Exhibit 10.1

 

AGREEMENT OF SUBLEASE

 

THIS AGREEMENT OF SUBLEASE (this "Sublease"), made and entered into as of the
8th day of July, 2015, by and between GBG USA INC., a Delaware corporation, with
offices at 350 Fifth Avenue, New York, New York 10118 ("Sublandlord"), and XCEL
BRANDS, INC., a Delaware corporation, with offices at 475 Tenth Avenue, 4th
Floor, New York, New York 10018 ("Subtenant").

 

W I T N E S S E T H:

 

WHEREAS, ESRT 1333 BROADWAY, L.L.C. (successor in interest to 1333 Broadway
Associates, L.L.C.) ("Landlord") leased to Sublandlord certain premises (the
"Premises") in the building commonly known as 1333 Broadway, New York, New York
(the "Building"), pursuant to that certain Agreement of Lease dated September
22, 2009 (the “Original Lease”), as amended by that certain First Amendment of
Lease, dated as of December 15, 2009 (the “First Amendment”), that certain
Second Amendment of Lease, dated as of March 31, 2012 (the “Second Amendment”),
that certain Third Amendment of Lease, dated as of September 19, 2013 (the
“Third Amendment”), that certain letter agreement dated as of March 9, 2010 (the
“First Letter Agreement”), that certain letter agreement dated as of May 25,
2011 (the “Second Letter Agreement”), that certain letter agreement dated as of
June 14, 2011 (the “Third Letter Agreement”), and that certain Fourth Amendment
of Lease, dated December 10, 2014 (the “Fourth Amendment”, and together with the
Original Lease, the First Amendment, the Second Amendment, the Third Amendment,
the First Letter Agreement, the Second Letter Agreement, and the Third Letter
Agreement, collectively, the “Lease”); and

 

WHEREAS, Subtenant now desires to sublease a portion of the Premises consisting
of approximately 29,566 rentable square feet comprising the entire tenth (10th)
floor of the Building, as more particularly described in "Exhibit A" which is
attached to this Sublease as an integral part hereof (the "Subleased Premises"),
from Sublandlord, and Sublandlord is willing to sublease the Subleased Premises
to Subtenant, upon the terms and conditions hereinafter set forth;

 

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NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants and obligations herein contained, the parties hereby agree as follows:

 

1. Subleased Premises. Sublandlord hereby subleases the Subleased Premises to
Subtenant, and Subtenant hereby hires the Subleased Premises from Sublandlord,
upon and subject to the terms and conditions set forth herein, together with
Sublandlord’s right under the Lease to use, subject to Landlord’s consent,
shafts in the Building for the purposes set forth in Article 56 of the Lease.

 

2. Term of Sublease. The term of the sublease (the "Term") provided for under
this Sublease shall commence on January 1, 2016 (the “Commencement Date”),
subject to receipt by Subtenant of the Consent (defined below) issued by
Landlord following the signing of this Sublease by Sublandlord and Subtenant,
and shall terminate on October 30, 2027 (the "Expiration Date"), unless sooner
terminated as provided herein. Sublandlord shall deliver possession of the
Subleased Premises to Subtenant in its "as is" broom clean condition on the
Commencement Date, provided that the Subleased Premises shall be vacant and free
of all tenancies and occupancies, and, to the best of Sublandlord’s knowledge,
with the building systems serving the Subleased Premises in good working order,
and Subtenant shall accept such possession. If a fire or other casualty occurs
prior to the Commencement Date that renders a material portion of the Subleased
Premises unusable by Subtenant in a commercially reasonable manner or
inaccessible and the damage therefrom is not substantially repaired by the
Commencement Date, or it is apparent that such damage will not be repaired by
the Commencement Date, then Sublandlord (to the extent Sublandlord terminates
the Lease as to the Subleased Premises) or Subtenant will have the right to
cancel this Sublease effective upon written notice to the other party to that
effect at any time prior to Sublandlord's delivery of the Subleased Premises in
substantially the condition required hereby. In the event of such cancellation,
Sublandlord will return to Subtenant any amounts theretofore paid by Subtenant
to Sublandlord and neither party shall have any further rights or obligations
hereunder except pursuant to Section 18.

 

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3. Fixed Rent.

 

(a) Subtenant shall pay Sublandlord fixed rent ("Fixed Rent") for the Subleased
Premises, for the period commencing with the Commencement Date and ending on the
final day of the Term, at the rental rates set forth on “Exhibit B” attached
hereto and made a part hereof.

 

(b) Notwithstanding anything to the contrary in the foregoing, Subtenant shall
pay the first monthly installment of Fixed Rent upon the signing of this
Sublease by Subtenant.

 

(c) The Fixed Rent for any portion of a calendar month falling within the Term
shall be prorated.

 

(d) The Fixed Rent and all other amounts payable by Subtenant to Sublandlord
under this Sublease (such other amounts are hereinafter called "Additional
Rent") shall be paid promptly when due, without notice or demand therefor, and,
except as expressly set forth herein, without deduction, abatement, counterclaim
or setoff of any kind for any reason whatsoever.

 

(e) Fixed Rent and Additional Rent shall be paid in lawful money of the United
States by check drawn on a bank which is a member of or clears through the New
York Clearing House Association to Sublandlord at its address set forth in the
preamble to this Sublease or at such other address as Sublandlord may from time
to time designate by notice to Subtenant.

 

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(f) Notwithstanding anything to the contrary contained in this Paragraph 3,
provided this Sublease shall be in full force and effect and Subtenant shall not
be in default hereunder beyond any applicable notice and grace periods, the
Fixed Rent shall be abated (i) for the first six (6) months of the Term
following the Commencement Date, and (ii) for the six (6) month period following
the first (1st) anniversary of the Commencement Date.

 

4. Additional Rent.

 

(a) Subtenant shall pay to Sublandlord all payments applicable to the Subleased
Premises on account of “Expenses”, "real estate taxes" or any other item of
"Additional Rent" which is required to be paid by Sublandlord, applicable to the
Subleased Premises, pursuant to the terms of the Lease on or before the earlier
of the due dates therefor which are set forth in the Lease or in this Sublease.
However, in calculating the Additional Rents due under this Sublease the term
“base tax year” shall mean the real estate taxes for the twelve (12) month
period from January 1, 2016 to December 31, 2016 (i.e., the average of the real
estate taxes for the fiscal years ending June 30, 2016 and June 30, 2017), the
term "Base Year" as hereinafter set forth for the determination of Expenses
shall mean the calendar year 2016 and “The Tax Percentage” and “The Operating
Expense Percentage” shall mean 50% of the amount by which Sublandlord is
required to expend for the “Additional Space” demised pursuant to the First
Amendment (which is the percentage equivalent to the fraction, the numerator of
which is 29,566 (i.e., the rentable square footage of the Subleased Premises)
and the denominator of which is 59,132 (i.e., the rentable square footage of the
Additional Space demised pursuant to the First Amendment). Additionally, the
term “comparative year”, for purposes of calculating Expenses, shall mean 2017.

 

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(b) Beginning on the Commencement Date, Subtenant shall pay Sublandlord for
electricity supplied to the Subleased Premises all amounts paid by Sublandlord
to Landlord therefor. It is understood that Landlord's charge for electricity
will be measured by a sub-meter and includes an overhead fee of five percent
(5%). Payments on account of electricity shall be made in each case within (10)
days after demand. There shall be no abatement of the electric charge (except to
the extent Sublandlord receives such an abatement from Landlord). Subject to the
terms of the Lease, electrical capacity available to the Subleased Premises is
not less than an average demand load of eight (8) watts per useable square foot
demand load, exclusive of electricity for the A/C Equipment. To the best of
Sublandlord’s knowledge, Sublandlord represents and warrants that the submeter
measuring consumption of electricity in the Subleased Premises is and shall be
in good working order upon the Commencement Date.

 

(c) Except for Additional Rent which is paid on the first day of each calendar
month together with the Fixed Rent pursuant to the Lease, Sublandlord shall give
Subtenant notice of the amount of any Additional Rent which is due hereunder
promptly after its receipt of an invoice from Landlord, and Subtenant shall make
the payment to Sublandlord in each case within ten (10) days after the date of
such notice.

