landlord shall elect otherwise, then such alterations, decorations, installations, additions or improvements made by Tenant upon the Demised Premises as Landlord shall select shall be removed by Tenant, and Tenant shall restore the Demised Premises to its original condition, at its own cost and expense, at or prior to the expiration of the Term. Where furnished by or at the expense of Tenant (except where same is a replacement of an item theretofore furnished and paid for by Landlord or against which Tenant has received a credit or contribution from Landlord), all movable property, furniture, furnishings and trade fixtures other than those affixed to the realty so that they cannot be removed without material damage shall remain the property of Tenant and shall be removed from the Demised Premises on or before the Expiration Date. In the event of damage to the Demised Premises or the Building by reason of such removal, Tenant shall restore the same to good order and condition (normal wear and tear excepted). If Tenant should desire to leave any part of such property in the Demised Premises upon the expiration of the Term, it shall so notify Landlord in writing not less than sixty (60) days prior to the expiration of the Term, specifying the items of property which it desires to so leave. If within thirty (30) days after the service of such notice Landlord shall request Tenant to remove any of the said property, Tenant shall, at its expense, at or before the expiration of the Term, remove said property and, in case of damage to the Demised Premises or the Building by reason of such removal, restore the Demised Premises to good order and condition (normal wear and tear excepted). Section 6.08. Landlord shall not be responsible for supervision and/or coordination in respect to Tenant's activities pursuant to this Lease. Landlord's managing agent shall perform such supervision and coordination and, with respect to any work, alteration, decoration, addition or improvement costing more than $15,000, Tenant agrees to pay such managing agent, promptly upon being billed therefor, a sum equal to ten (10%) percent of the cost of such work for indirect costs, field supervision and coordination in connection therewith. Tenant agrees to keep records of Tenant's work, alterations, decorations, additions and improvements costing in excess of $15,000 and of the cost thereof. Tenant agrees to furnish to Landlord's managing agent copies of such records certified as correct by Tenant within forty-five (45) days after Landlord's managing agent's request therefor. Section 6.09. Tenant will not do any act or suffer any act to be done which will in any way encumber the title of Landlord or Tenant in and to the Demised Premises or the Building or the Land, nor will the interest or estate of Landlord or Tenant in the Demised Premises or the Building or the Land be in any way subject to any claim by way of lien or encumbrance, whether by operation of law or by virtue of any express or implied contract by Tenant. Section 6.10. Tenant will not suffer or permit any liens to stand against the Demised Premises, the Building or the Land or any part thereof, by reason of any work, labor, services or materials done for, or supplied to, or claimed to have been done for, or supplied to, Tenant, or anyone holding the Demised Premises or any part thereof through or under Tenant. If any such lien is at any time filed against the Demised Premises or the Building or the Land, Tenant will cause the same to be discharged of record within thirty (30) 14 - 10 - days after the date of filing of the same, by either payment, deposit or bonding (and the failure of Tenant to do so shall be a material default hereunder entitling Landlord to give a notice to Tenant pursuant to the provisions of Section 17.01(1) hereof). In addition to any other right or remedy of Landlord, Landlord may, but will not be obligated to, procure the discharge of such lien either by paying the amount claimed to be due by deposit in court or bonding, and/or Landlord will be entitled, if Landlord so elects, to compel the prosecution of an action for the foreclosure of such lien by the lienor and to pay the amount of the judgment, if any, in favor of the lienor with interest computed at the Interest Rate, costs and allowances. Any amount paid or deposited by Landlord for any of the aforesaid purposes, and all legal and other expenses of Landlord, including, without limitation, attorneys' fees incurred in defending such action or in procuring the discharge of such lien, with all necessary disbursements in connection therewith, will become due and payable on the date of payment or deposit, as additional rent. Section 6.11. Nothing in this Lease will be deemed to be, or construed in any way as constituting, the consent or request of Landlord, express or implied by inference or otherwise, to any person, firm or corporation for the performance of any labor or the furnishing of any materials for any construction, rebuilding, alteration or repair of or to the Demised Premises, the Building or the Land or any part thereof, nor as giving Tenant any right, power or authority to contract for or permit the rendering of any services or the furnishing of any materials which might in any way give rise to the right to file any lien against Landlord's interest in the Demised Premises, the Building or the Land. ARTICLE 7 FLOOR LOAD, NOISE, WINDOW CLEANING Section 7.01. Tenant shall not place a load upon any floor of the Demised Premises which exceeds the load per square foot which such floor was designed to carry and which is allowed by law. Section 7.02. Business machines and mechanical equipment belonging to Tenant which cause noise or vibration that may be transmitted to the structure of the Building or the Demised Premises to such a degree as to be objectionable to Landlord shall be placed and maintained by the party owning the machines or equipment, at such party's expense, in settings of cork, rubber or spring type vibration eliminators sufficient to eliminate noise or vibration. Section 7.03. Tenant will not clean, nor require, permit, suffer or allow any window in the Demised Premises to be cleaned from the outside in violation of Section 202 of the Labor Law or of the rules of the Board of Standards and Appeals or of any other board or body having or asserting jurisdiction. ARTICLE 8 LAWS, ORDINANCES, REQUIREMENTS OF PUBLIC AUTHORITIES Section 8.01. Tenant shall, at its expense, comply with all laws, orders, ordinances and regulations or any direction made pursuant to any law, ordinance, rule, regulation or order of any public office or officer which or who shall, with respect to the particular use or manner of use of the Demised Premises (as opposed to office use in general) or to any abatement of nuisance, impose any violation, order or duty upon Landlord or Tenant arising from Tenant's particular use or manner of use of the Demised Premises (as opposed to office use in general), or as a result of any installations made therein (whether or not in compliance with the work article hereof) by Tenant or at Tenant's request, or required by reason of a breach of any of Tenant's covenants or agreements hereunder. Section 8.02. If Tenant should desire to contest the validity of any such law, ordinance, rule, regulation or order with which Tenant is obligated to comply, it may, at its expense, carry on such contest and non-compliance by it during such contest (so long as Tenant proceeds with due diligence) shall not constitute a breach of this Lease provided that it shall, to the satisfaction of Landlord, indemnify and hold Landlord harmless from and against all liability for any loss, damages and expenses (including, without limitation, attorneys' fees) which might result from or be incurred in connection with such contest or non- 15 - 11 - compliance. Notwithstanding the foregoing, non-compliance as aforesaid shall not commence or continue if it might subject Landlord to any fine or penalty or to prosecution for a crime, or if it would constitute a default by Landlord under any mortgage or lease affecting the Building and/or the Land. Section 8.03. If Tenant receives written notice of any violation of law, ordinance, rule, regulation or order applicable to the Demised Premises, it shall give prompt notice thereof to Landlord. Section 8.04. Except as aforesaid, Landlord shall, at its expense, comply with or cause to be complied with, all laws, ordinances, rules, regulations and orders of federal, state, county and municipal authorities and any direction made pursuant to law of any public officer or officers which shall, with respect to the public portions of the Building, impose any violation, order or duty upon Landlord or Tenant and with respect to which Tenant is not obligated by Section 8.01 to comply. Except as aforesaid, Landlord shall further, at its expense, comply with or cause to be complied with, all laws, ordinances, rules, regulations and orders of federal, state, county and municipal authorities and any direction made pursuant to law of any public officer or officers which affect Tenant's use or enjoyment of, or access to, the Demised Premises and with respect to which Tenant is not obligated by Section 8.01 to comply. Landlord may, at its expense, contest the validity of any such law, ordinance, rule, order or regulation. ARTICLE 9 INSURANCE, PROPERTY LOSS, REIMBURSEMENT Section 9.01. Tenant shall not do or permit to be done any act or thing upon the Demised Premises which will invalidate or be in conflict with the Certificate of Occupancy or the terms of the New York State standard form of fire, boiler, sprinkler, water damage or other insurance policies covering the Building and the fixtures and property therein and Tenant shall, at its own expense, comply with all rules, orders, regulations or requirements of the New York Board of Fire Underwriters or any other similar body having jurisdiction and shall not knowingly do or permit anything to be done in or upon the Demised Premises in a manner which increases the rate of fire insurance upon the Building or on any property or equipment located therein over the rate in effect at the commencement of the Term of this Lease. Section 9.02. If, by reason of any failure of Tenant to comply with the provisions of this Lease, the rate of fire, boiler, sprinkler, water damage or other insurance (with extended coverage) on the Building or on the property and equipment of Landlord or any other tenant or subtenant in the Building shall be higher than it otherwise would be, Tenant shall reimburse Landlord and the other tenants in the Building for that part of the fire, boiler, sprinkler, water damage or other insurance premiums thereafter paid by Landlord or by the other tenants in the Building which shall have been charged because of such failure by Tenant, and Tenant shall make the reimbursement on the first day of the month following such payment by Landlord or such other tenants. In any action or proceeding wherein Landlord and Tenant are parties, a schedule or "make up" of any insurance rate for the Building or Demised Premises issued by the New York Fire Insurance Exchange, or other body establishing fire insurance rates for the Building, shall be conclusive evidence of the facts therein stated and of the several items and charges in the insurance rates then applicable to the Building or Demised Premises. Section 9.03. Tenant, at Tenant's own cost and expense, shall maintain insurance protecting and indemnifying Landlord and Tenant (and at Landlord's request, the landlord under any ground or underlying lease [herein "Overlandlord"], as well as the holder of any mortgage affecting the Land, the Building or both) against any and all claims for injury or damage to persons or property for the loss of life or of property occurring upon, in or about the Demised Premises and the public portions of the Building used by Tenant, its employees, agents, contractors, customers and invitees arising out of the negligent act or omission of any of the foregoing, such insurance to afford minimum protection during the Term of this Lease of not less than a single combined limit of $3,000,000 in respect of property damage and bodily injury or death to any one person or in respect of any one occurrence or accident. Landlord may from time to time require that the amount of liability insurance to be maintained by Tenant under this Article be increased so that Landlord shall be adequately protected giving due consideration to all relevant circumstances and conditions. 16 - 12 - All such insurance shall be effected under valid and enforceable policies (which may cover the Demised Premises and other locations), shall be issued by insurers of recognized responsibility and shall contain a provision whereby the insurer agrees not to cancel the insurance without ten (10) days' prior written notice to Landlord. On or before the Commencement Date of this Lease, Tenant shall furnish Landlord with a certificate evidencing the aforesaid insurance coverage and renewal certificates shall be furnished to Landlord at least thirty (30) days prior to the expiration date of each policy for which a certificate was theretofore required to be furnished. Section 9.04. Tenant shall give Landlord immediate notice in case of a fire or accident in the Demised Premises or the Building, or of defects therein or in any fixtures or equipment promptly after Tenant becomes aware of the same. Section 9.05. Tenant shall indemnify and hold Landlord harmless from and against all liabilities, suits, claims, demands and actions, and costs and expenses of any kind or nature, due to or arising out of any injury to person or property, including death resulting at any time therefrom, occurring in or about the Demised Premises. To the extent of any valid and collectible insurance furnished by Tenant for the protection of Landlord, Tenant's obligation to indemnify and hold Landlord harmless against liability which is covered by such insurance shall be deemed, to the extent thereof, to be satisfied. Section 9.06. Landlord and Tenant shall each endeavor to secure an appropriate clause in, or an endorsement upon, each fire or extended coverage or rent insurance policy obtained by it and covering the Building, the Demised Premises or the personal property, fixtures and equipment located therein or thereon, pursuant to which the respective insurance companies waive subrogation or permit the insured, prior to any loss, to agree with a third party to waive any claim it might have against said third party. The parties hereto shall give prompt notice to the other in the event such clause is or becomes unavailable. The waiver of subrogation or permission for waiver of any claim shall extend to the agents of each party and the employees of each party and its respective agents and, in the case of Tenant, shall also extend to all other persons and entities occupying or using the Demised Premises. If and to the extent that such waiver or permission can be obtained only upon payment of an additional charge, then the party benefiting from the waiver or permission shall pay such charge upon written demand, or shall be deemed to have agreed that the party obtaining the insurance coverage in question shall be free of any further obligations under the provisions hereof relating to such waiver or permission. Subject to the foregoing provisions of this Section 9.06, each party hereby releases the other with respect to any claim (including a claim for negligence) which it might otherwise have against the other party for loss, damages or destruction with respect to its property by fire or other casualty (including rental value or business interest, as the case may be) occurring during the Term of this Lease. Section 9.07. Tenant agrees to look solely to Landlord's estate and interest in the Land and Building, or the lease of the Building, or of the Land and Building, and the Demised Premises (or the unencumbered proceeds from a sale thereof), for the satisfaction of any right or remedy of Tenant for the collection of a judgment (or other judicial process) requiring the payment of money by Landlord, in the event of any liability by Landlord, and no other property or assets of Landlord shall be subject to levy, execution, attachment, or other enforcement procedure for the satisfaction of Tenant's remedies under or with respect to this Lease, the relationship of Landlord and Tenant hereunder, or Tenant's use and occupancy of the Demised Premises, or any other liability of Landlord to Tenant. ARTICLE 10 DAMAGE OR DESTRUCTION BY FIRE OR OTHER CAUSE Section 10.01. If the Building or the Demised Premises shall be partially or totally damaged or destroyed by fire or other cause, then whether or not the damage or destruction shall have resulted from the fault or neglect of Tenant, or its employees, agents or visitors (and if this Lease shall not have been terminated 17 - 13 - as in this Article 10 hereinafter provided), Landlord shall to the extent permitted by available insurance proceeds, repair the damage and restore and rebuild the Building and/or the Demised Premises (without limiting the rights of any insurance company, subrogated to Landlord's rights hereunder pursuant to the terms of any insurance policy as to which Landlord shall have been unable to obtain a waiver of subrogation in accordance with Section 9.06 hereof to seek recovery from Tenant, and any rights of Landlord under any other provisions of this Lease or at law or in equity), with reasonable dispatch after notice to it of the damage or destruction; provided, however, that Landlord shall not be required to repair or replace any of Tenant's property. Notwithstanding anything contained herein to the contrary, in no event shall Tenant be relieved of liability or responsibility for damage or destruction resulting from the fault or neglect of Tenant if the insurance policies carried by Landlord on the Building do not contain a waiver of the right of subrogation. Section 10.02. If the Building or the Demised Premises shall be partially destroyed by fire or other cause, the rents payable hereunder shall be abated to the extent that the Demised Premises shall have been rendered untenantable and for the period from the date of such damage or destruction to the date the damage shall be repaired or restored. If the Demised Premises or a major part thereof shall be totally (which shall be deemed to include substantially completely) untenantable on account of fire or other cause, the rent shall abate as of the date of the damage or destruction and until Landlord shall repair, restore and rebuild the Building and the Demised Premises, provided, however, that should Tenant occupy or reoccupy a portion of the Demised Premises during the period the Demised Premises are made completely untenantable, rents allocable to such portion shall be payable by Tenant from the date of such occupancy. Section 10.03. If the Building or Demised Premises shall be totally damaged or destroyed by fire or other cause, or if the Building shall be so damaged or destroyed by fire or other cause that Landlord shall decide not to restore or rebuild it, then in either such case Landlord may terminate this Lease by giving Tenant notice to such effect within sixty (60) days after the date of the casualty. In case of any substantial damage or destruction mentioned in this Article 10 which prevents Tenant from operating its business in the Demised Premises for more than fifteen (15) Business Days, Tenant may terminate this Lease by notice to Landlord given within thirty (30) days of the occurrence of such damage. Section 10.04. 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 Demised Premises or of the Building pursuant to this Article 10. Landlord shall endeavor to effect such repair or restoration promptly and in such manner as not unreasonably to interfere with Tenant's business, provided no additional costs, for labor at overtime or premium rates, or otherwise, are incurred thereby. Section 10.05. Notwithstanding any of the foregoing provisions of this Article 10, if Landlord or Overlandlord or the holder of any superior mortgage shall be unable to collect all of the insurance proceeds (including rent insurance proceeds) applicable to damage or destruction of the Demised Premises or the Building by fire or other cause by reason of some action or inaction on the part of Tenant or any of its employees, agents or contractors, then, without prejudice to any other remedies which may be available against Tenant, there shall be no abatement of Tenant's rent until the total amount of such rent not abated which would otherwise have been abated equals the amount of uncollected insurance proceeds. Section 10.06. Landlord will not carry separate insurance of any kind on Tenant's property and Landlord shall not be obligated to repair any damage thereto or replace the same. Section 10.07. In the event of the termination of this Lease pursuant to any of the provisions of this Article 10, this Lease and the Term and estate hereby granted shall expire as of the date of such termination with the same effect as if that were the Expiration Date, and the Fixed Rent and additional rent payable hereunder shall be apportioned as of such date. Section 10.08. The provisions of this Article 10 shall be considered an express agreement governing any case of damage or destruction of the Demised Premises by fire or other casualty, and Section 227 of the Real Property Law of the State of New York providing for 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 to the Demised Premises and this Lease. 18 - 14 - ARTICLE 11 ASSIGNMENT, SUBLETTING, MORTGAGING Section 11.01. (a) Tenant will not by operation of law or otherwise, assign, mortgage or otherwise encumber this Lease, nor the estate and Term hereby granted, nor sublet or permit the Demised Premises or any part thereof to be used by others, without Landlord's prior written consent in each instance. The consent by Landlord to any assignment or subletting shall not in any manner be construed to relieve Tenant from obtaining Landlord's express written consent to any other or further assignment or subletting. If Tenant desires to assign or sublet all or any portion of the Demised Premises, Tenant agrees to use as its exclusive rental agent for such purpose the then designated leasing agent of the Building and to notify such leasing agent of its desire to assign this Lease or sublet the Demised Premises. Upon obtaining a proposed assignee or sublessee, upon terms satisfactory to Tenant, Tenant shall submit to Landlord in writing (1) the name of the proposed assignee or subtenant; (2) the terms and conditions of the proposed assignment or subletting; (3) the nature and character of the business of the proposed assignee or subtenant and any other information reasonably requested by Landlord. Upon receipt of the foregoing submission from Tenant Landlord shall have the following options to be exercised within thirty (30) business days from the date of such receipt: 1. If an assignment shall be proposed or if a proposed subletting shall be for all or substantially all of the Demised Premises, Landlord shall have the option to terminate this Lease effective as of the date proposed by Tenant for such assignment or subletting. 2. If a proposed sublease shall be for less than all or substantially all of the Demised Premises or if it shall be for less than the balance of the Term of this Lease, Landlord shall have the option to terminate this Lease as to the portion of the Demised Premises proposed to be sublet for such portion of the Term as is included in such proposed sublease, effective as of the effective date of such proposed sublease. In the event of the exercise of such option under this subparagraph 2, the rent and all other charges payable hereunder shall be equitably apportioned, and Tenant shall be responsible for the cost of constructing any necessary demising walls. 3. Landlord shall have the option to require Tenant to execute an assignment or sublease to Landlord, or to any party designated by Landlord, upon the same terms and conditions as contemplated with the proposed assignee or subtenant, except that (A) Landlord (or Landlord's designee) as assignee or sublessee shall have an express unlimited right to further assign or sublease to others and to make any alterations required in connection therewith, and (B) the rent or consideration payable under such assignment or sublease to Landlord (or Landlord's designee) shall be the lower of (i) the rental payable by Tenant to Landlord under this Lease, or (ii) the rental payable by the proposed assignee or subtenant pursuant to the assignment or sublease originally proposed by Tenant. (b) If Landlord shall not exercise any of its foregoing options within the time set forth above, provided Tenant shall not then be in default hereunder, Landlord's consent to any such proposed assignment or subletting shall not be "unreasonably" withheld or delayed, as described in paragraph (c) of this Section 11.01. If Landlord shall not exercise any of the options described in paragraph (a) above and Tenant shall thereupon assign this Lease or sublet all or any portion of the Demised Premises, then and in that event Tenant shall pay to Landlord as additional rent the difference, if any, between the Fixed Rent plus additional rent allocable to that part of the Demised Premises affected by such assignment or sublease pursuant to the provisions of this Lease, and the Fixed Rent and additional rent payable by the assignee or sublessee to Tenant. Such additional rent payments shall be made monthly within five (5) days after receipt of the same by Tenant. Any other cash or other consideration payable to Tenant in connection with such assignment or sublease or the sale of Tenant's property in connection therewith shall be similarly paid over to Landlord when and as received by Tenant. 