EX-10 13 10-13_151rent.htm

JAPAN AIRLINES MANAGEMENT CORP. (JMC)

AS

SUBLESSOR

AND

SUBLESSEE

BALTIA AIR LINES

SUBLEASE AGREEMENT

EFFECTIVE: ON OR ABOUT SEPTEMBER 1, 2011
TERMINATION: NOVEMBER 30, 2015

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SUBLEASE AGREEMENT

THIS AGREEMENT OF SUBLEASE made as of this 1st day of June 2011 by and between
Japan Airlines Management Corp. (the "Sublessor") a New York corporation, having
and place of business at Building No. 14, John F. Kennedy International Airport
(the "Airport"), in the County of Queens, City and State of New York and Baltia
Air Lines (the "Sublessee") a New York Corporation having its principal office
at Building 151 Room 361 JFK Inti Airport, Jan1aica, NY 11430

WITNESSETH

WHEREAS, Sublessor is the tenant under a certain Agreement of Lease between the
Port Authority of New York and New Jersey ("the Port Authority") Lease No. A
YB-970 (as the same may hereafter be amended, the "Lease") dated June 4, 1991
and covering certain premises at Building No, 14, John F. Kennedy International
Airport and as more particularly described in said Lease.

WHEREAS, by sublease dated June 4, 1991 (the "Master Sublease"), Sublessor
subleased to Japan Airlines Company, Ltd. (together with its successors and
assigns, "JAL") a certain portion of the Site, which is called as Building No.
151 and Building No. 14, as described therein (hereinafter referred to as the
"JAL Premises");

WHEREAS, by sublease dated as of June 1, 1991 (the "Company Sublease"), JAL
subleased to the New York City Industrial Development Agency (the "IDA") the
entire JAL Premises;

WHEREAS, by sublease dated as of June 1, 1991 (the "IDA Sublease"), the IDA then
Subleased back to JAL the entire JAL Premises;

WHEREAS, by sublease dated as of September 1, 1991 (the "JMC Sublease"), JAL
subleased back to Sublessor a portion of the J AL Premises as described therein
(as the same may change pursuant to the terms of JMC Sublease, the "JMC
Premises"); and

WHEREAS, Sublessee desires to lease certain space at said .TMC Premises from the
Sublessor.

NOW, THEREFORE, in consideration of the rents, covenants and mutual agreements
hereinafter contained, Sublessor and Sublessee hereby covenant and agree as
follows:

1. Subletting. Sublessor hereby sublets to Sublessee and the Sublessee hereby
hires and takes from the Sublessor certain office space located on the 2"d floor
of approximately 9,219 rentable square feet and 2672 rentable sf of aircraft
maintenance space in Bldg 151 subject to the terms and conditions of the Lease.

2. Term. The term of this Sublease shall commence, subject to the consent of the
Port Authority, on September 1, 2011, (the "Commencement Date") and, unless
earlier terminated by either party as herein provided or unless extended in
accordance with Section 52 hereof, and shall terminate on November 30, 2105. Not
withstanding the foregoing, either party shall have the right to terminate this
Sublease for any reason (24) months after Commencement Date by giving notice of
such termination sixty (60) days prior to such Early Termination Date; provided
however, that if the Sublease is terminated by the Port Authority for any reason
whatsoever prior to said expiration date, this Sublease shall thereupon
terminate on the day proceeding such 3

termination by the Port Authority.

3. Rent. The Sublessee agrees to pay to Sublessor Base Rental at the rate of$
324,029.75 per annum as more particularly described in Appendix I, in lawful
money of the United States, in equal monthly installments in advance of the
first day of each and every calendar month for the period September 1, 20 11 to
August 31, 2012. Effective September 1, 2012 and thereafter the rent will be
increased 4% per year on the first day of September of each year.

4. Use. The sublease shall be bound by and subject to the terms, covenants,
conditions and provisions of the Lease as to Sublessee's occupancy and use of
the Subleased Premises under this Sublease Sublessee agrees to and shall use the
Subleased Premises for the following purposes and activities only:

(a) As to the office space:

(i) Business and administrative offices in connection with Sublessee's business.

(ii) For the training ofpersonnel employed or to be employed by Sublessee in
connection with Sublessee's operation.

(iii) Any other lawful purpose which does not conflict with the Lease.

(b) Access to the Subleased Premises, subject to the provisions of paragraph 43
of this Sublease.

(i) For the parking of automobiles operated by officers, employees and business
invitees of Sublessee in connection with all purposes and activities defmed in
this Section 4.

(ii) Sublessee will have access to the Subleased Premises twenty-four hours,
seven days a week.

5. Alterations. Sublessee has accepted the Subleased Premises for occupancy in
their present condition. Any other work required to prepare the Subleased
premises for occupancy shall be prepared and completed by Sublessee at its sole
cost and expense. Sublessee, however shall not make any modifications or
alterations on the Subleased Premises without prior written consent of the
Sublessor. Any and all such alterations and modifications shall be made at the
sole cost and expense of Sublessee.

6. Services.

(a) Electricity and Gas.

(i) As long as Sublessee is not in default under any provision of this Sublease,
Sublessor shall make available reasonable quantities of electricity and gas for
usage by the Sublessee in the Subleased Premises, to the extent made available
to Sublessor by the Port Authority, or otherwise.

(ii) Such electricity and gas used by Sublessee shall be metered or sub-metered
by the Port Authority or other supplier and Sublessee shall be billed directly
by the Port Authority or other supplier for such consumption of gas and
electricity; provided, however, should such electricity or gas not be metered or
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sub-metered, Sublessee shall pay Sublessor its Pro Rata Share of consumption
thereof.

(b) Water. To the extent furnished and supplied by the Port Authority or other
supplier, the Sublessor shall furnish and supply cold water in reasonable
quantities for use by Sublessee in the Subleased Premises. Sublessee shall pay
Sublessor promptly its Pro Rata Share of the cost of such water, as charged and
billed by the Port Authority.

(c) Sewerage. Sewerage service as furnished by the City of New Y ark. The
Sublessee shall pay Sublessor promptly its Pro Rata Share of charges imposed or
assessed against the Port Authority and charged to the Sublessor with respect to
the use and occupancy of the Leased Premises of which the Subleased Premises
form a part.

(d) Heating. Ventilation, and Air Conditioning The Sublessor shall furnish and
supply heating, ventilation and air conditioning ("HV AC") in reasonable
quantities for use by Sublessee in the Subleased Premises. The HVAC will be
available twenty-four hours per day, seven days per week. Cost is included as
part of the electricity and gas cost. Neither the Sublessor nor the Port
Authority shall be under any obligation to supply utility services under (a) and
(b) above, if and to the extent and during any period that supplying of any such
service or the use of any component necessary therefore shall be prohibited or
rationed by any federal, state or municipal law, rule, regulation, requirement,
order or direction and if the Port Authority deems it in the public interest to
comply therewith, even though such law, rule, regulation, requirement, order or
direction may not be mandatory on the Port Authority as a public agency.

No failure, delay or interruption in making the foregoing utility services
available (whether or not a separate charge is made therefore) shall be or be
construed to be an eviction of the Sublessee or grounds for any diminution or
abatement of rental or (unless resulting from the negligence or willful failure
of the Sublessor or the Port Authority) shall be grounds for any claims by the
Sublessee for damages, consequential or otherwise.

7. Obligations of Sublessee.

essee shall conduct its operations hereunder in an orderly and proper manner, so
as not to unreasonably annoy, disturb or be offensive to others at or off the
Airport. The Sublessee shall take all reasonable measures to eliminate
vibrations originating on the Subleased Premises tending to damage any
equipment, structure, building or portion of a building which is on the
Subleased Premises,

essee shall use its best efforts to conduct all its operations at the Subleased
Premises in a safe and careful manner.

r and the Port Authority shall have the right to object to the Sublessee
regarding the conduct and demeanor of the employees of the Sublessee whereupon
the Sublessee will take all steps reasonably necessary to remove the cause of
the objection. If requested by the Port Authority the Sublessee shall supply and
shall require its employees to wear or carry badges or other suitable means of
identification, which shall be subject to the prior and continuing approval of
the General Manager of the Airport.

Lessee shall take all necessary measures to adopt and maintain strict security
measures with respect to all its operations in and about the Subleased Premises
and in this respect shall maintain such security in accordance with Sublessee's
own internal regulations, the rules and regulations of Sublessor, the Port
Authority and such governmental agencies as may have jurisdiction. Such security
measures taken in and about the Subleased Premises shall be performed by
Sublessee's personnel or by a contractor duly approved by the Port Authority to
perform cargo security services. Expenses arising from such security measure
shall be at the sole expense of Sublessee. Notwithstanding the foregoing
Sublessee shall also pay Sublessor its Pro Rata Share of security and security
maintenance expenses undertaken by Sublessor with respect to common areas of the
Leased Premises as required under Section II, hereof.

(e) The Sublessee shall remove from the Airport or otherwise dispose of, in a
manner approved by the General Manager of the Airport, all garbage, debris, and
other waste materials (whether solid or liquid) arising out of the occupancy of
the Subleased Premises or out of operations at the Subleased Premises. Any such
solid waste which may be temporarily stored in the open, shall be kept in
suitable garbage and waste receptacles, the same to be made of metal or other
suitable material, and equipped with tight fitting covers, and to be of a safe
and proper design in order to contain whatever material may be placed therein.
The Sublessee shall use extreme care when removing all such waste materials, and
shall effect such removal at such times and by such means as provided by the
Port Authority. No such garbage, debris, or other waste materials shall or be
permitted to be thrown, discharged or deposited into or upon the waters at or
bounding the Airport.

(f) In addition to compliance by the Sublessee with all laws, ordinances,
governmental rules, regulations and orders now or at any time in effect during
the term of the subletting hereunder which as a matter of law are applicable to
the operation, use or maintenance by the Sublessee of the Subleased Premises or
the operations of the Sublessee under this Sublease (except as otherwise
specifically provided herein), Sublessee agrees that it shall exercise the
highest degree of safety and care and shall conduct all its operations under the
Sublease and shall operate, use and maintain the Subleased Premises in
accordance with the highest standards in the air transportation industry and in
such manner that there will be at all times a minimum of air pollution, water
pollution or any other type of pollution and a minimum of noise emanating from,
arising out of or resulting from the operation, use or maintenance of the
Subleased Premises by the Sublessee and from the operations of the Sublessee
under this Sublease, considering the highest standards in the air transportation
industry.

8. Prohibited Acts.

(a) The Sublessee shall commit no unlawful nuisance, waste or injury on the
Subleased Premises and shall not do or permit to be done anything which may
result in the creation or commission or maintenance of such nuisance, waste or
injury on the Subleased Premises.

(b) The Sublessee shall not create nor permit to be caused or created upon the
Subleased Premises, any obnoxious odors or smokes, or noxious gases or vapors.
The creation of exhaust fumes by the operation of internal-combustion engines,
so long as such engines are maintained and are being operated in a proper
manner, shall not be a violation ofthis paragraph (b).