 

(d) Sublandlord shall have all of the rights and remedies for the non-payment of
Additional Rent as it has under this Sublease for the non-payment of Fixed Rent.

 

5. Subordination to and Incorporation of Lease, Etc.

 

(a) Obligations. Subtenant confirms that it has read the Lease and is familiar
with all of the terms and provisions set forth therein. Subject to the
modifications and exclusions set forth in this Sublease, the terms, provisions,
covenants, stipulations, conditions, rights, obligations, remedies, agreements
and definitions contained in the Lease are incorporated herein by reference and
are made a part hereof and shall, as between Sublandlord and Subtenant (as if
they were the "Landlord" and the "Tenant," respectively, under the Lease and as
if the Subleased Premises were the Premises demised under the Lease), constitute
the terms of this Sublease as if herein set forth at length, mutatis mutandis,
except to the extent that they do not relate to the Subleased Premises or are
inapplicable, inconsistent with, or modified by the terms of this Sublease, and
except as otherwise set forth herein. Subtenant agrees to observe, carry out,
perform and discharge the terms and provisions of the Lease as they relate to
the Subleased Premises to the extent required to be observed, carried out,
performed or discharged by the Sublandlord thereunder, except where inapplicable
or inconsistent with the terms of this Sublease. Sublandlord agrees to deliver
to Subtenant copies of all communications and notices relating to the Subleased
Premises (except to the extent same contains confidential information or
information relating to other portions of the Premises, in which event, such
information may be redacted prior to delivery) promptly after receipt of the
same from Landlord.

 

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(b) Subordination, Etc. Subtenant hereby agrees that (i) this Sublease is and
shall remain in all respects subject and subordinate to the Lease (other than
the redacted portions thereof) and to any matters to which the Lease is or shall
be subordinate, (ii) except to the extent otherwise expressly permitted by this
Sublease, Subtenant will occupy the Subleased Premises in accordance with the
terms of the Lease, will maintain the Subleased Premises in accordance with the
provisions of the Lease as though it were the "Tenant" thereunder and will not
do or cause to be done, or suffer any act or omit to do, any act which might
result in a violation of or a default under any of the terms, conditions,
covenants or agreements of the Lease. Sublandlord hereby represents, warrants
and covenants to Subtenant that Sublandlord shall not modify or amend the Lease
in any manner which would reduce Subtenant’s rights (except to a de minimis
extent) or increase Subtenant’s obligations (except to a de minimis extent)
hereunder, or voluntarily surrender the Lease or enter into any termination
thereof, without the prior written consent of Subtenant.

 

(c) Conflicting Terms. Except as otherwise specifically provided herein, in the
event that any term and/or condition of this Sublease shall conflict with, or be
inconsistent with, any term and/or condition of the Lease, this Sublease will
govern, unless such term and/or condition would constitute a default under or
breach of the Lease, in which case the Lease will govern. Subtenant shall not
take or suffer any action which would constitute a default under, or be a
violation of, the Lease.

 

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(d) Excluded Articles. The following provisions of the Original Lease shall be
deemed to be excluded from this Sublease: the recital, Section 2(A), Section
3(C)(v), Section 4(I), Section 4(R), Item (i) in the first paragraph of Article
5, Section 8(F), Section 13(E), Section 15(E), Article 17(B) and (C), Section
22(C) (except as set forth in Section (g) below), the last clause of the second
sentence and last sentence of Article 23, Section 27(E), Article 32, the second
clause of the second sentence of Article 39 (including the parenthetical
clause), Article 40, Article 53, Article 55 through Article 57, Article 59
(except to the extent Landlord consents to same), Exhibit A-1 through Exhibit C,
and Exhibit F. For purposes of this Sublease, (i) Subtenant shall be obligated
to provide any termination notice pursuant to Section 11(B) and Section 14(E),
five (5) days prior to the date that Sublandlord is to give notice, and (ii) the
reference to days in Section 8(E) to “Five Hundred Thousand and 00/100
($500,000.00)” shall be deemed omitted and replaced with “One Hundred Fifty
Thousand and 00/100 ($150,000.00)”.

 

The following provisions of the First Amendment shall be deemed to be excluded
from this Sublease: the recitals, Article 1, Section 2(A), Section 2(B), Section
3(B), Article 4 through Article 8, Exhibit A-1, and Exhibit B. The Second
Amendment, the Third Amendment, the Fourth Amendment, the First Letter
Agreement, the Second Letter Agreement and the Third Letter Agreement shall be
deemed to be excluded from this Sublease in its entirety.

 

(e) Termination of Lease. Subject to the terms and conditions of any
non-disturbance agreement entered into between Landlord and Subtenant pursuant
to Section 4(R) of the Lease, in the event that the term of the Lease is
terminated prior to the Expiration Date, this Sublease shall automatically cease
and terminate on the date of such termination. In the event of such termination,
Sublandlord shall return to Subtenant that portion of Fixed Rent and Additional
Rent paid in advance by Subtenant, if any, pro-rated as of the date of such
termination.

 

(f) Entry and Inspection. Sublandlord and Landlord shall have the right to enter
and inspect the Subleased Premises pursuant to the applicable provisions of the
Lease.

 

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(g) Services.

 

(i) Subtenant shall be entitled to the services, utilities and repairs which
Landlord is obligated to furnish or make to Sublandlord pursuant to the terms of
the Lease, but Sublandlord shall have no obligation to make any repairs or
provide such utilities or services. Sublandlord shall in no event be liable to
Subtenant nor, except to the extent set forth herein, shall the obligations of
Subtenant thereunder be impaired, or the performance thereof be excused, because
of any failure or delay on the part of Landlord in furnishing such services or
utilities or in making such repairs unless and to the extent such failure or
delay results from a default by Sublandlord under the Lease. If Landlord shall
default in any of its obligations to perform services with respect to the
Subleased Premises, Sublandlord will reasonably assist Subtenant's efforts to
obtain such services from Landlord in accordance with Paragraph 12 below.
Subtenant shall have the right to request services directly from Landlord and to
make direct payment to Landlord for same. If the obligation of Sublandlord to
pay Fixed Rent and/or Additional Rent under the Lease with respect to the
Subleased Premises is actually abated due to a failure by Landlord to provide
services in respect of the Subleased Premises or for any other reason relating
to the Subleased Premises, the Fixed Rent and Additional Rent payable hereunder
by Subtenant shall be similarly abated, on a pro-rata basis, during any such
period. Sublandlord agrees to maintain the two (2) 275 ton cooling towers
located on the Building roof (which provide chilled water to the HVAC servicing
the Subleased Premises) (the “Water Tower”). If as a result of Sublandlord’s
control of the Water Tower, the HVAC system servicing the Subleased Premises is
inoperable for three (3) or more consecutive business days, then Subtenant shall
be entitled to an abatement of Fixed Rent, which abatement shall commence as of
the first day after the expiration of such three (3) day period, as the case may
be, and shall be based on the extent of Subtenant’s inability to utilize the
Subleased Premises.

 

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(h) Consents and Notices. In all provisions of this Sublease (including
provisions of the Lease incorporated herein) requiring the approval or consent
of Sublandlord, Subtenant shall be required to obtain the approval or consent of
Sublandlord as well as the approval or consent of Landlord. At the request of
Subtenant, Sublandlord shall promptly apply to Landlord for any such approval or
consent and Sublandlord will cooperate with Subtenant and use reasonable
efforts, both at Subtenant’s sole expense, in attempting to obtain the consent
of Landlord when such consent is required hereunder or under the Lease. In all
provisions of this Sublease (including provisions of the Lease incorporated
herein) requiring that notice be given, Subtenant shall be required to give
notice to both Sublandlord and Landlord. Notwithstanding anything to the
contrary set forth in this Sublease, any covenants, representations or other
undertakings of Landlord under the Lease shall not be deemed to be made by, or
otherwise constitute obligations of, Sublandlord under this Sublease.
Notwithstanding the foregoing, to the extent (i) Landlord’s consent is not
required under the Lease, Sublandlord’s consent shall automatically be deemed
granted, and (ii) to the extent Landlord’s consent has been granted, Sublandlord
shall not unreasonably withhold, delay or condition its consent.

 

(i) Landlord's Consent to Sublease.

