487-489 Amsterdam Shareholder Portal
← Back

Proprietary Lease

The Proprietary Lease is the foundational legal agreement between each shareholder and 487-89 Amsterdam Avenue H.D.F.C., governing the rights and responsibilities of living in and co-owning the building. Unlike a standard rental lease, a proprietary lease conveys the right to occupy a specific apartment in exchange for holding shares in the corporation — making each resident simultaneously a tenant and an owner.

This document covers the full terms under which shareholders occupy their apartments, including:

  • Maintenance Charges — How monthly charges are calculated, assessed, and adjusted, and the corporation’s financial obligations to shareholders
  • Liens and Resale Restrictions — The building and all shares are subject to a lien held by the City of New York, and resale is governed by the income requirements of Section 576(1)(b) of the Private Housing Finance Law
  • Shareholder Rights and Duties — Rights of possession, repair responsibilities, restrictions on subletting, assignment, and alterations
  • Corporation Rights and Duties — The corporation’s right of entry, physical maintenance obligations, and remedies in the event of a shareholder default
  • Termination — The conditions under which the lease may be terminated and the impact on the shareholder
  • Destruction and Condemnation — Procedures in the event the building is damaged or taken by eminent domain

487-89 AMSTERDAM AVENUE H.D.F.C.

IMPORTANT NOTICE:

THIS BUILDING, INCLUDING THE APARTMENT TO WHICH THIS LEASE PERTAINS, IS SUBJECT TO A LIEN, FOR PROCEEDS FROM THE RESALE OF THE BUILDING AND SHARES ISSUED BY THE CORPORATION (LESSOR), WHICH IS SET FORTH IN GREATER DETAIL IN A SECURITY AGREEMENT BETWEEN THE CORPORATION AND THE CITY OF NEW YORK. IN ADDITION, THE RESALE OF SHARES TO WHICH THIS LEASE PERTAINS ARE SUBJECT TO A LIEN, BY THE CORPORATION, WHICH IS SET FORTH IN GREATER DETAIL IN THE BY-LAWS OF THE CORPORATION, AND TO THE LOW INCOME REQUIREMENTS OF SECTION 576(1)(b) OF THE PRIVATE HOUSING FINANCE LAW.

TABLE OF CONTENTS

Introduction

  • Page 2 - Introduction - Apartment and Term of Lease

I. MAINTENANCE CHARGES AND CORPORATION’S FINANCES

  • 1.01 Maintenance Charges - Determination; Special Assessments
  • 1.02 Maintenance and Operating Expenses - Definition, etc.
  • 1.03 Inspection of Books of Account

II. LIENS AND CREDITORS

  • 2.01 Lien of City and Corporation
  • 2.02 Lease Subordinate to Mortgages
  • 2.03 Effect of Liens on Alterations in Apartment
  • 2.04 Foreclosure - Receiver of Rents
  • 2.05 Discharge of Mechanic’s Lien

III. PROPRIETARY LEASES

  • 3.01 Signing and Holding of Originals
  • 3.02 Legal Effect and Interpretation
  • 3.03 Changes - Shareholders’ Approval; Written Form

IV. CERTIFICATES OF SHARES

  • 4.01 Share Certificates Accompany Leases
  • 4.02 Issuance of Additional Shares
  • 4.03 Unsold Shares

V. SHAREHOLDER (LESSEE)-RIGHTS AND DUTIES

  • 5.01 Rights of Possession
  • 5.02 Duties (Maintenance Payments, House Rules, Repairs, etc.)
  • 5.03 Restrictions on Use (Primary Residency, Obnoxious or Costly Uses, Compliance with Laws, etc.)
  • 5.04 Requirements for Alterations
  • 5.05 Restrictions on Transfer and Pledges (Subletting, Assignment, etc.)

VI. CORPORATION (LESSOR)-RIGHTS, DUTIES AND IMMUNITIES

  • 6.01 Right to Remedy Shareholder’s Default
  • 6.02 Right of Entry
  • 6.03 Waiver by Corporation - Requirements
  • 6.04 Physical Maintenance and Repair of the Building
  • 6.05 Corporation’s Immunities; Indemnity

VII. TERMINATION OF LEASES

  • 7.01 Termination by Corporation (Lessor) - Conditions
  • 7.02 Corporation’s Rights After Shareholder’s Default
  • 7.03 Impact of Termination on Shareholder
  • 7.04 Cancellation by Shareholder (Lessee)
  • 7.05 Mass Cancellations
  • 7.06 Expiration of Lease Due to Damage
  • 7.07 Continuation of Cooperative Management After All Leases Terminate

VIII. MISCELLANEOUS

  • 8.01 Notices
  • 8.02 More Than One Shareholder on Lease

ATTACHMENTS

  • House Rules

EXHIBITS

  1. Security Agreement and Note
  2. Affidavit of Sales

PROPRIETARY LEASE AGREEMENT

Made as of November 18, 1992

Between:

  • 487-89 AMSTERDAM AVENUE H.D.F.C., a New York corporation (hereinafter the “Corporation” and sometimes the “Lessor”)
  • ____________________________ (hereinafter the “Shareholder” and sometimes the “Lessee”)

WHEREAS, the Corporation is the owner of the land and the building (hereinafter the “Building”) (hereinafter sometimes collectively the “Property”) on it which are located in the City and State of New York and are known as and by the street number 487 Amsterdam Ave. and 489 Amsterdam Ave., New York, New York; and

WHEREAS, the Shareholder is the owner of 250 shares issued by the Corporation, to which this lease pertains and which have been allocated to Apartment ____ in the Building at ____ Amsterdam Avenue.

NOW, THEREFORE, the Corporation hereby leases to the Shareholder and the Shareholder leases from the Corporation, subject to the terms and conditions hereof, Apartment ____ in the Building (hereinafter the “Apartment”) for a term from November 18___, 1992, (the “Commencement Date”) until November 17___, 2051, (unless sooner terminated as hereinafter provided).

Definition of “Apartment”

As used herein “the Apartment” means the rooms in the Building as partitioned on the Commencement Date and designated by the above-stated apartment number, together with their attachments and fixtures and any closets, terraces, balconies, roof, or portion thereof outside of said partitioned rooms, which are allocated solely for use by the occupants of the Apartment.

I. MAINTENANCE CHARGES AND CORPORATION’S FINANCES

1.01 Maintenance Charges

(a) Determination of Amount - Number of Rooms

The maintenance charge (sometimes called rent) payable by the Shareholder for each year, or portion of a year, during the term shall be that percentage share of the Corporation’s maintenance and operating expenses for such year or portion of a year, as defined in Paragraph 1.02(a) of this lease, which results from dividing the number of rooms in the Apartment by the total number of rooms in all of the apartments in the Building on the date of the determination of such maintenance and operating expenses.

Such maintenance charge shall be payable in equal monthly installments in advance on the first day of each month, unless the Board of Directors of the Corporation (hereinafter the “Directors”) shall decide otherwise when determining the maintenance and operating expenses. If the Directors increase or decrease the maintenance charge pursuant to Paragraph 1.02(b) of this lease, the Shareholder shall pay the new maintenance charge after receiving thirty (30) days notice.

General Rule: Building expenses are shared by dividing the number of rooms in each apartment by the total number of rooms in all apartments.

(b) Special Assessments

Special assessments to pay for particular repairs or other unforeseen financial outlays may be imposed by the Directors on a per room basis or such other reasonable basis as they decide. The Shareholder shall pay such special assessments as the Directors may require after providing thirty (30) days notice, or shorter notice, in the event of emergency.