(c) The Sublessee shall not do or permit to be done anything which may interfere
with the effectiveness or accessibility of the drainage and sewerage system,
water system, communications system, fuel system, electrical, fire-protection
system, sprinkler system, alarm system, fire hydrants and hoses and other
systems, if any, installed or located on, under, or in the Subleased Premises.
Any construction work being performed by the Sublessee pursuant to and in
accordance with Section 5 hereof will not be deemed a violation of the
foregoing, but the same shall not relieve or release the Sublessee from its
responsibility of making the aforesaid systems accessible and of not interfering
with said systems.

(d) The Sublessee shall not do or permit to be done any act or thing upon the
Subleased Premises (1) which will invalidate or conflict with any fire
insurance, extended coverage or rental insurance policies covering the Subleased
Premises or any part thereof, or the Airport or any part thereof, or (2) which
in the opinion of the Port Authority, may constitute an extra hazardous
condition, so as to increase the risks normally attendant upon the operations
contemplated by or mentioned in Section 4 hereof. The Sublessee shall promptly
observe, comply with the provisions of any and all present and future rules and
regulations, requirements, orders and directions of The National Board of Fire
Underwriters and the Fire Rating Organization of New York, or of any other board
or organization exercising or which may exercise similar functions, which may
pertain or apply to the operations of the Sublessee on the Subleased Premises,
and the Sublessee shall, subject to and in accordance with the provisions of
Section 9 and ll hereof, make any and all structural and non-structural
improvements, alterations or repairs of the Subleased Premises required at any
time hereafter by any such present or future rule, regulation, requirement,
order or direction. If by reason of any failure on the part of the Sublessee to
comply with the provisions of this paragraph any fire insurance rate, extended
coverage or rental insurance rate on the Subleased Premises or any part thereof,
or on the Airport or any part thereof, shall at any time be higher than it would
be if the Subleased Premises were properly used for the purposes permitted by
Section 4 hereof, then the Sublessee shall pay to the Sublessor, as an item of
additional rental, that part of all insurance premiums paid by the Port
Authority which shall have been charged because of such violation or failure by
the Sublessee.

(e) The Sublessee shall not dispose of nor permit any one to dispose of any
waste material

(whether liquid or solid) by means of the toilets, manholes, sanitary sewers or
storm sewers in the Subleased Premises or on the Airport except after treatment
in installations or equipment included in plans and specifications submitted to
and approved by the Port Authority.

(f) The Sublessee shall not keep or store during any 24-hour period flrnnmable
liquids within any enclosed portion of the Subleased Premises (other than in
rooms or areas expressly constructed for the storage of such liquids) in excess
of the Sublessee's working requirements during the said 24-hour period. Any such
liquids having a flash point of less than ll0 F shall be kept and stored in
safety containers of a type approved by the Underwriters Laboratories or the
Factory Mutual Insurance Association.

(g) The Sublessee shall not operate any engine or any item of automotive
equipment in any enclosed space on the Subleased Premises unless such space is
adequately ventilated and unless such engine or item of automotive equipment is
equipped with a proper spark arresting device which has been approved by the
Port Authority.

(h) The Sublessee shall not install, maintain or operate, or permit the
installation, maintenance or operation on the Subleased Premises of any
vending-machine or device designed to dispense or sell food, beverages, tobacco,
tobacco products or merchandise of any kind whether or not included in the above
categories, or of any restaurant, cafeteria, kitchen, stand or other
establishment of any type for the preparation or dispensing of food. beverages,
tobacco, tobacco products, or merchandise of any kind whether or not included in
the above categories, or of any equipment or devices for the furnishing to the
public of service of any kind including therein, without limitation thereto,
telephone pay stations.

(i) The Sublessee shall not overload any floor and shall repair any floor,
including supporting members, and any paved area damaged by overloading. Nothing
in this paragraph (i) or elsewhere in this Sublease shall be or be construed to
be a representation by the Port Authority of the weight any floor will bear. G)
The Sublessee shall not fuel or defuel its automotive vehicles or other
equipment in any enclosed portions of the Subleased Premises.

(k) The Sublessee shall not use any cleaning materials having a harmful
corrosive effect on any part of the Subleased Premises.

(I) The Sublessee shall not use or permit the use of any truss or structural
supporting member of the building or roof or any part thereof of any building on
the Subleased Premises for the storage of any material or equipment, or to
hoist, lift, move or support any material or equipment, or other weight or load,
by means of said trusses or structural supporting members.

9. Compliance with Governmental Requirements.

(a) Subject to the Lease, the Sublessee shall comply with all laws and
ordinances and governmental rules, regulations and orders now or at any time
during the term of this Sublease, which as a matter of law are applicable to or
which afiect the operations of the Sublessee at the Subleased Premises hereunder
or the occupancy or use of the Subleased Premises.

(b) The Sublessee shall procure from all governmental authorities having
jurisdiction over the operations of the Sublessee hereunder and shall maintain
in full force and effect throughout the term of this Sublease all licenses,
certificates, permits or other authorization which may be necessary for the
conduct of such operations. "Governmental authority" shall not be construed as
intending to include The Port Authority of New York and New Jersey, under this
Sublease.

(c) The obligation of the Sublessee to comply with governmental requirements
with respect to the Subleased Premises is provided herein for the purpose of
assuring proper safeguards for the protection of persons and property on the
Subleased Premises. Such provision is not to be construed as a submission by the
Port Authority to the application to itself of such requirements or any of them.

(d) The Sublessee shall pay all license, certification, permit and examination
fees, duties, excises, taxes and all other governmental charges of every
character, present and future, which may be assessed, levied, exacted or imposed
on the Sublessee's property, operations or occupancy hereunder or on any
property whatsoever which may be received at the Subleased Premises or on the
gross receipts, rental or income there from including any penalties or interest
thereon and any taxes on personal property which may be assessed, levied,
exacted, or imposed, and the Sublessee shall make all applications and reports
required in connection therewith. If any bond or other undertaking shall be
required by any governmental authority in connection with any of the operations
of the Sublessee or any property received or exhibited by the Sublessee at the
Subleased Premises, the Sublessee shall furuish the same and pay all expenses in
connection therewith. The Sublessee shall also pay any and all franchise, excise
and other taxes, fees and other charges assessed, levied or imposed on the
Sublessee. No alleged or purported immunity or exemption from any taxes or fees
described in this paragraph available to the Port Authority shall be grounds for
or excuse non-payment thereof by the Sublessee.

(e) The Sublessee shall pay its Pro Rata Share of any and all real estate taxes,
if any, or any other tax, assessment, levy, fee or charge, general or special,
ordinary or extraordinary, foreseen or unforeseen, of whatever nature or kind
which during the term of the subletting hereunder may be levied, assessed,
imposed or charged by any taxing or other governmental authority. The
Sublessee's obligation hereunder shall include any such as are levied, assessed,
imposed or charged upon the Sublessor or the Port Authority and any payments
made by the Sublessor or the Port Authority to the taxing authority, by
agreement or otherwise, in lieu of any tax, assessment, levy or charge. If any
such tax, assessment, levy or charge, or payment in lieu thereof, is paid
directly by the Port Authority, the Sublessee shall pay the Port Authority its
Pro Rata Share therefore. 10. Rules and Regulations.

(a) The Sublessee covenants and agrees to observe and obey ( and to require its
officers, employees, guests, invitees, and those doing business with it to
observe and obey) the existing Rules and Regulations of the Port Authority and
such reasonable future Rules and Regulations and amendments and supplements to
existing Rules and Regulations for the government of the conduct and operations
of the Sublessee and others on the Subleased Premises as may from time to time
during the subletting be promulgated by the Port Authority for reasons of
safety, health, sanitation or good order. The obligation of the Sublessee to
require such observance and obedience on the part of its guests, invitees and
business visitors shall apply only while such persons are on the Subleased
Premises.

(b) The Sublessor shall furnish Sublessee with a copy of the Rules and
Regulations of the Port Authority prior to the Commencement Date and reasonable
advance notice of future changes to the Rules and Regulations of the Port
Authority. 11. Care. Maintenance, Rebuilding and Repair.

(a) The Sublessee shall repair, replace, rebuild and paint all or any part of
the Subleased Premises which may be damaged or destroyed by the acts or
omissions of the Sublessee or by those of its officers or employees or of other
persons on or at the Subleased Premises with the Sublessee's consent (but, as to
areas outside of the Subleased Premises, only by the acts or omissions of the
Sublessee or its officers or employees or its business guests). Sublessee should
not be obligated to repair areas outside the Subleased Premises.

(b) The Sublessee shall throughout the term of the subletting hereunder assume
the entire responsibility and shall relieve the Sublessor and the Port Authority
from all responsibility for all repair, rebuilding and maintenance whatsoever in
the Subleased Premises whether such repair, rebuilding or maintenance be
ordinary or extraordinary, partial or entire, foreseen or unforeseen, structural
or otherwise, and without limiting the generality of the foregoing, the
Sublessee shall

(l) Keep at all times in clean and orderly condition and appearance the
Subleased Premises and all of the Sublessee's fixtures, equipment and personal
property, which are located in any part of the Subleased Premises which is open
to or visible by the general public;

(c) In addition to the foregoing obligations of the Sublessee to repair,
replace, rebuild, paint and clean the Subleased Premises, and Sublessee's
obligations under Section 7 of this Sublease, Sublessee shall pay Sublessor, as
Additional Rent, and Operating & Maintenance fee referenced in this sublease
comprise the O&M rates set forth in Appendix I, of $57,195.71 per annum, for
expenses incurred in the use and occupancy of the common area of the Leased
Premises of which the Subleased Premises form a part.

The following items are items included as part of the Operations & Maintenance
Fee:

 1. Building maintenance which includes maintenance of common areas, tenant area
    and includes preventative maintenance, routine painting of office and
    warehouse areas, routine repairs and replacement of items due to wear and
    tear
 2. Security services as pertains to the Lobby Guard, the Guard Posts and
    maintenance of CCTV System.
 3. Landscape maintenance
 4. Snow removal
 5. Proration of liability insurance for common areas and administrative costs.

The following items are items that are not included as part of the Operations &
Maintenance Fee:

 1. Cleaning services to be paid directly by the tenant to the cleaning company;
 2. Electricity, gas and sewer to be prorated based on square footage occupied
    by the tenant and remitted to JMC at direct cost. The Sublessee will pay a
    monthly fee (Budget Plan) of$4,460.00 to be effective September 1, 2011
    until December 31, 2011. At the end of the year the Sublessor will either
    bill the Sublessee for additional costs that exceed the total of the budget
    payments made or reimburse the Sublessee for any over payments. Commencing
    with January 2012 and each January thereafter, the Sublessor will advise the
    Sublessee of any increase or reductions of the monthly rate for that year.
    With respect to utilities, the first monthly payment shall be due on
    September 1, 2011 as stated in the ("Schedule ofRates).
 3. Repair for damage to any part of the facility caused by employee( s) of the
    Subleasee or its customer contractor or vendor (normal wear and tear
    excepted).
 4. Replacement and recharging of fire extinguishers, and
 5. Alterations requested by the tenant

(d) The obligation of the Sublessee with respect to damage or destruction on any
part of the Airport or the premises other than the Subleased Premises as set
forth in paragraph (a) hereof (in the event that damage or destruction caused by
the acts or omissions of the Sublessee or by those of its employees, customers,
guests or invitees, or of other persons doing business with the Sublessee, is
covered by any contract of insurance under which the Port Authority is the
insured) is hereby released to the extent that the loss is recouped by actual
payment to the Port authority of the proceeds of such insurance; provided,
however, that, if this release shall invalidate any such policy of insurance or
limit or void the Port Authority's rights thereunder, then this release shall be
void and of no effect; and provided further that this release shall be void and
of no effect if and to the extent that such damage or destruction is covered
under the Port Authority's self-insurance plan.