19 - 15 - If Tenant fails to consummate any proposed assignment or subletting to which Landlord shall have consented within sixty (60) days after granting such consent, paragraph (a) shall again apply to said proposed assignment or subletting. No option exercised by Landlord pursuant to the above provisions of paragraph (a), and no assignment or sublease made to Landlord under the above provisions of paragraph (a), shall be binding upon any purchaser of any ground or underlying lease who acquires such ground or underlying lease by reason of the foreclosure of any mortgage to which this Lease is subordinate, nor upon any assignee of any ground or underlying lease who takes such assignment in lieu of such foreclosure, it being understood, however, that such purchaser or assignee may, at its option, elect to enforce such option, assignment or sublease. (c) In determining reasonableness with respect to its consent to a proposed assignment or sublease by Tenant, Landlord may take into consideration all relevant factors surrounding the proposed assignment or sublease, including, without limitation, the following: (i) the financial stability and business reputation of the proposed assignee or subtenant; (ii) the nature of the business and the proposed use of the Demised Premises by the proposed assignee or subtenant in relation to the majority of other tenants in the Building; (iii) that the proposed assignee or subtenant shall not be a tenant of other space in the Building or a party which has dealt with Landlord or Landlord's agent (directly or through a broker) with respect to space in the Building during the six (6) months immediately preceding Tenant's request for Landlord's consent, provided Landlord has space in the Building for such proposed assignee or subtenant; (iv) restrictions contained in leases of other tenants of the Building; (v) the effect that the proposed assignee's or subtenant's occupancy or use of the Demised Premises would have upon the operation and maintenance of the Building and Landlord's investment therein; (vi) that not more than one entity shall occupy the Demised Premises at any time. Section 11.02. If this Lease shall be assigned, or if the Demised Premises or any part thereof be sublet or occupied by any person or persons other than Tenant, Landlord may after default by Tenant, collect rent from the assignee, subtenant or occupant and apply the net amount collected to the rent herein reserved, but no such assignment, subletting, occupancy or collection of rent shall be deemed a waiver of the covenants in this Article, nor shall it be deemed acceptance of the assignee, subtenant or occupant as a tenant, or a release of Tenant from the full performance by Tenant of all the terms, conditions and covenants of this Lease. Section 11.03. Each assignee or transferee shall assume and be deemed to have assumed this Lease and shall be and remain liable jointly and severally with Tenant for the payment of the rent, additional rent and adjustments of rent, and for the due performance of all the terms, covenants, conditions and agreements herein contained on Tenant's part to be performed for the Term of this Lease. No assignment shall be binding on Landlord unless such assignee or Tenant shall deliver to Landlord a duplicate original of the instrument of assignment which contains a covenant of assumption by the assignee of all of the obligations aforesaid and shall obtain from Landlord the aforesaid written consent prior thereto. Section 11.04. For the purposes of this Lease, any sale, transfer or assignment of any of the stock of a corporate Tenant or any transfer in the control of Tenant by operation of law or otherwise shall be deemed an assignment. Section 11.05. The listing of any name other than that of Tenant, whether on the doors of the Demised Premises, on the Building directory or otherwise, shall not operate to vest any right or interest in this 20 - 16 - Lease or the Demised Premises. It is expressly understood that any such listing is a privilege extended by Landlord that is revocable at will by written notice to Tenant. Section 11.06. Tenant shall reimburse Landlord for any costs incurred by Landlord to review the requested consent provided in Article 11, including attorneys' fees. Section 11.07. If Landlord shall recover or come into possession of the Demised Premises before the Expiration Date, Landlord shall have the right to take over any sublease made by Tenant and to succeed to all rights of Tenant thereunder, Tenant hereby assigning (effective as of the date of Landlord's succession of Tenant's estate in the Demised Premises) such subleases as Landlord may elect to take over. Every subletting hereunder shall be subject to the condition that, from and after the termination of this Lease or re-entry by Landlord hereunder or other succession by Landlord to Tenant's estate in the Demised Premises, the subtenant under such sublease shall waive any right to surrender possession or to terminate the sublease and, at Landlord's election, shall be bound to Landlord for the balance of the term thereof and shall attorn to and recognize Landlord, as its landlord, under all of the then executory terms of such sublease, except that Landlord shall not be (a) liable for any previous act, omission or negligence of Tenant under such sublease, (b) subject to any counterclaim, defense or offset theretofore accruing to such subtenant against Tenant, (c) bound by any previous modification or amendment of such sublease made without Landlord's consent or by any previous prepayment of more than one month's rent and additional rent unless paid as provided in the sublease, or (d) obligated to perform any repairs or other work in the subleased space or the Building beyond Landlord's obligations under this Lease, and each subtenant shall execute and deliver such instruments as Landlord may reasonably request to evidence and confirm such attornment. Section 11.08. Notwithstanding anything to the contrary elsewhere contained herein (including Section 11.01(a) hereof), provided that Tenant shall not be in default in any of the terms of this Lease beyond notice and the expiration of any applicable grace period, Tenant may, without Landlord's consent but upon not less than ten (10) days' prior written notice to Landlord, sublet to any corporations or other business entities which control, are controlled by, or are under common control with Tenant (herein referred to as a "Related Entity") all or part of the Demised Premises or permit any Related Entity to occupy the same for any of the purposes permitted to Tenant, subject however to compliance with Tenant's obligations under this Lease. Such subletting or occupancy shall not be deemed to vest in any such Related Entity any right or interest in this Lease nor shall such subletting or occupancy relieve, release, impair or discharge any of Tenant's obligations hereunder. Tenant shall deliver to Landlord a copy of any such sublease or occupancy agreement for all or any portion of the Demised Premises. ARTICLE 12 NO LIABILITY ON LANDLORD Section 12.01. Landlord or its agents shall not be liable for any damage to property of Tenant or of others entrusted to employees of the Building, nor for the loss of or damage to any property of Tenant by theft or otherwise. Landlord or its agents shall not be liable for any injury or damage to persons or property resulting from fire, explosion, falling plaster, steam, gas, electricity, water, rain or snow, leaks from any part of the Building or from the pipes, appliances or plumbing works or from the roof, street or sub-surface or from any other place or by dampness or by any other cause of whatsoever nature, unless caused by or due to the negligence of Landlord, its agents, servants or employees; nor shall Landlord or its agents be liable for any such damage caused by other tenants or persons in the Building or caused by operations in construction of any private, public or quasi-public work; nor shall Landlord be liable for any latent defect in the Demised Premises or in the Building of which they form a part. If at any time any windows of the Demised Premises are temporarily or permanently closed, darkened or bricked up for any reason whatsoever including but not limited to Landlord's own acts, Landlord shall not be liable for any damage Tenant may sustain thereby, and Tenant shall not be entitled to any compensation therefor nor abatement of rent, nor shall the same release Tenant from its obligations hereunder nor constitute an eviction. 21 - 17 - ARTICLE 13 MOVING OF HEAVY EQUIPMENT Section 13.01. Tenant shall not move any safe, heavy equipment or bulky matter in or out of the Building without Landlord's written consent, which consent Landlord agrees not to unreasonably withhold or delay. If the movement of such items requires special handling, Tenant agrees to employ only persons holding a Master Rigger's License to do said work and all such work shall be done in full compliance with the Administrative Code of the City of New York and other municipal requirements. All such movements shall be made during hours which will least interfere with the normal operations of the Building, and all damage caused by such movement shall be promptly repaired by Tenant at Tenant's expense. ARTICLE 14 CONDEMNATION Section 14.01. In the event that the whole of the Demised Premises or access thereto shall be lawfully condemned or taken in any manner for any public or quasi-public use, this Lease and the Term and estate hereby granted shall forthwith cease and terminate as of the date of vesting of title. In the event that only a part of the Demised Premises shall be so condemned or taken, then, effective as of the date of vesting of title, the rent hereunder for such part shall be abated. In the event that only a part of the Building shall be so condemned or taken, then (a) if substantial structural alteration or reconstruction of the Building shall in the reasonable opinion of Landlord be necessary or appropriate as a result of such condemnation or taking (whether or not the Demised Premises be affected), Landlord may, at its option, terminate this Lease and the Term and estate hereby granted as of the date of such vesting of title by notifying Tenant in writing of such termination within sixty (60) days following the date on which Landlord shall have received notice of vesting of title, or (b) if Landlord does not elect to terminate this Lease, as aforesaid, this Lease shall be and remain unaffected by such condemnation or taking, except that the Fixed Rent and additional rent shall be abated to the extent, if any, hereinbefore provided in this Article 14. In the event that only a part of the Demised Premises shall be so condemned or taken and this Lease and the Term and estate hereby granted are not terminated as hereinbefore provided, Landlord will, at its expense, restore with reasonable diligence the remaining structural portions of the Demised Premises as nearly as practicable to the same condition as it was prior to such condemnation or taking. In the event of termination in any of the cases hereinabove provided in this Article 14, this Lease and the Term and estate hereby granted shall expire as of the date of such termination with the same effect as if that were the date hereinbefore set for the expiration of the Term of this Lease, and the rent hereunder shall be apportioned as of such date. In the event of any condemnation or taking hereinabove mentioned of all or a part of the Building, Landlord shall be entitled to receive the entire award in the condemnation proceeding, including any award made for the value of the estate vested by this Lease in Tenant, and Tenant hereby expressly assigns to Landlord any and all right, title and interest of Tenant now or hereafter arising in or to any such award or any part thereof, and Tenant shall be entitled to receive no part of such award. ARTICLE 15 ENTRY, RIGHT TO CHANGE PUBLIC PORTIONS OF THE BUILDING Section 15.01. Tenant shall permit Landlord to erect, use and maintain pipes and conduits in and through the Demised Premises. All such pipes and conduits shall either be concealed above the suspended ceiling area, or within the demising walls or installed in the service columns, or shall be installed along the walls of the Demised Premises and appropriately enclosed, where feasible. In the event the construction deprives the Tenant of the use of a material or substantial portion of the usable area of the Demised Premises (other than on a temporary basis), the Tenant shall be entitled to an pro rata abatement of rent for the space so permanently taken. Landlord or its agents or designees shall have the right, but only upon reasonable notice (except in emergencies, in which event no notice shall be required) given to Tenant or any authorized employee of Tenant at the Demised Premises, to enter the Demised Premises at reasonable times during business hours, for the 22 - 18 - purpose of making such repairs or alterations as shall be required or as Landlord shall have the right to make by the provisions of this Lease. Landlord shall be allowed to take all material into and upon the Demised Premises that may be required for the repairs and alterations above mentioned without the same constituting an eviction of Tenant in whole or in part, and the rent reserved hereunder shall in no wise abate, except as otherwise provided in this Lease, while said repairs or alterations are being made, by reason of loss or interruption of the business of Tenant because of the prosecution of any such work, or otherwise. Landlord agrees to do any work pursuant to this Article in such a manner so as not to unreasonably interfere with Tenant's business, provided no additional costs, for labor at overtime or premium rates, or otherwise, are incurred thereby. Section 15.02. During the twelve (12) months prior to the expiration of the Term of this Lease, Landlord may exhibit the Demised Premises to prospective tenants. Landlord shall also have the right to enter the Demised Premises for the purpose of inspecting the same or exhibiting the same to prospective purchasers or lessees of the entire Building or to prospective mortgagees of the property of which the Demised Premises forms a part. The holders of any mortgage of Landlord's interest in the property, or such holders' agents or designees, shall also have such right of inspection for itself and for any prospective assignees of any such mortgagees. Section 15.03. Landlord shall have the right at any time without thereby creating an actual or constructive eviction or incurring liability to Tenant therefor, to change the arrangement or location of such of the following as are not contained within the Demised Premises or any part thereof: entrances, passageways, elevators, doors and doorways, corridors, stairs, toilets and other like public service portions of the Building. ARTICLE 16 BANKRUPTCY Section 16.01. (a) Anything elsewhere in this Lease to the contrary notwithstanding, this Lease may be cancelled by Landlord by the sending of a written notice to Tenant within a reasonable time after the happening of any one or more of the following events: (i) Tenant shall (A) have applied for or consented to the appointment of a receiver, trustee, liquidator, or other custodian of Tenant or any of its properties or assets, (B) be unable to pay its debts generally as they become due or shall have taken any other action which could result in it becoming the subject of an insolvency or bankruptcy proceeding, (C) have made a general assignment for the benefit of creditors, (D) have commenced a voluntary case for relief as a debtor under the United States Bankruptcy Code or filed a petition to take advantage of any bankruptcy, reorganization, insolvency, readjustment of debts, dissolution or liquidation law or statute or an answer admitting the material allegations of a petition filed against it in any proceeding under any such law, or (E) be adjudicated a bankrupt or insolvent; or (ii) Without the acquiescence or consent of Tenant an order, judgment or decree shall have been entered by any court of competent jurisdiction approving as properly filed a petition seeking relief under the United States Bankruptcy Code or any bankruptcy, reorganization, insolvency, readjustment of debts, dissolution or liquidation law or statute with respect to Tenant or appointing a receiver, trustee, liquidator or other custodian of all or a substantial part of its properties or assets, and such order, judgment or decree shall have continued unstayed and in effect for any period of not less than sixty (60) days. Neither Tenant, nor any person claiming through or under Tenant or by reason of any statute or order of court, shall thereafter be entitled to possession of the Demised Premises, but shall forthwith quit and surrender the Demised Premises. If this Lease shall be assigned in accordance with its terms, the provisions of this Article shall be applicable only to the party then owning Tenant's interest in this Lease. (b) It is stipulated and agreed that in the event of the termination of this Lease pursuant to paragraph (a) hereof, Landlord shall forthwith, notwithstanding any other provisions of this Lease to the contrary, be entitled to recover from Tenant as and for liquidated damages an amount equal to the difference between the rent reserved hereunder for the unexpired portion of the Term demised and the then fair and reasonable rental value of the Demised Premises for the same period. In the computation of such damages the difference between any installment of rent becoming due hereunder after the date of termination and the fair and reasonable rental value of the Demised Premises for the period for which such installment was payable shall be discounted to the date of termination at the rate of four percent (4%) per annum. If the Demised Premises or any part thereof be re-let by Landlord for the unexpired Term of this Lease, or any part thereof, before the 23 - 19 - presentation of proof of such liquidated damages to any court, commission or tribunal, the amount of rent reserved upon such re- letting shall be prima facie evidence as to the fair and reasonable rental value for the part or the whole of the Demised Premises so re-let during the term of the re-letting. Nothing herein contained shall limit or prejudice the right of Landlord to prove for and obtain as liquidated damages by reason of such termination, an amount equal to the maximum allowed by any statute or rule in effect at the time when, and governing the proceedings in which, such damages are to be approved, whether or not such amount be greater, equal to, or less than the amount of the difference referred to above. ARTICLE 17 DEFAULTS AND REMEDIES AND WAIVER OF REDEMPTION Section 17.01. (1) If (A) Tenant defaults in fulfilling any of the covenants of this Lease, with respect to the covenants for the payment of Fixed Rent or additional rent, and if such default shall continue for seven (7) days after Landlord shall have given to Tenant a written notice specifying such default or (B) the Demised Premises are abandoned by Tenant or if the Demised Premises are damaged by reason of negligence or carelessness of Tenant, its agents, employees or invitees, or (C) in the case of the happening of a default or omission (other than in the payment of Fixed Rent, additional rent or other charges hereunder, and other than the failure to cause a lien against the Demised Premises, the Building or the Land to be discharged of record within the time period provided for elsewhere in this Lease) which default shall continue for twenty (20) days after notice thereof to Tenant (or in the case of the happening of a default or omission which cannot with due diligence be completely cured or remedied within such twenty (20) day period, if Tenant shall not have diligently commenced curing such default within such twenty (20) day period, and shall not thereafter with reasonable diligence and in good faith be proceeding to remedy or cure such default), then, in any such case, Landlord may give to Tenant a notice of intention to terminate this Lease upon the expiration of three (3) days from the service of such notice of intention, and upon the expiration of said three (3) days, this Lease and the Term hereof shall terminate, and Tenant shall then quit and surrender the Demised Premises to Landlord, but Tenant shall remain liable as hereinafter provided. (2) If (A) the notice provided for in (1) hereof shall have been given, and the Term shall expire as aforesaid; or (B) if Tenant shall make any default in the payment of Fixed Rent or additional rent herein reserved, or any part of either, or in making any other payment herein provided; or (C) if any execution or attachment shall be issued against Tenant or any of Tenant's property whereupon the Demised Premises shall be taken or occupied or attempted to be taken or occupied by someone other than Tenant; or (D) if Tenant shall make default with respect to any other lease between Landlord and Tenant; then in any of such events Landlord may, without notice, re-enter the Demised Premises either by force or otherwise, and dispossess Tenant and the legal representatives of Tenant or any other occupants of the Demised Premises by summary proceedings or otherwise and remove their effects and hold the Demised Premises as if this Lease had not been made. Tenant hereby waives the service of notice of intention to re-enter or to institute legal proceedings to the aforesaid end. If Tenant shall make default hereunder prior to the date fixed as the commencement of any renewal or extension of this Lease, Landlord may cancel and terminate such renewal or extension agreement by written notice, but Tenant shall remain liable as hereinafter provided. Section 17.02. In case of any such default, re-entry, expiration and/or dispossess by summary proceedings or otherwise, (i) the rent shall become due thereupon and be paid up to the time of such re-entry, dispossess and/or expiration together with such costs as Landlord may incur for legal expenses, attorneys' fees, brokerage and/or putting the Demised Premises in good order, or for preparing the same for re-rental; (ii) Landlord may re-let the Demised Premises or any part or parts thereof, either in the name of Landlord or otherwise, for a term or terms, which may at Landlord's option be less than or exceed the period which would otherwise have constituted the balance of the Term of this Lease and may grant concessions or free rent; and/or (iii) Tenant or the legal representatives of Tenant shall also pay Landlord as liquidated damages for the failure of Tenant to observe and perform Tenant's covenants herein contained, 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 (1) the 24 - 20 - aggregate of the installments of Fixed Rent and the additional rent (if any) which would have been payable hereunder by Tenant, had this Lease not so terminated, for the period commencing with such earlier termination of this Lease or the date of any such re- entry, as the case may be, and ending with the date hereinbefore set for the expiration of the full term hereby granted pursuant to Articles 1 and 2 hereof, over (2) the aggregate rental value of the Demised Premises for the same period, said lump sum to be discounted to the Expiration Date of this Lease at the then prevailing prime rate of interest; or (b) sums equal to the aggregate of the installments of Fixed Rent and additional rent (if any) which would have been payable by Tenant had this Lease not so terminated, or had Landlord not so re-entered the Demised Premises, payable upon the due dates therefor specified herein following such termination or such re-entry and until the date hereinbefore set for the expiration of the full Term hereby granted; provided, however, that if Landlord shall re-let the Demised Premises during said period, Landlord shall credit Tenant with the net rents received by Landlord for such re-letting, such net rents to be determined by first deducting from the gross rents as and when received by Landlord from such re-letting the expenses incurred or paid by Landlord terminating this Lease or of re-entering the Demised Premises and of securing possession thereof, including, without limitation, attorneys' fees and costs of removal and storage of Tenant's property, as well as the expenses of re-letting, including repairing, restoring, altering, decorating and preparing the Demised Premises for new tenants, brokers' commissions, advertising costs, attorneys' fees, and all other similar or dissimilar expenses chargeable against the Demised Premises and the rental therefrom in connection with such re-letting, it being understood that any such re-letting may be for a period equal to or shorter or longer than the remaining Term of this Lease; provided, further, that (1) in no event shall Tenant be entitled to receive any excess of such net rents over the sums payable by Tenant to Landlord hereunder, (2) in no event shall Tenant be entitled in any suit for the collection of damages pursuant to this paragraph (b) to a credit in respect of any net rents from a re-letting except to the extent that such net rents are actually received by Landlord prior to the commencement of such suit, and (3) if the Demised Premises or any part thereof should be re-let in combination with other space, then proper apportionment on a square foot area basis shall be made of the rent received from such re-letting and of the expenses of re-letting. For the purpose of paragraph (a) of this Section 17.02, the amount of additional rent which would have been payable by Tenant under Article 3 hereof for each year, as therein provided, ending after such termination of this Lease or such re-entry, shall be deemed to be an amount equal to the amount of such additional rent payable by Tenant for the calendar year and Tax Year ending immediately preceding such termination of this Lease or such re-entry. Suit or suits for the recovery of such damages, or any installments thereof, may be brought by Landlord from time to time at its election, and nothing contained herein shall be deemed to require Landlord to postpone suit until the date when the Term of this Lease would have expired if it had not been terminated under the provisions of Articles 16 or 17 hereof, or under any provision of law, or had Landlord not re-entered the Demised Premises. Landlord, at Landlord's option, may make such alterations, repairs, replacements and/or decorations in the Demised Premises as Landlord in Landlord's sole judgment considers advisable and necessary for the purpose of re-letting the Demised Premises; and the making of such alterations and/or decorations shall not operate or be construed to release Tenant from any liability hereunder as aforesaid. Landlord shall in no event be liable in any way whatsoever for failure to re-let the Demised Premises, or in the event that the Demised Premises are re-let, for failure to collect the rent thereof under such re-letting. In the event of a breach or threatened breach by Tenant of any of the covenants or provisions hereof, Landlord shall have the right of injunction and the right to invoke any remedy allowed at law or in equity as if re-entry, summary proceedings and other remedies were not herein provided for. Mention in this Lease of any particular remedy shall not preclude Landlord from any other remedy, in law or in equity. Tenant hereby expressly waives any and all rights of redemption granted by or under any present or future laws in the event of Tenant being evicted or dispossessed for any cause, or in the event of Landlord obtaining possession of the Demised Premises, by reason of the violation by Tenant of any of the covenants and conditions of this Lease, or otherwise. 