(c) Maintenance Charge Reduction

If the damage resulting from fire or other cause (see Paragraph 6.04(c)) shall be so extensive as to render the Apartment partly or wholly untenantable, or if its means of access shall be destroyed, the maintenance charge hereunder shall be reduced temporarily until the Apartment shall again be made wholly tenantable or the means of access restored.

However, if said damage shall be caused by the act or negligence of the Shareholder or the agents, employees, guests, roommate or family members of the Shareholder or any occupant of the Apartment, such maintenance charge shall be reduced only to the extent of the rental value insurance, if any, collected by Corporation with respect to the Apartment.

1.02 Maintenance and Operating Expenses

(a) Definition

“Maintenance and operating expenses” whenever used herein shall mean the estimated amount in cash which the Directors shall at least once a year determine to be necessary for:

  1. The operation, maintenance, care, alteration and improvement of the Building during the year or portion of the year for which such determination is made;

  2. The creation of an adequate reserve fund for replacements, repairs, improvements to the Building, assessments against the Property or the Corporation, losses, contingencies of all types, and for all other proper corporate purposes for which reserves are established by prudent corporations of a similar nature, including the adequacy of existing reserves;

  3. The payment of, or the establishment of a reserve for, principal of and interest on any debt secured by a mortgage or lien on the Building or encumbering any shares issued by the Corporation; and for payment of any charges pursuant to agreements for financing improvement to the Building which the Corporation may make; and

  4. The payment of all present and future taxes, assessments, water charges and sewer rents levied or imposed upon the Property or Corporation, and payment of sales, gross receipts, transfer and other taxes and charges.

(b) Annual Determination; Adjustments

At least once a year, the Directors shall determine the maintenance and operating expenses and the maintenance charges payable by all Shareholders under this and other leases. The Directors, by appropriate resolution or resolutions, may at any time thereafter during such year change their estimate of such maintenance and operating expenses or maintenance charges, and such change or changes may be to adjust for underestimates or overestimates of previous amounts determined or estimated, or such change or changes may be by reason of changes in conditions requiring a redetermination of such maintenance and operating expenses or maintenance charges. However, in no case shall any maintenance and operating expenses be adjusted downward except through charges against reserves previously established for such purpose or through an adjustment in the next succeeding yearly determination.

(c) Late Payment Charges

Unless prohibited by law, if the Shareholder shall default in the payment of any monthly installment of the maintenance charge (or any readjustment thereof) or any special assessment, and such default shall continue for fifteen (15) days, the Shareholder, in addition to such maintenance charge (or readjustment), special assessment and any other charges which may be payable under this lease, shall pay to the Corporation a late charge in an amount equal to five percent (5%) of the amount of the payment in default or Ten Dollars ($10.00), whichever is greater.

(d) Collection Costs

In the event that the Shareholder defaults in the payment of maintenance charges or any other charges or fees payable hereunder, the Corporation may take any and all steps necessary to collect the amounts due, including, but not limited to, the retaining of a collection agency or attorney to collect such amounts. The Shareholder shall be responsible for all reasonable attorneys’ fees and collection agency charges, or other reasonable collection costs.

1.03 Inspection of Books of Account

The Shareholder, upon at least five (5) days written notice to the Corporation, shall be entitled to inspect the books of account and record of receipts and expenditures of the Corporation, between the hours of 9:00 A.M. and 5:00 P.M. on business days at the office of the Corporation or at such other place or places where such records are customarily kept.

II. LIENS AND CREDITORS

2.01 Lien of City and Corporation

(a) City Lien for Resale Profits

During the first twenty-five (25) years following the closing of title between the City of New York (hereinafter the “City”) and the Corporation, the City shall have a lien, superior to all other liens except those of the Real Estate Tax and Water Liens of the City, for the enforcement of resale restrictions, on the proceeds from the resale of the Building, or the shares issued by the Corporation. Such restrictions are set forth in a security agreement between the Corporation and the City, which is attached to this Plan as Exhibit 1.

(b) Corporation Lien for Maintenance Payments and Other Charges

The Corporation shall have a security interest and lien upon the shares of stock which are appurtenant to this lease and the Apartment, and the lease and Apartment to which such shares are appurtenant, to enforce the collection of maintenance charges and of other charges and expenses payable by the Shareholder to the Corporation pursuant to this lease or the certificate of incorporation or by-laws of the Corporation (hereinafter collectively “charges”).

Such lien of the Corporation on the shares appurtenant to this lease shall commence on the first day of each month during the term for which the maintenance charge or other sums are payable hereunder, and shall be prior to all other liens on such shares and this lease, excepting only any lien held by or on behalf of the City of New York pursuant to Paragraph 2.01(a) of this lease and any lien for real estate taxes and water charges.

(c) Corporation Lien - Amount

The lien of the Corporation may not exceed the sum of (1) the charges due and unpaid for the then-current fiscal year of the Corporation plus (2) charges due and unpaid for the two fiscal years next preceding and (3) the Corporation’s reasonable legal fees and disbursements incurred to foreclose its lien.

(d) Corporation Lien - No Notice Required

The lien of the Corporation shall have full force and validity from the dates above specified, without the necessity for the Corporation to file any statement or notice with the Shareholder or with any public office or agency.

(e) Corporation Lien - Foreclosure

The Corporation may foreclose such liens by suit in equity or by action at law or by any other remedial method to which a secured creditor may have resort. In any foreclosure proceeding, the Corporation shall be entitled to the appointment of a receiver of the Apartment and to the recovery, as additional allowances, of all costs of suit and of reasonable attorneys’ fees and disbursements.

2.02 Lease Subordinate to Mortgages

This lease and the Shareholder’s rights hereunder are and shall be subject and subordinate to the lien of:

  1. Any mortgage or mortgages that are now, or may hereafter be, placed upon the Building or the Corporation’s interest in the Building; and

  2. Any advances made on the security thereof and any renewals, modifications, consolidations, replacements or extensions thereof.

The Shareholder covenants and agrees to execute and deliver, upon demand by the Corporation, such further instruments subordinating this lease to the lien of any such mortgage or mortgages as shall be desired by the Corporation, any prospective mortgagee or the holder of any such mortgage.

In the event that any such mortgage shall be foreclosed, this lease shall not be terminated or affected thereby (unless the purchaser at such foreclosure sale shall elect in writing to terminate this lease) and the Shareholder will attorn to the purchaser upon such foreclosure sale and will recognize such purchaser as landlord under this lease.

2.03 Effect of Liens on Alterations in Apartment

No alterations, installations or improvements in the Apartment shall be subject to any liens of mortgages on the Building or of the unpaid balance of the purchase price of the Building unless the Corporation shall, with the consent of the holder or holders of such mortgages or liens, agree in writing to such subjection.

2.04 Foreclosure - Receiver of Rents

The Shareholder shall not object to, and may not assert a claim for damages by reason of, any petition for rent receivership which the holder of any mortgage or lien on the Building or the Corporation’s interest therein, or a judgment creditor of the Corporation, may seek to obtain in any action or proceeding against the Corporation or the Building.

In the event that a receiver is appointed, upon notice by such receiver to the Shareholder, the Shareholder shall be obligated to pay the maintenance charges and other charges payable hereunder to such receiver in place of the Corporation until such time as the Shareholder receives notice from such receiver or from the Corporation that the receivership has terminated. Payment to such receiver shall to the extent of such payment constitute payment under this lease and shall satisfy the Shareholder’s obligations hereunder.

2.05 Discharge of Mechanic’s Lien

If, because of any act or omission (or claimed act or omission) of the Shareholder or of any subtenant, licensee or concessionaire under the Shareholder, any mechanic’s lien or other lien, charge or order for the payment of money shall be filed against the Building or the Corporation’s interest therein (other than by or through the Corporation), the Shareholder shall within sixty (60) days after notice to the Shareholder of the filing thereof, cause the same to be discharged of record by payment, deposit, bond, order of a court of competent jurisdiction or otherwise.