(e) Anything in this section to the contrary notwithstanding, Sublessee shall
have no obligation to repair, maintain or replace any exterior portion of the
building of which the Subleased Premises form a part, nor shall Sublessee have
any obligation to repair, maintain or replace the whole or any part of the roof
or the foundation of the building of which the Subleased Premises form a part.

12. Property Insurance

(a) The Sublessor shall during the term of this Sublease maintain and keep in
full force and effect insurance which satisfies Section ll(a) of the Lease ( or
self insurance to the extent it can be utilized to cover such risk under said
Section).

(b) Sublessee acknowledges that the insurance Sublessor maintains pursuant to
paragraph (a) above shall not be required to cover Sublessee's trade fixtures or
equipment, any of Sublessee's vehicles used on the Site, any furniture,
furnishings, or other personal property of Sublessee located on the Site
(collectively, "Sublessee Property" ). Sublessee shall maintain and keep in full
force and effect during the term of this subletting, property insurance insuring
the Sublessee Property against the risks described in Section 11 (a) of the
Lease in an amount equal to the full replacement value of Sublessee's Property.
To the extent such Sublessee Property includes property which is required to be
insured under Section 11(a) of the Lease, Sublessee shall obtain and maintain
such insurance in accordance with all of the terms and conditions of Section 11
of the Lease and shall at or prior to the time the same is required to be
delivered to the Port Authority under Section 11(c) of the Lease, deliver to the
Sublessor the policies or certificates required to be delivered thereunder. At
the Commencement Date, and upon expiration of the term of Sublessee's policies
required as aforesaid, Sublessee shall deliver to Sublessor certificates or
other evidence of the existence of the insurance coverage required under this
paragraph (b).

(c) In the event the Subleased Premises or any part thereof shall be damaged by
any casualty against which insurance is carried pursuant to this Section, the
Sublessee shall promptly furnish to the Sublessor such information and data as
may be necessary to enable the Port Authority to adjust the loss.

(d) Each party agrees to use reasonable efforts to include in each of its
insurance policies a waiver of the insurer's right of subrogation against the
other party, or in lieu of such waiver (a) an express agreement that such policy
shall not be invalidated if the assured waives the right of recovery against any
party responsible for a casualty covered by the policy before the casualty or
(b) any other form of permission for the release of the other party. If such
waiver, agreement or permission shall not be, or shall cease to be, obtainable
without additional charge or at all, the insured party shall so notify the other
party promptly after learning thereof. In such case, if the other party shall so
elect and shall pay the insurer's additional charge therefore, such waiver,
agreement or permission shall be included in the policy, or the other party
shall be named as an additional insured in the policy.

(e) Each party hereby releases the other party with respect to and agrees not to
make any claim (including a claim for negligence) which it might otherwise have
against the other party for loss, damage or destruction with respect to its
property (including loss covered by rental value or business interruption
insurance ) occurring during the term of this subletting to the extent to which
it is insured under a policy or policies covering such loss, damage or
destruction and containing a waiver of subrogation or permission to release
liability as provided in paragraph (e) above.

(f) The waiver of subrogation or permission for release referred to in paragraph
(e) above shall extend to the contractors and agents of each party and its and
their officers and employees and, in the case of Sublessee's insurance coverage,
shall also extend to JAL, its agents and contractors and its officers and
employees, but only if and to the extent that such waiver or permission can be
obtained without additional charge (unless such party shall pay such charge).
The release provided for in paragraph (e) above shall likewise extend to JAL,
such agents, contractors, officers and employees; of and to the extent that such
waiver or permission is effective as to them. Except as otherwise provided in
paragraphs (a) and (b) above, nothing contained in this Section 12 shall be
deemed to impose upon either party any duty to procure or maintain any of the
kinds of insurance referred to therein or any particular amounts or limits of
any such kinds of insurance.

13. Damage and Destruction

(a) If the Subleased Premises, any of the Common Facilities and/or any of the
building systems material to Sublessee's effective use of the Subleased Premises
in its business during the term of this Sublease shall be partially or totally
damaged or destroyed by fire or other casualty, the Sublessor shall, subject to
its rights under paragraph (c) below and the other terms and conditions of this
paragraph (a), repair the damage and restore and rebuild the Subleased Premises,
such Common Facilities and/or building systems as nearly as may be reasonably
practical to their condition and character immediately prior to such damage or
destruction, with reasonable diligence. Notwithstanding the foregoing, Sublessor
shall have no obligation to repair, restore and rebuild the Subleased Premises,
such Common Facilities and/or building systems (x) until the proceeds of any
insurance covering the same have been adjusted and made available to Sublessor
for such repair, restoration or rebuilding and Sublessor shall have obtained all
required approvals from the Port Authority to commence and proceed with such
repair, restoration or rebuilding, (y) at any time, in the event such fire or
other casualty is not fully covered (other than as to a deductible) by insurance
(other than where such fire or casualty would have been fully covered by
insurance if Sublessor had obtained the insurance required by paragraph (a) of
Section 12 hereof, but Sublessor failed to satisfy its obligation to so obtain
the same) and Sublessor notifies Sublessee, within ninety (90) days after such
fire or other casualty, that it elects not to repair, restore or rebuild the
Subleased Premises, such Common Facilities and/or any building systems by reason
thereof and (z) to the extent the Port Authority is obligated to (or is
permitted to and so elects to) repair restore or rebuild the same pursuant to
the terms of the Lease (including the portion thereof referred to as the Port
Authority Sublease). If Sublessor delivers to Sublessee a notice described in
clause (y) above electing not to repair rebuild or replace any part of the
demised premises. Common Facilities and/or building systems, Sublessee, within
thirty days thereafter, may elect by notice to Sublessor to terminate this
Sublease. In connection with any repair, restoration and/or rebuilding described
in this paragraph (a), Sublessor may redesign portions of the Site and the
facilities thereon and change the plans and specifications therefore, provided,
such redesigo and changes do not materially impair Sublessee's ability to use
the Subleased Premises and the Site for its air cargo business, does not
materially reduce the value of its leasehold Subleased Premises or materially
increase Sublessee's cost of repairing restoring or replacing the Sublessee
Property in the Subleased Premises.

(b) If the Subleased Premises, any of the Common Facilities and/or any of the
building systems material to Sublessee's effective use of the Subleased Premises
during the term of this Sublease shall be partially or totally damaged or
destroyed by fire or other casualty not attributable to the fault, negligence or
misuse of the Subleased Premises by Sublessee, its agents or employees under the
provisions of this Sublease, then the rents payable hereunder shall be abated to
the extent that the Subleased Premises shall have been rendered untenantable
from the date of such damage or destruction to the date the damage shall be
substantially repaired, restored or rebuilt (or until thirty (30) days after the
date Sublessor elects not to repair, restore or rebuild the same by notice
delivered in accordance with clause (y) of Paragraph (a) above). Should
Sublessee reoccupy a portion of the Subleased Premises during the period that
the repair, restoration, or rebuilding is in progress and prior to the date that
the same are made completely tenantable, rents allocable to such portion shall
be payable by Sublessee from the date of such occupancy to the date the
Subleased Premises are made tenantable.

(c) (1) In case of substantial damage or destruction to the Subleased Premises,
any of the Common Facilities and/or any of the building systems material to
Sublessee's efficient use of the Subleased Premises during the term of this
Sublease, Sublessee may terminate this Sublease by notice to Sublessor if
Sublessor cannot substantially complete or has not substantially completed
(except to the extent Sublessor has elected not to complete the same pursuant to
clause (y) of paragraph (a) above) the required repairs and the restoration and
rebuilding of the Subleased Premises, such Common Facilities and/or such
building systems within twelve (12) months from the date of such damage or
destruction, and such additional time after such date (but not to exceed three
(3) months as shall equal the aggregate period Sublessor may have been delayed
in doing so by adjustment of insurance, delays of the Port Authority or other
events of Force Majeure (as described in Section 42 hereof).

(2) In case the Cargo Terminal shall be so damaged by such force or other
casualty (whether or not the Subleased Premises shall have been damaged by such
fire or other casualty ), (A) so as to require an expenditure, as reasonably
estimated by a reputable architect, construction manager or contractor
designated by Sublessor, of more than frfty percent (50%) of the full insurable
value of the Cargo Tenninal immediately prior to the force or other casualty,
(B) where the time to substantially complete the required repair, restoration or
rebuilding, as reasonably estimated by a reputable architect, construction
manager or contractor designated by Sublessor, is more than 12 months from the
date of such damage or destruction,

(C) if less than one year remain in the term of the Sublease, so as to required
an expenditure, as reasonably estimated by a reputable architect, construction
manager or contractor designated by Sublessor, of more than 20% of the full
insurable value of the Cargo Terminal immediately prior to the force or other
casualty or (D) if less than one year remains in the term of the Sublease, where
the time to substantially complete the required repair, restoration or
rebuilding of the Cargo Terminal, as reasonably estimated by a reputable
architect, construction manager or contractor designated by Sublessor is more
than six months from the date of such damage or destruction, then, in any such
case, Sublessor or Sublessee may, at its option, terminate this Sublease and the
term and estate hereby granted, by notifying the non-terminating party in
writing of such termination, within 60 days after the date of such damage or
destruction.

(3) In the event that a notice of termination shall be given pursuant to
subparagraph (l) or (2) of this paragraph (c) or as provided in paragraph (a)
above, then this Sublease and the term and estate hereby granted shall expire as
of the date of such termination with the same effect as if that were the date
thereinbefore set for the expiration of the term hereof, and the Base Rental and
additional rent due and to become due hereunder shall be apportioned as of such
date, if not earlier abated pursuant to paragraph (b) above. Notwithstanding the
foregoing, no termination by reason of the events described in clauses (C) and
(D) of subparagraph (2) of this paragraph (c) shall be effective if, within ten
days after receipt of Sublessor's notice of termination, Sublessee has a right
to, and effectively extends the term of this Sublease beyond its then expiration
date pursuant to the terms of Section 52 hereof, unless such notice of
termination could also have been given under clause (A) or (B) of subparagraph
(2) of this paragraph (c). Nothing contained in this paragraph (c) or paragraph
(a) above shall relieve Sublessee from any liability to Sublessor in connection
with any damage to the Cargo Terminal by fire or other casualty if Sublessee
shall be legally liable in such respect.