25 - 21 - ARTICLE 18 LANDLORD'S RIGHT TO PERFORM TENANT'S OBLIGATIONS Section 18.01. If Tenant shall default in the observance or performance of any term or covenant on its part to be observed or performed under or by virtue of any of the terms or provisions in any Article of this Lease which default shall continue after notice and the expiration of any applicable cure period (except in the event of an emergency in which event no notice shall be necessary), Landlord, without being under any obligation to do so and without thereby waiving such default, may remedy such default for the account and at the expense of Tenant. If Landlord makes any expenditures or incurs any obligations for the payment of money in connection therewith, including, but not limited to, attorneys' fees in instituting, prosecuting or defending any action or proceedings, such sums paid or obligations incurred with interest computed at the Interest Rate and costs shall be deemed to be additional rent hereunder and shall be paid to it by Tenant on demand. ARTICLE 19 COVENANT OF QUIET ENJOYMENT Section 19.01. Landlord covenants that upon Tenant paying the rent and additional rents and observing and performing all the terms, covenants and provisions of this Lease on Tenant's part to be observed and performed, Tenant may peaceably and quietly enjoy the Demised Premises, subject nevertheless to the terms and conditions of this Lease and provided, however, that no eviction of Tenant by reason of paramount title, the foreclosure of any mortgage now or hereafter affecting the Demised Premises or by reason of any termination of any ground or underlying lease to which this Lease is subject and subordinate, whether such termination is by operation of law, by agreement or otherwise, shall be construed as a breach of this covenant nor shall any action by reason thereof be brought against Landlord, and provided further that this covenant shall bind and be enforceable against Landlord, subject to the terms hereof, only so long as Landlord is in possession and is collecting rent from Tenant but not thereafter. ARTICLE 20 EXCAVATION Section 20.01. In the event that an excavation should be made for building or other purposes upon land adjacent to the Building, or should be authorized to be made, Tenant shall, if necessary, afford to the person or persons causing or authorized to cause such excavation, license to enter upon the Demised Premises for the purpose of doing such work as shall reasonably be necessary to protect or preserve the wall or walls of the Building, or the Building, from injury or damage and to support them by proper foundations, pinning and/or underpinning. ARTICLE 21 SERVICES AND EQUIPMENT Section 21.01. So long as this Lease is in full force and effect, Landlord shall, at its cost and expense: (a) Provide necessary elevator facilities on Business Days from 8:00 A.M. to 6:00 P.M. and shall have sufficient elevators available at all other times. At Landlord's option, the elevators shall be operated by automatic control or by manual control, or by a combination of both of such methods. (b) (i) Maintain and keep in good order and repair the air-conditioning, heating and ventilating system installed by Landlord, which system is further described hereinbelow. The "interior" portion of said system will be operated by Landlord as seasonably required on Business Days from 8:00 A.M. to 6:00 P.M. and the "perimeter" portion of said system shall be under Tenant's control. Landlord shall have no responsibility or liability for the ventilating conditions and/or temperature of the Demised Premises during the 26 - 22 - hours or days Landlord is not required to furnish heat, ventilation or air-conditioning pursuant to this paragraph. Landlord has informed Tenant that the windows of the Demised Premises and the Building may be sealed and that accordingly, the Demised Premises may become uninhabitable and the air therein unbreathable during the hours or days when Landlord is not required pursuant to this paragraph to furnish heat, ventilation or air-conditioning. Such condition of the Demised Premises shall not constitute nor be deemed to constitute a breach or a violation of this Lease or of any provision thereof, nor shall such condition of the Demised Premises constitute or be deemed to constitute an eviction and Tenant shall not claim nor be entitled to claim any abatement of rent or make any claim for any damages or compensation by reason of such condition of the Demised Premises. Any use or occupancy of the Demised Premises during the hours or days Landlord is not required to furnish heat, ventilation or air-conditioning to the Demised Premises pursuant to this paragraph shall be at the sole risk, responsibility and hazard of Tenant. Tenant shall in any event cause all of the windows in the Demised Premises to be kept closed at all times and shall cause all of the vents, intakes, outlets and grilles in the Demised Premises to be kept entirely unobstructed at all times. Additionally, Tenant shall comply with and observe any and all rules, regulations and requirements hereafter prescribed by Landlord for the proper functioning of the heating, ventilating and air-conditioning system. (ii) The heating, ventilating and air-conditioning system servicing the Demised Premises consists, as of the date hereof, of an interior duct air distribution system and perimeter units. The perimeter units serve that portion of the Demised Premises which is within 15 feet from the glass line of the Building and operate automatically, commencing operation at 8:00 A.M. and ceasing operation at 6:00 P.M. The perimeter units may be activated by Tenant at any other time and upon activation will operate for a pre-programmed period of time and may be reactivated by Tenant thereafter on a continuing basis. All electricity used in connection with the operation of the perimeter units shall be supplied by Landlord upon and subject to all of the terms and conditions contained in Article 4 hereof. (iii) In the event that Tenant shall require operation of the "interior" portion of the air-conditioning, heating or ventilation system at times other than as described above, Tenant shall give Landlord at least twenty-four (24) hours advance notice of such requirement and, if reasonably practicable, Landlord will arrange for such operation and Tenant shall pay Landlord's established charges therefor as additional rent, including with respect to minimum number of hours and/or minimum floor area for such operation. (c) Provide cleaning and janitorial services on Business Days. (d) Furnish hot and cold water for lavatory, pantry and drinking and office cleaning purposes. If Tenant requires, uses or consumes water for any other purposes, Tenant agrees to Landlord installing a meter or meters or other means to measure Tenant's water consumption, and Tenant further agrees to reimburse Landlord for the cost of the meter or meters and the installation thereof, and to pay for the maintenance of said meter equipment and/or to pay Landlord's cost of other means of measuring such water consumption by Tenant. Tenant shall reimburse Landlord the cost of all water consumed, as measured by said meter or meters or as otherwise measured, including sewer rents. Section 21.02. Landlord reserves the right to interrupt, curtail or suspend the services required to be furnished by Landlord under this Article 21 when the necessity therefor arises by reason of accident, emergency, mechanical breakdown, or when required by any law, order or regulation of any federal, state, county or municipal authority, or for any other cause beyond the reasonable control of Landlord. Landlord shall do any work pursuant to this Article in such a manner so as to minimize interference with Tenant's business, provided no additional costs, for labor at overtime or premium rates, or otherwise, are incurred thereby. No diminution or abatement of rent or other compensation shall or will be claimed by Tenant as a result of any interruption, curtailment or suspension of services, nor shall this Lease or any of the obligations of Tenant be affected or reduced by reason of such interruption, curtailment or suspension. Section 21.03. Tenant shall reimburse Landlord for the cost to Landlord of removal from the Demised Premises and the Building of so much of any refuse and rubbish of Tenant as shall exceed that ordinarily accumulated daily in the routine of business office occupancy or by any use of the Demised Premises after customary business hours. 27 - 23 - Section 21.04. It is expressly agreed that only Landlord or any one or more persons, firms or corporations authorized in writing by Landlord will be permitted to furnish laundry, linen, towels, drinking water, ice and other similar supplies and services to tenants and licensees in the Building. Landlord may fix, in its sole and absolute discretion, at any time and from time to time, the hours during which and the regulations under which such supplies and services are to be furnished. Landlord expressly reserves the right to act as or to designate, at any time and from time to time, an exclusive supplier of all or any one or more of the said supplies and services, provided that the quality thereof and the charges therefor are reasonably comparable to that of other suppliers and Landlord furthermore expressly reserves the right to exclude from the Building any person, firm or corporation attempting to furnish any of said supplies or services but not so designated by Landlord. Section 21.05. It is expressly agreed that only Landlord or any one or more persons, firms or corporations authorized in writing by Landlord will be permitted to sell, deliver or furnish any food or beverages, either personally or through the use of vending machines, for consumption within the Demised Premises or elsewhere in the Building. Landlord expressly reserves the right to act as or to designate at any time, or from time to time, an exclusive supplier or suppliers of such food and beverages sold in the Building and Landlord further expressly reserves the right to exclude from the Building any person, firm or corporation attempting to purvey any such food or beverages but not so designated by Landlord. It is understood, however, that Tenant or regular office employees of Tenant who are not employed by any supplier of such food or beverages or by any person, firm or corporation engaged in the business of purveying such food or beverages, may personally bring or have delivered into the Building food or beverages for consumption within the Demised Premises by employees of Tenant, but not for resale to or for consumption by any other tenant. Landlord may fix in its absolute discretion, at any time and from time to time, the hours during which and the regulations under which foods and beverages may be brought or delivered into the Building by or for regular employees of Tenant. Notwithstanding the foregoing, it is understood that Tenant or regular office employees of Tenant who are not employed by any supplier of such food or beverages or by any person, firm or corporation engaged in the business of purveying such food or beverages, may personally bring food or beverages into the Building for consumption within the Demised Premises by employees of Tenant, but not for resale to or for consumption by any other tenant. It is further understood that Tenant may order food and beverages for delivery to Tenant in the Demised Premises for consumption by Tenant's employees and invitees from contractors, restaurants and caterers selected by Tenant, without obtaining Landlord's prior consent, provided however that if Landlord determines that the delivery by any such contractor, restaurant or caterer poses a security risk to the Building personnel or to other tenants in the Building or otherwise causes a nuisance or disruption in the Building, Landlord may exclude same from the Building. Section 21.06. Tenant agrees to employ such office maintenance contractor as Landlord may from time to time designate, for all waxing, polishing, lamp replacement, cleaning (other than those cleaning services Landlord is obligated to furnish) and the maintenance work in the Demised Premises, provided that the quality thereof and the charges therefor are reasonably comparable to that of other contractors. Tenant shall not employ any other contractor without Landlord's prior written consent, which shall not be unreasonably withheld. Section 21.07. Landlord will not be required to furnish any other services, except as otherwise provided in this Lease. Section 21.08. (a) Tenant, at its sole cost and expense, shall cause the Demised Premises to be exterminated on a monthly basis to the satisfaction of Landlord and shall for such purposes employ exterminators designated by Landlord. (b) If Tenant shall have facilities on the Demised Premises for cooking, drinking, eating, washing and/or storage of food, or similar items, Tenant shall, on a weekly basis, cause the portion of the Demised Premises on which such facilities are located to be exterminated to the satisfaction of Landlord by exterminators designated by Landlord. The foregoing shall not, however, constitute any approval or consent to the use of the Demised Premises for such purposes. 28 - 24 - (c) If Tenant fails to comply with the provisions of this Section 21.08, Landlord, in addition to any other remedies available to it under this Lease or pursuant to law, may perform such service, and the cost therefor shall be paid by Tenant on demand as additional rent hereunder. ARTICLE 22 DEFINITION OF LANDLORD Section 22.01. The term "Landlord" wherever used in this Lease shall be limited to mean and include only the owner or owners at the time in question of the Land and the Building or the Building or the tenant under a ground or underlying lease affecting the Land and the Building or the Building, or both, to whom this Lease may be assigned, or a mortgagee in possession, so that in the event of any sale, assignment or transfer of the Land and the Building or the Building, or of such ground or underlying lease, such owner, tenant under a ground lease or mortgagee in possession shall thereupon be released and discharged from all covenants, conditions and agreements of Landlord thereafter accruing hereunder; but such covenants, conditions and agreements shall be binding upon each new owner, tenant under a ground or underlying lease, or mortgagee in possession for the time being of the Land and the Building, until sold, assigned or transferred. ARTICLE 23 INVALIDITY OF ANY PROVISION Section 23.01. If any term, covenant, condition or provision of this Lease or the application thereof to any circumstance or to any person, firm or corporation shall be invalid or unenforceable to any extent, the remaining terms, covenants, conditions and provisions of this Lease, or the application thereof to any circumstances or to any person, firm or corporation other than those as to which any term, covenant, condition or provision is held invalid or unenforceable, shall not be affected thereby and each remaining term, covenant, condition and provision of this Lease shall be valid and shall be enforceable to the fullest extent permitted by law. ARTICLE 24 BROKER Section 24.01. The parties hereto agree that Newmark and Company Real Estate, Inc. and SageGroupAssociates Inc. (collectively, the "Brokers") were the only brokers who negotiated and brought about this transaction, and Landlord agrees to pay the Brokers a commission therefor as per separate agreements. Tenant represents and warrants that it has not dealt with any broker in connection with this transaction other than the Brokers, and Tenant agrees to indemnify and save Landlord harmless from any claims made by other brokers claiming to have dealt with Tenant. Landlord represents that it has not dealt with any broker in connection with this transaction other than the Brokers, and Landlord agrees to indemnify and save Tenant harmless from any claims made by other brokers claiming to have dealt with Landlord in connection with this transaction. ARTICLE 25 SUBORDINATION Section 25.01. This Lease is subject and subordinate to all ground or underlying leases and to all mortgages which may now or hereafter affect such leases or the Building of which the Demised Premises forms a part, and to all renewals, modifications, consolidations, replacements and extensions thereof. This clause shall be self-operative, and no further instrument of subordination shall be required by any mortgagee. In confirmation of such subordination, Tenant shall execute promptly any certificate that Landlord may request. Tenant hereby constitutes and appoints Landlord the Tenant's attorney-in-fact to execute any such certificate or certificates for and on behalf of Tenant. 29 - 25 - Section 25.02. At the option of Landlord or any successor landlord or the holder of any mortgage affecting the Demised Premises, Tenant agrees that neither the cancellation nor termination of any ground or underlying lease to which this Lease is now or may hereafter become subject or subordinate, nor any foreclosure of a mortgage affecting said premises, nor the institution of any suit, action, summary or other proceeding against Landlord herein or any successor landlord, or any foreclosure proceeding brought by the holder of any such mortgage to recover possession of such property, shall by operation of law or otherwise result in cancellation or termination of this Lease or the obligations of Tenant hereunder, and upon the request of any such landlord, successor landlord, or the holder of such mortgage, Tenant covenants and agrees to attorn to Landlord or to any successor to Landlord's interest in the Demised Premises, or to such holder of such mortgage or to the purchaser of the mortgaged premises in foreclosure. Section 25.03. In the event of any act or omission by Landlord which would give Tenant the right to terminate this Lease or to claim a partial or total eviction, pursuant to the terms of this Lease, if any, Tenant will not exercise any such right until: (i) it has given written notice of such act or omission to the following (whose names and addresses shall previously have been furnished to Tenant) by delivering such notice of such act or omission addressed to such holders at the last address so furnished: (a) the holder of any first mortgage, and (b) the landlord under any ground or underlying lease to which this Lease is subject and subordinate; and (ii) a reasonable period for remedying such act or omission shall have elapsed following such giving of notice during which such parties, or any of the parties, with reasonable diligence, following the giving of such notice, has not commenced and continued to remedy such act or omission or to cause the same to be remedied. Section 25.04. If, in connection with obtaining financing, a banking, insurance or other recognized institutional lender shall request reasonable modifications in this Lease as a condition to such financing, Tenant will not unreasonably withhold, delay or defer its consent thereto, provided that such modifications do not, in Tenant's reasonable opinion, increase the obligations of Tenant hereunder or materially adversely affect the leasehold interest hereby created or Tenant's use and enjoyment of the Demised Premises. ARTICLE 26 ESTOPPEL CERTIFICATE Section 26.01. Tenant agrees, at any time, and from time to time, upon not less than seven (7) days prior notice from Landlord, to execute, acknowledge and deliver to Landlord a statement in writing addressed to Landlord certifying that this Lease is unmodified and in full force and effect (or, if there have been modifications, that the same is in full force and effect as modified and stating the modifications), stating the dates to which the Fixed Rent, additional rental and other charges have been paid, and stating whether or not to the best knowledge of the signer of such certificate, there exists any default in the performance of any covenant, agreement, term, provision or condition contained in this Lease, and any claim or offset in favor of Tenant, and, if any, specifying each such default, claim or offset in favor of Tenant, and, if any, specifying each such default, claim or offset of which signer may have knowledge, it being intended that any such statement delivered pursuant hereto may be relied upon by Landlord and by any purchaser or prospective purchaser of the Building and/or the Land and by any mortgagee or prospective mortgagee of any mortgage affecting the Building and/or the Land, and by any landlord under a ground or underlying lease affecting the Land or the Building. 30 - 26 - ARTICLE 27 LEGAL PROCEEDINGS, WAIVER OF JURY TRIAL Section 27.01. Landlord and Tenant hereby waive, to the extent such waiver is not prohibited by law, the right to a jury trial in any action, summary proceeding or legal proceeding between or among the parties hereto or their successors arising out of this Lease or Tenant's occupancy of the Demised Premises or Tenant's right to occupy the Demised Premises. Section 27.02. Tenant hereby waives the right to interpose a counterclaim (other than a compulsory counterclaim) in any summary proceeding instituted by Landlord against Tenant or in any action instituted by Landlord for unpaid rent or additional rent under this Lease. Section 27.03. Tenant hereby agrees that the existence of any legal proceeding arising under this Lease, or any judgment resulting therefrom, shall remain confidential and to that end shall not discuss with, or make public disclosure of, the same to the press, other tenants of the Building, or otherwise. The parties hereto understand and agree that the papers filed in the course of any such legal proceeding may be available to the public but this Section 27.03 is understood by Tenant as a prohibition against any public discussion or disclosure of the same, including any response to any query from the press, other tenants of the Building or otherwise. Section 27.04. In the event Tenant claims or asserts that Landlord has violated or failed to perform a covenant of Landlord not to unreasonably withhold or delay Landlord's consent or approval, or in any case where Landlord's reasonableness in exercising its judgment is in issue, Tenant's sole remedy shall be an action for specific performance, declaratory judgment or injunction, and in no event shall Tenant be entitled to any money damages for a breach of such covenant, and in no event shall Tenant claim or assert any claims in any money damages in any action or by way of set-off, defense or counterclaim, and Tenant hereby specifically waives the right to any money damages or other remedies. ARTICLE 28 SURRENDER OF PREMISES/HOLDOVER Section 28.01. Upon the expiration or other termination of the Term of this Lease, Tenant shall quit and surrender the Demised Premises in good order and condition, ordinary wear and tear and damage by fire or other casualty, the elements and any cause beyond Tenant's reasonable control excepted, and shall remove all its property therefrom, except as otherwise provided in this Lease. Tenant's obligation to observe or perform this covenant shall survive the expiration or other termination of the Term of this Lease. Section 28.02. If at any time during the last month of the Term of this Lease, Tenant shall have removed all or substantially all of Tenant's property from the Demised Premises, Landlord may, and Tenant irrevocably grants to Landlord a license to, immediately enter and alter, renovate and redecorate the Demised Premises, without diminution or abatement of rent, or incurring liability to Tenant for any compensation, and such acts shall have no effect on this Lease. Section 28.03. Tenant agrees it shall indemnify and save Landlord harmless against all costs, claims, loss or liability resulting from delay by Tenant in surrendering the Demised Premises upon expiration or sooner termination of the term of this Lease, including, without limitation, any claims made by any succeeding tenant founded on such delay. The parties recognize and agree that the damage to Landlord resulting from any failure by Tenant timely to surrender the Demised Premises will be substantial, will exceed the amount of monthly rent theretofore payable hereunder, and will be impossible of accurate measurement. Tenant therefore agrees that if possession of the Demised Premises is not surrendered to Landlord within two (2) days after the date of the expiration or sooner termination of the Term of this Lease, then Tenant will pay Landlord as liquidated damages for each month and for each portion of any month during which Tenant holds over in the Demised Premises after expiration or sooner termination of the Term of this Lease, a sum equal to two and one-half (2 1/2) times the average rent and additional rent which was payable per month under this Lease during the 31 - 27 - six (6) month period preceding such expiration or termination of the Term of this Lease. The aforesaid obligations shall survive the expiration of sooner termination of the Term of this Lease. ARTICLE 29 RULES AND REGULATIONS Section 29.01. Tenant, its servants, employees, agents, visitors, and licensees shall observe faithfully and comply strictly with the rules and regulations set forth in Schedule C attached hereto and made a part hereof. Landlord shall have the right from time to time during the Term of this Lease to make reasonable changes in and additions to the rules thus set forth. Section 29.02. Any failure by Landlord to enforce any rules and regulations now or hereafter in effect, either against Tenant or any other tenant in the Building, shall not constitute a waiver of any such rules and regulations. ARTICLE 30 NOTICES Section 30.01. Any notice, request or demand permitted or required to be given by the terms and provisions of this Lease, or by any law or governmental regulation, either by Landlord to Tenant or by Tenant to Landlord, shall be in writing. Unless otherwise required by such law or regulation, such notice, request or demand shall be given, and shall be deemed to have been served and given by Landlord and received by Tenant, three (3) days after Landlord (1) shall have deposited such notice, request or demand by registered or certified mail return receipt requested enclosed in a securely closed postpaid wrapper, in a United States Government general or branch post office, addressed to Tenant at the Demised Premises, and until Tenant has moved its offices to the Demised Premises, (2) shall have deposited such notice, request or demand by registered or certified mail return receipt requested enclosed in a securely closed postpaid wrapper in such a post office addressed to Tenant at its address as stated on the first page of this Lease. Such notice, request or demand shall be given, and shall be deemed to have been served and given by Tenant and received by Landlord, three (3) days after Tenant shall have deposited such notice, request or demand by registered or certified mail return receipt requested enclosed in a securely closed postpaid wrapper in such a post office addressed to Landlord at 777 Third Avenue, New York, New York 10017. Notices may also be sent by Federal Express or other similar nationally recognized overnight courier and shall be deemed to have been served and given the next Business Day after deposit with such overnight courier. Either party may, by notice as aforesaid, designate a different address or addresses for notices, requests or demands to it. ARTICLE 31 NO WAIVER: ENTIRE AGREEMENT Section 31.01. The failure of Landlord to seek redress for violation of, or to insist upon the strict performance of, any covenant or condition of this Lease, or any of the Rules and Regulations set forth or hereafter adopted by Landlord shall not prevent a subsequent act which would have originally constituted a violation from having all the force and effect of an original violation. The receipt by Landlord of rent with knowledge of the breach of any covenant of this Lease shall not be deemed a waiver of such breach. The failure of Landlord to enforce any of the Rules and Regulations set forth, or hereafter adopted, against Tenant and/or any other tenant in the Building shall not be deemed a waiver of any such Rules and Regulations. No provision of this Lease shall be deemed to have been waived by Landlord, unless such waiver be in writing signed by Landlord. No payment by Tenant or receipt by Landlord of a lesser amount than the monthly rent herein stipulated shall be deemed to be other than on account of the earliest stipulated rent, nor shall any endorsement or statement on any check or any letter accompanying any check or payment as rent be deemed an accord and satisfaction, and Landlord may accept such check or payment without prejudice to Landlord's right to recover the balance of such rent or pursue any other remedy in this Lease provided. 