 

(i) Sublandlord shall, promptly after execution of this Sublease by both
parties, submit a copy of same to Landlord and shall use reasonable efforts to
obtain Landlord's consent to this Sublease (the “Consent”); provided, however,
that Sublandlord shall not be required to make any payments or commence any
action or proceeding in order to obtain the Consent and shall not in any event
be liable to Subtenant for any failure to obtain same (as long as Sublandlord
shall have used reasonable efforts as aforesaid to obtain the Consent).
Subtenant shall fully cooperate with Sublandlord in order to obtain the Consent,
including, but not limited to, promptly supplying such financial, business or
other information or documentation as Landlord may reasonably request of
Sublandlord in connection with this Sublease. In the event that the Consent is
not obtained within forty-five (45) days after the date of this Sublease, either
party may terminate this Sublease at any time prior to the issuance of such
Consent by giving written notice of termination to the other party. If this
Sublease is terminated pursuant to the immediately preceding sentence of this
Paragraph 5(i)(i), Sublandlord shall promptly return to Subtenant (A) the first
monthly installment of Fixed Rent which was paid by Subtenant pursuant to
Paragraph 3(b) above and (B) the Security Deposit (as hereinafter defined) which
was submitted by Subtenant pursuant to Section 19(a) below and, except as
aforesaid or as provided in Section 18 below, neither party shall have any
further obligation to the other party under this Sublease.

 

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(ii) Except as expressly set forth in the Consent, Landlord's consent to this
Sublease shall not be deemed or construed to modify, amend or affect the terms
and provisions of the Lease, or Sublandlord's obligations thereunder, which
shall continue to apply to the Premises, including the Subleased Premises, and
the occupants thereof, as if the Sublease had not been made.

 

(iii) Sublandlord shall request that the Consent include the following
provisions, provided Sublandlord shall not be responsible to Subtenant if
Landlord shall fail or refuse to issue a Consent containing same:

 

(A) a non-disturbance provision;

 

(B) a waiver of subrogation from Landlord in favor of Subtenant;

 

(C) a right to shaft space within the Building; and

 

(D) a right to signage in the elevator bank.

 

6. Use of Subleased Premises; Quiet Enjoyment.

 

(a) Subtenant covenants that it will use and occupy the Subleased Premises
solely for the purposes permitted by Section 1 of the Lease and subject to the
restrictions set forth in said Section 1.

 

(b) As long as Subtenant pays, when due, all Fixed Rent and Additional Rent due
hereunder and performs and observes all of the terms, covenants and conditions
of this Sublease, Subtenant shall have, hold and enjoy the Subleased Premises
peaceably and quietly during the Term hereof without hindrance or molestation by
Sublandlord, or any party claiming through or under Sublandlord, subject to the
terms and conditions of this Sublease and the Lease.

 

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7. Improvements. Subtenant shall make no improvements, alterations or
refurbishing of the Subleased Premises (collectively, "improvements") and shall
not install any signs outside the Subleased Premises or in any other common
areas of the Building without the prior written consent of Sublandlord, such
consent not to be unreasonably withheld, and Landlord, which shall be granted or
denied in accordance with the terms of the Lease. All Subtenant improvements
shall be performed by Subtenant at its sole cost and expense. Subtenant's rights
and obligations with respect to improvements within the Subleased Premises shall
be further governed and limited by the relevant provisions of the Lease. At the
request of Subtenant, Sublandlord shall request that Landlord list Subtenant's
name in the Building directory, provided that (a) in no event shall Subtenant’s
listings exceed its pro rata share of Sublandlord’s allotted listings and (b)
any charges imposed by Landlord for directory listings shall be paid by
Subtenant.

 

8. Default by Subtenant.

 

(a) The following shall constitute events of default (each an "Event of
Default"):

 

(i) if (A) Subtenant shall fail to pay any Fixed Rent or Additional Rent on the
due date thereof and such default shall continue for a period of three (3)
business days after notice by Sublandlord to Subtenant of such default
(provided, however, that Sublandlord shall not be required to deliver such
notice more than two (2) times in any twelve (12) month period, it being
understood that any further failure to pay any Fixed Rent or Additional Rent on
the due date thereof within such twelve (12) month period shall constitute an
immediate Event of Default), or (B) Subtenant shall fail to comply with any
term, provision or covenant of this Sublease or any applicable term, provision
or covenant of the Lease (to the extent incorporated herein by reference), and
Subtenant shall fail to remedy such failure within twenty (20) days after notice
from Sublandlord, or if such failure complained of shall be of a nature that the
same cannot be completely cured and remedied within said twenty (20) day period,
and Subtenant shall not (1) promptly upon the giving by Sublandlord of such
notice, advise Sublandlord of Subtenant's intention to institute all steps
necessary to remedy such situation, (2) promptly institute and thereafter
diligently pursue all steps necessary to remedy the same and (3) effect such
remedy within a reasonable time not to exceed sixty (60) days after the date of
the giving of said notice by Sublandlord and in any event prior to such time as
would either (y) subject Landlord, Sublandlord, Sublandlord's agents or any
mortgagee or ground lessee to civil or criminal liability or prosecution for a
crime, or (z) cause a default under any applicable mortgage or ground lease;

 

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(ii) if (A) any petition is filed by Subtenant under any provision of Federal or
state bankruptcy laws or other statute whether domestic or foreign involving
creditors' rights or the insolvency of debtors or any such petition is filed
against Subtenant and Subtenant fails to secure a dismissal or stay thereof
within thirty (30) days, or (B) Subtenant shall become insolvent or make an
assignment for the benefit of creditors, or (C) a receiver is appointed for all
or substantially all of the assets of Subtenant and Subtenant fails to secure a
dismissal or stay thereof within thirty (30) days; or

 

(iii) if Subtenant fails to deliver the Letter of Credit as required pursuant to
Section 19(a).

 

(b) Upon the occurrence of an Event of Default Sublandlord shall have the right,
at its option, to do and perform any one or more of the following, in addition
to, and not in limitation of any other remedy or right permitted it by law, by
this Sublease or by the Lease:

 

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(i) terminate this Sublease, in which event Subtenant shall immediately
surrender the Subleased Premises to Sublandlord, but if Subtenant shall fail to
do so, Sublandlord may, without prejudice to any other right or remedy
Sublandlord may have, either by law or under this Sublease or otherwise, obtain
possession or rent in arrears or damages for breach of contract, enter upon the
Subleased Premises and expel or remove Subtenant and Subtenant's personal
property, with or without force and without being liable to Subtenant, and
Subtenant agrees to indemnify and hold Sublandlord harmless for all losses or
damage which Sublandlord may suffer by reason of such termination, whether
through inability to relet the Subleased Premises or through decrease in rent or
by damage to the Subleased Premises, or otherwise, or

 

(ii) enter the Subleased Premises and remove Subtenant and its improvements and
personal property therefrom without terminating this Sublease or being liable to
Subtenant in any manner whatsoever for such acts, and, at Sublandlord's option,
relet the Subleased Premises as the agent of Subtenant and receive rent
therefor, and in such event Subtenant shall be liable on a monthly basis when
rent is otherwise due and payable to Sublandlord for any deficiency which may
arise by reason of such reletting during the remainder of the Term of this
Sublease, but shall not be entitled to any surplus so arising. In the event of a
conflict between the provisions of this Paragraph 8 and the provisions of the
Lease, the provisions of this Paragraph 8 shall prevail.

 

9. Subletting and Assignment.

 

(a) Subtenant shall not assign, mortgage, pledge, encumber or in any manner
transfer this Sublease or any part thereof nor sublet or suffer the Subleased
Premises or any part thereof to be used by others, except as expressly permitted
by this Sublease and the Lease. Subject to the terms of this Sublease and the
Consent, it is understood that a change in control of Subtenant shall be deemed
to constitute an assignment of this Sublease, except to the extent such change
of control is not deemed an assignment pursuant to the Lease.