(d) No damages, compensation or claim shall be payable by Sublessor for
inconvenience, loss of business or annoyance arising from any fire or other
casualty (even if arising out of Sublessor's willful negligence) or from any
repair or restoration of any portion of the Subleased Premises or of the Cargo
Terminal, Common Facilities or building systems therein pursuant to this Section
13. Subject to the Port Authority adjusting the insurance claim and making the
insurance proceeds available therefore, and subject to the Port Authority
approving the work required to perform the same, Sublessor shall use reasonable
efforts to effect such repair or restoration promptly and in such manner as not
to unreasonably interfere with Sublessee's use and occupancy.

(e) Sublessor will not carry insurance of any kind on Sublessee Property and,
except as provided by law, shall not be obligated to repair any damage thereto
or replace the same.

(f) The parties hereby stipulate that neither the provisions of Section 227 of
the Real Property Law of the State of New York nor those of any other similar
statute shall extend or apply to this Sublease.

14. Indemnity and Liability Insurance

(a) (1) The Sublessee shall indemnify and hold harmless the Port Authority, its
Commissioners, officers, employees and representatives, and Sublessor, its
officers, employees and representatives, from and against and shall reimburse
the Port Authority for costs and expenses including legal expenses incurred in
connection with the claims herein described and the Sublessor for costs and
expenses including reasonable attorney's fees actually incurred in connection
with the defense of all claims and demands of third persons including but not
limited to claims and demands for death or personal injuries, or for property
damages, arising out of any default of the Sublessee in performance or observing
any term or provision of this Sublease, or out of the use or occupancy of the
Subleased Premises by the Sublessee or by others with its consent or out of any
of the acts or omissions of the Sublessee, its officers, employees, guests,
representatives, customers, contractors, invitees, business visitors and other
persons who are doing business with the Sublessee or who are at the Subleased
Premises with the consent of the Sublessee, or arising out of the acts or
omissions of the Sublessee, its officers and employees elsewhere at the Airport
(and as to areas outside of the Sublease Premises only by the acts or omissions
of the Sublessee, its officers, employees, business guests), including claims
and demands of the City of New York from which the Port Authority derives its
rights in the Airport, for indemnification, arising by operation oflaw or
through agreement of the Port Authority with the said City.

(2) The Sublessee shall at its own expense defend any suit based upon any such
claim or demand (even if such suit, claim or demand is groundless, false or
fraudulent), and in handling such it shall not, without obtaining express
advance permission from the General Counsel of the Port Authority, raise any
defense involving in any way the jurisdiction of the tribunal over the person of
the Port Authority, its Commissioners, officers, agents or employees, the
immunity of the Port Authority, its Commissioners, officers, agents or
employees, the governmental nature of the Port Authority, or the provisions of
any statutes respecting suits against the Port Authority.

(b) In addition to the obligations set forth in paragraph (a) of this Section
and all other insurance required under this Sublease, the Sublessee during the
term of this Sublease in its own name as insured and including the Port
Authority and Sublessor as additional insureds shall maintain and pay the
premiums on a policy or policies of Commercial General Liability Insurance,
including premises-operations, and covering bodily injury, including death,
property damage liability, and Comprehensive Automobile Liability Insurance
covering owned, non-owned and hired vehicles and including automatic coverage
for newly acquired vehicles and providing for coverage in the limits set forth
below. The said Commercial General Liability insurance policy shall have a limit
of not less than $2,000,000.00 combined single limit per occurrence and an
armual aggregate for bodily injury and property damage liability. The said
Comprehensive Automobile Liability insurance shall have a limit of not less than
$2,000,000.00 combined single limit per accident for bodily injury and property
damage liability.

(c) The policies and certificates relating to liability insurance covered by
this section shall be duly endorsed by Sublessee's underwriters to provide that
Sublessee and said underwriters waive any and all rights of subrogation against
the Sublessor, the Port Authority and the City of New York and their respective
officers, agents and employees, and further provide that said insurance and any
and all policies of Sublessor shall be secondary insurance.

(d) All the aforesaid policies of insurance shall provide or contain an
endorsement providing that the protections afforded the Sublessee thereunder
with respect to any claim or action against the Sublessee by a third person
shall pertain and apply with like effect with respect to any claim or action
against the Port Authority or the Sublessor mising or said to arise out of such
claim, but such endorsement shall not limit, vary, change, or affect the
protections afforded the Port Authority or the Sublessor thereunder as an
additional insured. The said policy or policies of insurance shall also provide
or contain a contractual liability endorsement covering the obligations assumed
by the Sublessee under paragraph (a) hereof. All insurance coverage's and
policies required under this Section may be reviewed by the Sublessor and the
Port Authority for adequacy of terms, conditions and limits of coverage at any
time and from time to time during the tetm of the subletting hereunder. The
Sublessor or the Port Authority may, at any such time, require commercially
reasonable additions, deletions, amendments or modifications to the above
scheduled insurance requirements, or may require (if commercially reasonable)
such other and additional insurance, in such reasonable amounts, against such
other insurable hazards, as the Sublessor or the Port Authority may deem
required and the Sublessee shall promptly comply therewith

(e) As to the insurance required by the provisions of this Section, a certified
copy of the policies or a certificate or certificates of binders, evidencing the
existence thereof, shall be delivered by the Sublessee to the Sublessor and the
Port Authority upon execution of this Sublease and delivery thereof by the
Sublessor to the Port Authority. Each policy, certificate or binder delivered as
aforesaid either (i) shall bear the endorsement of or be accompanied by evidence
of payment of the premium thereon, or (ii) the Sublessee shall deliver to the
Sublessor and the Port Authority the certificate of insurance issued by the
insurance company issuing the policy. In the event a binder is delivered, it
shall be replaced within thirty (30) days by a certified copy of the policy or a
certificate. Each such copy or certificate shall contain a valid provision or
endorsement that the policy may not be canceled, terminated changed or modified
without giving thirty (30) days' written 15

advance notice thereof to the Sublessor and the Port Authority. Each such copy
or certificate shall contain an additional endorsement providing that the
insurance carrier shall not, without obtaining express advance permission from
the General Counsel of the Port Authority, raise any defense involving in any
way the jurisdiction of the tribunal over the person of the Port Authority, its
officers, agents, or employees, the immunity of the Port Authority, its
Commissioners, officers, agents or employees, the governmental nature of the
Port Authority or the provisions ofany statutes respecting suits against the
Port Authority. Any renewal policy or certificate shall be delivered to the
Sublessor and the Port Authority prior to the expiration of each expiring
policy, except for any policy expiring after the date of expiration of the term
of this Agreement. The aforesaid insurance shall be written by a company or
companies approved by the Sublessor. If at anytime any of the insurance policies
shall be or become unsatisfactory to the Port Authority as to the form or
substance or if any of the carriers issuing such policies shall be or become
unsatisfactory to the Port Authority, the Sublessee shall promptly obtain a new
and satisfactory policy in replacement. Ifthe Sublessor or the Port Authority at
any time so requests, a certified copy of each of the policies shall be
delivered to the Sublessor and the Port Authority. The insurance required by
this Section may be effected by blanket or umbrella policies, or both, provided
that the coverage under any such blanket or umbrella policies is the same as if
such insurance was effected by a single policy.

15. (a) Except with the prior written approval of the Sublessor and the Port
Authority, the Sublessee shall not erect maintain or display any signs or any
advertising at or on the exterior parts of the Subleased Premises or at or on
any other portion of the Airport outside the Subleased Premises. Interior signs
affecting public safety and security shall be in accordance with established
Port Authority standards. "Notwithstanding the above, the sublessee shall be
allowed to maintain a sign on the front door of the subleased premises."

16. Additional Rent and Charges

(a) If the Sublessor or the Port Authority has paid any sum or has incurred any
obligation or expense which the Sublessee has agreed to pay or reimburse the
Sublessor or the Port Authority for or if the Port Authority or the Sublessor is
required or elects to pay any sum or sums or incurs any obligations or expense
by reason of the failure, neglect or refusal or the Sublessee to perform or
fulfill any one or more of the conditions, covenants or agreements contained in
this Sublease or as a result of an act or omission of the Sublessee contrary to
the said conditions, covenants and agreements, the Sublessee agrees to pay the
sum or sums so paid or the expense so incurred, including all interest and costs
and the same may be added to any installment of rent thereafter due hereunder,
and each and every part of the same shall be and become additional rent,
recoverable by the Sublessor or the Port Authority in the same manner and with
like remedies as if it were originally a part of the rent as set forth in the
Lease.

(b) For all purposes under this Section and in any suit, action or proceeding of
any kind between the parties hereto, any receipt showing any payment of a sum or
sums by the Sublessor or the Port Authority for any work done or material
furnished shall be presumptive evidence against the Sublessee that the amount of
such payment was necessary and reasonable. Should the Port Authority elect to
use its operating and maintenance staff in performing any work and to charge the
Sublessee with the cost of same, any time report of any employee of the Port
Authority showing hours of labor or work allocated to such work, or any stock
requisition of the Port Authority showing the issuance of materials actually
used in the performance thereof, shall likewise be presumptive evidence against
the Sublessee that the amount of such charge was necessary and 16

reasonable.

17. Rights of Entry Reserved.

(a) With reasonable advance notice (except in the case of emergencies in which
case no notice is required) the Sublessor or the Port Authority, by their
respective officers, employees, agents, representatives and contractors shall
have the right at all reasonable times to enter upon the Subleased Premises for
the purpose of inspecting the same, for observing the performance by the
Sublessee of its obligations under the Sublease, and for the doing of any act or
thing which the Sublessor or the Port Authority may be obligated or have the
right to do under this Sublease, or where the Sublessor or the Port Authority
may otherwise be obligated or have the tight to do so.

(b) With reasonable advance notice (except in the case of emergencies in which
case no notice is required) and without limiting the generality of the
foregoing, the Port Authority, by its officers, employees, agents,
representatives, contractors, and furnishers of utilities and other services,
shall have the right, for its own benefit, for the benefit of the Sublessor and
Sublessee, or for the benefit of others than the Sublessee at the Airport, to
maintain existing and future sewerage, utility, mechanical, electrical and other
systems and to enter upon the Subleased Premises at all reasonable times to make
such repairs, replacements or alterations as may, in the opinion of the Port
Authority, be deemed necessary or advisable and , from time to time, to
construct or install over, in or under the Subleased Premises new systems or
parts thereof, and to use the Subleased Premises for access to other parts of
the Airport otherwise not conveniently accessible; provided, however, that in
the exercise of such rights of access, repair, alteration or new construction
the Port Authority shall not unreasonably interfere with the use and occupancy
of the Subleased Premises by the Sublessee.

(c) In the event that any of the Sublessee Property shall obstruct the access of
the Sublessor or the Port Authority, their respective employees, agents or
contractors to any of the existing or future utility, mechanical, electrical and
other systems and thus shall interfere with the inspection, maintenance or
repair of any such system, the Sublessee shall move such Sublessee Property, as
directed by the Port Authority, in order that access may be had to the system or
part thereof for its inspection, maintenance or repair, and , if the Sublessee
shall fail to so move such Sublessee Property after direction from the Port
Authority to do so, the Port Authority may move it and the Sublessee hereby
agrees to pay the cost of such moving upon demand.