32 - 28 - Section 31.02. This Lease with the Schedules annexed hereto, if any, contains the entire agreement between Landlord and Tenant, and any executory agreement hereafter made between Landlord and Tenant shall be ineffective to change, modify, waive, release, discharge, terminate, or effect an abandonment of this Lease, in whole or in part, unless such executory agreement is in writing and signed by the party against which enforcement of the change, modification, waiver, release, discharge, termination or the effecting of the abandonment is sought. ARTICLE 32 CAPTIONS Section 32.01. The captions of Articles in this Lease are inserted only as a matter of convenience and for reference, and they in no way define, limit or describe the scope of this Lease or the intent of any provision thereof. ARTICLE 33 INABILITY TO PERFORM Section 33.01. This Lease and the obligation of Tenant to pay rent hereunder and perform all of the other covenants and agreements hereunder on the part of Tenant to be performed shall in no way be affected, impaired or excused because Landlord is unable to fulfill any of its obligations under this Lease or to supply or is delayed in supplying any service expressly or impliedly to be supplied or is unable to make, or is delayed in making any repair, additions, alterations or decorations or is unable to supply or is delayed in supplying any equipment or fixtures if Landlord is prevented or delayed from so doing by reason of strike or labor troubles or any outside cause whatsoever including but not limited to, governmental preemption in connection with a National Emergency or by reason of any rule, order or regulation of any department or subdivision thereof of any government agency or by reason of the conditions of supply and demand which have been or are affected by war or other emergency. ARTICLE 34 NO REPRESENTATION BY LANDLORD Section 34.01. Landlord or Landlord's agents have made no representations or promises with respect to the Building, the Land or the Demised Premises except as herein expressly set forth, and no rights, easements or licenses are acquired by Tenant by implication or otherwise except as expressly set forth in the provisions of this Lease. The taking of possession of the Demised Premises by Tenant shall be conclusive evidence, as against Tenant, that Tenant accepts said premises and that the Demised Premises and the Building of which the same form a part were in good and satisfactory condition at the time such possession was so taken. ARTICLE 35 NAME OF BUILDING Section 35.01. The Building may be known as or by such name as Landlord, in its sole discretion, may elect, and Landlord shall have the right from time to time to change such designation or name without Tenant's consent. ARTICLE 36 SUCCESSORS AND ASSIGNS Section 36.01. The covenants, conditions and agreements contained in this Lease shall bind and inure to the benefit of the parties hereto and their respective heirs, legal representatives, successors and, except as otherwise provided herein, their assigns. 33 - 29 - ARTICLE 37 DEFERRED COLLECTIONS Section 37.01. If all or any part of the Fixed Rent or additional rents, as above defined, shall at any time become uncollectible, reduced or required to be refunded by virtue of any rules, regulations, orders, laws and ordinances (including, without limitation, rent control or stabilization laws), or governmental or quasi-governmental authorities having jurisdiction ("Laws and Ordinances"), then for the period prescribed by said Laws and Ordinances, Tenant shall pay to Landlord the maximum amounts permitted pursuant to said Laws and Ordinances. Upon the expiration of the applicable period of time during which such amounts shall be uncollectible, reduced or refunded, Tenant shall pay to Landlord as additional rent, within fifteen (15) days after demand, all such uncollected, reduced or refunded amounts that would have been payable for the period absent such Laws and Ordinances; provided, however, that the retroactive collection thereof shall then be lawful. ARTICLE 38 FEES/INTEREST/LATE CHARGES Section 38.01. Whenever any default by Tenant causes Landlord to incur attorneys' fees and/or any other costs or expenses, Tenant agrees that it shall pay and/or reimburse Landlord for such fees, costs or expenses promptly upon being billed therefor. Section 38.02. If any monies owing by Tenant under this Lease are paid more than five (5) days after the date such monies are payable pursuant to the provisions of this Lease, Tenant shall pay Landlord interest thereon, at the Interest Rate, for the period from the date such monies were originally payable to the date such monies are paid. In the event that twice in any twelve (12) month period Tenant shall have defaulted beyond any applicable notice and cure period in the payment of Fixed Rent or additional rent, or any part of either, then any further default by Tenant within such twelve (12) month period shall permit Landlord to collect from Tenant, upon demand, in addition to any interest payable pursuant to this Article 38, or elsewhere in this Lease, a late charge equal to ten percent (10%) of the amount of Fixed Rent and additional rent so due as compensation to Landlord for the costs incurred by it as a result of such defaults, Landlord and Tenant acknowledging that the actual amount of such costs would be impossible to ascertain. ARTICLE 39 ABATEMENT OF RENT Section 39.01. Anything herein to the contrary notwithstanding, provided this Lease shall be in full force and effect and Tenant shall not be in default hereunder beyond any applicable notice and grace periods, the Fixed Rent shall abate at the rate of $12,157.50 per month for a period of one (1) month from and after the Commencement Date. Notwithstanding the foregoing, if Tenant shall cure any such default and this Lease shall remain in full force and effect, then Tenant shall be entitled to receive the full rent abatement as hereinabove provided. ARTICLE 40 TENANT'S EXTENSION OPTION Section 40.01. Provided this Lease shall then be in full force and effect and Tenant shall not be in default hereunder beyond any applicable notice and grace period either as of the date of Tenant's exercise of the extension option described herein or as of the day which would otherwise be the first day of the Extension Term, as defined herein (which conditions regarding default may be waived by Landlord in its sole discretion), Tenant shall have the right, at its option, to extend the Term for a single one (1) year period (the "Extension Term"). The Extension Term shall commence on the day after the Expiration Date and shall expire on the day prior to the first (1st) anniversary of such date unless the Extension Term shall sooner end pursuant to any of the terms, covenants or conditions of this Lease or pursuant to law. Tenant shall give Landlord written notice of 34 - 30 - Tenant's intention to exercise such option on or before November 1, 1995, the time of exercise being of the essence, and upon the giving of such notice, this Lease and the Term shall be extended without execution or delivery of any other or further documents, with the same force and effect as if the Extension Term had originally been included in the Term and the Expiration Date shall thereupon be deemed to be the last day of the Extension Term. All of the terms, covenants and conditions of this Lease shall continue in full force and effect during the Extension Term, including items of additional rent and escalation which shall be payable on the terms herein set forth with respect to the Extension Term (although not payable with respect to the initial Term), except that the Fixed Rent shall be increased to $164,855.70 per annum and Tenant shall have no further right to extend the Term pursuant to this Article. 35 - 31 - IN WITNESS WHEREOF, Landlord and Tenant have respectively executed this Lease as of the day and year first above written. SAGE REALTY CORPORATION, AGENT By:/s/ Robert Kaufman --------------------------- Landlord RPS REALTY TRUST By:/s/ Stanley Rappoport --------------------------- Tenant Executive Vice President CORPORATE SEAL 36 - 32 - ACKNOWLEDGMENTS State of New York ) ss.: County of New York) On the 2nd day of March, 1995, before me personally came Robert Kaufman to me known, who being by me duly sworn, did depose and say that he resides at 18 Martin Court, Great Neck, that he is the Executive Vice President of SAGE REALTY CORPORATION, the corporation described in and which executed the foregoing instrument; that he knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by order of the Board of Directors of said corporation, and that he signed his name thereto by like order. /s/ Karen Perry ----------------------------- Notary Public CORPORATE TENANT State of New York ) ss.: County of New York ) On the 1st day of March, 1995, before me personally came Stanley Rappoport to me known, who, being by me duly sworn did depose and say that he resides at 52 Harlan Drive, New Rochelle, New York; that he is the Executive Vice President of RPS REALTY TRUST, the corporation described in and which executed the above instrument; and that he signed his name by order of the board of directors of such corporation. /s/ Evelyn M. Wilkowski ----------------------------- Notary Public 37 - 33 - SCHEDULE "A" FLOOR PLAN SEE ATTACHED 38 - 34 - SCHEDULE "B" INTENTIONALLY OMITTED 39 - 35 - SCHEDULE "C" RULES AND REGULATIONS 1. The rights of tenants in the entrances, corridors, elevators and escalators of the Building are limited to ingress to and egress from the tenants' premises for the tenants and their employees, licensees and invitees, and no tenant shall use, or permit the use of, the entrances, corridors, escalators or elevators for any other purpose. No bicycles, dogs or other animals may be brought into the Building by Tenant, or its employees, licensees or invitees. 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 plazas, entrances, corridors, escalators, elevators and other facilities of the Building by other tenants. Tenant shall not use or permit its employees to use the elevators before 10:00 A.M. in a "Down" direction for purposes of taking a coffee break or similar activities. Fire exits and stairways are for emergency use only, and they shall not be used for any other purposes by the tenants, their employees, licensees or invitees. No tenant shall encumber or obstruct, or permit the encumbrance or obstruction of, any of the sidewalks, plazas, entrances, corridors, escalators, elevators, fire exits or stairways of the Building. Landlord reserves the right to control and operate the public portions of the Building and the public facilities, as well as facilities furnished for the common use of the tenants, in such manner as it deems best for the benefit of the tenants generally. 2. The cost of repairing any damage to the public portions of the Building or the public facilities or to any facilities used in common with other tenants, caused by a tenant or the employees, licensees or invitees of the tenant, shall be paid by such tenant. 3. Landlord may refuse admission to the Building outside of ordinary business hours to any person not known to the watchman in charge or not having a pass issued by Landlord or not properly identified, and may require all persons admitted to or leaving the Building outside of ordinary business hours to register. Tenant's employees, agents and visitors shall be permitted to enter and leave the Building whenever appropriate arrangements have been previously made between Landlord and Tenant with respect thereto. Each tenant shall be responsible for all persons for whom he requests such permission and shall be liable to Landlord for all acts of such persons. Any person whose presence in the Building at any time shall, in the judgment of Landlord, be prejudicial to the safety, character, reputation and interests of the Building or its tenants may be denied access to the Building or may be ejected therefrom. In case of invasion, riot, public excitement or other commotion, Landlord may prevent all access to the Building during the continuance of the same, by closing the doors or otherwise, for the safety of the tenants and protection of property in the Building. Landlord may require any person leaving the Building with any package or other object to exhibit a pass from the tenant from whose premises the package or object is being removed, but the establishment and enforcement, or failure to enforce, of such requirements shall not impose any responsibility on Landlord for the protection of any tenant against the removal of property from the premises of the 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 tenant's premises or the Building under the provisions of this rule. 4. No tenant shall obtain or accept or use in its premises ice, drinking water, food, beverage, towel, barbering, boot blacking, floor polishing, lighting maintenance, cleaning or other similar services from any persons not authorized by Landlord in writing to furnish such services, provided always that the charges for such services by persons authorized by Landlord are not excessive. Such services shall be furnished only at such hours, in such places within the tenant's premises and under such regulations as may be fixed by Landlord. 5. No awnings or other projections over or around the windows shall be installed by any tenant and only such window blinds as are supplied, or permitted by Landlord shall be used in a tenant's premises. 6. There shall not be used in any space, or in the public halls of the Building, either by Tenant or by jobbers or others, in the delivery or receipt of merchandise or mail, any hand trucks, except those equipped with rubber tires and side guards. 40 - 36 - 7. All entrance doors in each tenant's premises shall be left locked when the tenant's premises are not in use. Entrance doors shall not be left open at any time. All windows in each tenant's premises shall be kept closed at all times, and all blinds or drapes therein above the ground floor shall be lowered or closed when and as reasonably required because of the position of the sun, during the operation of the Building air conditioning system to cool or ventilate the tenant's premises. 8. No noise, including the playing of any musical instruments, radio or television, which, in the judgment of Landlord, might disturb other tenants in the Building shall be made or permitted by any tenant and no cooking shall be done in Tenant's premises except as expressly approved by Landlord. 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 services or the proper and economic heating, cleaning or other servicing of the Building or the premises, or the use or enjoyment by any other tenant of any other premises, nor shall there be installed by any tenant any ventilating, air conditioning, electrical or other equipment of any kind which, in the judgment of Landlord, might cause any such impairment or interference. No dangerous, inflammable, combustible or explosive object or material shall be brought into the Building by any tenant or with the permission of any tenant. 9. Tenant shall not permit any cooking or food odors emanating from the Demised Premises to seep into other portions of the Building. 10. No acids, vapors or other materials shall be discharged or permitted to be discharged into the waste lines, vents or flues of the Building which may damage them. 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 purpose for which they were designed or constructed, and no sweepings, rubbish, rags, acids or other foreign substances shall be deposited therein. All damages resulting from any misuse of the fixtures shall be borne by the tenant who, or whose servants, employees, agents, visitors or licensees, shall have caused the same. 11. No signs, advertisement, notice or other lettering shall be exhibited, inscribed, painted or affixed by any tenant on any part of the outside or inside the premises or the Building without the prior written consent of Landlord. In the event of the violation of the foregoing by any tenant, Landlord may remove the same without any liability, and may charge the expense incurred by such removal to the tenant or tenants violating this rule. Interior signs and lettering on doors and elevators shall 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. Landlord shall have the right to prohibit any advertising by any tenant which impairs the reputation of the Building or its desirability as a building for offices, and upon written notice from Landlord, Tenant shall refrain from or discontinue such advertising. 12. No additional locks or bolts of any kind shall be placed upon any of the doors or windows in any tenant's premises, and no lock on any door therein shall be changed or altered in any respect. Duplicate keys for a tenant's premises and toilet rooms shall be procured only from Landlord, which may make a reasonable charge therefor. Upon the termination of a tenant's lease, all keys to the tenant's premises and toilet rooms shall be delivered to Landlord. 13. No tenant shall mark, paint, drill into, or in any way deface any part of the Building or the premises demised to such tenant. Not boring, cutting or stringing of wires shall be permitted, except with the prior written consent of Landlord, and as Landlord may direct. Not tenant shall install any resilient tile or similar floor covering in the premises demised to such tenant except in a manner approved by Landlord. 14. No tenant shall use or occupy, or permit any portion of the premises demised to such tenant to be used or occupied, as an office for a public stenographer or typist, or as a barber or manicure shop, or as an employment bureau. No tenant or occupant shall engage or pay any employees in the Building, except those actually working for such tenant or occupant in the Building or advertise for laborers giving an address at the Building. 41 - 37 - 15. No premises shall be used, or permitted to be used, at any time, as a store for the sale or display of goods or merchandise or any king, or as a restaurant, shop, booth, bootblack or other stand, or for the conduct of any business or occupation which involves direct patronage of the general public on the premises demised to such tenant, or for manufacturing or for other similar purposes. 16. The requirements of tenants will be attended to only upon application at the office of the Building. Employees of Landlord shall not perform any work or do anything outside for the regular duties, unless under special instructions from the office of the Landlord. 17. Each tenant shall, at its expense, provide artificial light in the premised demised to such tenant for Landlord's agents, contractors and employees while performing janitorial or other cleaning services and making repairs or alterations in said premises. 18. Employees of Tenant shall not loiter around the hallways, stairways, elevators, front, roof or any other part of the Building used in common by the occupants thereof. 19. Any cuspidors or similar containers or receptacles used in the Demised Premises shall be cared for and cleaned by and at the expense of Tenant. 20. Any and all wet and/or food garbage, including coffee grinds, is to be deposited in a plastic liner bag in a waste basket or other receptacle. 21. Tenant shall separate all refuse and rubbish of Tenant in accordance with the methods and procedures set forth, from time to time, by Landlord. 42 SIDE LETTERS 43 March 1, 1995 RPS Realty Trust 733 Third Avenue New York, New York 10017 Re: Lease between Sage Realty Corporation, as Agent ("Landlord"), and RPS Realty Trust ("Tenant") for a portion of the 10th floor (the "Demised Premises") in the building known as 747 Third Avenue, New York, New York (the "Building") Gentlemen: (1) Landlord hereby represents that as of the date hereof, the Demised Premises are vacant and available for possession by Tenant. (2) Tenant shall be entitled to four (4) directory listings on the Building lobby directory, free of charge to Tenant. Landlord may make a reasonable charge for any changes to the directory listings. (3) Landlord agrees that, for purposes of Section 11.08 of the Lease, the term "Related Entity" shall be deemed to include any trustee of Tenant. Kindly sign a copy of this letter where indicated to acknowledge your agreement with the foregoing. Very truly yours, SAGE REALTY CORPORATION, AGENT By:/s/ Robert Kaufman --------------------------- Robert Kaufman Executive Vice President Agreed to this 1st day of March, 1995 RPS REALTY TRUST By:/s/ Stanley Rappoport -------------------------- Stanley Rappoport Executive Vice President 44 March 2, 1995 RPS Realty Trust 733 Third Avenue New York, New York 10017 Re: Lease between Sage Realty Corporation, as Agent and RPS Realty Trust for premises located at 747 Third Avenue, New York, N.Y. (the "Building") Gentlemen: The undersigned represents that it is authorized to execute the referenced lease as agent for the owner of the Building. Very truly yours, SAGE REALTY CORPORATION By:/s/ Robert Kaufman -------------------- Robert Kaufman, Executive Vice President EX-10.29 3 AGREEMENT WITH HERBERT LIECHTUNG 1 EXHIBIT 10.29 2 AGREEMENT AGREEMENT, dated as of March 1, 1995, between RPS Realty Trust, a Massachusetts business trust (the "Trust"), and Herbert Liechtung, the President of the Trust ("Employee"). R E C I T A L S: A. The Trust and Employee are parties to an Employment Agreement dated as of October 24, 1988 (the "Employment Agreement") and such agreement provides that the Trust intends to engage in the business of mortgage lending. B. Under paragraph 3 of the Employment Agreement, upon the occurrence of a Business Change Event (as defined below), and provided Employee is at such time employed by the Trust, Employee may, at his option, by giving written notice to the Trust within 12 months of the occurrence of the Business Change Event, cause the Term of the Employment Agreement to terminate two months after such notice. For purposes of this Agreement and the Employment Agreement, a "Business Change Event" includes a change of the business carried on by the Trust having the effect that the Trust's business ceases to be primarily the business of mortgage lending. C. Pursuant to paragraph 3 of the Employment Agreement, if Employee elects to terminate his employment with the Trust as a result of a Business Change Event, the Trust is obligated to pay Employee a stated amount based on his average compensation (the "Business Change Event Payment"). D. In 1991, the Board of Trustees of the Trust authorized the Trust to make direct and indirect equity investments in real property. Since such time, the Trust has acquired nine real properties by means of negotiated transactions with its borrowers or in connection with (or in lieu of) foreclosure, and has made only one new mortgage loan. E. In 1993, the Trust announced that it intended to acquire equity interests in real properties, other than as a result of negotiated transactions with its borrowers and foreclosure. In connection therewith, during 1993 and early 1994 the Trust focused on several transactions which, if consummated, would have resulted in a significant increase in the Trust's assets invested in real properties, primarily shopping center properties. F. In January 1994, the Trust sold its California mortgage loan portfolio. G. In furtherance of the Trust's efforts to focus on direct equity investments, the Trust commenced discussions with Ramco-Gershenson, Inc. ("Gershenson"), a retail shopping center developer, resulting in the Trust and Ramco entering into a Letter of Intent, dated July 14, 1994, a copy of which is attached hereto as Exhibit A. H. It is anticipated that the Trust and Gershenson will effectuate a business combination through the contribution of, among other things, their respective shopping center properties to an operating limited partnership or, in the alternative, a transaction whereby, directly or indirectly, control of a material interest in the assets or business of Gershenson is acquired by or combined with the Trust or any of its affiliates (the "Gershenson Transaction"). 3 Simultaneously therewith or prior thereto, the Trust will dispose of its remaining mortgage loan assets (the "Mortgage Loans") or contribute the Mortgage Loans to a qualified REIT subsidiary, the stock of which will be distributed to the Trust's shareholders (the "Spin-Off Transaction"). I. The Trust and Employee agree that consummation of the Gershenson Transaction will be a Business Change Event within the meaning of the Employment Agreement, entitling Employee to terminate the Employment Agreement. J. In connection with the Business Change Event that will occur upon the consummation of the Gershenson Transaction, the Trust and Employee have mutually agreed to terminate the Employment Agreement and Employee's employment by the Trust, subject to the terms and conditions set forth herein. K. It is a condition to the consummation of the Gershenson Transaction that the Trust satisfy the remaining obligations of the Trust under the Employment Agreement. NOW, THEREFORE, the parties, intending to be legally bound hereby, agree as follows: 1. DEFINITIONS. All capitalized terms not otherwise defined in this Agreement shall have the meanings set forth in the Employment Agreement. 