If the Shareholder shall fail to discharge any such lien, the Corporation may discharge such lien, and any amounts paid by the Corporation therefor, including reasonable attorneys’ fees and disbursements, shall be deemed to be additional charges under this lease payable by the Shareholder upon demand.

III. PROPRIETARY LEASES

3.01 Signing and Holding of Originals

(a) Signing of Leases

This lease shall be signed in duplicate, one duplicate original to be held by the Corporation and one duplicate original to be held by the Shareholder.

(b) Additional Signed Copies

If required by the holder of any mortgage or lien on the Building or on the Corporation’s interest therein, or by the City of New York, a triplicate original shall be signed and held by such holder, and a quadruplicate original shall be signed and held by such holder or by the City, as the case may be.

(c) Corporation Holds Shareholder’s Lease

The Corporation may hold the original lease which is the property of the Shareholder on the following conditions:

  1. The Corporation will safeguard the original and make it available upon reasonable notice to the Shareholder for inspection;

  2. While the Corporation holds such original, the original shall not be subject to any lien or claim of the Corporation, except for mechanics liens which may arise by operation of law;

  3. The Shareholder has been furnished with a copy of this lease and the original shall be returned to the Shareholder upon request, promptly after the Shareholder has paid all charges due under the lease; and

  4. The Corporation shall not incur any liability for the loss of such original document except in the event of the Corporation’s willful failure to safeguard the document.

This lease and all other leases between the Corporation and the shareholders who are occupying apartments in the Building are in the form of one uniform lease which is now, or will be hereafter, signed by the Corporation as landlord. This lease and all other such leases shall be read and construed together and said leases are intended to be, and shall be taken to be, a single agreement between the Corporation and all such shareholders.

Any default by the Shareholder or by any other such shareholder shall be a default of such single agreement and may give rise to a default under this lease and every other such lease. In any action for termination, damages or other relief with respect to this lease, the Corporation may join, and the court may determine rights of the Corporation under all such leases as an entirety. All rights and remedies granted to the Corporation in this lease may be exercised and enforced by the Corporation as cumulative and independent rights and remedies and not as alternative or exclusive rights and remedies.

3.03 Changes - Shareholders’ Approval; Written Form

(a) Shareholder Approval Required

Except as provided in paragraphs (b) and (c) below, neither the Corporation nor any shareholder may change, waive, discharge, cancel or terminate this lease, in whole or in part, except by an agreement signed by the Corporation and shareholders representing at least sixty-six and two-thirds percent (66-2/3%) of the shares issued by the Corporation (excluding shares owned by the Corporation) and approved by two-thirds (2/3) vote of those shareholders present and voting in person or by proxy at a meeting of shareholders called for that purpose.

Any such agreement shall be binding upon the Corporation and all shareholders and their successors and assigns, regardless of when their shares were issued or acquired or when their leases were signed, and regardless of whether or not such other shareholders or successors or assigns executed such agreement, consented to it, or had notice of it.

However, without the consent or approval of any shareholder, the Corporation shall be permitted to make changes in the leases, which changes shall be binding on all shareholders, in any one or more of the following instances:

  1. To satisfy lawful requirements of governmental authorities or of a recognized fire insurance rating or inspection bureau;

  2. To comply with the terms and conditions of any present or future mortgage on the Building or on the Corporation’s interest therein, or with the lawful direction of the holder of any such mortgage;

  3. To change any obligations or restrictions on the use of the apartment which result from changes in technology and which do not substantially increase the obligations of the shareholders or substantially limit their rights in the Apartment;

  4. To reflect or correct changes in the name or address of the Corporation or of the Building or to reflect or correct changes in the tax lot or block number or street address of the Building or Apartment, or other similar ministerial changes; or

  5. To add any provision to the lease which imposes obligations or restrictions on all shareholders that are substantially the same as obligations or restrictions agreed to by the Corporation in mortgage documents or in agreements with federal, state or city officials or agencies.

(c) Change in Maintenance Charges

Notwithstanding the provisions of paragraph (a) above, the Directors may increase or decrease the maintenance charges to be paid by all shareholders without the consent or approval of any shareholder, pursuant to the terms of Paragraph 1.01 and Paragraph 1.02 hereof.

(d) Changes Must Be in Writing

Any change in this lease or any waiver or discharge in whole or in part shall not be valid or binding on the Corporation or on any shareholder, or any other person, unless said change or waiver or discharge is in writing and signed as provided above and unless the instruments are recorded pursuant to paragraph (e) below.

(e) Changes to be Recorded

Any instruments changing, waiving, discharging, canceling or terminating this lease or any provision herein, shall be filed and recorded in the office of the City Register of the City of New York (and, if applicable, in the County Clerk’s office) in which the deed from the City to the Corporation is filed, all at the Corporation’s expense.

IV. CERTIFICATES OF SHARES

4.01 Share Certificates Accompany Leases

(a) Share Ownership Requirement

The Shareholder may not occupy or use the Apartment unless the Shareholder is a shareholder of the Corporation and owns the full 250 shares of stock allocated to the Apartment.

(b) Each Lease Requires Specific Number of Shares

Attached to this lease is a certificate or certificates representing the full 250 shares of the capital stock of the Corporation which have been allocated to the Apartment. No such shares may be transferred without the consent of the Directors and, where applicable, without a simultaneous transfer of the lease for the Apartment to which such shares have been allocated.

No transfer of this lease may occur except simultaneously with a transfer of all of the shares of stock allocated to the Apartment, with the consent of the Directors and upon compliance with the requirements of Paragraph 5.05 of this lease.

4.02 Issuance of Additional Shares

The issuance of shares by the Corporation in excess of the total number of shares now outstanding requires the consent of shareholders representing at least sixty-six and two-thirds percent (66-2/3%) of the shares then issued and outstanding (excluding shares owned by the Corporation). Such additional shares may be issued by the Corporation only to provide for additional maintenance charges to cover deficits in the Corporation’s financing, reserves, and annual operating and maintenance expenses.

In the event that such additional shares are authorized, they shall be allocated to apartments on a per room basis, as provided in Paragraph 1.01(a) hereof. In such event, the shares now allocated to each apartment, including this Apartment, shall be reduced on a pro rata basis and additional shares shall be allocated to each apartment so that, after such reallocation, the percentage of the Corporation’s total issued shares allocated to each apartment is the same as before such reallocation.

4.03 Unsold Shares

If the Corporation at any time shall own issued shares which were not sold, the Corporation shall be deemed the holder of all leases covering apartments to which such shares were allocated but which apartments are not then under lease to any shareholder.

All terms and conditions to this lease shall be deemed to have been performed by the Corporation as the holder of such leases, including the obligation of the Corporation to pay maintenance charges. However, the Corporation shall have no obligation to pay any charges for any period during which the Corporation is the holder of such lease and is not occupying or using such an apartment or during which such apartment is uninhabitable or is incapable of being occupied.

In determining the required number or percentage of shares necessary to approve any matter, all unsold shares shall be included in the computation and shall be deemed cast by the Corporation for the action proposed by the Directors.

V. SHAREHOLDER (LESSEE) - RIGHTS AND DUTIES

5.01 Rights of Possession

Subject to the provisions of this lease, the Shareholder shall have the right to occupy the Apartment for dwelling purposes and for no other purpose, and to the quiet enjoyment and possession of the Apartment during the term hereof, except:

  1. That the Corporation shall have the rights granted to it pursuant to this lease or by law; and

  2. That such right of occupancy and possession shall be subject to the lawful requirements and regulations of federal, state, county or municipal authorities.

