Exhibit 10.2

 

 

 

LEASE

 

dated October   , 2005

 

between

 

CONTINENTAL FINANCE CORPORATION

 

                    as Lessor

 

and

 

ATLANTIC EXPRESS TRANSPORTATION CORP

 

                    as Lessee

 

 

Affecting premises commonly known as 7 NORTH STREET, 3 NORTH STREET, 2153
RICHMOND TERRACE, in Staten Island, New York.

 

 

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  1 — Demised Premises and Lease Term

 

 

  2 — Rent

 

 

  3 — No Counterclaim or Abatement

 

 

  4 — Use of Demised Premises

 

 

  5 — Condition of Demised Premises

 

 

  6 — Maintenance and Repair

 

 

  7 — Alterations and Additions

 

 

  8 — Impositions

 

 

  9 — Compliance With Requirements

 

 

10 — Liens

 

 

11 — Permitted Contests

 

 

12 — Utility Services

 

 

13 — Insurance

 

 

14 — Indemnification By Lessee

 

 

15 — Damage or Destruction

 

 

16 — Taking of the Demised Premises

 

 

17 — Quiet Enjoyment

 

 

18 — Right to Cure Lessee’s Default

 

 

19 — Events of Default and Termination

 

 

20 — Repossession

 

 

21 — Reletting

 

 

22 — Assignment of Subrents

 

 

23 — Lessee’s Equipment

 

 

24 — Security Deposit

 

 

25 — Survival of Obligations; Damages

 

 

26 — Injunction

 

 

27 — Waivers

 

 

28 — Lessor’s Remedies Cumulative

 

 

29 — Assignment and Subletting

 

 

30 — Subordination and Attornment

 

 

31 — Entry by Lessor

 

 

32 — Conveyance by Lessor

 

 

33 — No Merger of Title

 

 

34 — Acceptance of Surrender

 

 

35 — Holdover Tenancy

 

 

36 — End of Lease Term

 

 

37 — Option to Extend Lease Term

 

 

38 — Brokerage

 

 

39 — Definitions

 

 

40 — Notices

 

 

41 — Communications Tower

 

 

42 — Miscellaneous

 

 

Exhibit A — Description of Land

 

 

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LEASE

 

LEASE, dated October   , 2005, between CONTINENTAL FINANCE CORPORATION , a
DELAWARE corporation, having an address at 216 EAST 49TH STREET, NEW YORK, NEW
YORK 10017 (“Lessor”), and ATLANTIC EXPRESS TRANSPORTATION CORP, a NEW YORK
corporation, having an address at 7 NORTH STREET, STATEN ISLAND, NEW YORK 10302
(“Lessee”).

 

1.  The Demised Premises and Lease Term

 

In consideration of the Rent hereinafter reserved and the terms, covenants and
conditions set forth in this Lease to be observed and performed by Lessee,
Lessor hereby demises and leases to Lessee, and Lessee hereby rents and takes
from Lessor, the following property (collectively hereinafter referred to as the
“Demised Premises”):  (a) all the land (the “Land”) described in Exhibit A
hereto and designated as Section 5 , Block 1070 , Lots 1, 31 and 20 ; (b) all
buildings, structures and other improvements (the “Improvements”) now or
hereafter located on the Land, other than Lessee’s Equipment as hereinafter
defined; and (c) all rights of way or of use, servitudes, licenses, tenements,
appurtenances and easements now or hereafter belonging or pertaining to any of
the foregoing; TO HAVE AND TO HOLD the Demised Premises unto Lessee, and the
permitted successors and assigns of Lessee, upon and subject to all of the
terms, covenants and conditions herein contained, for a term (the “Lease Term”)
of TEN YEARS, commencing on December 1, 2005 and expiring on November 31, 2015,
unless the Lease Term shall sooner terminate pursuant to any of the conditional
limitations or other provisions of this Lease.

 

2.  Rent

 

Lessee covenants to pay to Lessor as a net minimum rent (the “Fixed Rent”)
during the Lease Term $357,000.00 per annum for the principal of the Lease Term
which precedes November 31, 2006, and $364,140.00 per annum from November 31,
2006 until November 31, 2007, and $371,422.80 per annum from November 31, 2007
until November 31, 2008, and $378,851.26 per annum from November 31, 2008 until
November 31, 2009, and $386,428.29 per annum from November 31, 2009 through the
remainder of the Lease Term.