2. TERMINATION. Subject to earlier termination as set forth in the Employment Agreement, Employee shall remain employed as President of the Trust and all provisions of the Employment Agreement shall remain in full force and effect until the date of consummation (the "Transaction Date") of the Gershenson Transaction or an Alternative Transaction (as such term is defined in paragraph 3). Effective upon the Transaction Date, the Employment Agreement and Employee's employment by the Trust shall, without any further action on the part of any party, be automatically terminated. From and after the termination of the Employment Agreement and Employee's employment by the Trust, neither party to the Employment Agreement shall have any liability, rights or obligations with respect to such agreement, except that, notwithstanding such termination, the Trust shall remain obligated to perform its indemnification obligations under the Employment Agreement. 3. PAYMENTS IN CONNECTION WITH TERMINATION. (a) On the Transaction Date, the Trust shall pay Employee all accrued but unpaid salary and bonuses and any unreimbursed expenses owed to Employee under the Employment Agreement through the Transaction Date, including without limitation, the Origination Bonus payable pursuant to paragraph 6 of the Employment Agreement in connection with the Trust's consummation of the Gershenson Transaction or an Alternative Transaction. Such amount shall be paid to Employee in cash by means of certified check or wire transfer. (b) In accordance with the terms of the Employment Agreement and in consideration of the termination of such agreement and Employee's employment by the Trust, on the Transaction Date the Trust shall pay Employee an amount equal to the sum of (i) $1,962,471 and (ii) the product of (x) $27.25 and (y) the number of days which elapse between January 1, 1995 and the Transaction Date (inclusive of the payments referred to in Section 7(b) hereof) (the "Termination Payment") in cash by means of certified check or wire transfer, in complete satisfaction and in lieu of its obligation to make the Business Change Event Payment; provided, however, if the Trust's obligation to make the Termination Payment arises in connection with the consummation of an Alternative Transaction, the amount of the Termination 4 Payment shall be increased or decreased based on the Origination Bonuses (if any) that would have been earned by the Employee under the Employment Agreement (after taking into account the consummation of such Alternative Transaction) during the 14 month period immediately following the Transaction Date as determined in good faith by the Trust's Board of Trustees; provided, further, in no event shall the amount of the Termination Payment be decreased by more than $200,964. (c) For purposes of this Agreement (other than paragraph 4), "Alternative Transaction" shall mean any transaction or series of transactions (including, without limitation, private purchases, tender offer, exchange offer, merger, consolidation, partnership or other business combination), other than the Gershenson Transaction, whereby, directly or indirectly, control of a material interest in the securities, assets or business of the Trust is acquired or combined with any unaffiliated third party; provided, however, an Alternative Transaction shall not include (i) any sale of the Trust's assets proposed following the adoption by the Board of a plan to liquidate the Trust or (ii) any transaction or series of transactions which would not otherwise constitute an Acquisition Event. 4. BONUS. (a) For extraordinary services provided to the Trust, the Trust shall pay Employee, on the date the Gershenson Transaction or an Alternative Transaction is consummated, an amount equal to $500,000 (the "Bonus Payment") in cash by means of a certified check or wire transfer. For purposes of this paragraph 4 only, "Alternative Transaction" shall mean any transaction or series of transactions (including, without limitation, private purchases, tender offer, exchange offer, merger, consolidation, partnership or other business combination) whereby, directly or indirectly, control of a material interest in the securities, assets or business of the Trust is acquired by or combined with any unaffiliated third party; provided, however, an Alternative Transaction shall not include any sale of the Trust's assets pursuant to a plan of liquidation (other than a plan of liquidation that arises from the Trust's decision not to consummate the Gershenson Transaction). (b) In the event (i) the Employment Agreement is terminated due to Employee's death or disability prior to the consummation of the Gershenson Transaction or an Alternative Transaction and (ii) the Gershenson Transaction or an Alternative Transaction is consummated on or before December 31, 1995, the Trust shall pay the Bonus Payment to Employee or his legal representatives on the date of the consummation of the Gershenson Transaction or such Alternative Transaction, as the case may be. 5. OPTION PLAN. (a) The Trust shall propose to its shareholders that the Trust's 1989 Employees' Stock Option Plan (the "Employee Plan") be amended and restated in substantially the form of Exhibit B hereto (the "Amended Employee Plan"), which Amended Employee Plan shall include the proposed amendments to the Employee Plan described on Exhibit C hereto (the "Proposed Amendments"); provided, however, the Amended Employee Plan shall not become effective unless and until (i) the Gershenson Transaction has been consummated and (ii) the Amended Employee Plan has been approved and adopted by the affirmative vote of or consent by at least a majority in interest of the shareholders of the Trust in accordance with Rule 16b-3(b) of the Securities Exchange Act of 1934, the Trust's Declaration of Trust and applicable law (the "Required Vote"); and provided, further, that in the event the Trust does not submit the Gershenson Transaction to its shareholders for approval, the Trust shall have no 3 5 obligation to propose to its shareholders the Amended Employee Plan. The Trust will include the Amended Employee Plan in its proxy solicitation materials relating to the Gershenson Transaction. (b) In the event the Trust fails to consummate the Gershenson Transaction because it decides to pursue an Alternative Transaction, the Trust's Board of Trustees shall make a good faith determination whether it is appropriate to propose that the shareholders of the Trust approve the Amended Employee Plan (or one or more of the Proposed Amendments which are a part of the Amended Employee Plan) in connection with such Alternative Transaction. In the event the Board of Trustees decides to propose to the Trust's shareholders the Amended Employee Plan (or one or more of the Proposed Amendments which are a part of the Amended Employee Plan) in connection with an Alternative Transaction, the Amended Employee Plan or such amendment(s) shall not become effective unless (i) such Alternative Transaction shall have been consummated and (ii) the Amended Employee Plan (or one or more of the Proposed Amendments which are a part of the Amended Employee Plan) shall have been approved and adopted by the Required Vote; provided, further, in the event the Trust does not submit such Alternative Transaction to a vote of its shareholders, the Trust shall, notwithstanding any determination made by its Board of Trustees pursuant to this paragraph 5(b), have no obligation to propose to its shareholders the Amended Employee Plan (or one or more of the Proposed Amendments which are a part of the Amended Employee Plan). (c) In accordance with Section 13 of the Employee Plan, in the event the Spin-Off Transaction is consummated, the exercise price of Employee's existing options will be adjusted based on the fair market value of the Trust's assets that will remain in the Trust (or will be contributed to a subsidiary partnership) and the fair market value of the assets that will be contributed to the spin-off company, as determined by Dean Witter Reynolds Inc. (d) In the event the Gershenson Transaction or an Alternative Transaction that includes the adoption of the Proposed Amendment set forth as item 4 on Exhibit C is consummated, the Trust will provide the Employee (or any subsequent holder of the Employee's options granted under the Employee Plan) with the same registration rights on the same terms and conditions that are granted in connection with such transaction (except that the Trust shall be permitted to modify such rights to the extent necessary to reflect any differences between the form of security held by the Employee and the form of the security held by the persons which are provided such registration rights in such transaction). (e) In the event the Employee resigns as a trustee of the Trust prior to the expiration of his term due to a breach by the Trust of its obligations under this Agreement or under the Master Asset Contribution Agreement to be entered into by the Trust and Gershenson in connection with the Gershenson Transaction that materially and adversely impacts Employee's rights or benefits as a trustee, then, notwithstanding such resignation, Employee shall be deemed to have satisfied the requirements for "retirement" under the Amended Employee Plan. 6. CONTRIBUTION TO SAVINGS PLAN. The Trust shall make a discretionary contribution consistent with past practice to the Trust's Retirement Savings Plan for Employee's account during any year in which the Employment Agreement remains in effect and 4 6 shall make a pro rata contribution for any portion of a year in which the Employment Agreement remains in effect. 7. CONTINUATION OF MEDICAL AND DENTAL COVERAGE. (a) For the 14 month period following the termination of the Employment Agreement, the Trust shall provide Employee with medical coverage no less favorable than (i) the medical coverage Employee is currently receiving under the Trust's health plan in existence on the date hereof and (ii) the medical coverage presently received by the executive officers of Gershenson under the Gershenson health plan in existence on the date hereof. (b) The Trust shall pay Employee an amount equal to the maximum premium payment per month for Employee's current dental coverage for the 14 month period following termination of the Employment Agreement. 8. ASSIGNMENT OF LIFE INSURANCE POLICY. On the Transaction Date, the Trust, at the Employee's election, shall assign to Employee the key man life insurance policy maintained by the Trust on Employee's life, provided that Employee simultaneously reimburse the Trust for any premiums paid by the Trust on behalf of Employee which are unearned by Employee as of such date. 9. EXCHANGE OF RELEASES. Upon termination of the Employment Agreement and Employee's employment by the Trust pursuant to this Agreement (i) Employee shall execute and deliver to the Trust a release, substantially in the form of Exhibit D attached hereto and (ii) the Trust shall execute and deliver to Employee a release, substantially in the form of Exhibit E attached hereto. 10. ACKNOWLEDGEMENT. The Trust hereby advises Employee that Employee has been employed by the Trust and/or the Trust's predecessors (including Resources Pension Shares 1, Resources Pension Shares 2, Resources Pension Shares 3 and Integrated Resources Pension Shares 4) since October 1, 1981. The Trust and Employee hereby acknowledge that Employee shall have provided the Trust and/or its predecessor entities with 15 years of continuous service on October 1, 1996. 11. LEGAL FEES. The Trust shall reimburse Employee for legal fees incurred by Employee in connection with this Agreement up to a maximum of $35,000. The Trust shall make the payment within 10 days after receipt of reasonably appropriate documentation evidencing the incurrence of such legal fees. 12. MISCELLANEOUS. (a) Assignment. This Agreement may not be assigned by Employee. This Agreement shall be binding upon and inure to the benefit of Employee and his successors and legal representatives. (b) Exclusive Agreement; Amendment. This Agreement supersedes all prior agreements among the parties with respect to its subject matter, is intended as a complete and exclusive statement of the terms of the Agreement between the parties with 5 7 respect thereto and cannot be changed or terminated except by a written instrument executed by the Trust and Employee. (c) Termination. The representations, warranties, covenants and agreements of the parties as set forth in paragraphs 2, 3, 5, 6, 7, 8 and 9 of this Agreement shall automatically terminate in the event (i) the Employment Agreement is terminated pursuant to its terms on a date which precedes the termination of the Employment Agreement pursuant to the terms of this Agreement or (ii) the Transaction Date occurs after December 31, 1995. The covenants and agreements of the Trust as set forth in paragraph 4 of this Agreement shall automatically terminate in the event (i) the Employment Agreement is terminated pursuant to its terms (other than as a result of Employee's death or disability) on a date which precedes the termination of the Employment Agreement pursuant to this Agreement or (ii) (x) the Employment Agreement is terminated as a result of Employee's death or disability on a date which precedes the termination of the Employment Agreement pursuant to this Agreement and (y) the Gershenson Transaction or an Alternative Transaction (as such term is defined in paragraph 4) is not consummated on or before December 31, 1995. (d) No Waiver. Nothing contained herein nor the execution of this Agreement by the Employee shall operate as a waiver of the Employee's right to assert that, notwithstanding whether the Gershenson Transaction is consummated, a Business Change Event has occurred. (e) Additional Parties. In the event the Trust completes a transaction which involves the transfer of a material portion of its assets to one or more subsidiaries or controlled affiliates or the acquisition of a material amount of assets by one or more subsidiaries or controlled affiliates, the Trust will cause each such subsidiary or affiliate, except for subsidiaries or other affiliates succeeding to ownership of the Mortgage Loans through a Spin-Off Transaction or third parties purchasing one or more of the Mortgage Loans, to assume on a joint and several basis with the Trust and each other all obligations of the Trust hereunder. In the event the Trust completes a transfer of a material portion of its assets to an unrelated third party, the Trust shall prior to making a distribution to its shareholders adequately reserve for any remaining liabilities under this Agreement. (f) Governing Law. This Agreement and all amendments hereof shall be governed by the internal law of the State of New York, without regard to conflicts of law principles thereof. RPS REALTY TRUST By:/s/ Joel M. Pashcow ------------------------------------ Name: Joel M. Pashcow Title: Chairman /s/ Herbert Liechtung --------------------------------------- Herbert Liechtung 6 8 EXHIBIT A 9 RPS REALTY TRUST 733 THIRD AVENUE NEW YORK, NEW YORK 10017 July 14, 1994 RAMCO-GERSHENSON, INC. 27600 NORTHWESTERN HIGHWAY SUITE 200 SOUTHFIELD, MICHIGAN 48034 Gentlemen: This letter (the "LETTER OF INTENT") sets forth the principal terms and conditions upon which RPS Realty Trust (THE "COMPANY") proposes to negotiate an acquisition of assets that will be effectuated through a contribution of certain assets of Ramco-Gershenson, Inc. and its affiliates (collectively, "RAMCO") and certain assets of the Company to a Delaware limited partnership (the "OPERATING PARTNERSHIP") to be formed by the Company (the "TRANSACTION"). This Letter of Intent represents only our current good faith intention to negotiate and enter into a definitive Asset Contribution Agreement relating to the Transaction. The date of the closing of the Transaction is referred to herein as the "CLOSING DATE". 1. THE CONTRIBUTION. A. Structure of the Contribution. (a) Ramco will contribute to the Operating Partnership the following assets and properties: (i) the shopping center properties listed on Schedule 1 (including the development land and development out parcels and options on such development land owned or controlled by Ramco as specified on such Schedule) (collectively, the "RAMCO PROPERTIES"), subject to the Ramco Properties' existing liabilities as listed and described on Schedule 2, and (ii) 100% of the non-voting 10 common stock (generally entitled to dividends equal to 99% of net cash flow) and 5% of the voting common stock (collectively, the "RAMCO MANAGEMENT STOCK") of the corporation that will hold Ramco's property management contracts with third parties as set forth on Schedule 3 (collectively, the "RAMCO THIRD PARTY MANAGEMENT CONTRACTS"). (The Ramco Properties and the Ramco Management Stock are collectively referred to herein as the "RAMCO CONTRIBUTION ASSETS".) Excluded from the Ramco Properties will be the outlots owned by Ramco which are not useful for the development or expansion of retail shopping centers contributed to the Company as set forth on Schedule 4, which outlots will not be developed by Ramco. Subject to adjustment as set forth in subparagraphs (c) and (d) below, Ramco will receive a limited partnership interest in the Operating Partnership based on the agreed upon value of the Ramco Contribution Assets as a fraction of the agreed upon value of all the assets contributed to the Operating Partnership; provided, however, in no event will Ramco receive an interest in the Operating Partnership that exceeds 37%. The agreed upon value of the Ramco Contribution Assets will be determined in accordance with Schedule 5. Schedule 5.1 illustrates the application of Schedule 5 based on certain assumptions. All out-of-pocket costs incurred by Ramco related to options on development land owned by Ramco that are contributed to the Company (other than Office Max) shall be reimbursed by the Company from funds available under the Company's line of credit at such time as the line of credit is in place. If Ramco incurs out-of-pocket costs relating to Office Max that are not borrowed, such costs shall be reimbursed by the Company from funds available under the Company's line of credit, up to a maximum of $1,980,000 (inclusive of all borrowed amounts). (b) Concurrently with the contribution of the Ramco Contribution Assets to the Operating Partnership (i) all the property management contracts relating to the Ramco Properties will be canceled and (ii) the Company and the Operating Partnership will be released from any obligation as to debts in excess of $5,000,000 on the Ramco Properties that are owed to Ramco. (c) In the event projected net operating income from the Ramco Jackson, Michigan property (the "JACKSON PROPERTY") during the 12 month period commencing October 1, 1994 (based on Qualifying Leases (as such term is defined in Schedule 5) in place as of such date) is less than $2,824,000, Ramco will have the right to increase its interest in the Operating Partnership based on the performance of the Jackson Property from October 1, 1994 until the date which is one year from the closing in accordance with the formula set forth in Schedule 6. 2 11 (d) In the event that as of October 1, 1994 Ramco has entered into a Qualifying Lease for new space to be constructed in the area of the Tel-Twelve Mall (the "TEL-TWELVE PROPERTY") previously occupied by Montgomery Ward Garden Shop (the "TEL-TWELVE LEASE"), (i) for purposes of making the calculation set forth on Schedule 5, projected net operating income from the Tel-Twelve Property will be computed without regard to the existence of the Tel-Twelve Lease and (ii) Ramco will have the right to increase its interest in the Operating Partnership based on the formula set forth in Schedule 6.1. (e) The Company will contribute (i) the shopping center properties listed on Schedule 7 (collectively, the "COMPANY PROPERTIES") and (ii) $75,000,000 in cash (the "COMPANY CASH") to the Operating Partnership. (The Company Properties and the Company Cash are referred to collectively herein as the "COMPANY CONTRIBUTION ASSETS".) The Company Contribution Assets will have an agreed upon value of $123,657,000, or, if, as of October 1, 1994, projected net operating income from the Company Properties is less than $5,200,000, such lesser agreed upon amount as determined by an independent appraiser selected by the parties. The Company will initially receive an interest in the Operating Partnership based on the agreed upon value of the Company Contribution Assets as a fraction of the agreed upon value of all the assets contributed to the Operating Partnership as described in subparagraph (a) and this subparagraph (e). The Company's interest in the Operating Partnership will be divided into two parts: (i) a 1% general partner interest and (ii) a limited partnership interest equal to the difference between (x) 99% and (y) the limited partnership interest allocated to Ramco. (f) Immediately prior to the consummation of the Transaction, the Company will, if it does not dispose of such assets prior to such date, contribute its mortgage loans, its Saratoga Street, Baltimore, Maryland property, its Norgate property, a certain amount of cash and certain other tangible and intangible assets (including, without limitation, furniture, fixtures and equipment) to a qualified REIT subsidiary ("RPS MORTGAGE"). The stock of RPS Mortgage will be distributed to the shareholders of the Company in a spin-off by means of a pro rata dividend (the "SPIN-OFF TRANSACTION"). In connection with the Spin-Off Transaction, RPS Mortgage will assume the liabilities of the Company relating to the assets that were contributed to RPS Mortgage and the Company's leases for office space. (g) Following or contemporaneous with the Spin-Off Transaction and prior to the closing of the Transaction, the Company will merge into a subsidiary Maryland business trust and will change its name to Ramco-Gershenson Properties Trust. 3 12 (h) Following or contemporaneous with the Spin-Off Transaction and prior to the closing of the Transaction, the Company will combine its shares of beneficial interest by means of a 4 for 1 reverse split. B. Structure of the Operating Partnership. (a) The Company will be the sole general partner of the Operating Partnership and will be responsible for the management of the Operating Partnership's business and affairs. The holders of the units of limited partnership interest (the "OP UNITS"), as limited partners in the Operating Partnership, will not have any right to participate in the management of the Operating Partnership except that the Company (in its capacity as sole general partner of the Operating Partnership) will not have the right, without the approval of limited partners owning at least 85% of the OP Units, to (i) amend the Operating Partnership's limited partnership agreement (the "PARTNERSHIP AGREEMENT") in any manner that would materially adversely affect the rights, privileges and preferences of the OP Units, (ii) dissolve or terminate the Operating Partnership prior to its stated date of dissolution or termination (other than a dissolution or termination which occurs without a vote pursuant to the Partnership Agreement or applicable law) or (iii) amend the Partnership Agreement in a manner that would subject the holders of the OP Units to any personal liability beyond their interest in the Operating Partnership. (b) Following the closing of the Transaction, the Company and Ramco will agree to conduct their respective real estate acquisition, management and development businesses through the Operating Partnership. (c) Subject to compliance with the allocations mandated under Section 704(c) of the Internal Revenue of the Code, profits, losses and distributions from the Operating Partnership shall be made in accordance with each partner's percentage interest in the Operating Partnership. Profits and losses will be allocated to the partners in the Operating Partnership utilizing the "traditional" allocation method. C. Terms of the OP Units (a) The limited partnership interests in the Operating Partnership will be divided into such number of OP Units that, following such division, will permit the OP Units to be exchanged for the Company's shares of beneficial interest ("SHARES") on a one-for-one basis. This one-for-one exchange ratio will be adjusted in the event of a stock combination, stock split, stock dividend or other event having a dilutive or anti-dilutive effect on the limited partners' exchange rights. 4 13 Upon the effectiveness of an exchange of OP Units for Shares, the Company will be issued one OP Unit in respect of each OP Unit that was redeemed. (b) In the event a limited partner desires to cause the Company to exchange his OP Units for Shares, the Company will have the option (the "CASH OPTION") to exchange such limited partner's OP Units for cash equal to the product of (i) the number of Shares then issuable upon the exchange times (ii) the current per share market price of the Shares based on the average closing prices of the Shares on the New York Stock Exchange for the five consecutive trading days ending on the date the notice of exchange was made. The Company will be issued one OP Unit in respect of each OP Unit exchanged by the Company pursuant to the Cash Option. (c) Any exchange of OP Units for Shares will be subject to compliance with the ownership limitations (i.e., excess shares) included in the Company's organizational documents. (d) Except as otherwise permitted by at least a majority of the Company's independent trustees, all limited partners will be prohibited from exercising their exchange rights for a period of one year from the Closing Date except, in the event of the death of a limited partner prior to such time, the estate of such limited partner shall have the right to exercise such exchange rights to the minimum extent necessary to obtain the funds needed to pay any estate taxes that may be payable at such time. Except in connection with a merger, business combination or other reorganization transaction, the Company will not exchange any of its OP Units as long as there are any other holders of such OP Units. D. Board of Trustees (a) Upon the closing of the Transaction, Ramco shall have the right, subject to compliance with the Company's organizational documents, to designate four trustees (not less than two of whom shall be independent of Ramco, the Company and their respective affiliates) to serve on the Company's nine person Board of Trustees (the "BOARD OF TRUSTEES"). The Company will agree to exercise its best efforts to secure the resignation of up to four of its trustees (other than Messrs. Pashcow, Liechtung, Goldberg and Blank) as is necessary to enable the Ramco designees to be elected to the Board of Trustees. Messrs. Pashcow, Liechtung, Goldberg and Blank, as well as one other existing trustee or another person designated by the Company, will serve as trustees of the Company following the closing. 