 

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(b) If this Sublease is assigned in violation of the provisions of this
Sublease, Sublandlord may and is hereby empowered to collect rent from the
assignee. In such event, Sublandlord may apply the net amount received by it to
the Fixed Rent, Additional Rent or any other payments herein reserved or
provided for, and no such collection shall be deemed a waiver of the covenant
herein against assignment, mortgage, pledge or encumbrance, or an acceptance of
the assignee as a tenant or subtenant under this Sublease or a release of
Subtenant from the further performance of its covenants herein. If the Subleased
Premises or any part thereof is sublet or occupied by others in violation of the
provisions of this Sublease, Sublandlord is hereby empowered to collect rent
from the subtenant or other occupant, and to apply the same to the curing of any
default hereunder in any order of priority Sublandlord may elect, any unexpended
balance to be applied by Sublandlord against any rental or other obligations
subsequently becoming due. The making of any assignment, mortgage, pledge,
encumbrance or subletting in whole or in part, and whether or not in violation
of the provisions of this Sublease, shall not operate to relieve Subtenant from
its obligations under this Sublease and, notwithstanding any such assignment,
mortgage, pledge, encumbrance or subletting, Subtenant shall remain liable for
the payment of all Fixed Rent, Additional Rent and other charges and for the due
performance of all the covenants, agreements, terms and provisions of this
Sublease until the end of the Term. Each and every assignee, whether as assignee
or as successor in interest of Subtenant or as assignee or successor in interest
of any assignee, shall immediately be and become and remain liable jointly and
severally with Subtenant and with each other for the payment of the Fixed Rent,
Additional Rent and other charges payable under this Sublease and for the due
performance of all the covenants, agreements terms and provisions of this
Sublease on the part of Subtenant to be paid and performed until the end of the
Term.

 

(c) Any proposal by Subtenant to assign this Sublease or to further sublet the
Subleased Premises or any portion thereof shall be subject to the prior written
consent of Landlord (in each case, to the extent Landlord’s consent is required
under the Lease) and Sublandlord. Sublandlord shall not unreasonably withhold
its consent to a proposed assignment or subletting of all or a part of the
Subleased Premises, provided that Landlord has given its consent therefor.
Subtenant shall reimburse Sublandlord for all reasonable out-of-pocket expenses
incurred in connection with a proposed assignment or subletting, including
without limitation the fees and disbursements of Sublandlord's attorneys,
provided under no circumstances shall same exceed Five Thousand and 00/100
Dollars ($5,000.00).

 

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(d) If Sublandlord shall consent to any assignment of this Sublease, Subtenant
shall pay to Sublandlord, as consideration therefor, an amount equal to fifty
percent (50%) of all sums and other consideration paid to Subtenant by the
assignee in connection with such assignment, including sums paid for the
purchase of the alterations and improvements which are present in the Subleased
Premises less transaction costs set forth in Section 4(J) of the Lease. The
foregoing payment shall be made by Subtenant to Sublandlord within ten (10)
Business Days after Sublandlord has given its consent to the assignment (after
accounting for the deductions set forth above). Sublandlord shall pay to
Landlord any payments required to be made under the Lease in connection
therewith.

 

(e) If Sublandlord shall consent to any further sublease of all or a portion of
the Subleased Premises, Subtenant shall pay to Sublandlord, as consideration
therefor, an amount equal to fifty percent (50%) of the rent, additional rent
and all other payments received by Subtenant under or in connection with such
sublease, including without limitation, any sums paid for the purchase of the
alterations and improvements which are present in the applicable premises less
(i) the Fixed Rent and the Additional Rent payable pursuant to Paragraph 4(a) of
this Sublease with respect to the applicable premises and (ii) the transaction
costs set forth in Section 4(J) of the Lease. Subtenant shall pay such excess
amounts to Sublandlord within ten (10) Business Days after receipt by Subtenant
in each case (after accounting for the deductions set forth above). Sublandlord
shall pay to Landlord any payment required to be made under the Lease in
connection therewith.

 

(f) Sublandlord shall be entitled to exercise any recapture right that it may
have pursuant to this Sublease (including the provisions of the Lease which have
been incorporated herein) in connection with a proposed assignment or subletting
of the Subleased Premises, or a portion thereof.

 

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(g) Notwithstanding anything in this Sublease to the contrary (and provided
Landlord consents to same), Sublandlord’s consent shall not be required
(provided Sublandlord and Landlord have been given prior notice and Landlord has
consented to same), for transactions entered into with (i) any entity which is
controlled by, under common control with or which controls Tenant, or (ii) a
corporation into or with which Subtenant is merged or consolidated or with an
entity to which all or substantially all of Subtenant’s assets are transferred,
provided (x) such merger, consolidation or transfer of assets is for a valid
business purpose and not principally for the purpose of transferring the
leasehold estate created hereby, and (y) the assignee or successor entity has a
net worth (determined in accordance with generally accepted accounting
principles consistently applied) at least equal to or in excess of the net worth
of Subtenant immediately prior to such merger, consolidation or transfer and
Sublandlord has been provided with reasonable proof thereof prior to such
transaction. The term control shall mean ownership of more than fifty (50%)
percent of all the voting stock of a corporation or more than fifty (50%)
percent of all the legal and equitable interest in any other entity. The
original named Subtenant covenants that, notwithstanding any assignment or
transfer, whether or not in violation of the provisions of this Sublease, and
notwithstanding the acceptance of fixed rent and/or additional rent by
Sublandlord from an assignee, transferee, or any other party, the originally
named Subtenant shall remain fully liable for the payment of the fixed rent and
additional rent and for the other obligations of this Sublease on the part of
Subtenant to be performed or observed.

 

10. Liability; Insurance.

 

(a) Neither Sublandlord nor its successors, assigns, employees or agents shall
be liable for any loss of or damage to property of Subtenant or Subtenant's
subtenants, assigns, employees, agents or visitors, except for loss or damage
resulting from Sublandlord's gross negligence or willful misconduct. With
respect to the Subleased Premises, Sublandlord, its successors, assigns,
employees and agents shall not be liable for any injury or damage to persons or
property except for loss or damage resulting from the gross negligence or
willful misconduct of Sublandlord, its successors, assigns, employees and
agents.

 

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(b) Subtenant shall maintain with respect to the Subleased Premises
comprehensive general public liability insurance, property insurance and other
insurance in the manner and with the minimum limits and maximum deductibles set
forth in the Lease, with insurance companies qualified to do business in the
State of New York and otherwise meeting the standards set forth in the Lease,
insuring Subtenant, Sublandlord, Landlord and any other parties required in
accordance with the Lease as named insureds, against, inter alia, claims and
liabilities for bodily injury or death to persons, and damage to property. Each
party shall look exclusively to any insurance carried by it pursuant to this
Sublease and the Lease for loss or damage to property resulting from the
negligence of the other party or its agents, servants, employees, contractors,
invitees or licensees, and, to the extent permitted by law, Sublandlord and
Subtenant each hereby releases and waives all right of recovery against the
other or anyone claiming through or under each of them by way of subrogation or
otherwise, provided that such waivers of liability are permitted and are
available under both Sublandlord's and Subtenant's policies of insurance or such
waivers are approved by their insurance carriers. Each party agrees to pay the
added cost, if any, of obtaining such approval from its insurance carrier.
Subtenant shall deliver a certificate of insurance to Sublandlord with respect
to all insurance required under this Sublease and the Lease concurrently with
its signing of this Sublease. Each of Subtenant's policies of insurance shall
provide that such policy may not be materially changed, amended, canceled or
allowed to lapse except upon thirty (30) days' prior written notice to
Sublandlord, Landlord and any other parties required in accordance with the
Lease. Such insurance shall be subject to Sublandlord's reasonable approval as
to form, content, coverage and expiration dates, which approval shall be deemed
granted if not refused within fifteen (15) days after delivery of the
certificate of insurance to Sublandlord.

 

11. Indemnification.

 

(a) Except as provided in Paragraph 10 hereof, Subtenant shall indemnify and
hold harmless Sublandlord from and against all claims, losses, costs, damages,
expenses and liabilities (including, but not limited to, the costs of legal
proceedings and reasonable attorneys' fees and disbursements) (collectively
referred to hereinafter as “Claims”) which Sublandlord may incur, pay or have
asserted against it by reason of any injuries to persons occurring in, on or
about the Premises and the Building caused by the acts or omissions of
Subtenant, its agents, employees, guests or invitees or by reason of any breach,
failure or default under the Sublease or the Lease on Subtenant's part,
including any breach or default which results in a breach of or possible
termination or forfeiture of the Lease. In the event of a conflict between the
provisions of this Paragraph 11 and any provision of the Lease, the provisions
of this Paragraph 11 shall prevail. The provisions of this Paragraph 11 shall
survive the expiration or earlier termination of this Sublease.