5.02 Duties (Maintenance Payments, House Rules, Repairs, etc.)

The Shareholder shall:

(a) Maintenance Charges

Pay the monthly installments of the maintenance charge and all other charges and assessments as the same become due and payable under this lease.

(b) Use and Occupancy Regulations

Comply with and observe all lawful requirements and regulations of federal, state, county or municipal authorities and the directions of the Corporation with respect to the use and occupancy of the Apartment and with respect to the use of those portions of the Building which are designed or intended for the common or joint use and benefit of all the shareholders and other tenants of the Building. The Shareholder shall also comply with and observe the house rules, which are attached hereto and made a part hereof, and any lawful amendments or additions thereto that shall hereafter be adopted by the Directors and of which the Shareholder shall have been notified in writing.

(c) Repairs

Make all repairs within the Apartment (whether structural or non-structural and whether or not arising out of a violation of law) except as provided in Paragraph 6.04 of this lease.

(d) Care of Apartment

Keep the Apartment in good order and condition and surrender the same, at the end or other expiration of the term, in the same condition as at the date of occupancy, reasonable wear and tear excepted.

(e) Permit Entry

Permit the Corporation and its agents and representatives to enter the Apartment under the circumstances and in the manner provided in Paragraph 6.02 of this lease.

(f) Fidelity to Corporation

Act faithfully toward the Corporation and be bound by the certificate of incorporation and by-laws of the Corporation now in force or as the same may hereafter be lawfully amended.

(g) Indemnify Corporation

Indemnify and save the Corporation harmless from all loss, costs, damage and expense (including reasonable attorneys’ fees) which may be imposed upon, incurred by, or asserted against the Corporation by reason of or in connection with:

  1. Any act, omission or negligence on the part of the Shareholder, or family, guests, employees, licensees, or any person in the Apartment with or without the Shareholder’s consent;

  2. Any violation by the Shareholder of any law, regulation, ordinance or order affecting the occupancy or use of the Apartment;

  3. Any violation by the Shareholder of any term or provision of this lease; or

  4. Any violation by the Shareholder of any of the house rules or of any amendment or addition thereto.

(h) Fire Insurance

Maintain fire and extended coverage insurance on the Shareholder’s personal property and leasehold improvements in such amount as the Shareholder shall determine and in a company acceptable to the Directors.

(i) Liability Insurance

At the Corporation’s option, maintain liability insurance, including medical payments coverage, in amounts acceptable to the Directors and in a company acceptable to the Directors, which liability insurance shall name the Corporation as an additional insured party. The Shareholder shall furnish the Corporation with a certificate evidencing such coverage.

5.03 Restrictions on Use (Primary Residency, Obnoxious or Costly Uses, Compliance with Laws, etc.)

The Shareholder shall not:

(a) Non-Residential Use

Use the Apartment for any purpose other than as a private dwelling for the Shareholder and the Shareholder’s immediate family, nor permit the Apartment to be used by others for any purpose other than the same; nor permit any party or parties whose combined use of the Apartment is equivalent to full-time residential use, except in compliance with Paragraph 5.05 of this lease.

(b) Primary Residence Requirement

Permit the Apartment to remain unoccupied by the Shareholder for more than six (6) consecutive months, or permit anyone to occupy the Apartment other than the Shareholder or the Shareholder’s immediate family as their primary residence, without the prior written consent of the Board of Directors. “Primary residence” shall mean the residence which is used for at least six (6) months of each year as the occupant’s principal place of abode and where the occupant’s immediate family resides.

(c) Objectionable Activities

Permit any objectionable or offensive noise, vibration, odor or activity to emanate from the Apartment, or obstruct in any manner, or permit to be obstructed, any of the common areas of the Building, or use the same for any purpose other than ingress and egress to and from the Apartment and such other uses as may be permitted by the Corporation, or place or cause to be placed in any public corridors or lobby any mats, rugs, furniture or objects of any kind.

(d) Hazardous Uses

Permit any use of the Apartment which will increase the rate of insurance on the Building or on property kept therein, or obstruct or interfere with the rights of other shareholders, or annoy or disturb them by any unreasonable noise, vibration or otherwise, or injure, deface or otherwise harm the Apartment or the Building or any portion thereof, or use, place or keep the Apartment or any part of the Building or use or keep anything therein which may, in the opinion of the Directors, be dangerous, hazardous or detrimental to the reputation of the Building. This prohibition shall include, but not be limited to, any conduct that is deemed inconsistent with maintaining the Building as an HDFC cooperative under Section 577 of the Private Housing Finance Law.

(e) Violations of Law

Permit any violation of any law, ordinance or regulation, or of the certificate of incorporation or by-laws of the Corporation, or of the Building’s Certificate of Occupancy, with respect to the occupancy or use of the Apartment or any part of the Building, or with respect to the business or profession of the Shareholder or any other occupant of the Apartment, or with respect to any other matter relating to the occupancy or use of the Apartment or the Building or any part thereof.

(f) Overcrowding

Permit the number of persons who reside in the Apartment to exceed the maximum number of occupants permitted under applicable laws, ordinances and regulations, including those regulating health, buildings and housing.

(g) Pets

Without prior written consent of the Directors, keep or harbor any animals or pets in the Apartment except:

  1. The usual and ordinary types of domesticated household pets, provided that such pets are not kept, bred or maintained for any commercial purpose, and provided further that the keeping of any such pet shall be subject to reasonable rules and regulations adopted by the Directors from time to time, including, without limitation, rules requiring registration of all pets and requiring adequate controls such as leash, cage, collar, tag and inoculations.

  2. Notwithstanding the above, the Directors may refuse permission for any pet which, in the Directors’ reasonable judgment, may cause damage to the Apartment or the Building or cause annoyance or discomfort to the other occupants and shareholders of the Building.

5.04 Requirements for Alterations

The Shareholder shall not make or permit to be made any alterations, additions, improvements or changes in or to the Apartment or in or to any fixtures or equipment therein, without the prior written consent of the Directors.

The prior written consent of the Directors shall not be required for any alterations which:

  1. Do not affect the Building structure or any facilities used in common with other apartments;

  2. Do not increase the burden on any facility used in common with other apartments; and

  3. Do not require a permit from any governmental agency or a license from a professional engineer or architect.

(c) Standards for Alterations

All work by or on behalf of the Shareholder (whether or not the Directors’ consent is required) shall be done in a first-class, workmanlike manner, shall be in compliance with all legal requirements, including the procurement of all required permits from governmental authorities, and shall be in compliance with the provisions herein and such reasonable requirements as the Directors may prescribe.

(d) Work Not to Disturb Other Shareholders

All work by or on behalf of the Shareholder shall be done at such times and in such manner as to cause as little inconvenience as is reasonably possible to other shareholders and to the management of the Building.

(e) Alterations Become Part of Building

Unless otherwise provided in the prior written consent of the Directors or in an agreement between the Shareholder and the Corporation, any and all improvements, alterations or additions made in or to the Apartment, whether permanent or temporary in character, made by either party, shall become the property of the Corporation and shall remain upon and be surrendered with the Apartment at the termination of this lease or the termination of the Shareholder’s right to possession of the Apartment.

(f) Corporation May Require Removal or Restoration

Notwithstanding the foregoing, the Corporation, either in granting its consent or at the time of expiration or termination of the lease or of the Shareholder’s right to possession, may require, as a condition to consent or continued possession, that the Shareholder remove any installations, improvements, alterations or additions and restore the Apartment to its condition prior to such work, all at the Shareholder’s expense.