5 14 (b) The two persons affiliated with Ramco who will become members of the Board of Trustees will be Joel Gershenson and Dennis Gershenson. (c) In the Company's discretion, the Company shall have the right to amend its organizational documents to provide that newly created trusteeships or vacancies on the Board of Trustees shall be filled by a majority of the independent trustees then in office. (d) At all times, a majority of the Board of Trustees shall be independent of Ramco, the Company and their affiliates. (e) The Board of Trustees will appoint a non-voting Advisory Committee consisting of Michael A. Ward, Richard Gershenson and Bruce Gershenson. The members of the Advisory Committee will be available to consult with and advise the Board of Trustees as requested. E. Uses of Contributed Cash (a) The cash contributed to the Operating Partnership by the Company shall be used as follows: (i) to pay all fees and expenses relating to the Transaction (other than prepayment penalties or premiums and any other expenses and related legal fees in excess of $250,000 relating to the debt listed on Schedule 2 and classified as Ramco Loan Payoffs, any cash amounts paid by Ramco to any third party in order to obtain his or its consent to the Transaction or to any Ramco investor who owns interests in the Ramco Properties, and such closing costs that are customarily paid by sellers of real property in the localities where the Ramco Properties are located), one-half of all title insurance costs and recording charges incurred in connection with the Transaction, and tenant improvement costs incurred at the Ramco Properties with respect to leases entered into after October 1, 1994 that are not otherwise included in whole or in part, in RNOI (as such term is defined in Schedule 5) (other than with respect to the Tel-Twelve Lease and Qualifying Leases at the Jackson Property entered into after October 1, 1994 that are not otherwise included, in whole or in part, in RNOI), (ii) if the Company has not received a commitment for a line of credit as of the closing of the Transaction, to establish a reserve equal to two times the estimated monthly general and administrative expenses of the Company, (iii) to prepay the remaining $5,000,000 of the debt associated with the Ramco Properties payable to Ramco and (iv) the balance, to prepay the debt listed on Schedule 2 and classified as Floating Rate or Prepayable Short-Term Loans and Short-Term Advantageous Rate Loans, as agreed to by the parties. 6 15 (b) All prepayment penalties or premiums and expenses (including, without limitation, legal fees relating to such prepayments) in excess of $250,000 relating to or triggered by the prepayment of any of the debt listed on Schedule 2 and anticipated to be prepaid as set forth in subparagraph (a) above shall be paid by Ramco. (c) Prior to the closing of the Transaction, Ramco shall use its best efforts to (i) refinance the debt listed on Schedule 2 and classified as Floating Rate or Prepayable Short-Term Loans and Short-Term Advantageous Rate Loans (after making the prepayments described in Paragraph 1.E.(a)) on the terms described in clause (ix) of Paragraph 4.A. and (ii) obtain a line of credit in an amount to be determined by the parties which would be used to fund the future development and acquisition activities of the Company. 2. MANAGEMENT AND CONFLICTS. A. The five principals of Ramco (collectively, the "RAMCO PRINCIPALS") will enter into agreements with the Company pursuant to which they will agree to conduct all of their real estate ownership, acquisition, management and development activities (other than certain limited activities relating to their existing video arcade and fast food franchise businesses and activities relating to the properties listed on Schedule 8 that will be excluded from the Transaction (collectively, the "EXCLUDED PROPERTIES")) through the Company and in connection therewith the Ramco Principals will agree to offer all real estate opportunities of which they become aware (other than opportunities relating to the Excluded Properties) to the Company. The Ramco Principals (other than Joel Gershenson and Dennis Gershenson) will enter into non-competition agreements with the Company pursuant to which such Ramco Principals will agree not to compete, directly or indirectly, with the Company with respect to the ownership, acquisition, management and development of real estate (except with respect to the Excluded Properties) until the later of (i) three years from the Closing Date or (ii) the date such Ramco Principal is no longer an officer or director of the Company; provided, however, in the event any such Ramco Principal becomes Chairman, Vice Chairman, President or Chief Executive Officer of the Company (or holds any other office in the Company that is vested with powers and duties substantially similar to those powers and duties typically vested by corporations or business trusts in the office of Chairman and President), the term of such Ramco Principal's non-competition agreement shall be extended until the later of (i) four years from the Closing Date or (ii) one year after the date such Ramco Principal is no longer an officer or director of the Company. Joel Gershenson and Dennis Gershenson will enter into similar non-competition agreements with the Company 7 16 except that the term of such agreements will extend until the later of (i) four years from the Closing Date or (ii) one year after the date such Ramco Principal is no longer an officer or director of the Company. B. Each of the Ramco Principals will enter into three year employment agreements with the Company pursuant to which each such Ramco Principal will be paid an annual base salary of $100,000 and shall receive such other perquisites (including, without limitation, stock options and bonuses) that are customarily provided by similar real estate investment trusts to comparable officers as agreed to by the parties. The Ramco Principals will hold the following offices with the Company: Chairman: Joel Gershenson; President and Chief Executive Officer: Dennis Gershenson; Chief Operating Officer and Executive Vice President: Michael Ward; Executive Vice President and Secretary: Richard Gershenson; Executive Vice President and Treasurer: Bruce Gershenson. C. The Ramco Principals will not be permitted to exchange or dispose of all or any portion of their OP Units during the 30 month period following the closing of the Transaction without the prior written consent of a majority of the Board of Trustees (including a majority of the independent trustees) (the "RAMCO LOCK-UP") other than to the minimum extent necessary to fund the payment of estate taxes due upon the death of any Ramco Principal. The third party investors of Ramco who will receive OP Units in connection with the Transaction will not be permitted to dispose of all or any portion of their OP Units during the one year period following the closing of the Transaction without the prior written consent of a majority of the Board of Trustees (including a majority of the independent trustees) other than to the minimum extent necessary to fund the payment of estate taxes due upon the death of any such investor. The Company will grant to the Ramco Principals "piggyback" registration rights at the time of closing that will become effective upon the expiration of the Ramco Lock-Up and, with certain exceptions (including, without limitation, the underwriter's cutback) to be agreed to by the parties, grant to the Ramco Principals the right to have any unregistered Shares held by them registered incidentally to any registration being conducted by the Company of its shares. D. During the 12 month period following the closing of the Transaction, each of the Ramco Principals will be permitted to pledge up to 25% of the OP Units initially held by him to a bank or other financial institution; following the expiration of such 12 month period and during the remaining term of the Ramco Lock-Up, the Ramco Principals will be permitted to pledge up to 50% of the OP Units initially held by him to a bank or other financial institution. 8 17 E. Upon the closing of the Transaction, the Company will satisfy (without using the Company Cash that will be contributed to the Operating Partnership) and/or, at the election of Joel M. Pashcow ("PASHCOW") and Herbert Liechtung ("LIECHTUNG"), RPS Mortgage will assume the remaining obligations of the Company under its existing employment agreements with Pashcow and Liechtung. F. Prior to the closing of the Transaction, the Company may amend the terms and conditions of its 1989 Stock Option Plan (the "EXISTING OPTION PLAN") so that, immediately prior to the Spin-Off Transaction, each current holder of an option (individually, an "OPTION" and collectively, the "OPTIONS") to purchase existing shares in the Company will receive, in exchange therefore, two separately exercisable Options: one to purchase Shares and the other to purchase shares in RPS Mortgage, each exercisable for the same number of shares, and containing substantially equivalent terms, as the existing Option. The exercise price for each new Option in the Company will be determined by adjusting existing exercise price ($5.75 per share) based on the relative fair market value of the assets that will be contributed to the Operating Partnership and the assets that will be contributed to RPS Mortgage. In addition, the total number of shares for which Options may be granted under the Existing Option Plan and the exercise price of outstanding Options will be adjusted to reflect the impact of the Company's 4 for 1 reverse split. Similar adjustments will be made to the Company's 1989 Trustees' Stock Option Plan and the options outstanding under such plan (the "TRUSTEES' PLAN"). In addition, the Company shall have the right to amend the Trustees' Plan to extend the exercise date for those options granted to any trustee who resigns prior to the expiration of such trustee's term. G. Prior to the closing of the Transaction, the Company will have the right to amend the terms of the Existing Option Plan as follows: (i) the expiration date of the Existing Option Plan and all outstanding Options will be extended for five years until December 6, 2004; (ii) the three month period during which former employees have the right to exercise outstanding Options will be extended to become a one year period and will not be triggered if a former employee continues to serve the Company in a trustee capacity; (iii) the Options will be assignable to members of an optionee's immediate family (including trusts for such family members); and (iv) a retirement provision will be added that will provide for a 5 year exercise period for following Retirement (as defined below). "Retirement" shall mean voluntary retirement from the Company at least age 55 provided the person in question has provided the Company and its predecessors with at least 15 years of continuous service. 9 18 H. Prior to the closing of the Transaction, the Board of Trustees will adopt a new employee stock option plan (the "NEW OPTION PLAN") that will provide for the grant of options equal to difference between (i) 9% of the total number of issued and outstanding Shares of the Company (on a fully diluted basis assuming the exchange of all OP Units for Shares) and (ii) the number of options granted under the Existing Option Plan and the Trustees' Plan. The New Option Plan will have terms and conditions that are substantially similar to those included in the Existing Option Plan, as amended as described above. Except as set forth in Paragraph 2.I. below, options under the New Option Plan shall be reserved for grant solely to employees of the Company. I. Subject to satisfaction of Pashcow's existing employment agreement with the Company, upon the closing of the Transaction, Pashcow shall be (i) elected Vice Chairman and (ii) pursuant to a new 5 year employment agreement, will be granted an additional 180,000 options (that will vest over a term of not more than 3 years) under the New Option Plan at a exercise price based on the average closing price of the Shares on the New York Stock Exchange for the 30 trading days following the Closing Date. At the closing of the Transaction, each of the Ramco Principals will be granted 24,000 options (that will vest over a term of not more than 3 years) at the exercise price described above. Pashcow's employment agreement will provide that if during the term of his employment agreement he is replaced as a trustee, he will receive the same benefits from the Company that he would have received had Pashcow remained a trustee throughout the term of his employment agreement. J. Prior to the closing of the Transaction, the Board of Trustees will adopt a trustees' medical health insurance plan that will provide satisfactory health benefits to the Company's trustees not otherwise covered. K. Ramco shall grant to the Company the option, exercisable at any time during the 10 year period commencing on the closing of the Transaction, to acquire, subject to the receipt of all necessary consents, Ramco's interest in any Excluded Property (other than any part of the Summit Place complex) for an amount (the "OPTION PRICE") (payable either in cash or subject to compliance with applicable securities laws, OP Units) equal to the lesser of (i) Ramco's net cash investment in such property (including any tax payable by Ramco as a result of the exercise of the option) and (ii) the fair market value of Ramco's interest in such property; provided, however, if at any time during the term of the option Ramco receives a bona fide offer to sell its interest in an Excluded Property that Ramco is willing to accept or receives a bona fide offer to sell the Excluded Property that Ramco is willing to accept, the Company shall have the right to acquire Ramco's interest in such 10 19 Excluded Property at the price for such interest or for the amount Ramco would have received had the Excluded Property been sold for the proposed price. In addition, if during such 10 year period Ramco's direct or indirect interest in the Summit Place complex shall equal 25% or more, the Company shall immediately receive an option (the "Summit Place Option") to acquire Ramco's interest in such property at a price equal to 90% of its fair market value. The exercise of the Summit Place Option shall be subject to the receipt of all consents needed to transfer Ramco's interest in the Summit Place Complex. 3. FUTURE DIVIDENDS. Following the closing of the Transaction, the Company will promptly announce its intention to pay a dividend based on a payout ratio of 85% of funds from operations ("FFO"). 4. CONDITIONS TO THE TRANSACTION. A. The definitive Asset Contribution Agreement will provide that the consummation of the Transaction will be subject to fulfillment, at or prior to the Closing Date, of each of the following conditions (among others): (i) the preparation, execution and delivery of a definitive Asset Contribution Agreement and related documents containing such provisions as are customary to transactions of this type, in form and substance reasonably satisfactory to the parties, (ii) the Board of Trustees and the shareholders of the Company shall have approved the Transaction, (iii) if applicable to the Transaction, the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 shall have expired, (iv) all required material consents of third parties (including, without limitation, consents from the mortgagees of record holding the Ramco Property debt) shall have been obtained, (v) the Spin-Off Transaction shall have been consummated and in connection therewith the Company shall have received a no-action letter from the Securities and Exchange Commission (the "SEC"), satisfactory to the Company, generally to the effect that the issuance of the RPS Mortgage stock to the Company's existing shareholders in connection with the Spin-Off Transaction does not require registration under the Securities Act of 1933, (vi) the Company Cash shall equal $75,000,000 (reduced by any Transaction expenses advanced by the Company prior to closing), (vii) there shall not be enacted, entered, promulgated or enforced any statute, rule, regulation, executive order, decree, preliminary or permanent injunction or restraining order which prohibits the consummation of the Transaction, (vii) the absence of any material adverse change in the Company Properties or the Ramco Contribution Assets, (ix) the debt listed on Schedule 2 and classified as Floating Rate or 11 20 Prepayable Short-Term Loans and Short-Term Advantageous Rate Loans (after utilizing the Company Cash in the manner set forth in paragraph 1.E.) shall have been refinanced (the "Refinanced Loan") on the following terms: (a) the principal amount of the Refinanced Loan, after taking into account all borrowed transaction costs, shall not exceed $92,500,000; (b) the annual interest expense (all of which will be payable currently) relating to the Refinanced Loan shall not exceed $8,485,000; (c) the Refinanced Loan shall have a term of not less than 10 years; (d) the principal amount of the Refinanced Loan shall amortize on a schedule of not less than 30 years (unless otherwise agreed to by the parties); (e) the Refinanced Loan shall not be secured by more than $150,000,000 in properties; and (f) the Refinanced Loan shall have commercially reasonable terms; (x) the satisfaction of the Floor Amount Condition (as defined below); and (xi) the receipt by the Company's Board of Trustees of an opinion from Dean Witter Reynolds Inc. ("DEAN WITTER"), satisfactory to such board, relating to the fairness, from a financial point of view, of the Transaction to the existing shareholders of the Company. B. Ramco's obligation to proceed with the Transaction is subject to the condition that Ramco and its investors will receive a limited partnership interest in the Operating Partnership that is 30% or more (the "FLOOR AMOUNT CONDITION") (assuming for this purpose that Ramco's projected net operating income from (i) the Jackson Property for the 12 month period commencing October 1, 1994 is $2,824,000 and (ii) the Tel-Twelve Property for the 12 month period commencing October 1, 1994 includes a full 12 months of revenues attributable to the Tel-Twelve Lease). (For purposes of making the calculation in clause (ii) above, revenues from the Tel-Twelve Lease shall not be less than $182,000 or more than $510,000 notwithstanding the actual terms of such lease or if such lease exists.) If at any time the Company notifies Ramco that in its good faith judgment (after application of the assumption described in the following sentence) Ramco and its investors would receive a limited partnership interest in the Operating Partnership that is less than the Floor Amount Condition, Ramco, within 5 business days of the receipt of such notice, will be obligated to either (x) terminate the Asset Contribution Agreement or (y) reduce the Floor Amount Condition to the percentage specified in the Company's notice as determined in manner consistent with the formula for allocating interests in the Operating Partnership and after application of the assumption that the interest rate on the Refinanced Loan will be 150 basis points over prevailing rates for 10 year United States Treasury Bonds. 12 21 5. PUBLIC ANNOUNCEMENTS. Except as may be required by law or under the Company' listing agreement with the New York Stock Exchange, neither of the parties hereto shall make any public announcement regarding the subject matter of this Letter of Intent without the prior consent of the other; provided, however, neither the Company nor its Board of Trustees shall be prohibited from issuing or making available any press release to any wire service or investment banking firm or making any disclosure to the Company's shareholders (through letter, SEC filing or otherwise) that, in the good faith judgment of the Company's Board of Trustees, is necessary to discharge the Board of Trustees' fiduciary duties owed to the Company's shareholders. Each party shall use commercially reasonable efforts to coordinate any public announcements and to consult with one another prior thereto. 6. NO SHOPPING. Each party will cease all existing discussions with any third party with respect to, and will cease all activities relating to, any merger, consolidation, sale of a substantial portion of assets, tender offer, initial public offering or any similar transaction or business combination which would defeat the intent of this Letter of Intent (collectively, an "ACQUISITION PROPOSAL"). In addition, neither party will, nor will either party authorize or permit its directors, trustees or employees or any attorneys, accountants, investment bankers or other representatives retained by it to, directly or indirectly, solicit or encourage the making of any inquiries or the making of any proposal which it is reasonably expected may lead to any Acquisition Proposal; provided, however, that nothing contained in this paragraph shall preclude any action taken by the Company's Board of Trustees (including, without limitation, responding to requests for information from all persons (including, without limitation, persons with whom the Company had discussions prior to the date of this Letter of Intent) and participating in negotiations regarding alternative transactions (including Acquisition Proposals) involving the Company) that, in the good faith judgment of the Board of Trustees, is necessary to discharge the Board of Trustees' fiduciary duties owed to the Company's shareholders. (For purposes of determining the duties that the Board of Trustees owes to its shareholders, the Company has advised you that for state law purposes it is treating the Transaction as a sale of control of the Company). In the event the Company receives a written offer for an Acquisition Proposal, it will promptly advise Ramco of the existence of such offer. The provisions of this paragraph shall not apply to any assets that will not be included in the Transaction. 13 22 7. COMMERCIALLY REASONABLE EFFORTS. Each of the parties hereto agrees on a prompt basis to proceed with the negotiation and execution and delivery of a definitive Asset Contribution Agreement embodying the terms relating to the Transaction set forth in this Letter of Intent and containing such other provisions as are customary and mutually agreed to by the parties. 8. CERTAIN FEES AND EXPENSES. A. The definitive agreement relating to the Transaction shall provide that if the Company terminates the transaction contemplated by the Asset Contribution Agreement because either (i) the Company entered into an alternative transaction with a third party or (ii) Dean Witter was unable to render a fairness opinion in connection with the Transaction (other than as a result of the condition of the Ramco Contribution Assets), the Company will reimburse Ramco for all reasonable out-of-pocket expenses incurred by Ramco in connection with the Transaction up to a maximum of $1,250,000 (without any offset or credit for any expenses advanced by the Company in connection with the Refinanced Loan). B. If the Transaction is consummated, all fees and expenses relating to the Transaction shall be paid by the Company (other than any prepayment penalties or premiums and expenses and legal fees in excess of $250,000 relating to the prepayment of the debt listed on Schedule 2 and classified as Ramco Loan Payoffs, any cash amounts paid by Ramco to any third party in order to obtain its consent to the Transaction or to any Ramco investor, and such closing costs that are customarily paid by sellers of real property in the localities where the Ramco Properties are located) but including one-half of all title insurance costs and recording costs incurred in connection with the Transaction, and tenant improvement costs incurred at the Ramco Properties with respect to leases entered into after October 1, 1994 that are not otherwise included, in whole or in part, in RNOI (other than with respect to the Tel-Twelve Lease, and Qualifying Leases at the Jackson Property entered into after October 1, 1994 that are not otherwise included, in whole or in part, in RNOI). C. From and after execution of the Asset Contribution Agreement, the Company will, upon receipt by the Company of the undertaking described below, advance all reasonable expenses relating to the Refinanced Loan that satisfies the terms described in paragraph 4.A.(ix). The Company's obligation to advance such expenses shall be subject to receipt of an undertaking from Ramco and the Ramco Principals to repay such amounts in the event the Asset Contribution Agreement is 14 23 terminated as a result of a breach by Ramco of any of its representations, warranties or covenants set forth in the Asset Contribution Agreement. D. Notwithstanding anything to the contrary contained herein, Ramco shall be responsible for any transfer taxes relating to the contribution of the Ramco Properties to the Company. Ramco and RPS shall cooperate in minimizing any such transfer taxes which may be so payable. In doing so Ramco shall provide the Company with such assurances and indemnifications as may be reasonably requested by the Company against the imposition of any such transfer taxes. 9. COOPERATION. Each party hereto will use commercially reasonable efforts to (a) furnish to the other parties such necessary information and reasonable assistance as such other parties may reasonably request in connection with the transactions contemplated hereby, (b) cooperate in preparing, causing to be filed with the SEC and to be cleared for mailing a proxy statement relating to the Transaction and the Spin-off Transaction, (c) provide the officers, employees, attorneys, accountants, investment bankers and other representatives of the other party with reasonable access to the properties and personnel of such party and furnish upon request copies of all books, records, documents and other information of such party (including, without limitation, interim financial reports of such party) that relate to the assets or properties that will be contributed by such party to the Operating Partnership in connection with the Transaction, and (d) provide such further assistance as the other party hereto may reasonably request. 