 

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(b) Except as provided in Paragraph 10 hereof, and to the extent not arising
from the willful acts or negligence of Subtenant or Subtenant's agents,
employees, contractors, licensees, guests or invitees, Sublandlord shall
indemnify and hold harmless Subtenant from and against all Claims which
Subtenant may incur, pay or have asserted against it by reason of (A) any
injuries to persons or property occurring in, on or about the Subleased Premises
caused by the acts, omissions or negligence of Sublandlord, its agents,
employees, contractors, licensees, guests or invitees, (B) by reason of any
breach, failure or default hereunder on Sublandlord's part, including any breach
or default which results in a breach of or possible termination or forfeiture of
the Lease, or (C) a termination of this Sublease as a result of Sublandlord’s
default under the Lease.

 

(c) Notwithstanding anything contained in this Sublease to the contrary, except
to the extent resulting from Subtenant’s holdover in the Subleased Premises, in
no event shall either party to this Sublease be liable to the other party under
this Sublease for any special, consequential or punitive damages of any nature
whatsoever.

 

12. Subtenant's Rights. Notwithstanding anything to the contrary herein set
forth, Subtenant shall in no case have any rights in respect of the Subleased
Premises greater than the rights of Sublandlord under the Lease. Subtenant will
look solely to Landlord for the enforcement of Subtenant's rights. Sublandlord
agrees to use commercially reasonable efforts (not including the expenditure of
funds or the institution of litigation except as set forth herein) to obtain for
the benefit of Subtenant any services or other benefits provided by Landlord
under the Lease which relate to the use and enjoyment of the Subleased Premises
(which efforts shall be at Subtenant’s expenses unless the request is for
Sublandlord’s other space in the Building as well, in which event the costs will
be appropriately prorated). In furtherance of the foregoing, Sublandlord agrees
to (i) cooperate with Subtenant, at the sole cost and expense of Subtenant, by
promptly delivering to Landlord, in Sublandlord’s name if necessary, any
communications or notices pertaining to the Subleased Premises received from
Subtenant and directed to Landlord, as Subtenant shall reasonably request; and
(ii) upon request by Subtenant, and at the sole cost and expense of Subtenant,
either join with Subtenant in any proper action or proceeding, in the name of
Sublandlord, permit Subtenant to commence such action in the name of Sublandlord
alone or have Sublandlord commence the action alone, if necessary, to require
and obtain performance by Landlord under the Lease and/or to collect damages
resulting from a breach by Landlord of its obligations under the Lease, at the
sole cost and expense of Subtenant. For the purpose of such an action and only
to such extent, all of the rights of Sublandlord under the Lease are hereby
conferred upon and assigned to Subtenant, Subtenant is hereby subrogated to such
rights and Sublandlord agrees to reasonably cooperate, at Subtenant's expense,
with Subtenant's prosecution of any such action. In addition to the
indemnification provided under Paragraph 11 hereof, Subtenant hereby indemnifies
and agrees to hold harmless Sublandlord from and against all claims, losses,
costs, damages, expenses and liabilities (including but not limited to, the
costs of legal proceedings and reasonable attorneys' fees and disbursements)
which Sublandlord may incur, pay or have asserted against it by reason of the
prosecution of any such action by Subtenant or Sublandlord's cooperation
therewith. The provisions of the foregoing sentence shall survive the expiration
or earlier termination of this Sublease.

 

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13. Possession, Care and Condition of Subleased Premises.

 

(a) Possession and Condition.

 

(i) Subtenant acknowledges that Sublandlord has afforded Subtenant the
opportunity for full and complete investigation, examination and inspection of
the Subleased Premises. Subtenant acknowledges that it has examined the
Subleased Premises and that it is leasing the Subleased Premises in their "as
is" broom clean condition on the date hereof, normal wear and tear excepted.
Sublandlord shall deliver the Subleased Premises with, to the best of
Sublandlord’s knowledge, the existing HVAC units in good working order, which
HVAC unit specifications are set forth on Exhibit “C’ attached hereto and made a
part hereof. Additionally, Sublandlord shall deliver to Subtenant the ACP-5
certificate received from Landlord. Except as otherwise provided herein,
Sublandlord shall have no obligation to perform any work or supply any materials
to prepare the Subleased Premises for Subtenant's occupancy. Subtenant shall, at
its sole cost and expense, make all improvements required to prepare the
Subleased Premises for its occupancy. Sublandlord has made no representation or
warranty concerning the condition of the Subleased Premises except as expressly
set forth in this Sublease.

 

A. Subtenant shall pay to Sublandlord within ten (10) business days after
Sublandlord’s written demand, its proportionate share of Sublandlord’s actual
costs to operate and maintain the Water Tower (based on Subtenant’s
proportionate share of usage as compared to usage by all additional floors in
the Premises being serviced by the Water Tower). Subtenant shall be required to
pay Sublandlord an annual fee of $500.00 per ton for water usage relating to the
supplemental HVAC unit presently servicing the IDF room (which unit is 1 ½ ton
unit) and for water usage for any additional supplement HVAC unit installed in
the Subleased Premises after the Commencement Date. Additionally, (i) if
Subtenant chooses to hook up to the Water Tower for use in any additional HVAC
equipment, Subtenant shall hook up same at Subtenant’s sole cost and expense
utilizing Sublandlord’s subcontractor (which is presently React Technical, Inc.)
or another subcontractor reasonably acceptable to Sublandlord, and (ii)
Sublandlord shall be entitled to charge Subtenant on a monthly basis for all
after hours HVAC use based on a commercially reasonable per hour charge, as
reasonable determined by Sublandlord, based on Sublandlord’s actual costs, if
any, for providing such overtime usage. Sublandlord’s HVAC hours shall be Monday
through Friday from 7:00AM to 6:00PM. If Subtenant requires HVAC after the usual
business hours of the Building, then Subtenant shall give notice (which may be
by e-mail) to Sublandlord’s facilities department not later than 2:00 p.m. on
the day prior to the date on which such after hour services are required (i.e.,
after hours, weekends and/or holidays). Sublandlord’s current standard charge
for overtime HVAC service is $15.00 per unit per hour, provided that the
Sublandlord acknowledges that overtime charges shall not be charged for the
supplemental HVAC unit servicing the IDF room.

 

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(b) On the date upon which the Term shall expire and come to an end, whether by
expiration, by lapse of time or otherwise, Subtenant, at its sole cost and
expense, shall quit and surrender the Subleased Premises to Sublandlord in good
order and condition, reasonable wear and tear and damage by fire or other
casualty excepted, and broom clean. Subtenant shall, prior to such expiration,
remove any Specialty Alteration (as defined in the Lease) for which removal
thereof is required pursuant to the Lease. In the event of any removal,
Subtenant shall perform same and restore the Subleased Premises to their
condition prior to the installation of such Specialty Alteration or other
improvements and alterations, reasonable wear and tear and damage by casualty
excepted. Should Landlord require Sublandlord to remove any Specialty Alteration
made prior to the Commencement Date, Sublandlord shall notify Subtenant of such
requirement at least ninety (90) days prior to the Expiration Date, in which
case, same shall be either (a) removed by Subtenant prior to the Expiration Date
and Sublandlord shall within ten (10) business days of demand, reimburse
Subtenant for the reasonable costs of removal of the Previous Improvements
thereof, or (b) upon mutual agreement between Sublandlord and Subtenant, removed
by Sublandord at Sublandlord’s sole cost and expense, provided Subtenant shall
provide to Sublandlord reasonably sufficient access to the Subleased Premises,
prior to the Expiration Date, to perform such removal. Should Subtenant fail to
provide such necessary access, all such Previous Improvements shall be removed
by Subtenant prior to the Expiration Date, subject to Sublandlord’s obligation
to reimburse Subtenant for same.

