Ground Lease

GROUND LEASE


BETWEEN


HARTZ MOUNTAIN INDUSTRIES, INC.


and


HARTZ-PW LIMITED PARTNERSHIP
-----------------------------------------


Premises:


Operations Center


Lincoln Harbor Project


2
INDEX


ARTICLE PAGE
------- ----


1. Definitions .................................. 1
2. Demise and Term .............................. 4
3. Rent ......................................... 5
4. Use of Demised Premises ...................... 6
5. Construction of Building ..................... 6
6. Tax and Operating Expense Payments ........... 7
7. Common Areas ................................. 11
8. Mortgaging and Transfer by Landlord .......... 11
9. Quiet Enjoyment .............................. 12
10. Assignment, Subletting and Mortgaging ........ 12
11. Compliance with Laws ......................... 16
12. Insurance and Indemnity ...................... 17
13. Rules and Regulations ........................ 20
14. Alterations .................................. 21
15. Repairs and Maintenance ...................... 21
16. Electric Energy .............................. 22
17. Other Services: Service Interruption ........ 22
18. Access, Changes and Name ..................... 22
19. Mechanics' Liens and Other Liens ............. 23
20. Non-Liability and Indemnification ............ 23
21. Damage or Destruction ........................ 25
22. Eminent Domain ............................... 26
23. Surrender .................................... 28
24. Conditions of Limitation ..................... 28
25. Re-Entry by Landlord ......................... 29
26. Damages ...................................... 30
27. Affirmative Waivers .......................... 33
28. No Waivers ................................... 33
29. Broker ....................................... 34
30. Curing Tenant's Defaults ..................... 34
31. Notices ...................................... 35
32. Estoppel Certificates ........................ 35
33. Arbitration .................................. 36
34. Memorandum of Lease .......................... 36
35. Miscellaneous ................................ 37


EXHIBITS
--------


Exhibit "A" Building
Exhibit "B" Fixed Rent
Exhibit "C" Floor Space
Exhibit "D" Property Description
Exhibit "E" Lincoln Harbor Project
Exhibit "F" Mortgage Terms
Exhibit "G" Operating Expenses
Exhibit "H" Fee Mortgage Amounts
Exhibit "I" Landlord's Share of Insurance Proceeds and Con-
demnation Awards
Exhibit "J" Nondisturbance Agreement


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LEASE, dated April 14, 1986, between HARTZ MOUNTAIN INDUSTRIES, INC., a New York corporation having an office at 400 Plaza Drive, Post Office Box 1411, Secaucus, New Jersey 07094, and HARTZ-PW LIMITED PARTNERSHIP, a New Jersey limited partnership having an address at 400 Plaza Drive, Post Office Box 1411, Secaucus, New Jersey 07094.


ARTICLE 1 - DEFINITIONS


1.01. As used in this Lease the following words and phrases shall have the meanings indicated:


A. Additional Charges: All amounts that become payable by Tenant to Landlord hereunder other than the Fixed Rent.


B. Broker: Joseph Hilton & Associates Incorporated.


C. Building: The building to be located on the Land as more particularly described on the plan attached hereto as Exhibit "A".


D. Calendar Year: Any twelve-month period during the term of this Lease commencing on a January 1.


E. Commencement Date: The date of this Lease.


F. Demised Premises: The Land, and the Building and any other improvements now or hereafter located thereon, which Building and other improvements are and shall be the property of Tenant.


G. Expiration Date: The date that is the day before the ninety-eighth (98th) anniversary of the Commencement Date if the Commencement Date is the first day of a month, or the ninety-eighth (98th) anniversary of the last day of the month in which the Commencement Date occurs if the Commencement Date is not the first day of a month.


H. Fixed Rent: As set forth on the Rent Schedule annexed hereto as Exhibit "B".


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I. Fixed Rent Commencement Date: Shall mean the Commencement Date (as defined in the Space Lease).


J. Floor Space: 604,528, as the same may be increased or decreased pursuant to Section 35.13 hereof, and as more particularly set forth on Exhibit "C" annexed hereto and made a part hereof.


K. Hartz Lease: The Agreement of Lease, dated of even date herewith, between Tenant, as landlord, and Hartz Mountain Industries, Inc., as tenant, pursuant to which Tenant subleased a portion of the Building to Hartz Mountain Industries, Inc.