10. BINDING EFFECT; TERMINATION. Except for the provisions of Sections 5, 6, 7, 9, 10, 11, and 12, this Letter of Intent constitutes an expression of mutual intention, is not a binding obligation on the part of either party hereto and shall not otherwise create any rights in favor of either of the parties hereto. A binding agreement with respect to the Transaction will result only from the execution and delivery of a definitive Asset Contribution Agreement and such other definitive agreements as the parties determine are necessary to reflect the respective obligations and rights of the parties with respect to the Transaction. The provisions of Sections 6, 7 and 9 shall terminate on, and have no effect following, the earliest of (i) October 15, 1994, (ii) upon written notice from the Company to Ramco following a good faith determination by the Company's Board of Trustees that an Acquisition Proposal for an alternative transaction is more favorable than the Transaction to the Company's shareholders, or (iii) the execution 15 24 of a definitive agreement relating to the Transaction; provided, however, such termination shall not excuse any breach arising prior to the date of such termination. 11. EXPENSES. Promptly following the execution and delivery of this Letter of Intent, the Company and Ramco shall, at the Company's expense, commission (i) an audit by Deloitte & Touche of the Ramco Properties and, if requested by the Company, the management corporation, and (ii) a Phase I environmental study and engineering report on the Company's Properties. In the event (i) this Letter of Intent is terminated prior to the execution of a definitive Asset Contribution Agreement and (ii) in the good faith judgment of the Company projected net operating income from the Ramco Properties for the 12 month period commencing October 1, 1994 (based on Qualifying Leases in place as of such date) is less than $26,200,000, Ramco and the Ramco Principals hereby agree, jointly and severally, to reimburse the Company for all amounts advanced pursuant to clause (i) of this paragraph 11 (collectively, the "Advanced Expenses"). Ramco and the Ramco Principals shall reimburse the Company for the Advanced Expenses within 5 business days after the receipt of a notice from the Company that the events described in clauses (i) and (ii) above have occurred. Except for the bankruptcy of a partnership previously disclosed to the Company, Ramco and the Ramco Principals, hereby agree, jointly and severally, to reimburse the Company for the Advanced Expenses, within 5 business days after receipt of a notice from the Company, if the Letter of Intent is terminated or the Company does not enter into a definitive Asset Contribution Agreement primarily because one or more of the Ramco Principals was involved during the past 5 years in one of the events described in Item 401(f) of Regulation S-K promulgated under the Securities Exchange Act of 1934. 12. MISCELLANEOUS. The laws of the State of New York shall govern the interpretation, validity and performance of the terms of this Letter of Intent, regardless of the law that might be applied under applicable principles of conflicts of law. The parties acknowledge that this Letter of Intent shall not affect the parties' respective obligations under the confidentiality letters dated November 2, 1993 between the Company and Ramco and the Ramco Principals which shall remain in effect in accordance with the terms thereof. The parties hereto irrevocably and unconditionally consent to submit to the jurisdiction of the courts of the State of New York in connection with any actions, suits or proceedings arising out of or relating to this Letter of Intent, and further agree that service of any process, summons, notice or 16 25 document by U.S. Registered Mail to the respective party's address set forth above (or any other address provided in writing to the other party) shall be effective service of process for any action, suit or proceeding brought against a party hereto in any such court. The parties hereto hereby irrevocably and unconditionally waive any objection to the lack of venue of any action, suit or proceedings arising out of this Letter of Intent, in the courts of the State of New York or the United States of America located in the State of New York, and hereby further irrevocably and unconditionally waive and agree not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum. 13. COUNTERPARTS. This Letter of Intent may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 17 26 Please acknowledge your agreement to, and acceptance of, the foregoing, by executing a copy of this agreement in the appropriate space set forth below and returning the same to the undersigned, whereupon it will constitute our agreement with respect to the matters contained herein. Very truly yours, RPS REALTY TRUST By:/s/ Herbert Liechtung --------------------- Herbert Liechtung, President AGREED AND ACCEPTED AS OF THE DATE FIRST ABOVE WRITTEN: RAMCO-GERSHENSON, INC. By:/s/ Dennis Gershenson ----------------------------------- Dennis Gershenson, Vice President- Finance /s/ Dennis Gershenson - --------------------- Dennis Gershenson /s/ Joel Gershenson - ------------------- Joel Gershenson /s/ Bruce Gershenson - -------------------- Bruce Gershenson /s/ Richard Gershenson - ---------------------- Richard Gershenson /s/ Michael A. Ward - ------------------- Michael A. Ward 18 27 ATTACHMENT TO LETTER OF INTENT SCHEDULE 1-PART 1 LISTING OF INCLUDED SHOPPING CENTERS SHOPPING CENTER LOCATION TEL-TWELVE MALL SOUTHFIELD, MICHIGAN FRASER SHOPPING CENTER FRASER, MICHIGAN EASTRIDGE SHOPPING CENTER FLINT, MICHIGAN ROSEVILLE PLAZA ROSEVILLE, MICHIGAN NAPLES TOWNE CENTRE NAPLES, FLORIDA SOUTHFIELD PLAZA SOUTHFIELD, MICHIGAN TROY TOWNE CENTER TROY, OHIO SOUTHFIELD PLAZA EXPANSION SOUTHFIELD, MICHIGAN WEST ALLIS SHOPPING CENTRE WEST ALLIS, WISCONSIN NORTH TOWNE COMMONS TOLEDO, OHIO NEW TOWNE PLAZA CANTON, MICHIGAN FERNDALE TOWNE CENTRE FERNDALE, MICHIGAN CLINTON VALLEY STRIP STERLING HEIGHTS, MICHIGAN KENTWOOD TOWNE CENTRE GRAND RAPIDS, MICHIGAN CLINTON CONSUMER MALL STERLING HEIGHTS, MICHIGAN ORION PLAZA LAKE ORION, MICHIGAN WEST OAKS I NOVI, MICHIGAN SPRING MEADOWS SHOPPING CENTER TOLEDO, OHIO JACKSON CROSSING JACKSON, MICHIGAN EDGEWOOD SHOPPING CENTER LANSING, MICHIGAN WEST OAKS II NOVI, MICHIGAN OAKBROOK SQUARE FLINT, MICHIGAN 19 28 ATTACHMENT TO LETTER OF INTENT SCHEDULE 1 - PART 2 DEVELOPMENT LAND AND DEVELOPMENT OUTPARCELS
PARCEL SIZE (ACRES) ROSEVILLE PLAZA (12 MILE & GRATIOT) .90 NEW TOWNE PLAZA (CANTON TOWNSHIP) 2.0, 2.5 EDGEWOOD TOWNE CENTRE (LANSING) .75, .95
20 29 ATTACHMENT TO LETTER OF INTENT SCHEDULE 1 - PART 3 REIMBURSABLE COSTS RELATED TO OPTIONS ON DEVELOPMENT LAND OWNED BY RAMCO
OPTIONS & RELATED DEVELOPMENT COSTS INCURRED TO 5-12-94 (1) JACKSON WEST JACKSON, MICHIGAN 26,297 TROY - LIVERNORS & MAPLE TROY, MICHIGAN 2,483 WARREN-TEN MILE & DEQUINDRE WARREN, MICHIGAN 721 OFFICEMAX-NORTH TOWNE TOLEDO, OHIO 175,468 BENNETT PROPERTY TOLEDO, OHIO 41,574 HORNHOLLOWAY PROPERTY TOLEDO, OHIO 7,320 ROTH PROPERTY TOLEDO, OHIO 871 SARA PROPERTY TOLEDO, OHIO 10,360 WEST OAKS III NOVI, MICHIGAN SPRINGMEADOWS PHASE III TOLEDO, OHIO SHELBY TOWNSHIP-HALL ROAD SHELBY TOWNSHIP, MICHIGAN ------- 265,094 =======
(1) COSTS INCURRED BASED ON ACCOUNTING RECORDS. CERTAIN ITEMS INCLUDING LEGAL, PROFESSIONAL, ENGINEERING, ENVIRONMENTAL MAY NOT HAVE BEEN INVOICED YET. COSTS TO BE UPDATED TO DATE OF COMBINATION. ALL OPTION AND RELATED DEVELOPMENT COSTS INCURRED TO DATE OF COMBINATION WILL BE REIMBURSED TO RAMCO BY THE REIT. FUTURE PAYMENTS FOR DEVELOPMENT COSTS TO BE THE RESPONSIBILITY OF THE REIT. 21 30 ATTACHMENT TO LETTER OF INTENT SCHEDULE 2 RAMCO PROPERTIES' EXISTING LIABILITIES SEE REVISED ATTACHED SCHEDULE REFLECTS PROJECTED DEBT BALANCES AS OF JUNE 30, 1994 31 PRIVILEGED AND CONFIDENTIAL, PREPARED AT THE REQUEST OF, AND UNDER THE DIRECTION OF MONIGHAM MILLER SCHWARTZ AND COHN
RAMCO-GERSHENSON,INC. 23-JUN-94 LOANS OUTSTANDING ON REFIT PROPERTIES FILENAME:LINSHARE 2 INTEREST TYPE LENDER RATE - ------------------------------------------------------------------------------------------------------ FLOATING RATE OR PREPAYABLE SHORT-TERM LOANS TEL-TWELVE HALL FIRST BANK OF BOSTON PRIME + 1 TEL-TWELVE HALL TERM HUNTINGTON BANK PRIME + 1 TEL-TWELVE HALL EQUIP HUNTINGTON BANK PRIME + 1 RAMCO FRASER FIRST BANK OF BOSTON PRIME + 1 RAMCO FRASER EQUIP HUNTINGTON BANK PRIME + 1 RAMCO LAPEER FIRST NBO BANK, N.A. PRIME + .5 RAMCO SOUTH NAPLES FIRST BANK OF BOSTON PRIME + 1 SOUTHFIELD PLAZA EQUIP HUNTINGTON BANK PRIME + 1 RAMCO SINGSER FIRST BANK ONE TREAS + 425 S-12 ASSOCIATES FIRST KEY BANK OF NEW YORK 9.375% WEST ALLIS SHOPPING CENTER FIRST BANK OF BOSTON PRIME + 1 FORD SHELDON FIRST HUNTINGTON BANK PRIME + 1 FORD SHELDON FIRST AETNA LIFE 9.925% FERNDALE PLAZA FIRST SUN LIFE 9.75% 104W STERLING FIRST NORTHWESTERN MUTUAL LIFE 10.125% 104W STERLING EQUIP HUNTINGTON BANK PRIME + 1 RAMCO OAKBROOK SECOND BANK OF BOSTON PRIME + 1 STERLING MALL FIRST MUTUAL BENEFIT 11.50% STERLING MALL SECOND FIRST OF AMERICA PRIME + 1 W & G REALTY FIRST AETNA LIFE 9.925% WEST OAKS I EQUIP HUNTINGTON BANK PRIME + 1 WEST OAKS II EQUIP HUNTINGTON BANK PRIME + 1 RAMCO JACKSON CONSTRUCTION NBO BANK, N.A. PRIME + .75 RAMCO JACKSON TERM HUNTINGTON BANK PRIME + 1 RAMCO LANSING CONSTRUCTION BANK OF BOSTON PRIME + 1 LEWIS ALEXIS GROUP FIRST NATIONWIDE LIFE 9.50% NORTH TOWNE OFFICEWAX - CONSTRUCTION MICHIGAN NATIONAL BANK PRIME + .75 LA II GROUP TOTAL SHORT - TERM LOANS - -------------------------------- SHORT - TERM ADVANTAGEOUS RATE LOANS - -------------------------------- ROSEVILLE PLAZA FIRST BARCLAY'S BANK LIBOR + 125 SOUTHFIELD PLAZA FIRST BARCLAY'S BANK LIBOR + 125
PROJECTED TO BE BALANCE RAMCO THIRD DEBT REFINANCED AT DEBT TO PARTY LEFT AT REIT TYPE 6-30-94 EQUITY SWAP DEBT IN PLACE INCEPTION - -------------------------------------------------------------------------------------------------------- FLOATING RATE OR PREPAYABLE SHORT-TERM LOANS TEL-TWELVE MALL 31,115,000 31,115,000 31,115,000 TEL-TWELVE MALL 112,497 112,497 112,497 TEL-TWELVE MALL 16,579 16,579 16,579 0 0 RAMCO FRASER 2,276,089 2,276,089 2,276,089 RAMCO FRASER 28,234 28,234 28,234 0 0 RAMCO LAPEER 9,289,923 9,289,923 9,289,923 0 0 RAMCO SOUTH NAPLES 1,096,692 1,096,692 1,096,692 0 0 SOUTHFIELD PLAZA 22,950 22,950 22,950 0 0 RAMCO SINGSER 7,333,933 7,333,933 7,333,933 0 0 S-12 ASSOCIATES 2,086,821 2,086,821 2,086,821 0 0 WEST ALLIS SHOPPING CENTER 14,861,461 14,861,461 14,861,461 0 0 FORD SHELDON 576,716 576,716 576,716 FORD SHELDON 5,875,075 5,875,075 5,875,075 0 0 FERNDALE PLAZA 1,793,679 1,793,679 1,793,679 0 0 104W STERLING 1,684,800 1,684,800 1,684,800 104W STERLING 20,530 20,530 20,530 0 0 RAMCO OAKBROOK 1,517,300 1,517,300 1,517,300 0 0 STERLING MALL 5,899,747 5,899,747 5,899,747 STERLING MALL 1,628,437 1,628,437 1,628,437 0 0 W & G REALTY 4,381,413 4,381,413 4,381,413 0 0 WEST OAKS I 21,781 21,781 21,781 0 0 WEST OAKS II 30,728 30,728 30,728 0 0 RAMCO JACKSON 24,691,163 24,691,163 24,691,163 RAMCO JACKSON 63,742 63,742 63,742 0 0 RAMCO LANSING 4,280,720 4,280,720 4,280,720 0 0 LEWIS ALEXIS GROUP 13,000,000 13,000,000 13,000,000 0 0 NORTH TOWNE OFFICEMAX - 1,620,000 1,620,000 1,620,000 LA II GROUP ------------------------------------------------------------ TOTAL SHORT - TERM LOANS 135,326,010 0 135,326,010 0 135,326,010 - -------------------------------- SHORT - TERM ADVANTAGEOUS RATE LOANS - -------------------------------- ROSEVILLE PLAZA 9,903,108 9,903,108 9,903,108 0 SOUTHFIELD PLAZA 8,821,633 8,821,633 8,821,633 0
*REPRESENTS LOAN PREPAYABLE WITH PENALTY. 32 PRIVILEGED AND CONFIDENTIAL, PREPARED AT THE REQUEST OF, AND UNDER THE DIRECTION OF MONIGHAM MILLER SCHWARTZ AND COHN
RAMCO-GERSHENSON,INC. 23-JUN-94 LOANS OUTSTANDING ON REFIT PROPERTIES FILENAME:LINSHARE 2 PROJECTED BALANCE RAMCO INTEREST AT DEBT TO TYPE LENDER RATE 6-30-94 EQUITY SWAP - ------------------------------------------------------------------------------------------------------------------------------- -------------------------- TOTAL SHORT - TERM ADVANTAGEOUS RATE LOANS 18,724,741 0 - ------------------------------------------ LONG-TERM ADVANTAGEOUS RATE LOANS - ------------------------------------------ RAMCO OAKBROOK FIRST CAPITOL HOLDING .75 OF SALOMON 30 YR UTILI 7,000,000 WEST OAKS I FIRST UNION MUTUAL 10.125% 4,413,627 -------------------------- TOTAL LONG-TERM ADVANTAGEOUS RATE LOANS 11,413,627 0 - ------------------------------------------ LONG-TERM LOANS LEFT IN PLACE - ------------------------------------------ KENTWOOD TOWNE CENTER FIRST NATIONWIDE LIFE 9.375% 11,265,548 WEST OAKS II FIRST TRAVELERS 10% 9,549,050 SPRING MEADOWS FIRST TRAVELERS 9.50% 12,000,540 SPRING MEADOWS FIRST FDB ANNUITY 8.75% 1,970,635 -------------------------- TOTAL LONG-TERM LOANS LEFT IN PLACE 34,785,773 0 - ------------------------------------------ RAMCO LOAN PAYOFFS - ------------------------------------------ RAMCO FRASER OTHER RAMCO VENTURES 64,271 RAMCO SOUTH NAPLES OTHER RAMCO VENTURES 1,601,461 (1,601,461) RAMCO SINGER OTHER RAMCO VENTURES 72,864 (72,864) WEST ALLIS SHOPPING CENTER OTHER RAMCO VENTURES 1,035,392 FERNDALE PLAZA LAND CONT 21,875 FERNDALE PLAZA OTHER RAMCO VENTURES 193,635 (193,635) KENTWOOD TOWNE CENTER OTHER RAMCO VENTURES 142,010 (142,010) RAMCO OAKBROOK OTHER RAMCO VENTURES 1,618,759 STERLING MALL OTHER RAMCO STERLING HEIGHTS 420,000 STERLING MALL OTHER 104W STERLING 177,200 STERLING MALL OTHER RAMCO VENTURES 681,125 (681,125) W & G REALTY OTHER RAMCO VENTURES (344,114) 344,114 SPRING MEADOWS OTHER RAMCO VENTURES 79,351 RAMCO JACKSON OTHER RAMCO VENTURES 2,458,166 (2,458,166) RAMCO JACKSON OTHER RAMCO-GERSHENSON, INC. RAMCO LANSING OTHER RAMCO VENTURES 2,697,079 (494,852) -------------------------- TOTAL RAMCO LOAN PAYOFFS 10,919,174 (5,300,099) -------------------------- TOTAL LOANS OUTSTANDING 211,169,325 (5,300,099) ========================== LESS: REIT DEBT PAYDOWN (75,000,000-2,000,000 TRANSACTION COSTS = 73,000,000) DEBT REMAINING IN PLACE 132,869,226
TO BE THIRD DEBT REFINANCED PARTY LEFT AT REIT DEBT IN PLACE INCEPTION - --------------------------------------------------------------------------------------------- ---------------------------------------- TOTAL SHORT - TERM ADVANTAGEOUS RATE LOANS 18,724,741 18,724,741 0 - ------------------------------------------ LONG-TERM ADVANTAGEOUS RATE LOANS - ------------------------------------------ RAMCO OAKBROOK 7,000,000 7,000,000 0 WEST OAKS I 4,413,627 4,413,627 0 ---------------------------------------- TOTAL LONG-TERM ADVANTAGEOUS RATE LOANS 11,413,627 11,413,627 0 - ------------------------------------------ 0 0 LONG-TERM LOANS LEFT IN PLACE 0 0 - ------------------------------------------ 0 0 KENTWOOD TOWNE CENTER 11,265,548 11,265,548 0 WEST OAKS II 9,549,050 9,549,050 0 SPRING MEADOWS 12,000,540 12,000,540 0 SPRING MEADOWS 1,970,635 1,970,635 0 ---------------------------------------- TOTAL LONG-TERM LOANS LEFT IN PLACE 34,785,773 34,785,773 0 - ------------------------------------------ RAMCO LOAN PAYOFFS - ------------------------------------------ RAMCO FRASER 64,271 64,271 0 0 RAMCO SOUTH NAPLES 0 0 0 0 RAMCO SINGER 0 0 0 0 WEST ALLIS SHOPPING CENTER 1,035,392 1,035,392 0 0 FERNDALE PLAZA 21,875 21,875 FERNDALE PLAZA 0 0 0 0 KENTWOOD TOWNE CENTER 0 0 0 0 RAMCO OAKBROOK 1,618,759 1,618,759 0 0 STERLING HALL 420,000 420,000 STERLING HALL 177,200 177,200 STERLING HALL 0 0 0 0 W & S REALTY 0 0 SPRING MEADOWS 79,351 79,351 RAMCO JACKSON 0 0 RAMCO JACKSON 0 0 RAMCO LANSING 2,202,227 2,202,227 ---------------------------------------- TOTAL RAMCO LOAN PAYOFFS 5,619,075 0 5,619,075 ---------------------------------------- TOTAL LOANS OUTSTANDING 205,869,226 64,924,141 140,945,085 ======================================== LESS: REIT DEBT PAYDOWN (75,000,000-2,000,000 TRANSACTION COSTS = 73,000,000) (73,000,000) ------------------------- DEBT REMAINING IN PLACE 64,924,141 67,945,085 132,869,226 =========================
33 ATTACHMENT TO LETTER OF INTENT SCHEDULE 3 THIRD-PARTY SHOPPING CENTER MANAGEMENT CONTRACTS RAMCO OFFICE ONE DEVELOPMENT COMPANY SUMMIT NORTH LIMITED PARTNERSHIP SUMMIT PLACE AND SUMMIT CROSSING KM BLUE ASH DEVELOPMENT COMPANY LIVONIA TOWNE SQUARE KM SAGINAW DEVELOPMENT COMPANY RAMCO CLINTON DEVELOPMENT COMPANY SANDUSKY CENTER PARTNERS SOUTHFIELD PROPERTIES - GGJ ASSOCIATES SOUTHFIELD PROPERTIES - CEDAR/JOLLY MAPLE & LIVERNOIS PLAZA G & R DEVELOPMENT G & S REALTY COMPANY C G S ASSOCIATES - LIVONIA SOUTHFIELD PROPERTIES - LANSING MART GERSHENSON-WITTBOLD LOUISVILLE MELVINDALE PLAZA MICHIGAN MART ASSOCIATES GERSHENSON-WITTBOLD MT. CLEMENS NINE MILE & HARPER SOUTHFIELD PROPERTIES - PLYMOUTH/SOUTHFIELD KMART TEN MILE & DEQUINDRE SOUTHFIELD PROPERTIES - VAN BORN SOUTHFIELD PROPERTIES - YPSILANTI SOUTHFIELD PROPERTIES - DAYTON SOUTHFIELD PROPERTIES - SOUTHGATE SOUTHFIELD PROPERTIES - 13 MILE & SCHOENHERR SOUTHFIELD PROPERTIES - WESTLAND OTHER MANAGEMENT/ACCOUNTING SERVICE CONTRACTS PONMALREST ASSOCIATES, INC. BURGER KING FRANCHISE R G PARTNERSHIP BURGER KING PROPERTY LANDLORD RAMCO VIDEO - TEL TWELVE MALL VIDEO ARCADE MAIN STREET VIDEO VIDEO ARCADE SUMMIT VIDEO VIDEO ARCADE 23 34 ATTACHMENT TO LETTER OF INTENT SCHEDULE 3 ACCOUNTING SERVICES RAMCO SUMMIT NORTH DEVELOPMENT COMPANY RAMCO LEWIS ALEXIS ASSOCIATES FERNDALE REDEVELOPMENT COMPANY RAMCO L & W PARTNERS RAMCO GP FERNDALE/LIVONIA LIMITED PARTNERSHIP LIVONIA REDEVELOPMENT COMPANY RAMCO LAPEER, INC. RAMCO KENTWOOD ASSOCIATES RAMCO OAKBROOK SQUARE, INC. RAMCO STERLING HEIGHTS RAMCO JACKSON, INC. RAMCO CONSUMER MALL ASSOCIATES RAMCO TROY ASSOCIATES LIMITED PARTNERSHIP RAMCO NOVI DEVELOPMENT COMPANY RAMCO SPRING MEADOWS ASSOCIATES LIMITED PARTNERSHIP PONMALREST ASSOCIATES, INC. RAMCO ALLIS DEVELOPMENT COMPANY R G PARTNERSHIP RAMCO VIDEO - TEL TWELVE MALL MAIN STREET VIDEO SUMMIT VIDEO RAMCO SANDUSKY ASSOCIATES RAMCO SANDUSKY, INC. R G TEL TWELVE COMPANY SCHUST & BAY DEVELOPMENT COMPANY RAMCO VENTURES FIVE PARTNERS 24 35 ATTACHMENT TO LETTER OF INTENT SCHEDULE 4 OUTLOTS NOT USEFUL FOR DEVELOPMENT OR EXPANSION OF RETAIL SHOPPING CENTERS, OR OTHERWISE EXCLUDED
PARCEL SIZE ACRES STERLING HEIGHTS, MICHIGAN (1) 5.84 WATERFORD, MICHIGAN (2) 5.0,1.15,2.6,1.2 SAGINAW, MICHIGAN (3) 3.77,25.54 SANDUSKY, OHIO (4) 1.1,1.6,.96,8.63,6.92 TROY, OHIO (5) .92, 18.745 COMMERCE TOWNSHIP (COMMERCE (6) 1.55, 24.55 & UNION LAKE) SPRING MEADOWS PLACE (7) 1.019 (SPRINGFIELD TOWNSHIP, OHIO)
(1) SALE OF PROPERTY TO BE COMPLETED BEFORE REIT FORMATION (2) PART OF SUMMIT PLACE COMPLEX (3) 3.77 ACRES ADJACENT TO SHOPPING CENTER NOT INCLUDED IN REIT, 25.54 ACRES ZONED MULTIPLE BEHIND SHOPPING CENTER. (4) ADJACENT TO SHOPPING CENTER NOT INCLUDED IN REIT. (5) LAND IN PROXIMITY OF SHOPPING CENTER CANNOT BE DEVELOPED AS EXPANSION TO SHOPPING CENTER. (6) LAND CURRENTLY ZONED MULTI-FAMILY, BEING USED FOR SEPTIC FIELD ADJACENT TO SHOPPING CENTER NOT INCLUDED IN REIT. (7) PROPERTY UNDER CONTRACT TO BE SOLD BEFORE REIT FORMATION.
25 36 Schedule 5 (a) The dollar value of the Ramco Contribution Assets shall be determined in accordance with the following formula: ANOI [RNOI - (RPI + ( ---- x RGA ))] x.85 TNOI - ------------------------------------ - $75,000,000 .09 Where: RNOI = The sum of (i) projected net operating income from the Ramco Properties (exclusive of revenues attributable to the Tel-Twelve Lease) for the 12 month period commencing October 1, 1994 based on Qualifying Leases in place as of such date and (ii) MCF. RPI = Projected interest on the Ramco Properties for the 12 month period commencing on the Closing Date based on debt financing in place immediately following the closing. CNOI = Projected net operating income from the Company Properties for the 12 month period commencing October 1, 1994 based on leases in place as of such date. TNOI = The sum of ANOI and CNOI. RGA = The 12 month projected general and administrative expenses of the Company. MCF = Projected net cash flow from the management corporation for the 12 month period commencing October 1, 1994 assuming that the Transaction closed on that date and all management contracts relating to the Ramco Properties were canceled. ANOI = RNOI increased by (i) projected net operating income from the Tel-Twelve Lease for the 12 month period commencing October 1, 1994 and (ii) the difference between $2,824,000 and RNOI from the Jackson Property as of October 1, 1994. 26 37 OPV = $17.36 Unless the Company otherwise agrees, a lease will be considered a "Qualifying Lease" if it satisfies all of the following conditions: it is duly executed and delivered by all necessary parties, it initially had a term of at least 3 years, it requires the payment of a market rent, the tenant under the lease is a person who normally occupies space in a retail shopping center, the tenant is open for business and paying rent or, if it is a new lease, the tenant is scheduled to be open for business and paying rent within 3 months after the lease is signed (except if the conditions for occupancy require that more than 3 months elapse before the tenant is scheduled to open for business and begin paying rent, this condition will be satisfied if the tenant under such lease provides the Company with an estoppel letter indicating that the lease is in full force and effect and the tenant is scheduled to be open for business and paying rent within 5 months after the lease is signed), the tenant's business, design of improvements and type of establishment is consistent with the leasing restrictions included in existing reciprocal easement agreements, development agreements and/or anchor leases, it satisfies all REIT eligibility requirements, and it requires the tenant to pay for an appropriate share of operating expenses at the property. 27 38 SCHEDULE 5.1 ILLUSTRATION OF SCHEDULE 5 FORMULA
Base Case - --------- Dollar Value of RPS Assets $123,657,000 67.5% Gershenson NOI $ 27,607,000 Add: Third-Party Management 231,000 Less: Interest on Existing Debt at 8.79% (4,046,000) Less: Interest on $92.5 Million of Refinanced Debt at 8.45% (7,800,000) Less: G&A Allocated to Gershenson (1,753,800) ------------- Gershenson FFO 14,238,200 Payout Ratio 85% ------------- 12,102,470 Dividend Yield 9.0% ------------- 134,471,890 Less: RPS Cash Contribution (75,000,000) ------------- Dollar Value of Gershenson Assets 59,471,890 32.5% ----------------------- Combined Value 183,128,890 100.0% RPS Shares Outstanding 5,698,480 67.5% Gershenson Shares/OP Units 2,740,640 32.5% ------------ Total Shares/OP Units to be Outstanding 8,439,120 Per Share Value $17.36
28 39 Schedule 6 Ramco will be entitled to receive additional OP Units, up to an aggregate maximum equal to the difference between (A) the number of OP Units Ramco would have received at the closing assuming rent projected 12 month net operating income from the Jackson Property on October 1, 1994 equalled at least $2,824,000 and (B) the number of OP Units issued to Ramco at the closing of the Transaction as a result of the actual projected 12 month net operating income from the Jackson Property as of October 1, 1994, determined in accordance with the following formula: OP Units = (NOI / CR) - (AA + I) --------------------- OPV Where: NOI = The annualized stabilized net operating income of the Jackson Property from all sources other than non-qualifying leases on the date which is one year from the Closing Date minus the sum of (i) the projected 12 month net operating income from the Jackson Property from all sources as of October 1, 1994, (ii) any increased rent attributable to automatic fixed minimum rent escalations attributable to leases in place as of October 1, 1994, (iii) percentage rents in excess of the percentage rents taken into consideration in computing projected 12 month net operating income from the Jackson Property as of October 1, 1994 with respect to leases in place as of October 1, 1994; provided, however, with respect to any leases entered into on or after October 1, 1994, annualized stabilized net operating income shall not include the amount by which tenant improvements and tenant allowances in such lease (calculated by amortizing such amounts over the initial term of the lease) exceed the product of (a) the average thereof for such property and type of tenant and (b) the number of square feet covered by such lease. CR = the applicable capitalization rate of .106. AA = the sum of all amounts advanced by the Operating Partnership from and after the closing of the Transaction through and including the date which is one year from the Closing Date for capital expenditures relating to new tenants, tenant improvements, tenant allowances and leasing costs at the Jackson Property. 29 40 I = interest on AA (calculated from the date such amounts were advanced) at an annual rate equal to the greater of (i) 10% per annum or (ii) a floating rate per annum equal to the prime rate of Bank of Boston plus 2%. OPV = $17.36 A lease will be considered "nonqualifying" unless it satisfies all of the following conditions: it is executed and delivered within one year from the Closing Date, it has a term of at least 3 years, it requires the payment of a market rent, the tenant under the lease is a person who normally occupies space in a retail shopping center and is open for business and paying rent, the tenant's business, design of improvements and type of establishment is consistent with the leasing restrictions included in existing reciprocal easement agreements, development agreements and/or anchor leases, it satisfies all REIT eligibility requirements, and it requires the tenant to pay for an appropriate share of operating expenses at the property. 30 41 Schedule 6.1 Ramco will be entitled to receive additional OP Units, up to an aggregate maximum equal to the number of OP Units Ramco would have received at the closing assuming rent from the Tel-Twelve Property on October 1, 1994 had been increased by $510,000, determined in accordance with the following formula: OP Units = (NOI / CR) - (AA + I) --------------------- OPV Where: NOI = The annualized stabilized net operating income attributable to the Tel-Twelve Lease (after taking into account all incremental increases in expenses at the Tel-Twelve Property attributable to such lease) on the date the tenant under such lease begins paying rent. CR = the applicable capitalization rate of .106. AA = the sum of all amounts advanced or incurred by the Operating Partnership from and after the closing of the Transaction through and including the date on which the tenant under the Tel-Twelve Lease begins paying rent for capital expenditures, tenant improvements, tenant allowances and leasing costs relating to the Tel-Twelve Lease. I = interest on AA (calculated from the date such amounts were advanced) at an annual rate equal to the greater of (i) 10% per annum or (ii) a floating rate per annum equal to the prime rate of Bank of Boston plus 2%. OPV = $17.36 Ramco will not be entitled to receive additional OP Units pursuant to this Schedule 6.1 unless the tenant under the Tel-Twelve Lease is open for business and begins paying rent within one year from the Closing Date. 31 42 ATTACHMENT TO LETTER OF INTENT SCHEDULE 7 LISTING OF COMPANY OWNED SHOPPING CENTERS TO BE CONTRIBUTED Sunshine Plaza Shopping Center Crofton Shopping Center Trinity Corners Shopping Center Commack Property Lantana Shopping Center 9 North Wabash Chester Plaza Shops 32 43 ATTACHMENT TO LETTER OF INTENT SCHEDULE 8 RAMCO EXCLUDED PROPERTIES AND BUSINESSES RIVER'S EDGE OFFICE BUILDING SOUTHFIELD, MICHIGAN SUMMIT NORTH WATERFORD, MICHIGAN SUMMIT PLACE AND SUMMIT CROSSING WATERFORD, MICHIGAN BLUE ASH COMMONS CINCINNATI, OHIO LIVONIA TOWNE SQUARE LIVONIA, MICHIGAN RAY TOWNE PLAZA SAGINAW, MICHIGAN PARK PLACE SHOPPING CENTER SANDUSKY, OHIO