 

(c) Furniture and Equipment. Sublandlord shall leave the furniture, moveable
fixtures and equipment which are presently situated in the Subleased Premises
and which are listed on "Exhibit E" attached hereto and made a part hereof (the
"Included Property") in the Subleased Premises upon delivery of the Subleased
Premises to Subtenant on the Commencement Date. Subtenant shall take possession
of the Included Property in its "as is", "where is" condition. The parties
confirm that the Included Property shall not include telephones. Sublandlord
makes no representations or warranties with respect to the Included Property.
The Included Property shall remain the property of Sublandlord during the Term.
Subtenant shall be responsible for any damage to or loss of any of the Included
Property, reasonable wear and tear excepted. If the Term has not been terminated
prior to the Expiration Date, then title to the Included Property shall pass to
Subtenant on the Expiration Date, and Subtenant shall thereupon have all rights
and responsibilities associated with the ownership of the Included Property.

 

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(d) Holdover. Notwithstanding anything to the contrary provided elsewhere in
this Sublease, Subtenant shall pay to Sublandlord upon demand one hundred
twenty-five percent (125%) of all amounts that Sublandlord is required to pay
and actually pays to Landlord pursuant to the Lease which are attributable to a
holdover by Subtenant in the Subleased Premises after the Expiration Date
(provided that if any such amounts are also attributable to a holdover by
Sublandlord in its premises in the Building, such amounts shall be prorated
between Sublandlord and Subtenant). Additionally, Subtenant agrees to indemnify
and save Sublandlord harmless from and against all claims, losses, damages
(including, without limitation, consequential, punitive, indirect or similar
damages), liabilities, costs and expenses (including, without limitation,
reasonable attorneys’ fees and disbursements) resulting from delay by Subtenant
in surrendering the Subleased Premises at the expiration of the Term.

 

(e) Construction Allowance. Subtenant shall be entitled to receive a
construction allowance for Subtenant’s build out of the Subleased Premises in
the amount of Three Hundred Sixty Nine Thousand Five Hundred Seventy Five and
00/100 Dollars ($369,575.00) (the "Allowance"). The Allowance shall be used for
the "hard" construction costs of labor and materials actually incurred by
Subtenant for construction of permanent improvements to prepare the Subleased
Premises for Subtenant's initial occupancy ("Subtenant's Work"). Notwithstanding
the forgoing to the contrary, Subtenant may utilize up to fifteen percent (15%)
of the Allowance towards soft costs, including architectural, engineering and
filing fees associated with Subtenant’s initial build-out. Upon completion of
Subtenant's Work, as evidenced by a certificate from Subtenant's architect to
such effect delivered to Sublandlord, Subtenant shall submit to Sublandlord a
written request for payment of the Allowance. During the performance of
Subtenant’s Work, Subtenant may submit draw requests (each a "Draw Request") at
any time (but not more frequently than monthly) for the disbursement of the
lesser of (A) 90% of the cost of the applicable portion of Subtenant’s Work or
(B) 90% of the portion of the total cost of Subtenant’s Work represented by such
portion of Subtenant’s Work. Each Draw Request shall be in writing and shall be
accompanied by (i) paid invoices for the applicable portion of Subtenant’s Work,
(ii) a certificate signed by Subtenant’s architect certifying that such portion
of Subtenant’s Work has been satisfactorily completed in accordance with the
final plans therefor approved by Landlord and Sublandlord, and (iii) lien
waivers or releases from all contractors and subcontractors who have performed
such portion of Subtenant’s Work with respect to all claims against Landlord and
Sublandlord arising out of such portion of Subtenant’s Work. Upon completion of
Subtenant's Work, Subtenant shall submit to Sublandlord a written request for
payment of (x) the balance of the Allowance or (y) the balance of the amount
actually expended by Subtenant for Subtenant's Work, whichever is the lesser,
but subject to the limitation on "soft costs" set forth above. Such request
shall be accompanied by (i) all paid invoices for Subtenant's Work not yet
provided to Sublandlord, (ii) a certificate signed by Subtenant's architect
certifying that Subtenant's Work has been satisfactorily completed in accordance
with the final plans therefor approved by Landlord and Sublandlord, (iii) copies
of all Buildings Department sign-offs and inspection certificates and all other
permits required to be issued by public authorities or governmental entities or
insurance boards having jurisdiction over Subtenant's Work, and (iv) final lien
waivers or releases from all contractors and subcontractors who have performed
any of Subtenant's Work (to the extent not previously provided to Sublandlord)
with respect to all claims against Landlord and Sublandlord arising out of such
Subtenant's Work. Within twenty (20) days after receipt of each Draw Request
from Subtenant and supporting documentation, Sublandlord shall pay the amount
due pursuant to this Paragraph 13(d). If Sublandlord fails to disburse to
Subtenant any portion of the Allowance to which Subtenant is entitled (and which
is not then in dispute), then Subtenant may give Sublandlord notice of such
failure which notice shall state in bold that IF SUBLANDLORD SHALL CONTINUE TO
FAIL TO MAKE DISBURSEMENTS OF THE ALLOWANCE FOR TEN (10) BUSINESS DAYS AFTER THE
DATE OF Sublandlord’s receipt of notice, then Subtenant shall have the right to
deduct or recoup the sum owed from, or offset or net the sums owed against, the
Fixed Rent and Additional rent next becoming due under the Sublease. Should such
failure continue for more than ten (10) business days after Sublandlord’s
receipt of such notice, Subtenant shall have the right to deduct or recoup the
sum owed from, or offset or net the sums owed against, the Fixed Rent and
Additional Rent next becoming due under the Sublease.

 

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(f) Subtenant shall be allocated up to twenty-four (24) hours of overtime
freight elevator service during Subtenant’s build-out and initial move-in at no
cost to Subtenant, which service shall be scheduled pursuant to the terms of the
Lease. Any cost associated with the initial twenty-four (24) hours of overtime
freight service during Subtenant’s build-out and initial move out shall be borne
by Sublandlord.

 

(g) Obligation to Repair. Subtenant shall take good care of the Subleased
Premises and the fixtures and appurtenances therein. All damage or injury to the
Subleased Premises and to its fixtures, appurtenances and equipment or to the
Building caused by Subtenant's moving of Subtenant's property in or out of the
Building or by Subtenant's installation or removal of furniture, fixtures or
other property, or resulting from Subtenant's negligent acts, omissions or
misconduct shall be promptly repaired by Subtenant, at its sole cost and
expense, to the reasonable satisfaction of Sublandlord and Landlord. If a
request is made by Landlord for Sublandlord to repair the Subleased Premises in
accordance with the Lease, Subtenant shall undertake such repair at its cost in
accordance with the Lease. All of said repairs required to be made by Subtenant
shall be in conformance with the terms of the Lease. If Subtenant fails to make
such repairs, the same may be made by Sublandlord or Landlord at the expense of
Subtenant and all sums so spent and expenses incurred by Sublandlord shall be
collectible as Additional Rent and shall be paid by Subtenant to Sublandlord
within five(5) business days after rendition of a bill or statement therefor.
Notwithstanding anything to the contrary in the foregoing, Subtenant shall
maintain and operate the HVAC equipment in the Subleased Premises at its sole
cost and expense.

 

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(h) Sublandlord represents and warrants, as of the date of this Sublease, as
follows:

 

(i) Neither Sublandlord nor, to its knowledge, Landlord is in default under the
Lease;

 

(ii) Sublandlord has not received from Landlord any notice of default, which
default remains uncured;

 

(iii) attached hereto as Exhibit F is a true and complete (redacted) copy of the
Lease;

 

(iv) the Lease is currently in full force and effect;

 

(v) Sublandlord has not assigned its interest in the Lease or sublet any portion
of the Subleased Premises other than pursuant to this Sublease; and

 

(vi) Sublandlord has not made any written material complaints regarding the
building systems in and/or servicing the Subleased Premises, including the HVAC
and the supplemental air conditioning, electrical and plumbing systems.