L. Insurance Requirements: Rules, regulations, orders and other requirements of the applicable board of underwriters and/or the applicable fire insurance rating organization and/or any other similar body performing the same or similar functions and having jurisdiction or cognizance over the Land and Building, whether now or hereafter in force.


M. Land: The land described on Exhibit "D" annexed hereto and made a part hereof.


N. Landlord: On the date as of which this Lease is made, shall mean Hartz Mountain Industries, Inc., a New York corporation having an address at 400 Plaza Drive, Secaucus, New Jersey 07094, but thereafter "Landlord" shall mean only the fee owner of the Land.


O. Legal Requirements: Laws and ordinances of all federal, state and local governments, and rules, regulations, orders and directives of all departments, subdivisions, bureaus, agencies or offices thereof, and of any other governmental authorities having jurisdiction over the Land and Building.


P. Lincoln Harbor Project: The project more particularly described on Exhibit "E" annexed hereto and made a part hereof.


Q. Mortgage: The mortgage creating a lien on the leasehold estate created pursuant to this Lease, to be entered into pursuant to a loan commitment substantially on the terms set forth in the schedule annexed hereto as Exhibit "F", and any replacement, extension, modification, or amendment thereto.


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R. Operating Expenses: The costs and expenses for the items set forth on said Exhibit "G" annexed hereto and made a part hereof.


S. Permitted Uses: Any and all uses permitted by law and which are in keeping with the character and quality of the Lincoln Harbor Project.


T. Person: A natural person or persons, a partnership, a corporation, or any other form of business or legal association or entity.


U. Project Floor Space: 2,206,457, as the same may be increased or decreased pursuant to Section 35.13 hereof, and as more particularly set forth on Exhibit "C" annexed hereto and made a part hereof.


V. Real Estate Taxes: The real estate taxes, assessments and special assessments imposed upon the Demised Premises by any federal, state, municipal or other governments or governmental bodies or authorities. If at any time during the Term the methods of taxation prevailing on the date hereof shall be altered so that in lieu of, or as an addition to or as a substitute for, the whole or any part of such real estate taxes, assessments and special assessments now imposed on real estate there shall be levied, assessed or imposed on Landlord specifically in substitution for any of the foregoing Real Estate Taxes (a) a tax, assessment, levy, imposition, license fee or charge wholly or partially as a capital levy or otherwise on the rents received therefrom, or (b) any other such additional or substitute tax, assessment, levy, imposition or charge, then all such taxes, assessments, levies, impositions, fees or charges or the part thereof so measured or based shall be deemed to be included within the term "Real Estate Taxes" for the purposes hereof, calculated as if Landlord's only asset were the leasehold estate created by this Lease.


W. Rent: The Fixed Rent and the Additional Charges.


X. Rules and Regulations: The reasonable rules and regulations that may be promulgated by Landlord from time to time in connection with the common areas of the Lincoln Harbor Project, as may be reasonably changed by Landlord from time to time.


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Y. Space Lease: The Agreement of Lease, dated of even date herewith, between Tenant, as Landlord, and PaineWebber Incorporated, as tenant, pursuant to which Tenant subleased the Land and the Building to PaineWebber, Inc.


Z. Subtenants: The tenants under the Space Lease and the Hartz Lease from time to time.


AA. Tenant: On the date as of which this Lease is made shall mean Hartz-PW Limited Partnership, but thereafter "Tenant" shall mean only the tenant under this Lease at the time in question, provided, however, that nothing herein shall be construed as relieving Hartz-PW Limited Partnership of any liability for the obligations of Tenant hereunder in the event Hartz-PW Limited Partnership ceases to be the Tenant hereunder, except as otherwise expressly provided herein or by separate agreement between Landlord and Hartz-PW Limited Partnership.


BB. Tenants' Fraction: 27.4%, determined by dividing the Floor Space by the Project Floor Space, as the same may be decreased pursuant to Section 35.13 hereof.


CC. Term: The period commencing on the Commencement Date and ending at 11:59 P.M. of the Expiration Date, unless otherwise terminated in accordance with the provisions hereof.


DD. Unavoidable Delay: A delay arising from or as a result of a strike, lockout, or labor difficulty, explosion, sabotage, accident, riot or civil commotion, act of war, fire or other catastrophe, Legal Requirement or an act of the other party and any cause beyond the reasonable control of that party other than such party's financial condition, provided that the party asserting such Unavoidable Delay has exercised its best efforts to minimize such delay. The party asserting such delay promptly upon becoming aware of such Unavoidable Delay, shall give written notice of such Unavoidable Delay to the other party.