(g) Shareholder Responsible for Damage

The Shareholder shall be fully responsible to the Corporation and to other shareholders for any loss, damage or injury resulting from any such work or from any failure by the Shareholder or the Shareholder’s contractors to comply with the requirements of this Paragraph 5.04 and shall indemnify the Corporation for the same.

5.05 Restrictions on Transfer and Pledges (Subletting, Assignment, etc.)

The Shareholder shall not sell, transfer or assign any or all of the shares allocated to the Apartment or transfer, sublet, assign or encumber this lease or the Shareholder’s interest hereunder or in the Apartment, or license or permit the occupancy of the Apartment by any person other than the Shareholder or members of the Shareholder’s immediate family, without first obtaining the prior written consent of the Directors to such transfer. Any sale, transfer or assignment of shares or any transfer, subletting, assignment or encumbrance of this lease or the Shareholder’s interest hereunder, or any license or permission for occupancy, without such consent shall be null and void.

(b) Corporation’s Right of First Refusal

If the Shareholder desires to sell or transfer all of the shares allocated to the Apartment and transfer the lease for the Apartment, the Shareholder must first obtain a bona fide offer in writing to purchase such shares and lease, which offer shall set forth the terms of sale, the price and the identity of the purchaser.

The Shareholder shall then give the Corporation written notice, setting forth all such terms, and the Corporation shall have the right to purchase said shares and lease at the price and on the terms set forth in such offer, within thirty (30) days after receipt of said notice (or such lesser time as may be specified in the outside offer before which the offer expires). If the Corporation does not exercise its right to purchase on such terms within said thirty (30) day period (or shorter period), the Shareholder may thereafter sell said shares and assign said lease to the offeror named in such notice, subject to the provisions of paragraph (c) below and subject to the resale restrictions in the security agreement attached to this Plan as Exhibit 1.

Any sale not consummated within four (4) months following the expiration of said thirty (30) day period (or shorter period) shall again become subject to the Corporation’s right of first refusal as herein provided. The price and terms of such subsequent sale shall be no more favorable to the purchaser than the price and terms set forth in the previous offer.

(c) Conditions for Approval of Transfer

The Directors may condition their approval of any transfer of the lease and shares upon compliance with the following requirements:

  1. Payment to the Corporation of a transfer fee in such amount as the Directors shall determine to cover the Corporation’s administrative and legal costs in reviewing and processing such transfer, which fee may be changed by the Directors from time to time;

  2. The transferee being satisfactory to the Directors as a person likely to fulfill the transferee’s obligations under the lease and to observe and comply with all the provisions thereof;

  3. The transferee having financial resources adequate, in the sole judgment of the Directors, to enable the transferee to perform the transferee’s obligations under the lease;

  4. The shares and lease being transferred simultaneously and to the same transferee;

  5. The transferor having paid all charges and assessments due and owing to the Corporation under this lease;

  6. The transferee agreeing to be bound by all the terms, covenants and conditions of this lease;

  7. The transferee’s occupancy of the Apartment will not violate applicable laws and regulations, including those limiting the income of residents and the resale price, as set forth in Exhibit 1 to this Plan, or any other law or regulation;

  8. The transferee executing an assumption of this lease, together with a counterpart of the lease, or amendments to the lease, if any, which counterpart or amendments shall be in a form acceptable to the Corporation and be acknowledged for recording;

  9. The transfer being made in accordance with all applicable federal, state and local laws, regulations and executive orders; and

  10. Any other reasonable requirement which the Directors may impose, including compliance with the income restrictions and resale restrictions set forth in Exhibit 1 to this Plan.

(d) No Waiver

Notwithstanding any consent by the Directors to any transfer, subletting, assignment or occupancy, no further or succeeding transfer, subletting, assignment or occupancy by any such transferee, subtenant, assignee or occupant shall be made without the prior written consent of the Directors, as required by this Paragraph 5.05.

(e) Subletting

If the Shareholder desires to sublet the Apartment, with or without furniture, the following requirements must be met:

  1. The Shareholder shall give the Corporation and the Directors written notice of the intent to sublet, together with:

    • Name and address of the proposed subtenant;
    • Term of the proposed sublease;
    • Rental to be paid;
    • Other terms and conditions; and
    • Affidavit or affirmation by the Shareholder that the Shareholder does not intend to use the sublet as a means of evading the primary residence requirement or the requirement of Board approval for transfers.

  2. Any sublease shall be upon all the terms and conditions of this lease and no sublease may provide for rent in excess of the maintenance charges and any special assessments then being charged by the Corporation allocable to the Apartment plus such additional charge as may be permitted by law.

  3. The Directors may condition their approval of the sublet upon:

    • Payment of a processing fee;
    • The subtenant being satisfactory to the Directors;
    • The subtenant having adequate financial resources;
    • Written agreement by the subtenant to comply with the lease and house rules; and
    • Any other reasonable conditions.

  4. No apartment shall be sublet for more than two (2) years during any four (4) year period without the prior written consent of the Directors.

  5. Any violation of the primary residence requirement or any unauthorized sublet shall be grounds for termination of this lease pursuant to Article VII hereof.

(f) Pledges and Encumbrances

No pledge, assignment or encumbrance of this lease or the shares allocated to the Apartment (except a pledge to the Corporation to secure payment of amounts due under this lease) shall be permitted without the prior written consent of the Directors. The Directors may refuse such consent in their sole and absolute discretion.

VI. CORPORATION (LESSOR) - RIGHTS, DUTIES AND IMMUNITIES

6.01 Right to Remedy Shareholder’s Default

If the Shareholder shall fail to make any repairs or to perform any other act required of the Shareholder under this lease within fifteen (15) days after notice thereof from the Corporation (or within such shorter period as may be required in order to meet the requirements of any law or governmental regulation, or if an emergency exists which requires more prompt action), the Corporation may, but need not, make such repairs or perform such other act.

Any expense incurred by the Corporation in so doing shall be deemed to be an additional charge under this lease and shall be payable by the Shareholder to the Corporation upon demand. The Corporation’s performance or failure to perform any such act shall not constitute a waiver of the Shareholder’s default or limit any other remedy which the Corporation may have for such default.

6.02 Right of Entry

The Shareholder shall permit representatives of the Corporation to enter the Apartment at all reasonable times for the purposes of:

(a) Inspection and Posting Notices

Examining or inspecting the same, or exhibiting the same to prospective shareholders or purchasers, or posting such notices as the Corporation may deem necessary for its protection or that of the Apartment or the Building.

(b) Repairs

Making any repairs which the Corporation may deem necessary or which the Shareholder may have failed to make after reasonable demand by the Corporation.

(c) Compliance with Law

Performing, or causing to be performed, any work necessary to comply with any law, regulation, ordinance or order of any governmental authority.

(d) Emergency Entry

In the event of any emergency in which, in the Corporation’s judgment, entry by the Corporation is necessary to prevent or mitigate damage or injury to persons or property, the Corporation may enter the Apartment without prior notice to the Shareholder and, if necessary, may forcibly enter the same. The Corporation shall not be liable to the Shareholder or to any other person for such entry.

(e) Manner of Entry

Except in case of emergency, such entry shall be during normal working hours or at such other reasonable times as the Shareholder and the Corporation agree upon. The Corporation shall give the Shareholder reasonable advance notice of such entry except in case of emergency or routine periodic inspection or examination. Wherever practicable, such entry shall be made so as to minimize inconvenience to the Shareholder.

6.03 Waiver by Corporation - Requirements

No course of dealing between the Corporation and the Shareholder, no delay or forbearance by the Corporation in seeking to exercise or enforce any right which the Corporation may have under this lease, and no custom or practice of the trade or of the Corporation, or of other landlords at any other property, shall constitute a waiver by the Corporation of any of its rights or any obligation by the Shareholder under this lease or estop the Corporation from exercising or enforcing any such right or obligation.