(d) Nothing in this Section shall or shall be construed to impose upon the
Sublessor any obligations so to construct or maintain or to make repairs,
replacement, alterations or additions, or shall create any liability for any
failure so to do. With respect to the Subleased Premises the Sublessee is and
shall be in exclusive control and possession thereof and the Sublessor or the
Port Authority shall not in any event be liable for any injury or damage to or
to any person happening on or about said Subleased Premises nor for any injury
or damage to said Subleased Premises nor to any property of the Sublessee or of
any other person located therein or thereon (other than to the extent the same
are occasioned by the affirmative, willful acts of the Sublessor or the Port
Authority, its employees, agents and representatives).

(e) At any time and from time to time during ordinary business hours within the
six (6) months next preceding the expiration of the subletting, the Sublessor,
for and by its agents and employees, whether or not accompanied by prospective
lessees, occupiers or users of the Subleased Premises, shall have the right to
enter thereon for the purpose of exhibiting and viewing all parts of the same,
and during such six-month period the Sublessor may place and maintain on the
Subleased Premises the usual " To Let" signs, which signs 17

the Sublessee shall permit to remain without molestation.

(f) If, during the last month of the subletting, the Sublessee shall have
vacated the Subleased Premises and removed all or substantially all of its
property from the Subleased Premises, subject to consent of Sublessee, the
Sublessor may immediately enter and alter, renovate and redecorate the Subleased
Premises.

(g) The exercise of any or all of the foregoing rights by the Sublessor or
others shall not be or be construed to be an eviction of the Sublessee nor be
made the ground for any abatement of rental nor any claim or demand for damages,
consequential or otherwise.

18. Condemnation. If due to the condemnation or taking or seizure by any
authority having the right of eminent domain, (i) more than fifteen (15%)
percent of the Subleased Premises under the Sublease is taken or rendered
untenantable, or (ii) in the event that more than twenty-five (25%) percent of
the ground is taken, or (iii) if access to the Subleased Premises under the
Sublease be denied which taking in the manner hereinabove referred to and in
excess of the foregoing percentage amounts shall unreasonably or unduly
interfere with the use of the building, ground area, parking area, or deny
access to these Subleased Premises, then and in either of such events as
hereinabove provided, the lease term created shall, at the option of the
Sublessee, terminate, cease and become null and void from the date when the
authority exercising the power of eminent domain takes or interferes with the
use of the building of which the Subleased Premises forms a part, its use of the
ground area, parking area, or area of access to the Subleased Premises. The
Sublessee shall only be responsible for the payment of rent until the time of
surrender. In any event, no part of the Port Authority's condemnation award
shall belong to or be claimed by the Sublessee. Without diminishing the Port
Authority's award, the Sublessee shall have the right to make a claim against
the condemning authority for such independent claim which it may have and as may
be allowed by law, for costs and damages due to relocating, moving and other
similar costs and charges directly incurred by the Sublessee and resulting from
such condemnation. In the event of any partial taking which would not be cause
for termination of the within Sublease or in the event of any partial taking in
excess of the percentages provided hereinabove and in which event the Sublessee
shall elect to retain the balance of the Subleased Premises remaining after such
taking, then and in either event, the rent shall abate in an amount mutually to
be agreed upon between the Sublessor and Sublessee based on the relationship
that the character of the property prior to the taking bears to the property
which shall remain after such condemnation. In any event, no part of the Port
Authority's condemnation award shall belong to or be claimed by the Sublessee.
However, the Sublessor or the Port Authority shall, to the extent permitted by
applicable law and as the same may be practicable on the site of the Subleased
Premises, at the Sublessor's sole cost and expense, promptly make such repairs
and alterations in order to restore the building and/or improvements to usable
condition to the extent of the condemnation award.

In the event that all or any portion of the Subleased Premises is required by
the Port Authority to comply with any present or future governmental law, rule,
regulation, requirement, order or direction, the Port Authority may by notice
given to the Sublessee terminate the Subletting with respect to all such portion
of the premises so required. If the Port Authority so elects to terminate all or
such portion of the Subleased Premises so required either Sublessor or the Port
Authority shall give the Sublessee written notice to such effect. Such
termination shall be effective on the date specified in the notice.

No taking by or conveyance to any governmental authority nor any delivery by the
Sublessee nor

18

taking by the Port Authority pursuant to this Section shall be or be construed
to be an eviction of the Sublessee or a breach of this Sublease or to be made
the basis of any claim by the Sublessee against the Sublessor or the Port
Authority for damages, consequential or otherwise.

In the event that the taking covers the entire Subleased Premises or in the
event that the subletting is terminated with respect to the Subleased Premises,
then this Sublease shall, as of the date possession is taken by such agency or
agencies from the Port Authority, or as of the effective date of such
termination, cease and determine in the same manner and with the same effect as
if the term of the subletting had on that date expired.

19. Late Charges. If the Sublessee should fail to pay any amount required under
this Sublease when due to the Sublessor, including without limitation any
payment of Base Rental, additional or other rental or any payment of utility
fees or charges, or other charges or fees, or if any such amount is found to be
due as the result of an audit, then, in such event, the Sublessor or the Port
Authority may impose (by statement, bill or otherwise) a late charge with
respect to each such unpaid amount for each late charge period herein below
described during the entirety of which such amount remains unpaid, each such
late charge not to exceed an amount equal to eight-tenths of one percent of such
unpaid amount for each late charge period. There shall be twenty-four late
charge periods during each calendar year; each late charge period shall be for a
period of at least fifteen (15) calendar days except one late charge period each
calendar year may be for a period of less than fifteen (but not less than
thirteen) calendar days. Without limiting the generality of the foregoing, late
charge periods in the case of amounts found to have been owing to the Sublessor
or the Port Authority as the result of Port Authority audit findings shall
consist of each late charge period following the date the unpaid amount should
have been paid under this Sublease. Each late charge shall be payable
immediately upon demand made at any time therefore by the Sublessor or the Port
Authority. No acceptance by the Sublessor or the Port Authority of payment of
any unpaid amount or of any unpaid late charge amount shall be deemed a waiver
of the tight of the Sublessor or the Port Authority to payment of any late
charge or late charges payable under the provisions of this Section, with
respect to such unpaid amount. Each late charge shall be and become additional
rent, recoverable by the Sublessor or the Port Authority in the same manner and
with like remedies as if it were otiginally a part of the rentals as set forth
in this Sublease. Nothing in this Section is intended to, or shall be deemed to,
affect, alter modify or diminish in any way (i) any rights of the Sublessor or
the Port Authority under this Sublease, or (ii) any obligations of the Sublessee
under this Sublease. In the event that any late charge imposed pursuant to this
Section shall exceed a legal maximum applicable to such late charge, then, in
such event, each such late charge payable under this Sublease shall be payable
instead at such legal max1mum.

20. Assignment and Sublease. The Sublessee covenants and agrees that it shall
not assign or sublet the Subleased Premises or any part thereof, without the
prior written consent of the Sublessor and the Port Authority, severally.

21. Further Terms and Conditions. This Sublease IS further subject to the
following terms and conditions:

(1) The Sublessee shall be prohibited from performing any activity or services
at the Airport for which the Port Authority requires payment of fees to the Port
Authority unless the Sublessee pays such fees (including the obtaining of a Port
Authority issued permit, if so required);

(2) The subletting herein shall be subject to and subordinate to all of the
terms, covenants, conditions and provisions of the Lease and the rights of the
Port Authority thereunder;

(3) The subletting herein shall not be changed, modified, discharged (other than
a voluntary termination or cancellation as hereinafter provided) or extended
without the prior written approval of the Port Authority, and shall not be
voluntarily terminated by the Sublessee (other than by reason of default or
pursuant to a cancellation right contained in the Sublease) except upon one
hundred twenty (120) days' notice to the Port Authority;

(4) The Subletting shall terminate and expire as to the Sublessee's right
thereunder to use and occupy the Subleased Premises (excepting the Sublessee's
obligations which survive such termination) without notice to the Sublessee as
of the termination date of this Sublease, unless earlier terminated under the
provisions of this Sublease;

(5) Written approval and consent by the Port Authority shall be a condition
precedent to the effectiveness ofthis Sublease.

(6) Nothing herein shall be deemed to limit the Sublessor from exercising its
right to terminate this Sublease in accordance with the terms and provision
thereof;

(7) Any sale, assignment, transfer, sublease, mortgage, pledge, hypothecation,
encumbrance or disposition of the Subleased Premises or of the rents, revenues
or any other income from the Subleased Premises, or this Sublease, or any part
thereof, or any license or other interest of the Sublessee therein not made in
accordance with the provisions of the Lease shall be null and void ab initio and
of no force or effect;

(8) If without prior written consent of the Sublessor and the Port Authority,
the Sublessee assigns, sells, conveys, transfers, mortgages, pledges or sublets
in violation of the foregoing paragraphs of this Section or if, except as
expressly permitted hereunder, the Subleased Premises are occupied by anybody
other than the Sublessee, the Sublessor or the Port Authority may collect rent
from any assignee, Sublessee or anyone who claims a right under this Sublease or
subletting or who occupies the Subleased Premises, and the Sublessor or the Port
Authority shall apply the net amount collected to the rental herein reserved;
but no such collection shall be deemed a waiver by the Sublessor or the Port
Authority of the covenants contained in the foregoing paragraphs of this Section
or an acceptance by the Sublessor or the Port Authority of any such assignee,
Sublessee, claimant or occupant as Sublessee, nor a release of the Sublessee by
the Sublessor and the Port Authority, severally, from the further performance by
the Sublessee of the covenants contained herein; and

(9) The Sublessee shall not use or permit any person to use the Subleased
Premises or any portion thereof for any purpose other than the purposes stated
in Section 4. Except as provided in this Sublease or otherwise permitted in
writing by the Port Authority, the Sublessee shall not permit the Subleased
Premises to be used or occupied by any person other than its own officers,
employees, contractors, and representatives.