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ARTICLE 3 - RENT


3.01. Tenant shall pay the Fixed Rent in equal monthly installments in advance on the fifth (5th) day of each and every calendar month beginning on the Fixed Rent Commencement Date. If the Fixed Rent Commencement Date occurs on a day other than the first day of a calendar month, the Fixed Rent for such partial calendar month shall be prorated on a per diem basis and paid on the Fixed Rent Commencement Date.


3.02. The Rent shall be paid in lawful money of the United States to Landlord at its office, or such other place, or Landlord's agent, as Landlord shall designate by notice to Tenant. Tenant shall pay the Rent promptly when due and without any abatement, deduction or setoff for any reason whatsoever, except as may be expressly provided in this Lease. Tenant shall assume the risk of lateness or failure of delivery of the mails, and no lateness or failure of the mails will excuse Tenant from its obligation to have made the payment in question when required under this Lease.


3.03. No payment by Tenant or receipt or acceptance by Landlord of a lesser amount than the correct Rent shall be deemed to be other than a payment on account, nor shall any endorsement or statement on any check or any letter accompanying any check or payment be deemed an accord and satisfaction, and Landlord may accept such check or payment without prejudice to Landlord's right to recover the balance or pursue any other remedy in this Lease or at law provided.


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


3.05. If Tenant shall fail to pay any installment of Fixed Rent within ten (10) days or any other item of Rent within thirty (30) days after the date when such payment is due and Landlord shall have delivered a bill for same (which delivery may be by invoice and shall not be required to comply with the requirements for notices


5 8 specified in Article 31 of this Lease), then any such payment shall bear interest calculated from the due date to the date such payment is received by Landlord, at a rate equal to two (2) percentage points in excess of the rate of interest publicly announced from time to time by Citibank, N.A., or its successor, as its "base rate" (or such other term as may be used by Citibank, N.A., from time to time, for the rate presently referred to as its "base rate") (the "Late Payment Rate").


3.06. It is the intention of the parties that the Fixed Rent payable under this Lease shall be net to Landlord, so that this Lease shall yield to Landlord the Fixed Rent specified herein during the Term of this Lease, and that all costs, expenses and obligations of every kind and nature whatsoever relating to the Demised Premises shall be paid by Tenant, other than liens placed on the Demised Premises by Landlord, or claims against Landlord for Landlord's negligence or default under the terms of this Lease (nothing herein shall be construed as affecting the provisions of any insurance carried by Landlord, Tenant, subtenant or assign with respect to the Demised Premises, including fire and hazard insurance, liability insurance and any other insurance).


ARTICLE 4 - USE OF DEMISED PREMISES


4.01. Tenant shall use and occupy the Demised Premises only for the Permitted Uses and in compliance with all Legal Requirements.


ARTICLE 5 - CONSTRUCTION OF BUILDING


5.01. Tenant shall, at its own cost and expense, cause the construction of the Building and the other improvements contemplated in connection therewith substantially in accordance with the provisions of the Space Lease.


5.02. Tenant shall at all times during the term of this Lease, at its own cost and expense, keep and maintain in good condition, or cause to be kept and maintained, the Demised Premises in compliance with all Insurance Requirements and Legal Requirements. Landlord shall not be required to furnish any services or facilities or to make any improvements, repairs or alterations in or to the Demised Premises during the term of this Lease.


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5.03. Tenant may, at its option and its own cost and expense, at any time and from time to time, make such alterations, changes, replacements, improvements and additions (herein collectively called "Alterations") in and to the Demised Premises as it may deem desirable.


5.04. At any time on or before the Expiration Date, Tenant shall have the right, but not the obligation, to remove all or any portion of the Building. If, on the Expiration Date, all or any portion of the Building shall remain on the Land, title thereto shall become the sole property of the Landlord.


5.05. Landlord reserves the right, at any time and from time to time, to increase, reduce or change the number, type, size, location, elevation, nature and use of any buildings and other improvements in the Lincoln Harbor Project, including, without limitation, the right to move and/or remove same, provided same shall not block or unreasonably interfere with Tenant's means of ingress or egress to and from the Building; provided that such shall not deviate materially from the approved site plan without Tenant's prior written consent, which consent shall not be unreasonably withheld or delayed, and provided further that Tenant may thereupon request a recalculation of Operating Expenses in accordance with Section 35.14 hereof.