No failure by the Corporation to insist upon the strict performance of any term hereof or to exercise any right, remedy or election herein contained or permitted by law shall waive, affect or diminish any right of the Corporation thereafter to demand strict compliance and performance of all other terms hereof or to exercise any such right, remedy or election.

Any waiver of any term or condition of this lease or any consent to any departure therefrom must be in writing and signed by the Corporation, and shall be effective only to the extent specifically set forth in such writing. No such waiver or consent in any one or more instances shall be deemed or construed to be a further or continuing waiver or consent.

6.04 Physical Maintenance and Repair of the Building

(a) Corporation’s Obligations

The Corporation shall maintain, or cause to be maintained, in reasonably good order and repair:

  1. The roof, foundation, and structural portions of the Building;

  2. Common entrances, hallways, elevators, and other portions designed or intended for the common or joint use and benefit of all the shareholders and other occupants of the Building;

  3. The water mains, gas mains, electric mains and other service and utility lines within the Building up to the point of their entry into the Apartment; and

  4. The Building’s heating plant and all other equipment designed or intended for the common or joint use and benefit of the shareholders.

(b) Corporation’s Discretion

The Directors shall have the sole authority to determine when repairs, replacements, maintenance, alterations and improvements are necessary or desirable, the times when the same shall be performed, and by whom the same shall be performed.

(c) Damage by Fire or Other Casualty

If the Apartment or the Building or any portion thereof shall be damaged or destroyed by fire or other casualty, the Corporation shall, except as provided in Paragraph 7.06 of this lease, proceed with reasonable promptness to restore or reconstruct the Apartment, the Building or the portion damaged or destroyed to substantially the same condition as existed prior to such fire or casualty.

However, if such restoration or reconstruction is not possible, or if the cost of such restoration or reconstruction would exceed the proceeds of any insurance received by the Corporation with respect to such fire or casualty, the Corporation may, but need not, reconstruct or restore the Apartment or the Building to a condition different from that existing prior to the fire or casualty or may terminate this lease in accordance with the provisions of Paragraph 7.06 hereof.

In no event shall the Corporation or the Directors or the shareholders thereof be liable to the Shareholder for any loss or damage to personal property of the Shareholder or occupants of the Apartment, or for any loss of use of the Apartment or the Building or any portion thereof, or for any inconvenience or annoyance to the Shareholder or the occupants of the Apartment, which may result from any fire or other casualty, or from the restoration or reconstruction of the Apartment or the Building.

6.05 Corporation’s Immunities; Indemnity

(a) No Liability for Personal Property

Neither the Corporation nor the Directors nor the shareholders of the Corporation shall be liable to the Shareholder or to any person claiming through or under the Shareholder for any injury or damage to persons or property in or about the Apartment, or for any loss of or damage to any property of the Shareholder or of any other person, resulting from:

  1. Fire, explosion, collapse of structure, falling plaster, steam, gas, electricity, water, rain or snow leakage from any part of the Building or from pipes, appliances or plumbing works therein, or from any other cause;

  2. The bursting or leaking of water pipes, plumbing fixtures, or steam pipes;

  3. Acts or omissions of co-tenants or of other persons who may be occupying other apartments or portions of the Building;

  4. Public construction work or other public undertakings;

  5. Acts of God or the elements; or

  6. Any other cause, unless such injury or damage shall have been caused by or be due to the Corporation’s gross negligence or willful misconduct.

(b) Limitation on Duty to Maintain

The Corporation shall not be liable or responsible for any failure in the supply of, or for any interruption in the supply of, any utilities or services by reason of any cause beyond the Corporation’s reasonable control, including, but not limited to, by reason of accident, repairs, strikes, shortages, or compliance with governmental requirements.

(c) Acts Beyond Corporation’s Control

Neither the Corporation nor the Directors nor the shareholders of the Corporation shall be liable to the Shareholder or to any other person for any loss, injury or damage resulting from:

  1. Acts, omissions or negligence of any other shareholder, occupant, guest, invitee, or trespasser in the Building, or of employees of contractors hired by any of them; or

  2. Strikes, lockouts, riots, civil commotion, insurrection, war or rebellion, or acts of governmental authorities, or any other cause beyond the Corporation’s reasonable control.

(d) Shareholder Indemnity of Corporation

The Shareholder shall indemnify and save harmless the Corporation, the Directors, shareholders, officers, employees and agents of the Corporation, from any and all liability, penalties, damages, costs and expenses (including reasonable attorneys’ fees) by reason of:

  1. Any injury or death to any person or damage to any property caused by or resulting from any act, omission or negligence of the Shareholder, or of any member of the Shareholder’s family, or of the Shareholder’s employees, guests, invitees, agents, contractors or subcontractors, or any person claiming through or under the Shareholder;

  2. Any failure on the part of the Shareholder to perform or comply with any of the terms or provisions of this lease;

  3. Any injury or death to any person or damage to any property caused by or resulting from work or labor done, or the installation of fixtures, equipment or other property in the Apartment by or on behalf of the Shareholder or any predecessor in interest of the Shareholder; or

  4. All costs and expenses, including reasonable attorneys’ fees, incurred by the Corporation in successfully defending any action or proceeding brought against the Corporation which relates to or arises out of this lease or the Shareholder’s occupancy or use of the Apartment or the Building.

VII. TERMINATION OF LEASES

7.01 Termination by Corporation (Lessor) - Conditions

(a) Events of Default

The Corporation may terminate this lease and the Shareholder’s right to possession of the Apartment upon the occurrence of any one or more of the following events (herein called “Events of Default”):

  1. Failure to Pay Maintenance: If default be made by the Shareholder in the payment of maintenance charges or any other charges or assessments due hereunder, and such default shall continue for fifteen (15) days after written notice thereof from the Corporation to the Shareholder; or

  2. Failure to Cure Violations: If the Shareholder shall fail to comply with or observe any other term, covenant or condition of this lease, or of the certificate of incorporation or by-laws of the Corporation, or of the house rules, and such failure shall continue for fifteen (15) days after written notice thereof from the Corporation to the Shareholder (or such shorter period as may be reasonable in the case of an emergency); provided, however, that if the failure requires work or action which cannot reasonably be completed within fifteen (15) days, and the Shareholder shall commence such work or action within the fifteen (15) day period and shall diligently pursue the same to completion, such longer period shall be allowed as is reasonable for such completion, not to exceed sixty (60) days; or

  3. Bankruptcy or Insolvency: If the Shareholder shall file a voluntary petition in bankruptcy, or shall be adjudicated a bankrupt or insolvent, or shall file any petition or answer seeking reorganization or any arrangement under the federal bankruptcy laws or under any other law or statute of the United States or of any state thereof, or if a receiver or trustee shall be appointed for all or substantially all of the Shareholder’s property or assets; or

  4. Unlawful Use: If the Apartment shall be used for any unlawful purpose, or in violation of the certificate of occupancy issued for the Building; or

  5. Abandonment: If the Apartment shall be abandoned or remain unoccupied by the Shareholder for a period of six (6) consecutive months, without the prior written consent of the Directors; or

  6. Prohibited Transfer: If any transfer, subletting, assignment, encumbrance or occupancy of all or any part of the Apartment or the shares allocated to the Apartment shall be made without the required consent of the Directors as provided in Paragraph 5.05 hereof; or

  7. Violation of Residency Requirement: If the Shareholder violates the primary residence requirement set forth in Paragraph 5.03(b) hereof; or

  8. Nuisance or Objectionable Conduct: If the Shareholder or any person occupying the Apartment with the Shareholder’s permission shall create or maintain or permit to be created or maintained a nuisance in the Apartment or in the Building, or shall cause or permit the Apartment or any part of the Building to be used in a manner which disturbs the peaceful enjoyment of the other shareholders or occupants of the Building.