 

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14. Notices. Notices, demands and any other communications hereunder shall be in
writing and shall be given or made by personal delivery, by overnight delivery
by a recognized national courier service or by certified mail, return receipt
requested, addressed to Sublandlord at its address hereinabove set forth, to the
attention of Robert K. Smits, and addressed to Subtenant at the address
hereinabove set forth, or at such other address which either party may hereafter
designate for such purpose by a written notice; provided, however, that after
Subtenant has moved into the Subleased Premises, notices, demands and any other
communications shall be sent to Subtenant at the Subleased Premises, in each
case to the attention of Jim Harris, Chief Financial Officer. In the case of any
notice of default, a copy of such notice shall be sent to Blank Rome LLP, 405
Lexington Avenue, New York, New York 10174, Attention: Brad L. Shiffman, Esq..
Notices, demands and other communications shall be deemed given (a) if delivered
by personal delivery or by overnight courier service, on the date of delivery or
rejection of delivery, or (b) if sent by certified mail, upon receipt or
rejection of such delivery. Sublandlord shall, within five (5) days after
receipt thereof, give to Subtenant a copy of each notice or demand received from
Landlord relating to the Subleased Premises, and Subtenant shall, within five
(5) days after receipt thereof, give to Sublandlord a copy of each notice or
demand received from Landlord relating to the Subleased Premises.

 

15. Miscellaneous. This Sublease contains the entire agreement of the parties
with respect to the transactions contemplated hereby, supersedes all prior
agreements or understandings between the parties and may not be changed or
modified in any way unless such change or modification is in writing and signed
by the parties hereto. Neither Sublandlord nor Subtenant has made any
representations or warranties with respect to this Sublease except as expressly
set forth herein. If any provision of this Sublease shall be held to be invalid
or unenforceable in any respect, the validity or enforceability of the remaining
portions of this Sublease shall be unaffected thereby. This Sublease shall be
binding upon, inure to the benefit of and be enforceable by the parties hereto
and their respective successors and assigns. The headings in this Sublease are
for convenience only and shall not be used in construing the intentions of the
parties. This Sublease shall be governed by and construed in accordance with the
laws of the State of New York. Sublandlord and Subtenant each represent that it
has full right and authority to enter into this Sublease and that the officer
signing this Sublease on its behalf is authorized to do so. This Sublease may be
signed in counterparts, each of which shall constitute an original but all of
which, when taken together, shall constitute one instrument. Sublandlord and
Subtenant each waives, to the extent permitted by law, the right to a jury trial
in any action or legal proceeding between the parties arising out of this
Sublease or Subtenant's occupancy of the Subleased Premises. Terms used with
initial capitalization and not defined herein shall have the meanings given to
them in the Lease.

 

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16. Attorneys' Fees. If either party hereto is made or becomes a party to any
litigation commenced by or against the other party involving the enforcement of
any of the rights and remedies of such party, or arising on account of the
default of the other party in the performance of such party's obligations
hereunder, then the prevailing party in such litigation, or the party becoming
involved in such litigation because of a claim against such other party, as the
case may be, shall be reimbursed by the other party for all costs and reasonable
attorneys' fees incurred by such party in such litigation.

 

17. Interest; Late Charges. Subtenant shall, on demand, pay interest on any
Fixed Rent, Additional Rent and other amounts payable by Subtenant to
Sublandlord pursuant hereto if any such amount is not received prior to its due
date. Interest will accrue at a fluctuating rate per annum equal to four percent
(4%) above the rate of interest announced by JPMorgan Chase Bank, N.A., or its
successor, from time to time as its prime or base lending rate (but in no event
at a rate in excess of the maximum legal rate permitted by law) from the date
such amounts of Fixed Rent, Additional Rent or other amounts first became due
hereunder until the same are received by Sublandlord. Notwithstanding the
foregoing, Subtenant shall not be responsible for the payment of the late charge
for the first late payment in any twelve (12) month period, provided same is
paid within five (5) days of the due date thereof. In addition, if any Fixed
Rent, Additional Rent or other amount payable by Subtenant to Sublandlord
pursuant hereto is not paid within fifteen (15) days after its due date,
Subtenant shall pay to Sublandlord a late charge of five cents ($.05) for each
Dollar of the overdue amount to defray Sublandlord's administrative costs for
handling the late payment. The right of Sublandlord to collect interest and late
charges shall be without derogation of any other right of Sublandlord hereunder.
The amounts payable under this Paragraph 17 shall be deemed to be Additional
Rent for purposes of this Sublease.

 

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18. Brokerage. Each party represents and warrants to the other that it has had
no dealings or communications with any broker or agent in connection with this
Sublease other than Jones Lang LaSalle Americas, Inc. and Newmark Grubb Knight
Frank (collectively, the Broker”). In the event any broker or agent (other than
the Broker) claims that it is entitled to a commission due to the acts of
Subtenant, Subtenant covenants and agrees to pay, hold harmless and indemnify
Sublandlord from and against any and all costs, expenses or liability incurred
by Sublandlord in connection with or relating to any claims for compensation,
commissions and fees asserted by such broker or agent with respect to this
Sublease or the negotiation hereof (including, without limitation, the cost of
legal fees and related expenses incurred in connection with defending against
such claims). In the event any broker or agent (including the Broker) claims
that it is entitled to a commission due to the acts of Sublandlord, Sublandlord
covenants and agrees to pay, hold harmless and indemnify Subtenant from and
against any and all costs, expenses or liability incurred by Subtenant in
connection with or relating to any claims for compensation, commissions and fees
asserted by such broker or agent with respect to this Sublease or the
negotiation hereof (including, without limitation, the cost of legal fees and
related expenses incurred in connection with defending against such claims). The
commission due to the Broker shall be paid by Sublandlord pursuant to a separate
agreement or agreements. Each party’s liability under this Section 18 shall
survive any expiration or termination of this Sublease.

 

19. Security Deposit.

 

(a) As security for the full and punctual performance by Subtenant of all of the
terms and conditions of this Sublease, Subtenant shall submit to Sublandlord
three (3) business days after Landlord delivers Landlord’s consent to this
Sublease (which delivery may be via electronic delivery) an irrevocable standby
letter of credit (such letter of credit and all renewals and replacements
thereof are referred to herein as the "Letter of Credit") in an amount equal to
nine (9) months average Fixed Rent (i.e. One Million One Hundred Eight Thousand
Seven Hundred Twenty Four and 90/100 Dollars ($1,108,724.90)) (the "Security
Deposit") in the form of "Exhibit D" which is attached hereto as an integral
part hereof and otherwise in form and substance satisfactory to Sublandlord. The
Letter of Credit shall be issued in the Borough of Manhattan, State of New York
to Sublandlord as the sole beneficiary thereunder by a bank or trust company
(the "Issuing Institution") acceptable to Sublandlord and shall, in each case,
have an expiration date of not earlier than one (1) year after its date of
issuance. The Letter of Credit shall not limit the number of times that
Sublandlord is entitled to draw thereunder and shall be transferable by
Sublandlord to any successor to Sublandlord's position as sublandlord under this
Sublease without cost to Sublandlord or such successor. The final Letter of
Credit established hereunder shall have an expiration date which falls no
earlier than December 15, 2027. Provided that (i) this Sublease shall be in full
force and effect and Subtenant shall not then be in default hereunder, and (ii)
Sublandlord has not previously drawn on the Security Deposit by reason of
Default on the part of Subtenant, the Security Deposit shall be reduced to an
amount equal to six (6) months average Fixed Rent hereunder (i.e., Seven Hundred
Thirty Nine Thousand One Hundred Forty Nine and 90/100 Dollars ($739,149.90)) at
the expiration of the fifth (5th) anniversary of the Commencement Date.
Sublandlord shall consent to a modification of the letter of credit to reduce
the amount thereof in accordance herewith (the form and substance of such
modification to be satisfactory to Sublandlord in its sole but reasonable
discretion) or shall accept a replacement letter of credit in the reduced amount
which is in form and substance reasonably satisfactory to Sublandlord and which
otherwise satisfies the requirements hereof and shall thereupon return to
Subtenant the original letter of credit then being held by Sublandlord.

 

26

 

  

(b) Whenever Subtenant is in default under this Sublease and such default has
continued after any applicable notice has been delivered to Subtenant and beyond
any applicable cure period or whenever Sublandlord has obtained a judgment
against Subtenant based on a claim arising out of this Sublease, Sublandlord may
draw the amount of such default or judgment, as the case may be, against the
Letter of Credit, to the extent required for the payment of any Fixed Rent or
Additional Rent or for any sum which Sublandlord may expend or be required to
expend by reason of Subtenant's default. The Letter of Credit may be drawn upon
by presentation to the Issuing Institution of a statement of any officer of
Sublandlord certifying that Sublandlord is entitled to draw such amount pursuant
to the terms of this Sublease. Subtenant shall have no right to demand that the
Security Deposit be applied to any of the obligations of Subtenant hereunder and
such application shall not constitute the cure by Subtenant of the underlying
default to which the Security Deposit is so applied.