22. Termination by the Sublessor.

(a) If any one or more of the following events shall occur, that is to say:

(1) The Sublessee shall become insolvent or shall take the benefit of any
present or future insolvency statute, or shall make a general assignment for the
benefit of creditors, or file a voluntary petition in bankruptcy or a petitioner
answer seeking an arr-angement or its reorganization or the readjustment of its
indebtedness under the federal bankruptcy laws or under any other law or statute
of the United States or of any state thereof, or consent to the appointment of a
receiver, trustee, or liquidator of all or substantially all of its property; or

(2) By order or decree of a court the Sublessee shall be adjudged bankrupt or an
order shall be made approving a petition filed by any of its creditors or by any
of the stockholders of the Sublessee, seeking its reorganization or the
readjustment of its indebtedness under the federal bankruptcy laws or under any
law or statute of the United States or of any state thereof, provided that if
any such judgment or order is stayed or vacated within sixty (60) days after the
entry thereof, any notice of cancellation shall be and become null, void and of
no effect; or

(3) By or pursuant to, or under authority of any legislative act, resolution or
rule, or any order or decree of any court or govennnental board, agency or
officer having jurisdiction, a receiver, trustee, or liquidator shall take
possession or control of all or substantially all of the property of the
Sublessee, and such possession or control shall continue in effect for a period
ofthirty (30) days; or

(4) The Sublessee shall voluntarily abandon, desert or vacate the Subleased
Premises or discontinue its operations at the Airport, or after exhausting or
abandoning any right of further appeal, the Sublessee shall be prevented for a
period of sixty ( 60) days by action of any governmental agency other than the
Port Authority having jurisdiction thereof, from conducting its operations at
the Airport, regardless of the fault of the Sublessee; or

(5) Any lien is filled against the Subleased Premises because of any act or
omission of the Sublessee and shall not be discharged within sixty (60) days
after the Sublessee has received notice thereof; or

(6) Except as pennitted by Section 20 hereof, the subletting hereunder or the
interest or estate of the Sublessee under this Sublease shall be transferred
directly by the Sublessee or shall pass to or devolve upon, by operation of law
or otherwise, any other person, firm or corporation; or

(7) A petition under any part of the federal bankruptcy laws or an action under
any present or future insolvency law or statute shall be filed against the
Sublessee and shall not be dismissed within sixty ( 60) days after the filing
thereof; or

(8) The Sublessee shall, without the prior written approval of the Port
Authority, become a possessor or merged corporation in a merger, a constituent
corporation in a consolidation, or a corporation in dissolution; or

(9) The Sublessee shall fail duly and punctually to pay the rentals, fees or
charges or to make any other payments required hereunder when due to the
Sublessor and shall continue in its failure to pay said rentals, fees or other
charges or to make any other payments required hereunder for a period often (10)
days after notice from the Sublessor to malce said payments; or

(l0) The Sublessee shall fail to keep, perform and observe each and every other

21

promise, covenant and agreement set forth in this Sublease on its part to be
kept, performed, or observed, within thirty (30) days after receipt of notice of
default thereunder from the Sublessor (except where fulfillment of its
obligation requires activity over a period of time, and the Sublessee shall have
commenced to perform whatever may be required for fulfillment within thirty (30)
days after receipt of notice and continues such performance without interruption
except for causes beyond its control); then upon the occurrence of any such
event or at any time thereafter during the continuance thereof; the Sublessor or
the Port Authority may upon twenty (20) days' notice terminate the rights of the
Sublessee hereunder and the subletting, such termination to be effective upon
the date specified in such notice. Such right of termination and the exercise
thereof shall be and operate as a conditional limitation.

(b) No acceptance by the Sublessor or the Port Authority of rentals, fees,
charges or other payments in whole or in part for any period or periods after a
default of any of the terms, covenants and conditions hereof to be performed,
kept or observed by the Sublessee shall be deemed a waiver of any right on the
part of the Sublessor or the Port Authority to terminate the subletting.

(c) No waiver by the Sublessor or the Port Authority of any default on the part
of the Sublessee in performance of any of the terms, covenants or conditions
hereof to be performed, kept or observed by the Sublessee shall be or be
construed to be a waiver by the Sublessor or the Port Authority of any other or
subsequent default in performance of any of the said terms, covenants and
conditions.

(d) The rights of termination described above shall be in addition to any other
rights of termination provided in this Sublease and in addition to any rights
and remedies that the Sublessor or the Port Authority would have at law or in
equity consequent upon any breach of this Sublease by the Sublessee, and the
exercise by the Sublessor of any right of termination shall be without prejudice
to any other such rights and remedies.

(11) The Sublessor shall have the right to terminate the Sublease for any reason
with 60 days notice to the Sublessee after the 2"d year of occupancy.

23. Right of Re-entry. The Sublessor shall, as an additional remedy upon the
giving of a notice of termination as provided in Section 22 hereof, have the
right to re-enter the Subleased Premises and every part thereof upon the
effective date of termination without further notice of any kind, and may regain
and resume possession either with or without the institution of summary or any
other legal proceedings or otherwise. Such re-entry, or regaining or resumption
of possession, however, shall not in any manner affect, alter or diminish any of
the obligations of the Sublessee under this Sublease, and shall in no event
constitute an acceptance of surrender.

24. Waiver of Redemption. The Sublessee hereby waives any and all rights to
recover or regain possession of the Subleased Premises and all rights
ofredemption, granted by or under any present or future law in the event it is
evicted or dispossessed for any cause, or in the event the Sublessor obtains
possession of the Subleased Premises in any lawful marmer.

25. Survival of the Obligations of the Sublessee.

(a) In the event that the subletting shall have been terminated in accordance
with a notice of termination as provided in Section 22 hereof, or the interest
of the Sublessee canceled pursuant thereto, or in the event that the Sublessor
has re-entered, regained or resumed possession of the Subleased Premises in
accordance with the provisions of Section 23 hereof, all the obligations of the
Sublessee under this Sublease with respect to the Subleased Premises shall
survive such termination or cancellation, or re-entry, regaining or resumption
of possession and shall remain in full force and effect for the full term of the
subletting under this Sublease, and the amount or amounts of damages or
deficiency therefore shall become due and payable to the Sublessor or the Port
Authority to the same extent, at the same time or times and in the same manner
as if no termination, cancellation, re-entry, regaining or resumption of
possession had taken place. The Sublessor may maintain separate actions each
month to recover the damage or deficiency then due or at its option and at any
time may sue to recover the full deficiency less the proper discount, for the
entire unexpired term.

(b) The amount of damages for the period of time subsequent to termination or
cancellation (or re-entry, regaining or resumption of possession) on account of
the Sublessee's rental obligations, shall be the sum of the following:

(1) The amount of the total of all armual Base and Additional Rentals with
respect to the Subleased Premises less the instalhnents thereof payable prior to
the effective date of termination except that the Ocredit to be allowed for the
installment payable on the first day of the month in which the termination is
effective shall be pro-rated for the part of the month the subletting remains in
effect on the basis of the actual number of days in said month;

(2) An amount equal to all reasonable expenses actually incurred by the
Sublessor or the Port Authority in connection with regaining possession and
restoring and reletting the Subleased Premises, for legal expenses, putting the
Subleased Premises in order including, without limitation, cleaning, decorating
and restoring (on failure of the Sublessee to restore), maintenance and
brokerage fees.

(c) Without limiting the foregoing, in the event this Sublease shall be
terminated pursuant to Section 22 hereof and the Sublessor shall have completed
the Construction or any portion thereof specified in Section 5 hereof, the
Sublessee shall and hereby agrees to pay to the Sublessor any and all amounts,
costs or expenses, or any type whatsoever, paid or incurred by the Sublessor,
including all interest costs, damages, losses, and penalties, and all of the
same shall be deemed treated as survived damages hereunder.

26. Reletting by the Sublessor. The Sublessor upon termination or cancellation
pursuant to Section 22 hereof, or upon any re-entry, regaining or resumption of
possession pursuant to Section 23 hereof, may occupy the Subleased Premises or
may relet the Subleased Premises, and shall have the right to permit any person,
firm or corporation to enter upon the Subleased Premises and use the same. Such
reletting may be of part only of the Subleased Premises or a part thereof
together with other space, and for a period of time the same as or different
from the balance of the term hereunder remaining, and on terms and conditions
the same as or different from those set forth in this Agreement. The Sublessor
shall also, upon termination or cancellation pursuant to the said Section 22, or
upon its re-entry, regaining or resumption of possession pursuant to the said
Section 23, have the right to repair or to make structural or other changes in
the Subleased Premises, including changes which alter the character of the
Subleased Premises and the suitability thereof for the purpose of the Sublessee
under this Sublease, without affecting, altering or diminishing the obligations
of the Sublessee hereunder.

27. Remedies to be Non-Exclusive. All remedies provided in this Sublease shall
be deemed cumulative and additional and not in lieu of or exclusive of each
other or of any other remedy available to the Port Authority or to the
Sublessor, at law or in equity, and the exercise of any remedy, or the existence
herein of other remedies or indemnities shall not prevent the exercise of any
other remedy. 23

28. Surrender. The Sublessee covenants and agrees to yield and deliver peaceably
to the Sublessor possession of the Subleased Premises on the date of cessation
of the subletting, whether such cessation be by termination, expiration or
otherwise, promptly and in good condition, except for reasonable wear and tear
which does not cause or tend to cause deterioration of the Subleased Premises or
adversely affect the efficient or proper utilization thereof, and all of the
Subleased Premises shall be free and clear of all liens, encumbrances, security
interests of any type whatsoever, and of any rights of any approved sublessees
or of any persons occupying or having any right to occupy the Subleased Premises
in whole or in part.

29. Acceptance of Surrender of Sublease. No agreement of surrender or to accept
a surrender shall be valid unless and until the same shall have been reduced to
writing and signed by the du1y authorized representatives of the Sublessor and
the Port Authority, Except as expressly provided in this Section, neither the
doing of, nor any omission to do, any act or thing, by any of the officers,
agents or employees of the Sublessor or the Port Authority, shall be deemed an
acceptance of a surrender of the letting or ofthis Sublease Agreement. 30.
Effect ofLease Between the City ofNew York and the Port Authority. Nothing
contained in this Sublease shall be deemed a waiver by the Sublessor of any of
its rights, licenses or privileges under this Sublease in the event that the
City Lease should be surrendered, canceled or terminated prior to the date
specified in the City Lease for its expiration.

31. Removal of Property. All personal property (including trade fixtures)
removable without material damage to the Leased Premises, which are installed by
the Sublessee in or on the Subleased Premises shall be deemed to be and remain
in the property of the Sublessee. All such property, provided the Sublessee
shall install suitable replacements therefore if such personal property is
necessary to perform any of the Sublessee's obligations hereunder, may at the
Sublessee's option be removed by the Sublessee from the Subleased Premises at
any time during the term of this Sublease and shall, unless otherwise agreed in
writing by the parties, be removed by the Sublessee at or before the expiration
or other termination of the term of this Sublease. If the Sublessee shall fail
to remove its property on or before the tennination or expiration of the
subletting, the Sublessor may remove such property to a public warehouse for
deposit or retain the same in its own possession, and sell the same at public
auction, the proceeds of which shall be applied first to the expenses of
removal, storage and sale, second to any sums owed by the Sublessee to the
Sublessor, with any balance remaining to be paid to the Sublessee; if the
expenses of such removal, storage and sale shall exceed the proceeds of sale,
the Sublessee shall pay such excess to the Sublessor upon demand.

32. Brokerage. The Sublessor and the Sublessee represents and warrants that no
broker has been concerned on their behalf in the negotiation of this Sublease
and that there is no broker who is or may be entitled to be paid a commission in
connection therewith. The Sublessee shall indenmify and save harmless the
Sublessor of and from any claim for commission or brokerage made by any and all
persons, firms or corporations whatsoever for services rendered to the Sublessee
in connection with the negotiation or execution of this Sublease. The Sublessor
shall indenmifY and save harmless the Sublessee and the Port Authority of and
from any claim for commission or brokerage made by any and all persons, fmns or
corporations whatsoever for services rendered to the Sublessor in connection
with the negotiation or execution ofthis Sublease.

33. Limitation of Rights and Privileges Granted.

(a) No greater rights or privileges with respect to the use of the Subleased
Premises or any 24

part thereof are granted or intended to be granted to the Sublessee by the
Sublease, or by any provision thereof, than the rights and privileges expressly
and specifically granted.