(b) Notice and Opportunity to Cure

Except in cases of emergency or where immediate action is required to protect the Corporation, the Building, or other shareholders, the Corporation shall give the Shareholder written notice specifying the Event of Default and allowing the Shareholder an opportunity to cure the default within the time period specified in paragraph (a) above.

If the default is of such a nature that it cannot reasonably be cured within the specified time period, and if the Shareholder commences action to cure the default within the specified period and diligently pursues such cure to completion within a reasonable time not exceeding sixty (60) days (unless a longer period is permitted under paragraph (a)(2) above), the Corporation shall not terminate the lease.

(c) Repeated Defaults

If the Shareholder repeatedly defaults in the performance of any obligation hereunder, even though each such default is cured within the applicable cure period, the Corporation may terminate this lease if the Shareholder shall again be in default (whether the same or a different obligation) within one (1) year after having twice previously been in default and received notice thereof.

7.02 Corporation’s Rights After Shareholder’s Default

(a) Termination and Re-Entry

Upon the occurrence of an Event of Default, and after giving such notice as may be required by law or by this lease, the Corporation may:

  1. Terminate this lease and the Shareholder’s right to possession of the Apartment;

  2. Re-enter and take possession of the Apartment and expel or remove the Shareholder and any other persons who may be occupying the Apartment, using such force as may be necessary; and

  3. Hold, lease or otherwise dispose of the Apartment and the shares allocated thereto.

(b) Damages and Other Relief

In addition to the remedies specified in paragraph (a), the Corporation may:

  1. Sue for possession of the Apartment;

  2. Sue for any maintenance charges, assessments or other charges due and unpaid, together with interest thereon at the maximum legal rate, and including reasonable attorneys’ fees and costs of collection;

  3. Sue for damages for breach of this lease, including damages for loss of use or occupancy of the Apartment;

  4. Obtain injunctive relief to restrain any violation or breach of this lease;

  5. Exercise any other remedy available at law or in equity; and

  6. Exercise any combination of the foregoing remedies.

(c) Cumulative Remedies

All remedies available to the Corporation under this lease or at law or in equity shall be cumulative and may be exercised concurrently or successively. The exercise of one remedy shall not preclude the exercise of any other remedy, and the failure to exercise any remedy shall not constitute a waiver thereof.

(d) Recovery of Expenses

If the Corporation shall institute any action or proceeding to enforce or interpret this lease or to recover possession of the Apartment or to collect any monies due hereunder, the Shareholder shall pay to the Corporation all costs and expenses incurred by the Corporation in connection with such action or proceeding, including reasonable attorneys’ fees, whether or not such action or proceeding is prosecuted to judgment.

7.03 Impact of Termination on Shareholder

(a) Surrender of Shares

Upon termination of this lease by the Corporation pursuant to this Article VII, the Shareholder shall immediately:

  1. Surrender possession of the Apartment to the Corporation in the condition required by this lease;

  2. Surrender to the Corporation all certificates representing shares allocated to the Apartment, duly endorsed in blank or with duly executed instruments of transfer;

  3. Pay to the Corporation all maintenance charges, assessments and other charges due and owing through the date of such termination, together with interest and late charges; and

  4. Pay to the Corporation all costs and expenses incurred by the Corporation in connection with such termination, including reasonable attorneys’ fees.

(b) Remaining Obligations

Termination of this lease shall not relieve the Shareholder of:

  1. Liability for any maintenance charges, assessments or other charges which had accrued prior to such termination and remain unpaid;

  2. Liability for any damages sustained by the Corporation as a result of the Shareholder’s breach of this lease;

  3. Liability for any costs and expenses incurred by the Corporation in enforcing its rights under this lease; or

  4. Any other obligation which by its nature should survive termination of the lease.

(c) Right to Proceeds from Resale

Upon termination of this lease by the Corporation for default, and after the Corporation has sold or otherwise disposed of the shares allocated to the Apartment and the lease for the Apartment (or has taken over the Apartment for the Corporation’s own use), the Shareholder shall be entitled to receive the proceeds from such sale (or the value of the shares as determined by the Board of Directors if the Corporation retains them), subject to the following deductions:

  1. All maintenance charges, assessments and other charges due and owing to the Corporation, together with interest and late charges;

  2. All costs and expenses incurred by the Corporation in terminating the lease, recovering possession of the Apartment, and selling the shares and lease, including reasonable attorneys’ fees, court costs, and brokerage commissions;

  3. All costs of any repairs or restoration required to place the Apartment in the condition required by this lease;

  4. Any amounts required to be paid to the City of New York or other parties pursuant to the security agreement or other agreements affecting the shares or the Building; and

  5. Any other damages sustained by the Corporation as a result of the Shareholder’s default.

If the proceeds from the sale (or value retained by the Corporation) are insufficient to cover all of the above deductions, the Shareholder shall remain liable for the deficiency. Any remaining proceeds after such deductions shall be paid to the Shareholder.

(d) No Waiver of Rights

Nothing in this Paragraph 7.03 shall be deemed to constitute a waiver of the Corporation’s right to retain the shares allocated to the Apartment and to decline to resell them if the Board of Directors determines that such retention is in the best interests of the Corporation.

7.04 Cancellation by Shareholder (Lessee)

(a) Voluntary Cancellation

The Shareholder may cancel this lease and surrender the shares allocated to the Apartment to the Corporation at any time by giving the Corporation at least sixty (60) days prior written notice of the Shareholder’s intention to do so, and by complying with all of the following conditions:

  1. Payment to the Corporation of all maintenance charges, assessments and other charges due and owing through the date of cancellation, together with any interest and late charges;

  2. Surrender of possession of the Apartment to the Corporation in the condition required by Paragraph 5.02(d) of this lease (good order and condition, reasonable wear and tear excepted);

  3. Surrender to the Corporation of all certificates representing shares allocated to the Apartment, duly endorsed in blank or with duly executed instruments of transfer;

  4. Payment to the Corporation of any transfer fee or cancellation fee established by the Board of Directors; and

  5. Compliance with all other terms and conditions of this lease relating to the termination of the Shareholder’s rights hereunder.

(b) Effect of Voluntary Cancellation

Upon compliance with all of the conditions set forth in paragraph (a) above, this lease shall terminate and the Shareholder shall have no further rights or obligations hereunder, except for obligations which by their nature survive termination of the lease.

The Corporation may retain the shares and the Apartment, or may resell the shares and assign a new lease for the Apartment. If the Corporation resells the shares, the Shareholder shall be entitled to receive the proceeds from such sale, subject to deductions for any amounts owed to the Corporation and for the Corporation’s costs and expenses in connection with the resale, including reasonable attorneys’ fees and brokerage commissions.

(c) Resale Restrictions Apply

Any cancellation and resale pursuant to this Paragraph 7.04 shall be subject to all resale restrictions contained in the security agreement between the Corporation and the City of New York (Exhibit 1 to the Plan), including restrictions on resale price and on the income of the purchaser.

7.05 Mass Cancellations

(a) Effect on Corporation

If leases covering apartments having more than fifty percent (50%) of the shares issued by the Corporation shall be canceled within any period of twelve (12) months (whether by voluntary cancellation by shareholders, by termination by the Corporation, or by expiration of the lease term), the Corporation may elect to:

  1. Continue as a cooperative corporation and maintain the Building in accordance with the terms of the remaining leases; or

  2. Dissolve the Corporation and sell or otherwise dispose of the Building in accordance with applicable law and the certificate of incorporation and by-laws of the Corporation.