ARTICLE 6 - TAX AND OPERATING EXPENSE PAYMENTS


6.01. On or before the Commencement Date (as such term is defined in the Space Lease) Landlord shall use its best efforts to obtain from the City of Weehawken a separate tax lot and zoning lot number for the Demised Premises. Commencing on the Commencement Date and provided that Landlord shall have obtained a separate tax lot number for the Demised Premises, Tenant shall pay to the appropriate governmental authority the Real Estate Taxes for the Land and the Building for each year during the Term not later than one (1) business day before any delinquency fee would be imposed upon the payment of the same. If Landlord shall not have obtained a separate tax lot number for the Demised Premises on or before the Commencement Date, then, commencing on the Commencement Date, Tenant shall pay to Landlord an amount equal to its Proportionate Share (hereinafter defined) of the Real Estate Taxes for the Land and the Building for the tax lot of which the Demised Premises form a part for any


7 10 year during the Term not later than five (5) business days before any delinquency fee would be imposed upon the payment of the same, until such time as Landlord shall have obtained such separate tax lot number; but in no event shall Tenant's payment for Real Estate Taxes be more or less than that amount which Tenant would have paid if the Demised Premises were a separate tax lot. Tenant's "Proportionate Share" shall mean the sum of (x) the tax attributable to the Building and other improvements located on the Land, as may be separately assessed or as shown in the Tax Assessor's Notes, and (y) 4.42% of the tax attributable to the tax lot of which the Land forms a portion. Landlord agrees that, throughout the term thereafter, the Demised Premises will constitute a separate tax and zoning lot, separate and apart from other real property. In determining the amount of Real Estate Taxes for the partial calendar years in which the Term shall commence or expire, Real Estate Taxes payable in such calendar year shall be apportioned for that portion of the Tax Year (hereinafter defined) occurring within the calendar year and Real Estate Taxes for such calendar year shall be prorated for the number of days in such calendar year occurring subsequent to the Commencement Date or prior to the Expiration Date, as the case may be. "Tax Year" shall mean the period January 1 through December 31 (or such other period as hereafter may be duly adopted by the City of Weehawken as its fiscal year for Real Estate Tax purposes), any portion of which occurs during the Term. Tenant shall have the right to institute, and in good faith prosecute, tax certiorari proceedings with respect to the Building and the Land. In the event of the institution of such proceedings, such proceedings shall be at Tenant's sole cost and expense and Landlord shall cooperate fully with Tenant in connection with any such proceedings.


6.02. (a) Prior to the Commencement Date, Landlord shall deliver to Tenant a statement estimating the Operating Expenses for the partial calendar year commencing on the Commencement Date and Tenant shall pay to Landlord on a monthly basis on or before the tenth (10th) day of each calendar month during the first partial calendar year of the Term an amount equal to such estimated Operating Expenses divided by the number of months or partial months in such partial calendar year. On or before February 15 of each calendar year or partial calendar year during the Term, Landlord shall furnish Tenant with an operating statement (the "Operating State-


8 11 ment") in reasonable detail setting forth the actual Operating Expenses for the preceding calendar year. If such Operating Statement shall show that the actual Operating Expenses for the preceding calendar year were in excess of those estimated by Landlord and previously paid by Tenant, then within forty (40) days after receipt of such actual Operating Statement, Tenant shall remit to Landlord any such deficiency together with interest thereon at the Late Payment Rate, calculated from the date of each payment to the date of payment or refund, as the case may be. If such Operating Statement shall show that Tenant shall have paid amounts in excess of the actual Operating Expenses, then Landlord shall remit to Tenant together with such Operating Statement a check in the amount equal to such excess payments together with interest thereon at the Late Payment Rate, calculated from the date of each payment to the date of payment or refund, as the case may be.