(b) The Subleased Premises are let to the Sublessee and the Sublessee takes the
same subject to all the following, (to the extent the Sublessor or the Port
Authority has advised the Sublessee in writing thereof; or to the extent the
Sublessee otherwise has knowledge thereof; or to the extent the same are matters
of public record); (i) easements, restrictions, reservations, covenants and
agreements; of any, to which the Subleased Premises may be subject, and rights
of the public in and to any public street; (ii) rights, if any of any
enterprise, public or private which is engaged in furnishing heating, light,
power, telegraph, telephone, steam, or transportation services and of the City
of New York and State of New York; and (iii) permits, licenses, regulations and
restrictions, if any, of the United States, the City of New York or State of New
York or other governmental authority.

34. Notices. Except where expressly required or permitted herein to be oral, all
notices, directions, requests consents and approvals required to be given to or
by either party shall be in writing, and all such notices shall be personally
delivered to the duly designated officer or representative of such party or
delivered to the office of such officer or representative dming regular business
homs, or forwarded to him or to the party at such address by certified or
registered mail. Duly designated officer or representative and office address:

Sublessor: Michael Buckley President Japan Airlines Management Corp. Building
No. 14 John F. Kennedy International Airport Jamaica, New York 11430

Sublessee: Mr. Igor Dmitrowsky President & CEO Baltia Air Lines Building 151,
Room 361 JFKIA, Jamaica NY 11430

If mailed, the notice herein required to be served should be deemed effective
and served as of the date received.

The foregoing designated officers or representatives and the office addresses
thereof may be changed from time to time, on written notice to the other party.

35. Other Construction by the Sublessee. Except as expressly provided herein,
the Sublessee shall not erect any structures, make any improvements or do any
other construction work on the premises or alter, modifY, or make additions or
improvements or repairs to or replacements of any structure now existing or
built at any time during the subletting, or install any fixture (other than
trade fixtures, removable without material damage to the freehold, any such
dan1age to be immediately repaired by the Sublessee) without the prior 25

written approval of the Sublessor and the Port Authority and in the event any
construction, improvement, alteration, modification, repair, replacement or
addition, is made without such approval, then upon reasonable notice so to do,
the Sublessee will remove the same, or at the option of the Sublessor cause the
same to be changed to the satisfaction of the Sublessor. In case of any failure
on the part of the Sublessee to comply with such notice, the Sublessor may
effect the removal or change and the Sublessee shall pay the cost thereof to the
Sublessor.

36. Place of Payments. All payments required of the Sublessee by this Agreement
to Sublease shall be made to Japan Airlines Management Corp., Building No. 14,
John F. Kennedy International Airport, Jamaica, New York, 11430, or to such
other address as may be substituted therefore by notice to the Sublessee from
time to time.

37. Construction and Application of Terms.

(a) The Section and paragraph headings, if any, in this Sublease, are inserted
only as a matter of convenience and for reference and in no way define, limit or
describe the scope or intent of any provision hereof.

(b) Unless otherwise expressly specified, the terms, provisions and obligations
contained in the Exhibits and the Addendum attached hereto, whether there set
out in full or as amendments of, or supplements to provisions elsewhere in the
Sublease stated, shall have the same force and effect as if herein set forth in
full. 38. Non-liability of Individuals. No Commissioner, director, officer,
agent or employee of either party shall be charged personally or held
contractually liable by or to the other party under any term or provision of
this sublease or of any supplement, modification or amendment to this Sublease
or because of any breach thereof, or because of its or their execution or
attempted execution.

39. Termination by the Sublessee.

(a) If any one or more of the following events shall occur:

(1) The Port authority shall for safety or other reasons prohibit the use of the
Public Landing Area at the Airport for scheduled passenger or air cargo
transport operations for a period covering more than thirty (30) consecutive
days;

(2) Scheduled Aircraft Operators at the Airport or Sublessee (unless due to the
fault of Sublessee) shall be prevented from using the Public Landing Area to
conduct their scheduled cargo, passenger or combination of cargo and passenger
flights to and from the Airport for a period covering more than ninety (90)
consecutive days as a result of a permanent injunction issued by a court of
competent jurisdiction; or

(3) Scheduled Aircraft Operators at the Airport (unless caused by or resulting
from the acts or omissions of the Sublessee) shall be prevented from using the
Public Landing Area to conduct their scheduled passenger flights, cargo flights
or combination passenger and cargo flights to and from the Airport for a period
covering more than ninety (90) consecutive days as a result of any order, rule
or regulation of the Federal Aviation Administration, or other governmental
agency having jurisdiction over the operations of the Scheduled Aircraft
Operators; then upon the occurrence of any such event or at any time thereafter
during the continuance of the conditions, the Sublessee may by twenty (20) days'
notice terminate the subletting, such termination to be effective upon the date
set forth in such notice and to have the same effect as if the term of the
subletting had on that date expired.

(b) The payment of rentals by the Sublessee for the period or periods after the
Sublessee shall have a right to terminate under this Section shall not be or be
construed to be a waiver by the Sublessee of any such right of termination.

40. Abatement. If the Port Authority shall, for safety or other reasons,
prohibit the use of the Public Landing Area at the Airport or of any substantial
part thereof for domestic and foreign scheduled passenger or air cargo transport
operations for a period covering more than sixty ( 60) consecutive days and the
Sublessee shall thereby be prevented from conducting those operations at the
Airport enumerated in Section 4 hereof, then upon the occurrence of such event,
the Sublessee at its option shall be entitled to abatement of rental during such
period of prohibition and prevention. In the event that the Sublessee shall
exercise such option the Sublessee shall be deemed to have released and
discharged the Sublessor and the Port Authority of and from all claims and
rights which the Sublessee may have hereunder arising out of or consequent upon
such closing and the subsequent interrupted use of such Public Landing Area or
part thereof during the period of prohibition.

41. Quiet Enjoyment. The Sublessor covenants and agrees that as long as it
remains the Lessee under the Lease, Sublessee, upon paying all rentals and fees
hereunder and performing all the covenants, conditions and provisions of this
Sublease on its part to be performed, shall and may peacefully and quietly have
and enjoy the Subleased Premises free of any act or acts of the Sublessor except
as expressly agreed upon in this Sublease.

42. Force majeure. Neither the Sublessor, the Sublessee nor the Port Authority
shall be deemed to be in violation of this Sublease if is prevented from
performing any of its obligations hereunder by reason of strikes, boycotts,
labor disputes, embargoes, shortages of material, acts of God, acts of the
public enemy, acts of superior governmental authority, weather conditions,
tides, riots, rebellion, sabotage or any other circumstances for which it is not
responsible and which are not within its control; provided, however, that this
provision shall not apply to failure by the Sublessee to pay the rentals and
fees specified in Section 3 or other charges specified in this Sublease, and
shall not apply to any other charges or money payments, and, provided, further,
that this provision shall not prevent a party from exercising a right of
termination under Sections 22 and 39 and under any other section of this
Sublease. 43. Ingress and Egress. To the extent granted to Sublessor by the Port
Authority under the Lease:

(a) The Sublessee shall have the right of ingress and egress between the
Subleased Premises and a city street or public way outside the Airport by means
of existing roadways used in common with others having rights of passage within
the Airport, provided, however, that the Port Authority may, at its sole cost
and expense, from time to time substitute other reasonably equivalent means
ofingress and egress.

(b) The use of all roadways and taxiways shall be subject to the rules and
regulations of the Port Authority which are now in effect or which may hereafter
be promulgated for the safe and efficient operation of the Airport. In addition
to the rights of closure granted above, the Port Authority may, at any time,
temporarily or permanently close, or consent to or request the closing of, any
such roadway, and any other area at the Airport presently or hereafter used as
such, so long as a means of ingress and egress reasonably equivalent to that
provided in subparagraph (a) above is concurrently made available to the
Sublessee. The Sublessee hereby releases and discharges the Port Authority, and
the Sublessor, their respective successors and assigns, of and from any and all
claims, demands or causes of action which the Sublessee may now or at any time
hereafter have against any of the foregoing, arising or alleged to arise out of
the closing of any street, roadway, or other area used as such whether within or
outside the Airport, provided, that the Port Authority makes available to the
Sublessee at its sole cost and expense a means of ingress and egress reasonably
equivalent to that provided in subparagraph (a) above.

44. Non-Discrimination.

(a) Without limiting the generality of any of the provisions of the Sublease,
the Sublessee, for itself, its successors in interest, and assigns, as a part of
the consideration hereof, does hereby covenant and agree that (1) no person on
the grounds of race, creed, color, sex or national origin, shall be excluded
from participation in, denied the benefits of, or be otherwise subjected to
discrimination in the use of the Subleased Premises by it, (2) that in the
construction of any improvements on, over, or under the Subleased Premises and
furnishing of services thereon by it, no person on the ground ofrace, creed,
color, sex or national origin shall be excluded from participation in, denied
the benefits of, or otherwise be subject to discrimination, (3) that the
Sublessee shall use the Subleased Premises in compliance with all other
requirements imposed by or pursuant to Title 49, Code of Federal Regulations,
Department of Transportation, Subtitle A, Office of the Secretary, Part 21,
Non-discrimination in Federally-assisted programs of the Department of
Transportation-Effectuation of Title VI of the Civil Rights Act of 1964, and as
said Regulations may be amended, and any other present or future laws, rules,
regulations, orders or directions of the United States of America with respect
thereto which from time to time may be applicable to the Sublessee's operations
at the Airport, whether by reason of agreement between the Port Authority and
the United States Govermnent or otherwise.

(b) The Sublessee's non-compliance with the provisions of this Section shall
constitute a material breach of this Sublease. In the event of the breach by the
Sublessee of any of the above nondiscrimination provisions the Port Authority
may take appropriate action to enforce compliance; or in the event such
noncompliance shall continue for a period of twenty (20) days after receipt of
written notice from the Port Authority, the Port Authority shall have the right
to terminate the Sublease and the subletting hereunder with the same force and
effect as a termination under the Section of this Sublease providing for
termination for default by the Sublessee in the performance or observance of any
other term or provision of this Sublease, or may pursue such other remedies as
may be provided by law; and as to any or all the foregoing, the Port Authority
may take such action as the United States may direct.

(c) The Sublessee shall indemnify and hold harmless the Sublessor and the Port
Authority from any claims and demands of third persons, including the United
States of America resulting from the Sublessee's noncompliance with any of the
provisions ofthis Section and the Sublessee shall reimburse the Port Authority
for any loss or expense incurred by reason of such noncompliance. 28

45. Affirmative Action. In addition to and without limiting any other term or
provision of this Sublease, the Sublessee assures that it will undertake an
affirmative action program as required by 14 CFR Part 152, Subpart E, to insure
that no person shall on the grounds of race, creed, color, national origin, or
sex be excluded from participating in any employment activities covered in 14
CFR Part 152, Subpart E. The Sublessee assures that no person shall be excluded
on these grounds from participating in or receiving the services or benefits of
any program or activity covered by this subpart. The Sublessee assures that it
will require that its covered suborganizations provide assurances to the
Sublessee that they similarly will under take affirmative action programs and
that they will require assurances from their suborganizations, as required by 14
CFR Part 152, Subpart E, to the same effect. The Sublessee's non-compliance with
the provisions of this Section shall constitute a material breach of this
Sublease. In the event of the breach of the Sublessee of any appropriate action
to enforce compliance; or in the event such non-compliance shall continue for a
period of twenty (20) days after receipt of written notice from the Port
Authority, the Port Authority shall have the right to terminate this Sublease
and the subletting hereunder with the same force and effect as a termination
under the Section of this Sublease providing for termination for default by the
Sublessee in the performance or observance of any other term or provision of
this Sublease, or may pursue such other remedies as may be provided by law.