(b) Rights of Remaining Shareholders

If the Corporation elects to continue as a cooperative corporation pursuant to paragraph (a)(1) above, the remaining shareholders whose leases have not been canceled shall have the right to continue to occupy their apartments pursuant to the terms of their leases.

However, such remaining shareholders may be required to pay increased maintenance charges to cover the Corporation’s operating expenses if the income from the canceled apartments is insufficient to meet the Corporation’s obligations. The Board of Directors may also impose special assessments or take other measures necessary to ensure the financial viability of the Corporation.

(c) Distribution Upon Dissolution

If the Corporation elects to dissolve pursuant to paragraph (a)(2) above, the proceeds from the sale or other disposition of the Building and other corporate assets shall be distributed in accordance with applicable law and the certificate of incorporation and by-laws of the Corporation, and subject to the rights of creditors, mortgagees, and the City of New York under the security agreement.

7.06 Expiration of Lease Due to Damage

(a) Substantial Destruction

If the Building shall be so damaged or destroyed by fire or other casualty that:

  1. More than fifty percent (50%) of the Building is rendered uninhabitable; or

  2. The cost of restoration or reconstruction would exceed the insurance proceeds available to the Corporation by more than fifty percent (50%) of such proceeds; or

  3. The damage or destruction occurs during the last five (5) years of the lease term;

then the Corporation may elect, by resolution of the Board of Directors adopted within ninety (90) days after such fire or other casualty, to terminate this lease and all other leases for apartments in the Building.

(b) Notice of Termination

If the Corporation elects to terminate the leases pursuant to paragraph (a) above, it shall give written notice thereof to all shareholders within thirty (30) days after adoption of such resolution. The leases shall terminate thirty (30) days after the giving of such notice, and all shareholders shall surrender possession of their apartments to the Corporation on or before the termination date.

(c) Distribution of Insurance Proceeds

If the Corporation terminates the leases pursuant to this Paragraph 7.06, the insurance proceeds and any other funds of the Corporation (after payment of all debts, obligations and expenses of the Corporation) shall be distributed to the shareholders in proportion to their shareholdings.

However, such distribution shall be subject to the rights of mortgagees and the City of New York under the security agreement, and shall be subject to any applicable resale restrictions.

(d) Abatement of Maintenance Charges

If the Corporation elects to terminate the leases pursuant to this Paragraph 7.06, the maintenance charges payable by all shareholders shall abate from the date of the fire or other casualty until the termination date, to the extent that such charges exceed the Corporation’s actual expenses during such period.

7.07 Continuation of Cooperative Management After All Leases Terminate

(a) Corporation Continues as Owner

If all proprietary leases covering apartments in the Building shall terminate or expire (whether by mass cancellation, by decision of the Corporation not to renew, by expiration of the lease term, or for any other reason), the Corporation shall continue to exist as the owner of the Building and may:

  1. Continue to operate the Building as a cooperative corporation by issuing new proprietary leases to shareholders; or

  2. Operate the Building as a rental property; or

  3. Sell or otherwise dispose of the Building in accordance with applicable law and the certificate of incorporation and by-laws of the Corporation.

(b) Rights of Former Shareholders

If the Corporation continues to operate the Building after termination or expiration of all leases, former shareholders who held shares immediately prior to such termination or expiration shall have the following rights:

  1. Right of First Refusal: If the Corporation elects to issue new proprietary leases, former shareholders shall have a right of first refusal to receive new leases and to repurchase shares allocated to the apartments they formerly occupied, on terms and conditions established by the Board of Directors.

  2. Right to Distribution: If the Corporation elects to sell the Building or distribute its assets, former shareholders shall be entitled to receive a distribution of the proceeds (after payment of all debts, obligations and expenses of the Corporation) in proportion to their former shareholdings, subject to the rights of creditors, mortgagees and the City of New York under the security agreement.

(c) Time Limitations

The rights specified in paragraph (b) above must be exercised by former shareholders within ninety (90) days after notice from the Corporation of the availability of such rights. Failure to exercise such rights within the specified period shall result in forfeiture of such rights.

(d) Subject to Resale Restrictions

All rights and transactions described in this Paragraph 7.07 shall be subject to all applicable resale restrictions contained in the security agreement between the Corporation and the City of New York, including restrictions on resale price and on the income of purchasers or lessees.

VIII. MISCELLANEOUS

8.01 Notices

(a) Method of Service

All notices, demands, requests or other communications which may be or are required to be given, served or sent by either party to the other pursuant to this lease shall be in writing and shall be:

  1. Delivered personally; or

  2. Sent by registered or certified mail, return receipt requested, postage prepaid; or

  3. Sent by recognized overnight courier service with proof of delivery.

(b) Address for Notices to Shareholder

All such notices, demands, requests or other communications to the Shareholder shall be addressed to the Shareholder at the Apartment, or to such other address as the Shareholder may from time to time designate by written notice to the Corporation.

(c) Address for Notices to Corporation

All such notices, demands, requests or other communications to the Corporation shall be addressed to:

487-89 Amsterdam Avenue H.D.F.C. 487 Amsterdam Avenue New York, New York 10024

or to such other address as the Corporation may from time to time designate by written notice to the Shareholder.

(d) When Notice is Effective

Any such notice, demand, request or other communication shall be deemed to have been given, served or sent:

  1. If personally delivered, on the date of delivery;

  2. If sent by registered or certified mail, on the date shown on the return receipt; or

  3. If sent by overnight courier, on the date of delivery shown on the courier’s proof of delivery.

8.02 More Than One Shareholder on Lease

(a) Joint and Several Liability

If this lease is executed by more than one person as Shareholder, then the term “Shareholder” as used in this lease shall mean all such persons, and each of them, jointly and severally.

All such persons shall be jointly and severally liable for the performance of all obligations of the Shareholder under this lease, including the payment of maintenance charges and other charges. Any notice given to any one of such persons shall be deemed to have been given to all of them.

(b) Disagreements Among Multiple Shareholders

In the event of any disagreement among multiple shareholders who are parties to this lease:

  1. The Corporation may require that all actions requiring the consent of the Shareholder be approved by all such persons, or by such percentage of them as the Corporation may reasonably require; or

  2. The Corporation may recognize one of such persons as the authorized representative of all for purposes of giving and receiving notices and making decisions under this lease, provided that such authorization is given to the Corporation in writing signed by all shareholders who are parties to this lease; or

  3. If the disagreement is such that the obligations under the lease cannot be performed, the Corporation may treat such situation as a default under the lease and may exercise any remedies available to it under Article VII of this lease.

(c) Death or Withdrawal of One Shareholder

In the event of the death or withdrawal of one or more shareholders where multiple shareholders are parties to this lease, the remaining shareholders shall continue to be bound by all terms and conditions of this lease and shall remain jointly and severally liable for all obligations hereunder.

The shares allocated to the Apartment may be transferred to the remaining shareholders, or the remaining shareholders may add additional shareholders, only with the prior written consent of the Board of Directors and in accordance with the requirements of Paragraph 5.05 of this lease.

ATTACHMENT: HOUSE RULES

Note: House Rules are referenced throughout this lease but were not included in the original transcription. The House Rules document would be a separate attachment to this Proprietary Lease.

EXHIBITS

Exhibit 1: Security Agreement and Note

Note: Referenced throughout this lease but not included in the transcription. This would be a separate exhibit document.

Exhibit 2: Affidavit of Sales

Note: Referenced in the lease but not included in the transcription. This would be a separate exhibit document.

END OF PROPRIETARY LEASE