 

(c) If any Letter of Credit required to be maintained under this Paragraph 19 is
not renewed or replaced on or before the thirtieth (30th) day prior to its
expiration with a renewal or replacement Letter of Credit meeting the
requirements of this Paragraph 19, then Sublandlord, at any time after such
thirtieth (30th) day and prior to such renewal or replacement, may draw on such
Letter of Credit for the undrawn amount of such Letter of Credit and deposit the
proceeds of such draw into an account maintained by Sublandlord (which account
may not include other funds of Sublandlord) and Sublandlord shall have the right
to draw on such proceeds whenever Sublandlord would have had the right to draw
on the Letter of Credit, if such Letter of Credit had been renewed or replaced.
Any renewal or replacement Letter of Credit shall be deposited with and held by
Sublandlord.

 

(d) In the case of every use, application or retention of the Security Deposit,
Subtenant shall, within ten (10) business days after demand, increase the Letter
of Credit by such sum, so that the Security Deposit shall be replenished to the
amount which Subtenant is required to maintain hereunder and the failure to do
so shall constitute an Event of Default hereunder without any notice or cure
period.

 

27

 

  

(e) As security for the full and punctual performance by Subtenant of all of the
terms and conditions of this Sublease, until such time as Subtenant delivers the
Letter of Credit to Sublandlord, first month’s rent in the amount of One Hundred
Seventeen Thousand Thirty Two Dollars and 08/100 ($117,032.08) shall be deemed
to be additional security hereunder, which amount may be applied as if same
where the Security Deposit hereunder.

 

20. Consent to Jurisdiction. Each of the parties hereto hereby irrevocably
consents and agrees that any legal action or proceeding with respect to this
Sublease may be brought in any of the Federal or State courts having subject
matter jurisdiction located in the Borough of Manhattan, The City of New York,
and, by its execution and delivery of this Sublease, each such party hereby (a)
accepts the non-exclusive jurisdiction of the aforesaid courts, (b) irrevocably
agrees to be bound by any final judgment (after any appeal) of any such court
with respect to this Sublease, and (c) irrevocably waives, to the fullest extent
permitted by law, any objection which it may now or hereafter have to the laying
of venue of any suit, action or proceeding with respect to this Sublease brought
in any such court, and further irrevocably waives, to the fullest extent
permitted by law, any claim that any such suit, action or proceeding brought in
any such court has been brought in an inconvenient forum.

 

21. Confidentiality. Subtenant and Sublandlord each agree that the other party
may not use the name or logo of the other party or any of their respective
subsidiaries, divisions and affiliates, in any press release, marketing
material, advertising campaign or other public document without the prior
written consent of the other party. No public announcement or press release
concerning this Sublease, its contents, transactions contemplated herein or the
negotiations related thereto may be issued by any party without the written
approval of all parties to this Sublease.

 

28

 

  

22. Due Authorization. Each party represents and warrants to the other party
that (i) each party, on its own behalf, has all necessary power and authority to
execute and deliver this Sublease, to perform its respective obligations
hereunder, and to consummate the transactions contemplated hereunder, (ii) no
other proceedings on the part of any party are necessary to authorize the
execution and delivery of this Sublease or to consummate the transactions
contemplated hereunder and (iii) this Sublease has been duly and validly
executed and delivered by each party hereto and shall constitute a valid, legal
and binding agreement of each of respective party, enforceable against each
party in accordance with and subject to the terms and conditions of this
Sublease.

 

23. Defined Terms. Terms used with initial capitalization and not defined herein
shall have the meanings given to them in the Lease.

 

 

 

[Remainder of Page Intentionally Left Blank]

 

 

 

 

 

 

29

 

 

IN WITNESS WHEREOF, this Sublease has been executed by the duly authorized
representatives of the parties as of the day and year first above written.

 

    SUBLANDLORD:           GBG USA INC.             By: /s/ Robert K. Smits    
      Name: Robert K. Smits           Title: EVP – Secretary

 

    SUBTENANT:           XCEL BRANDS, INC.             By: /s/ Robert D’Loren  
        Name: Robert D’Loren           Title: Chairman, CEO

 

 

30

 

 

EXHIBIT A

 

Floor Plan
of
Subleased Premises

 

A-1

 

 

EXHIBIT B

 

Fixed Rent

 

Subleased Premises

 

 

 

Period  Annual Fixed Rent   Monthly Fixed Rent  Commencement Date – day
preceding fifth anniversary of the Commencement Date (“First Date”) 
$1,404,385.00   $117,032.08  Day following First Date – Expiration Date 
$1,552,215.00   $129,351.25 

 

B-1

 

  

EXHIBIT C

 

HVAC UNITS

 

 

The Subleased Premises presently has two (2), forty (40) ton (Trane) units
covering the Subleased Premises, and one (1), one and a half (1 ½) ton (Trane)
unit covering the IDF room. All units are water-cooled and are tied into the
Water Tower.

 

C-1

 

 

EXHIBIT D

 

Form of Letter of Credit

 

  Date:   L/C No.:   Amount: $

 

GBG USA INC.
350 Fifth Avenue, 9th Floor
New York, New York 10118
Attention: Robert K. Smits

 

Ladies/Gentlemen:

 

We hereby establish our Irrevocable Standby Letter of Credit No. ___________ in
favor of GBG USA INC. for the account of XCEL BRANDS, INC. for a sum not
exceeding $______________, available by your drafts at sight on us effective
immediately and expiring at our counters at our close of business on
______________.

 

Drafts drawn hereunder must be accompanied by a statement signed by one of your
officers reading as follows: "The amount of the accompanying draft is due and
payable to GBG USA INC. by XCEL BRANDS, INC. under a certain Agreement of
Sublease between GBG USA INC., as sublandlord, and XCEL BRANDS. INC., as
subtenant."

 

Drafts drawn hereunder must indicate: "Drawn under Letter of Credit No.
_________ of [Name of Issuing Bank]."

 

It is a condition of this Letter of Credit that it shall be automatically
extended without amendment for further periods of one year from the present and
each future expiration date, unless, at least thirty (30) days prior to such
date, we shall send you notice in writing by registered or certified mail,
return receipt requested, that we elect not to renew this Letter of Credit for
such additional period. Any such notice will be effective two (2) days after
being sent by us, and thereafter you may draw draft(s) on us at sight for
amounts up to the remaining balance of this Letter of Credit on or before the
then applicable expiration date, and such draft(s) need not be accompanied by
any statement.

 

This Letter of Credit is transferable in its entirety to any assignee or
transferee of your interest in the Agreement of Sublease referred to above
without any fee or charge on your part or on the part of the transferee.

 

Partial drawings under this Letter of Credit are permitted. The amount and date
of presentation of any draft drawn and presented pursuant to the terms of this
Letter of Credit shall be noted on this Letter of Credit by us. After making
such notation, this Letter of Credit shall be returned immediately to you,
unless any such draft presented and paid shall have exhausted this credit, in
which case this Letter of Credit shall be retained by us.

 

We hereby engage with the drawers, endorsers and bona fide holders of drafts
drawn under and in compliance with the terms of this Letter of Credit that such
drafts will be duly honored if presented for payment at our office located at
___________________________________ or at our principal office in New York City
prior to the time of expiration hereof. Such drafts will be paid in immediately
available funds before 2:00 p.m. New York time on the Banking Day after the day
on which such draft is so presented. "Banking Day" means a day on which
commercial banks are open for business in New York.

 

This Letter of Credit is subject to the Uniform Customs and Practice for
Documentary Credits (2007 Revision) of the International Chamber of Commerce
(Publication No. 600).

 

  Very truly yours,   [Name of Issuing Bank]           Authorized Signature

 

D-1

 

 

 

EXHIBIT E

 

List of Included Property

 

E-1

 

 

 

EXHIBIT F

 

Lease

 

F-1