In the implementation of this Section, the Port Authority may consider
compliance by the Sublessee with the provisions of any federal, state or local
law concerning affirmative action/equal employment opportunity which are at
least equal to the requirements of this Section, as effectuating the provisions
of this Section. If the Port Authority determines that by virtue of such
compliance with the provisions of any such federal, state or local law that the
provisions hereof duplicate or conflict with such law the Pmt Authority may
waive the applicability of the provisions of this Section to the extent that
such duplication or conflict exists.

Nothing herein provided shall be construed as a limitation upon the application
of any laws which establish different standards of compliance or upon the
application of requirements for the hiring of local or other area residents.
Nothing in this Section shall grant or be deemed to grant to the Sublessee the
right to make any agreement or award for concessions for consumer services at
the Airport.

46. Condition of Subleased Premises. The Sublessee hereby acknowledges that it
has not relied upon any representation or statement of the Sublessor or the Port
Authority or their respective Commissioners, officers, employees or agents as to
the condition of the Subleased Premises. The Sublessee, prior to the execution
of this Sublease, has thoroughly examined the Subleased Premises and determined
then to be suitable for the Sublessee's operations hereunder and the Sublessee
hereby agrees to take the Subleased Premises in the condition they are in as of
the commencement of the term of the subletting hereunder. Without limiting any
obligation of the Sublessee to commence operations hereunder at the time and in
the manner stated elsewhere in this Sublease, the Sublessee agrees that no
portion of the Subleased Premises will be used initially or at any time during
the subletting which is in a condition unsafe or improper for the conduct of the
Sublessee's operations hereunder so that there is possibility of injury or
damage to life or property. It is hereby understood and agreed that whenever
reference is made in this Sublease to the condition of the Subleased Premises as
of the commencement of the term thereof, the same shall be deemed to mean the
condition of the Subleased Premises as of the date the Sublessee first occupied
the Subleased Premises, and as to the improvements made and the alteration work
performed during the term of the Sublease in the condition existing after the
completion of the same. The foregoing is not intended to limit any obligation of
the Sublessor or the Port authority as expressly set forth in this Sublease.

47. Definitions. The following terms, when used in this Agreement, shall, unless
the context shall require otherwise, have the respective meanings given below:

(a) "Airport" shall mean the land and the Subleased Premises in the City ofNew
York, in the County of Queens and State of New York, which are shown in green
upon the Exhibit attached to the Basic Lease between the City of New Yark and
the Port Authority referred to in subdivision (b) below, said Exhibit being
marked "Map II", and lands contiguous thereto which may have been heretofore or
may hereafter be acquired by the Port Authority to use for air terminal
purposes.

(b) "City lease" shall mean the agreement between the City of New York and the
Port Authority dated April 17, 1947, as the same from time to time may have been
or may be supplemented or amended. Said agreement dated April17, 1947, has been
recorded in the Office of the Register of the City of New York, County of
Queens, on May 22, 194 7m in Liber 5402 of Conveyances, at pages 319, et seq.

(c) "Sublease" shall mean this Agreement of Sublease

(d) "Lease", shall mean the Agreement of Lease between the Port Authority of New
York and New Jersey and Japan Airlines Management Corp. (Lease No. AYB-970,
dated June 4, 1991).

(e) "Subletting" shall mean the subletting under this Sublease for the original
term stated herein, and shall include any extension thereof.

(f) "Leased Premises" shall mean the Subleased Premises as defined in Section 1
hereof.

(g) "Pro Rata Share" shall mean a fraction the numerator of which is the
rentable square footage of the Subleased Premises and the denominator of which
is the square footage of the building in which the Subleased Premises is
located.

(h) "Public Landing Area" shall mean the area of land at the Airport including
runways, taxiways and the areas between and adjacent to runways and taxiways,
designated and made available from time to time by the Port Authority for the
landing and taking off of aircraft.

(i) "Scheduled Aircraft Operator" shall mean a Civil Aircraft Operator engaged
in transportation by aircraft operated wholly or in part on regular flights to
and from the Airport in accordance with published schedules; but so long as the
Federal Aviation Act of 1958, or any similar federal statute providing for the
issuance of Foreign Air Carrier Permits or Certificates of Public Convenience
and Necessity or substantially similar permits or certificates, is in effect, no
person shall be deemed to be a Scheduled Aircraft Operator within the meaning
ofthis Lease unless he also holds such a permit or certificate. G) "General
Manager of the Airport" shall mean the person or persons from time to time
designated by the Port Authority to exercise the powers and functions vested in
the said General Manager by the Lease, but until further notice from the Port
Authority to the Lessee it shall mean the General Manager (or the temporary or
acting General Manager) of the Airport for the time being, or his duly
designated representative or representatives.

(k) "Governmental Authority", "Governmental Board", "Governmental Agency" shall
mean federal, state, municipal and other governmental authorities, boards and
agencies of any state, notion or government, except that it shall not be
construed to include The Port Authority of New York and New Jersey, the Lessor
under the Lease.

(1) "Civil Aircraft Operator" shall mean a person engaged in civil
transportation by aircraft or otherwise operating aircraft for civilian
purposes, whether governmental or private. If any such Person is also engaged in
the operation ofaircraft for military, naval or airforce purposes, he shall be
deemed to be a Civil Aircraft Operator only to the extent that he engages in the
operation of aircraft for civilian purposes.

(m) "Person" shall mean not only a natural person, corporation or other legal
entity, but also two or more natural persons, corporations or other legal
entitles acting jointly as a firm, partnerships unincorporated association,
consortium, joint adventures or otherwise.

(n) "JAL Premises" shall mean the premises as defined in Section 5 (a) (1) of
the Lease.

(o) "Common Area" shall mean all areas in and about Building 151 and Building 14
not exclusively subleased to Sublessee hereunder and used in common with JMC,
JAL, and other subtenants.

(p) "Common Facilities" shall mean any facilities not exclusively subleased to
Sublessee and used in common with JMC, JAL and other subtenants.

(q) "Site" shall mean the land upon which Building 151 is located.

48. Automobile Parking. As provided under Section 4 hereof, Sublessor shall be
permitted to utilize the parking as designated by Sublessor for the exclusive
use of Sublessee, its officers, employees and business invitees. Except as
authorized in Section 4, and herein, Sublessee shall prevent all persons from
parking automobiles on the spaces assigned for exclusive use, except that
automobiles or trucks may be permitted to be outside the Subleased Premises for
the purpose of discharging or picking up cargo, mail and for official and
special purposes.

49. Security Deposit. -The Sublessee shall deposit with the Sublessor upon
occupancy (and shall keep deposited throughout the tenn of this Sublease) the
sum equivalent to two (2) months installments of the Base Rental, including O&M
of $49,260.20 then in effect (as set forth in Section 3 hereof) , in cash, as
security for the full, faithful and prompt performance of and compliance with,
on the part of the Sublessee, all of the provisions, terms, and conditions of
the Sublessee on its part to be fulfilled, kept, performed or observed and as
security for the payment of all other rentals, fees, charges and obligations
owed or which may become due and owing to the Sublessor arising from the
Sublessee's operations at the Subleased Premises. This Security Deposit will be
made in 3 installments, July 15,2011, Aug 15, 2011 and Sept 15,2011.

50. Successors and Assims. This Sublease shall be binding upon and run to the
benefit of the Sublessor, the Sublessee and their respective permitted
successors and assigns hereunder.

51. Options to Renew. Provided the Sublessee is not in default with respect to
the terms and conditions of this Sublease, Sublessee shall have the right to
renew the within Sublease for an additional period of five (5) years, to
commence at the end of the term of this Sublease, subject to the terms and
conditions of this Sublease, except that base rentals, additional rentals and
any other charges of any kind whatsoever under such renewed or extended Sublease
shall be subject to such rental rates and as may be consistent with market rates
for similar cargo properties at John F. Kennedy International Airport.

In this respect, Sublessor shall have the sole discretion to determine such
rental rates and other charges and shall provide notice of such rental rates and
other charges to Sublessee no later than four ( 4) months prior to the
expiration of this Sublease.

Provided however, this option to renew shall have no force and effect unless
Sublessee gives written notice of intention or exercise said option by certified
mail to Sublessor no less than two (2) months prior to expiration of the term of
this Sublease.

Anything herein to the contrary notwithstanding, any renewal or extension of
this Sublease shall be subject to the approval and consent in writing of the
Port Authority and shall not become effective unless the Port Authority so
approves and grants written consent not later than one (1) month prior to the
commencement of the term of any renewal extension of this Sublease agreement.

Anything herein to the contrary notwithstanding the exercise by Sublessee of the
option to renew herein shall be subject to the certification of Sublessee that
no broker has been or will be utilized in connection herewith, or in connection
with the entering into any renewal or extension of the term of this Sublease
Agreement.

52. Governing Law. This Sublease shall be construed in accordance with and
governed by the laws of the State of New York. 53. Entire Agreement. This
Sublease Agreement consists of the foregoing and constitutes the entire
agreement of the parties and may not be changed, modified, discharged or
extended except by written instrument duly executed by the Sublessor and
Sublessee. 32

IN WITNESS WHEREOF, the parties hereto have executed these presents the day and
year first above written.

Cecretary __ /Signed /__ JAPAN AIRLINES MANAGEMENT CORP.

By: ____/Signature/ ___
Michael Buckley

(Title) ___ President__

__/Signature/ ___
Witness: BALTIA AIR LINES

By: ___/signature/____
Igor Dmitrowsky

(Title) ___ President & CEO ____

APPENDIX I

Rm 361/Zone9/R30 BALTIA AIR
(increasing 4% each year) Period(year) Space Rate/SF/year Payment/year
Payment/month 9/1/11 -8/31/12
Rental
O&M
Total
11,891

$27.25
$4.81

$324,029.75
$57,195.71
$381,225.46

$31,768.79 9/1/12-8/31/13
Rental
O&M
Total
11891

$28.34
$5.01

$336,990.94
$59,573.91
$396,564.85

$33,047.07 9/1/13-8/31/14
Rental
O&M
Total
11891

$29.47
$5.21

$350,427.77
$61,952.11
$412,379.88

$34,364.99 9/1/14-8/31/15
Rental
O&M
Total
11891

$30.65
$5.42

$364,459.15
$64,449.22
$428,908.37

$35,742.36

Actual space 10,810 sf .... 10% added for common use space.

Janitorial is a direct agreement with the Service provider.

Utilities are reviewed each year and tenants will be advised of any return or
increase.
Utilities= 11891 x $4.50 = $53,509.50/year = $4,460/month

34