(b) In addition, in each Operating Statement, Landlord may set forth any estimated increases in Operating Expenses for the then current calendar year, provided, however, that in no event shall Landlord's estimate exceed an amount equal to the sum of the actual Operating Expenses for the preceding calendar year and an amount equal to such actual Operating Expenses multiplied by the percentage increase in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics of the United States Department of Labor, New York, N.Y. - Northeastern N.J. Area, All Items (1967 = 100), or any successor index thereto, appropriately adjusted (the "CPI"). If the CPI ceases to be published, and there is no successor thereto, such other index as Landlord and Tenant shall agree upon in writing shall be substituted for the CPI. If Landlord or Tenant are unable to agree as to such substituted index, such matter shall be submitted to the American Arbitration Association or any successor organization for determination in accordance with the regulations and procedures thereof then obtaining for commercial arbitration. After receipt of such Operating Statement, Tenant shall pay to Landlord a sum equal to 1/12th of the amount shown on such statement multiplied by the number of months of the Term in said calendar year preceding the demand, less the amount (if any) paid by Tenant prior to such demand pursuant hereto for such months, and thereafter, commencing with the month in which the demand is made in continuing thereafter for each month of the Term until the rendition


9 12 of a new Operating Statement, 1/12th of the amount shown on such Operating Statement.


6.03. Each such statement given by Landlord pursuant to Section 6.02 shall be conclusive and binding upon Tenant unless within 120 days after the receipt of the Operating Statement provided for above Tenant shall notify Landlord that it or the Subtenant under the Space Lease disputes the correctness of the statement, specifying, to the extent the information is available, the particular respects in which the statement is claimed to be incorrect. If such notice is sent, Tenant, Subtenant, and its accountants may examine Landlord's books and records relating to the Operating Expenses to determine the accuracy of the Operating Statement. If, after such examination, Tenant or Subtenant still disputes such Operating Statement, any party may refer the decision of the issues raised to one of the so-called "big eight" public accounting firms, mutually satisfactory to Landlord, Tenant and Subtenant, or if Landlord, Tenant and Subtenant shall be unable to agree, then the firm to which the dispute shall be referred shall be chosen as follows: Landlord, Tenant and Subtenant shall each be permitted to exclude one of such firms from the pool of acceptable firms; the firm to whom such decision shall be referred shall then be chosen by lot from the pool of remaining firms, and if the firm chosen by lot shall refuse to serve, a substitute firm shall be chosen by lot. Provided, however, that if such a firm has been chosen by Tenant and the Subtenant by such process, the firm so chosen shall be deemed acceptable to Landlord and Tenant. The firm so chosen may, in its discretion, retain one or more consultants to assist in the resolution of the dispute referred to it. The decision of such accountants, absent manifest error, shall be conclusively binding upon the parties. The fees and expenses (including the fees of such consultants) involved in such decisions shall be borne by the unsuccessful party as between Landlord and Tenant (and if both parties are partially successful, the accountants shall apportion the fees and expenses between the parties based on the degree of success of each party). If such dispute is ultimately determined in Tenant's favor (either by agreement between Landlord or Tenant or by decision of the accountants), Landlord promptly after such determination shall pay to Tenant any amount overpaid by Tenant. Pending the determination of such dispute by agreement or arbitration as aforesaid, Tenant shall, within twenty (20) days after


10 13 receipt of such statement, pay the Additional Charges in accordance with Landlord's statement, without prejudice to Tenant's position.


ARTICLE 7 - COMMON AREAS


7.01. Tenant and its subtenants and concessionaires, and their respective officers, employees, agents, customers and invitees, shall have the non-exclusive right, in common with Landlord and all others to whom Landlord (or other owner of the Lincoln Harbor Project) has granted or may hereafter grant such right, but subject to the Rules and Regulations, to use the common areas of the Lincoln Harbor Project. Landlord reserves the right, at any time and from time to time, to close temporarily all or any portions of such common areas (provided that such closure does not unreasonably interfere with Tenant's business at the Demised Premises, except in cases of emergency) when in Landlord's reasonable judgment any such closing is necessary or to (a) make repairs or changes or to effect construction within the Lincoln Harbor Project; (b) prevent the acquisition of public rights in such areas; or (c) protect or preserve natural persons or property. Landlord also reserves the right to grant easements for public utilities (including, without limitation, easements affecting the Land, in connection with the development of the Lincoln Harbor Project. Landlord may do such other acts in and to such common areas as in its reasonable judgment may be desirable to improve or maintain same, provided, however that Landlord shall not change the standard of maintenance of such common areas without Tenant's approval, which approval shall not be unreasonably withheld or delayed. In all such events, such work shall be commenced and prosecuted diligently and with as little interference as possible with Tenant's use of the Demised Premises.


7.02. Tenant agrees that it, any subtenant or licensee and their respective officers, employees; contractors and agents will park their automobiles and other vehicles only upon the Land.


ARTICLE 8 - MORTGAGING AND TRANSFER BY LANDLORD


8.01. Landlord may not mortgage the fe ...