FOLLOWING IS A LIST OF BUSINESSES IN WHICH THE RAMCO PRINCIPALS ARE INVOLVED WHICH ARE NOT INCLUDED AS PART OF THE TRANSACTION AND AR NOT A PART OF EXCLUDED PROPERTIES. THIS FOLLOWING LIST IS FOR INFORMATIONAL PURPOSES ONLY. PONMALREST ASSOCIATES, INC. BURGER KING FRANCHISE K G PARTNERSHIP BURGER KING PROPERTY LANDLORD
VIDEO ARCADE BUSINESSES AS OF MAY 12, 1994: RAMCO VIDEO - TEL TWELVE MALL VIDEO ARCADE MAIN STREET VIDEO VIDEO ARCADE SUMMIT VIDEO VIDEO ARCADE
33 44 RAMCO-GERSHENSON PROPERTIES TRUST AMENDED AND RESTATED 1989 EMPLOYEES' STOCK OPTION PLAN 1. PURPOSES The purposes of the Ramco-Gershenson Properties Trust Amended and Restated 1989 Employees' Stock Option Plan (the "Plan") are (i) to provide incentives to those key employees of Ramco-Gershenson Properties Trust (the "Trust") who are in a position to contribute to the long-term success of the Trust, (ii) to assist the Trust in attracting and retaining qualified executives, (iii) to provide participants with an opportunity to share in the growth in value of the Trust and (iv) to align participants' interests with those of the Trust's shareholders. The Plan is being amended and restated in connection with the Ramco Transaction. Certain capitalized terms not otherwise defined in this Plan shall have the meanings set forth in Section 19. 2. SHARES SUBJECT TO THE PLAN The total number of shares for which options may be granted under the Plan shall not exceed, in the aggregate, 387,500 shares of beneficial interest in the Trust, par value $.10 per share (the "Shares"), subject, however, to adjustment in accordance with the provisions of Section 13 hereof. Such Shares may be authorized and unissued Shares, or Shares previously issued and reacquired by the Trust. Except as provided in Section 5, any Shares which were the subject of unexercised portions of any terminated or expired options shall not be subject to further options under the Plan. 3. ADMINISTRATION The Plan shall be administered by the Compensation Committee of the Board of Trustees of the Trust (the "Committee"). No member of the Committee shall be eligible to participate in the Plan. Each member of the Committee shall be a Disinterested Person and an "outside director" within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"), and the regulations promulgated thereunder, to the extent applicable. Subject to the terms, conditions and limitations of the Plan, the Committee shall have full and complete discretion under the Plan, including the authority (a) to select the employees to whom and the time or times at which options to purchase Shares shall be granted, (b) to determine the number of Shares to be subject to each option (and the option price, where appropriate), and (c) to take any other steps in connection with the Plan or the options as it may deem necessary or advisable. The Committee shall have full power and authority to administer and interpret the Plan and to adopt or amend such rules, regulations, agreements and instruments for implementing the Plan and for conduct of its business as it deems necessary or advisable. The Committee's interpretations of the Plan and all determinations made by the Committee B-1 45 pursuant to the powers vested in it hereunder shall be conclusive and binding on all persons having any interest in the Plan or in any awards granted hereunder. Subject to the terms, conditions and limitations of the Plan, the Committee may amend or modify the terms of any outstanding option prospectively or retroactively and may cause outstanding options to be canceled and grant new options in place thereof; provided, however, that such amendment, modification or cancellation shall not impair the rights of any option holder without the holder's consent; and provided, further, that options with respect to no more than 387,500 Shares shall be granted to any one individual during any calendar year. 4. ELIGIBILITY Officers and other employees of the Trust shall be eligible to participate in the Plan. Members of the Board of Trustees who are not also officers or employees of the Trust shall not be eligible to participate in the Plan. 5. GRANT OF OPTIONS Upon and effective as of the Effective Date, the Trust shall enter into a new option agreement with each of the individuals set forth on Exhibit A attached hereto who were granted options in the amounts set forth on Exhibit A prior to the Effective Date (an "Optionee"), which agreement will supersede any preexisting option agreements with such Optionee and will reflect the amended terms of such Optionee's options under the Plan. All such options shall be subject to the terms and conditions set forth in this Plan and to such other terms as the Committee deems appropriate. Options granted under the Plan shall not be intended to qualify as incentive stock options under Section 422A of the Code. 6. EXERCISE PRICE The exercise price of an option shall be equal to $5.75 per share, subject to adjustment in accordance with the provisions of Section 13 hereof. 7. TERM Unless the agreement covering an option (the "Option Agreement") provides otherwise, options granted hereunder shall expire not later than ______________, 200_* (the "Expiration Date"). 8. EXERCISE OF OPTIONS (a) Unless the Option Agreement provides otherwise, options granted under Section 5 hereof shall be fully exercisable on the Effective Date; provided that, any Options __________________________________ * Not earlier than December 6, 2004 or later than 10 years from the Closing of the Ramco Transaction. B-2 46 granted to an Optionee who is subject to Section 16(b) of the Securities Exchange Act of 1934, as amended, shall not be exercisable during the six-month period following the Effective Date. (b) Options shall be exercisable during an Optionee's lifetime by the Optionee, or if the Optionee has become disabled, by his legal representative. (c) Options shall be exercisable for cash, or in lieu of, or in addition to cash, by the delivery of Shares (at their fair market value on the date of exercise) previously owned by the Optionee or to be acquired by the Optionee upon the exercise of the option. (d) No fractional Shares, or cash in lieu thereof, shall be issued under any option granted hereunder. 9. TERMINATION OF EMPLOYMENT (a) Except as set forth in clause (b), if an Optionee's Termination of Employment is for any reason other than death, disability or Retirement, the Optionee shall have the right to exercise the option, not later than the earlier of (i) one year after the date of such termination and (ii) the Expiration Date. (b) Notwithstanding the provisions of clause (a), if an Optionee's Termination of Employment occurs but the Optionee continues after such Termination of Employment to serve the Trust in another capacity, as either a Trustee or Employee, the Optionee shall have the right to exercise his Options during the period in which he remains a Trustee or Employee (subject to extension as set forth in the following sentence and in Section 10). On the date the Optionee ceases to be a Trustee, the Optionee shall have the right to exercise the Option, not later than the earlier of (i) one year from the date on which the Optionee ceases to be a Trustee of the Trust (except as such time may be extended in Section 10(c)) and (ii) the Expiration Date. 10. DEATH; DISABILITY; RETIREMENT (a) If an Optionee's Termination of Employment is by reason of death, all of the Optionee's options shall immediately become exercisable in full and the personal representative of the Optionee, or the person or persons to whom the option shall have been transferred by will or by the laws of descent and distribution, shall have the right to exercise such options not later than the earlier of (i) one year from the date of the Optionee's death and (ii) the Expiration Date. (b) If an Optionee's Termination of Employment is by reason of disability, all of the disabled Optionee's options (which have been held for a period of at least one year as of the date of such total disability shall immediately become exercisable in full) and the disabled Optionee, or his legal representative, shall have the right to exercise such options not later than the earlier of (i) one year from the date of such disability and (ii) the Expiration Date. (c) If an Optionee's Termination of Employment is due to Retirement or an Optionee ceases to be a Trustee of the Trust due to Retirement, all of the Optionee's options shall immediately become exercisable in full, and the Optionee shall have the right to exercise such B-3 47 options not later than the earlier of (i) five years from the date of Retirement and (ii) the Expiration Date. 11. TRANSFERABILITY OF OPTIONS (a) An Optionee's rights and interests under the Plan (including the right to exercise unexercised options) may not be assigned or transferred, except in the case of an Optionee's death to the person or persons to whom the option shall have been transferred by will or the laws of descent and distribution or pursuant to a qualified domestic relations order as defined in the Code or Title I of the Employer Retirement Income Security Act of 1984, as amended, or the rules thereunder. (b) Notwithstanding the foregoing, the Committee may provide in an Option Agreement (or another writing) that the Optionee may transfer, without consideration for the transfer, all or part of the Optionee's options to members of his immediate family (i.e., children, grandchildren or spouse), to trusts for the benefit of such immediate family members and to partnerships in which such family members are the only parties. 12. AGREEMENTS WITH OPTIONEES Each grant made under this Plan may be evidenced by an Option Agreement containing such terms and conditions as the Committee shall approve. Each such agreement shall provide that, as a condition to the grant of the options evidenced thereby, the Optionee agrees that the Trust may arrange to deduct from any payments due to the Optionee from the Trust, the aggregate amount of federal, state or local taxes of any kind required by law to be withheld with respect to the exercise of such options, or if no such payments are due or to become due to the Optionee, that, if required by the Trust, the Optionee shall pay to the Trust, or make arrangements satisfactory to the Trust regarding the payment to it of, the aggregate amount of such taxes. 13. ADJUSTMENTS (a) The total number of Shares for which options may be granted under the Plan and option rights (both as to the number of Shares and the option price) shall be appropriately adjusted for any increase or decrease in the number of outstanding Shares resulting from payment of a stock dividend on the Shares, a stock dividend that constitutes a spin-off, a subdivision or combination of Shares, or a reclassification of the Shares, and (in accordance with the provisions contained in the next paragraph) in the event of a recapitalization of the Trust or a consolidation or merger in which the Trust shall be the surviving entity. If in connection with the Ramco Transaction the Trust sells or disposes of the Mortgage Loans listed on Schedule 1 (collectively, the "Transferred Assets") and the proceeds of such sales or other dispositions are not included in a spin-off entity, the exercise price of the options shall be reduced by multiplying the existing exercise price by a fraction, the numerator of which is the net value ascribed to the Transferred Assets by Dean Witter Reynolds, Inc. (the "Transferred Asset Value") and the denominator of which is the sum of (i) the Transferred Asset Value and (ii) the fair market value of the Trust's assets that will remain in the Trust (or will be contributed to a subsidiary partnership)(as determined by Dean Witter Reynolds, Inc.). B-4 48 (b) In its absolute discretion, and on such terms and conditions as it deems appropriate, the Committee may provide by the terms of any option that such option cannot be exercised after the merger or consolidation of the Trust into another entity, the exchange of all or substantially all of the assets of the Trust for the securities of another entity, the acquisition by another entity of 80% or more of the Trust's then outstanding Shares or the liquidation or dissolution of the Trust, and if the Committee so provides, it may, in its absolute discretion and on such terms and conditions as it deems appropriate, also provide, either by the terms of such option or by a resolution adopted prior to the occurrence of such merger, consolidation, exchange, acquisition, liquidation or dissolution, that, for some period of time prior to such event, such option shall be exercisable as to all Shares subject thereto, notwithstanding anything to the contrary in Section 8 and/or in any installment provisions of such option. 14. RIGHTS AS A SHAREHOLDER An Optionee or a transferee of an option shall have no rights as a shareholder with respect to any Share covered by an option until he shall have become the holder of record of such Share, and no adjustment shall be made for dividends (ordinary or extraordinary, whether in cash, securities or other property) or distributions or other rights in respect of such share for which the record date is prior to the date on which he shall become the holder of record thereof. 15. AMENDMENT AND TERMINATION The Board of Trustees of the Trust or the Committee, without the consent of the participants, may at any time alter or discontinue the Plan, provided that such action will not materially affect options theretofore granted and provided that no such action of the Board of Trustees of the Trust or the Committee may, without the approval of Shareholders, alter the provisions of the Plan so as to (a) increase the total number of Shares which may be purchased pursuant to options granted under the Plan (except to reflect stock dividends, stock splits or similar recapitalizations), (b) change the manner of determining the option price, (c) change the requirements as to employees eligible to participate in the Plan, (d) extend the option period or (e) modify the Plan in any way that requires shareholder approval in order for options granted thereafter to qualify as performance-related compensation for purposes of Section 162(m) of the Code and the regulations promulgated thereunder, to the extent applicable. 16. INVESTMENT PURPOSE No Shares shall be issued or transferred upon the exercise of any option hereunder unless and until all legal requirements applicable to the issuance or transfer of such Shares have been complied with to the satisfaction of the Committee. The Committee shall have the right to condition the issuance of Shares made to any Optionee hereunder on such Optionee's undertaking in writing to comply with such restrictions on his subsequent disposition of such Shares as the Committee shall deem necessary or advisable as a result of any applicable law, regulation or official interpretation thereof, and certificates representing such Shares may be legended to reflect any such restrictions. B-5 49 17. RIGHT TO TERMINATE EMPLOYMENT Nothing contained herein or in any Option Agreement shall restrict the right of the Trust to terminate the employment of any Optionee at any time, with or without cause. 18. DETERMINATION OF FAIR MARKET VALUE The "fair market value" of the Shares as of a particular date, shall be deemed to be (a) the closing sales price per Share if the Shares are listed on a stock exchange or (b) if the Shares are not listed, the mean between the closing or average bid and asked prices per Share on the over-the-counter market. 19. CERTAIN DEFINITIONS "Disinterested Person" means an Independent Trustee who qualifies as such under Rule 16b-3(C)(2)(i) promulgated under the Securities Act of 1933, as amended, or any successor definition under the Act. "Employee" means any officer or employee (as defined in accordance with Section 3401(c) of the Internal Revenue Code of 1986, as amended) of the Trust. "Independent Trustee" means a member of the Board of Trustees who is not also an employee of the Trust and who is otherwise a Disinterested Person. "Predecessor Program" means RPS Realty Trust, Resources Pension Shares 1, Resources Pension Shares 2, Resources Pension Shares 3, Integrated Resources Pension Shares 4, a California limited partnership, Resources Pension Advisory Corp., and/or any of its affiliates, and such other programs or entities as may be designated by the Committee. "Ramco Transaction" means the transaction pursuant to which RPS Realty Trust and Ramco-Gershenson, Inc. shall have contributed to Ramco-Gershenson Properties, L.P. certain assets and properties in accordance with the Master Agreement, dated as of April 3, 1995. "Retirement" means an Optionee's Termination of Employment or voluntary retirement as a Trustee (which ever is later) after attainment of age 55 and completion of fifteen years of continuous service to the Trust and/or any Predecessor Program or as otherwise determined by the Board of Trustees or the Trust. "Termination of Employment" means the time when the employee-employer relationship between the Optionee and the Trust is terminated for any reason or, if the Optionee is covered by an employment agreement, the time such employment agreement expires by its terms (provided such Optionee does not continue to serve the Trust as an employee). "Trustee" means any member of the Board of Trustees. B-6 50 20. GOVERNING LAW The Plan shall be governed by the laws of the State of Maryland, without regard to the conflicts of law principles thereof. 21. EFFECTIVE DATE The Plan was originally effective December 6, 1989. The amended and restated Plan shall become effective upon (i) adoption by the Board of Trustees of the Trust, (ii) approval by the holders of a majority of the issued and outstanding Shares of the Trust present or represented and entitled to vote at a meeting of shareholders and (iii) consummation of the Ramco Transaction (the "Effective Date"), and shall continue in effect thereafter until terminated or suspended by the Committee. In the event shareholder approval is not obtained, and/or the Ramco Transaction is not consummated, the terms and conditions of the RPS Realty Trust 1989 Employees' Stock Option Plan, as in effect prior to this amendment and restatement, shall remain in full force and effect. B-7 51 Exhibit A
Number of Options Number of Options Outstanding Prior to Outstanding Upon Name Effective Date Effective Date* ---- -------------------- ----------------- -- Joel Pashcow 600,000 150,000 Herbert Liechtung 600,000 150,000 Edwin Frankel 50,000 12,500 John J. Johnston, Jr. 50,000 12,500 Steven Liechtung 20,000 5,000 Nancy Comerford 5,000 1,250
____________________ * Post-reverse stock split. 52 Schedule 1
Mortgage Loan Trust Advance - ------------- ------------- Simmons Manufacturing Warehouse $ 1,500,000 Coral Way Shopping Center 3,000,000 1-5 North Wabash Avenue 2,850,000 1733-53 Mass Avenue 2,200,000 Mt. Morris Commons Shopping Center 2,700,000 New England Telephone Building 3,000,000 19 Rector Street Office Building 3,000,000 Hylan Plaza Shopping Center 25,000,000 NCR Building 468,493 Branhaven Plaza Shopping Center 2,800,000 Copps Hill Shopping Center 3,590,000 Madison Shopping Center 1,550,000 Holiday Park Shopping Center 1,916,000
53 Exhibit C Proposed Amendments to the Employee Plan: 1. The expiration date of the Employee Plan and all outstanding options granted thereunder will be extended for five years until December 6, 2004. 2. Paragraph 9(a) of the Employee Plan will be amended in a manner that makes it inapplicable to any optionee whose employment is terminated for a reason other than death or disability for as long as such optionee serves the Trust as a trustee. 3. The three month period described in paragraph 9(a) of the Employee Plan will be extended to one year. 4. Options granted under the Employee Plan will, under an individual option agreement between the Trust and Employee, be assignable to members of an optionee's immediate family (including trusts for such family members). 5. If an optionee ceases to be an employee or trustee of the Trust due to his retirement at or after the age of 55 and has provided the Trust and its predecessors with at least 15 years of service,the optionee will have 5 years from the date of retirement to exercise an option granted under the plan. 6. In the event the Spin-Off Transaction does not occur and, alternatively, the Trust sells or disposes of the Mortgage Loans listed on Schedule 1 (collectively, the "Transferred Assets"), the Employee Plan will be amended to provide that the exercise price of the options will be reduced by multiplying the existing exercise price by a fraction, the numerator of which is the net value ascribed to the Transferred Assets by Dean Witter Reynolds Inc. (the "Transferred Asset Value") and the denominator of which is the sum of (i) the Transferred Asset Value and (ii) the fair market value of the Trust's assets that will remain in the Trust (or will be contributed to a subsidiary partnership) (as determined by Dean Witter Reynolds Inc.). 54 Schedule 1
Mortgage Loan Trust Advance - ------------- ------------- Simmons Manufacturing Warehouse $ 1,500,000 Coral Way Shopping Center 3,000,000 1-5 North Wabash Avenue 2,850,000 1733-53 Mass Avenue 2,200,000 Mt. Morris Commons Shopping Center 2,700,000 New England Telephone Building 3,000,000 19 Rector Street Office Building 3,000,000 Hylan Plaza Shopping Center 25,000,000 NCR Building 468,493 Branhaven Plaza Shopping Center 2,800,000 Copps Hill Shopping Center 3,590,000 Madison Shopping Center 1,550,000 Holiday Park Shopping Center 1,916,000
55 EXHIBIT D FORM OF RELEASE Herbert Liechtung, for himself and on behalf of his heirs, executors, administrators, successors and assigns (collectively, the "Releasor"), hereby remises, releases and forever discharges RPS Realty Trust (the "Trust") and its direct and indirect subsidiaries, shareholders, trustees, affiliates, predecessors, successors and assigns, and its present and former trustees, officers, employees, agents, attorneys and its heirs, executors, administrators, successors and assigns (collectively, the Releasees"), and each of them, of and from any and all claims, demands, or causes of action whatsoever from the beginning of the world to the date present, whether individual, class or derivative in nature, at law or in equity, whether based on any federal, state or foreign law or right of action, foreseen or unforeseen, matured or unmatured, known or unknown, accrued or not accrued, arising out of or in connection with the Employment Agreement dated October 24, 1988 between Releasor and the Trust (the "Employment Agreement") and Releasor's employment by the Trust and/or the Trust's predecessors (including Resources Pension Shares 1, Resources Pension Shares 2, Resources Pension Shares 3 and Integrated Resources Pension Shares 4) which any Releasor has, had or have or can, shall, or may hereafter have against the Releasees, or any of them, with the exception of any rights to indemnification under paragraph 13 of the Employment Agreement and any rights under the Agreement dated March 1, 1995 between Releasor and the Trust (the "Surviving Claims"). Releasor hereby acknowledges that he may hereafter discover facts in addition to or different from those he now knows or believes to be true with respect to the subject matter of this release but that it is his intention to, and he does hereby, fully, finally and forever settle and release any and all claims, demands, and causes of action, known or unknown, suspected or unsuspected, of every kind and nature whatsoever, which now exist, may hereafter exist or may heretofore have existed with respect to the subject matter of this release; in furtherance of such intention, he acknowledges that this release shall be and remain in effect as a full and complete release of any and all claims or matters he has, may have or may hereafter have against any Releasee arising out of or in connection with the Employment Agreement, with the exception of the Surviving Claims, notwithstanding the subsequent discovery or existence of such additional or different facts. IN WITNESS WHEREOF, the undersigned has duly executed this release as of the ___ day of ___________, 1995. _____________________________ Herbert Liechtung D-1 56 EXHIBIT E FORM OF RELEASE RPS Realty Trust (the "Trust"), for itself and on behalf of its direct and indirect subsidiaries, shareholders, trustees, affiliates, predecessors, successors and assigns, and its present and former trustees, officers, employees, agents, attorneys and its heirs, executors, administrators, successors and assigns (collectively, the Releasor"), hereby remises, releases and forever discharges Herbert Liechtung and on his heirs, executors, administrators, successors and assigns (collectively, the "Releasee"), of and from any and all claims, demands, or causes of action whatsoever from the beginning of the world to the date present, whether individual, class or derivative in nature, at law or in equity, whether based on any federal, state or foreign law or right of action, foreseen or unforeseen, matured or unmatured, known or unknown, accrued or not accrued, arising out of or in connection with the Employment Agreement dated October 24, 1988 between Releasee and the Trust (the "Employment Agreement") and Releasee's employment by the Trust and/or the Trust's predecessors (including Resources Pension Shares 1, Resources Pension Shares 2, Resources Pension Shares 3 and Integrated Resources Pension Shares 4) which any Releasor has, had or have or can, shall, or may hereafter have against the Releasee. Releasor hereby acknowledges that it may hereafter discover facts in addition to or different from those it now knows or believes to be true with respect to the subject matter of this release but that it is its intention to, and it does hereby, fully, finally and forever settle and release any and all claims, demands, and causes of action, known or unknown, suspected or unsuspected, of every kind and nature whatsoever, which now exist, may hereafter exist or may heretofore have existed with respect to the subject matter of this release; in furtherance of such intention, it acknowledges that this release shall be and remain in effect as a full and complete release of any and all claims or matters it has, may have or may hereafter have against any Releasee arising out of or in connection with the Employment Agreement, notwithstanding the subsequent discovery or existence of such additional or different facts. IN WITNESS WHEREOF, the undersigned has duly executed this release as of the ___ day of __________, 1995. RPS REALTY TRUST By:_________________________________ E-1 -----END PRIVACY-ENHANCED MESSAGE-----