 

The Fixed Rent shall be payable in advance in equal monthly installments on the
first day of each calendar month.  If the Lease Term does not commence on the
first day of a month, the Fixed Rent for the month in which the Lease Term
commences shall be appropriately apportioned.  The first installment of Fixed
Rent shall be paid simultaneously with the execution of this Lease.  Each date
on which Fixed Rent is payable hereunder is hereinafter referred to as a “Rent
Payment Date”.

 

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Lessee also covenants to pay, from time to time as provided in this Lease, as
Additional Rent:  all other amounts and obligations which Lessee assumes or
agrees to pay under this Lease; interest at the rate of ten percent per annum on
such of the foregoing amounts and obligations as are payable to Lessor and are
not paid within ten days after the due date (or, if a demand therefor is
required by the terms of this Lease, within ten days after such demand), from
the due date or such demand, as the case may be, until the payment thereof; and
interest at the rate of ten percent per annum on all installments of Fixed Rent
not paid on the due date, from the due date until paid.  If Lessee fails to pay
any such Additional Rent, Lessor shall have all the rights, powers and remedies
provided for in this Lease or at law or in equity or otherwise in the case of
nonpayment of rent. Additional Rent shall specifically include any and all
utilities, whether paid directly to the providers or to Landlord, full amount of
real estate taxes and any and all expenses incurred in connection with
environmental issues relating to the Premises.

 

All Fixed Rent and Additional Rent (collectively hereinafter referred to as
“Rent”) shall be paid in such coin or currency (or, subject to collection, by
good check payable in such coin or currency) of the United States of America as
at the time shall be legal tender for the payment of public and private debts,
at the office of Lessor as set forth above, or at such place and to such person
as Lessor from time to time may designate.

 

3.  No Counterclaim or Abatement

 

All Rent shall be absolutely net to Lessor so that this Lease shall yield to
Lessor the full amount of the installments thereof throughout the Lease Term
without deduction.  All Rent shall be paid to Lessor without notice, demand,
counterclaim, setoff, deduction or defense, and nothing shall suspend, defer,
diminish, abate or reduce any Rent, except as otherwise specifically provided in
this Lease.

 

The obligations and liabilities of Lessee hereunder in no way shall be released,
discharged or otherwise affected (except as expressly provided herein) by reason
of:  any damage to or destruction of or any Taking of the Demised Premises or
any part thereof; any restriction or prevention of or interference with any use
of the Demised Premises or any part thereof; any title defect or encumbrance or
any eviction from the Demised Premises or any part thereof by title paramount or
otherwise; any bankruptcy, insolvency, reorganization, composition, adjustment,
dissolution, liquidation or other like proceeding relating to Lessor, or any
action taken with respect to this Lease by any trustee or receiver of Lessor, or
by any court, in any such proceeding; any claim which Lessee has or might have
against Lessor; any failure on the part of Lessor to comply with or perform any
of the terms hereof or of any other agreement with Lessee; or any other
occurrence whatsoever, whether similar or dissimilar to the foregoing, whether
or not Lessee shall have notice or knowledge of any of the foregoing.  Except as
expressly provided herein, Lessee waives all rights now or hereafter conferred
by statute or otherwise to quit, terminate or surrender this Lease or the
Demised Premises or any part thereof, or to receive any abatement, suspension,
deferment, diminution or reduction of any Rent payable by Lessee hereunder.

 

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4.  Use of Demised Premises

 

Lessee covenants that the Demised Premises shall be used solely for VEHICLE AND
BUS PARKING, MAINTENANCE AND REPAIR, administrative offices, lodging with
respect to 3 North Street and for no other purpose, unless approved in writing
by Lessor.

 

Lessee shall not do or permit any act or thing which is contrary to any Legal
Requirements or Insurance Requirements, or which might impair the value or
usefulness of the Demised Premises or any part thereof.  Lessee shall not use,
or allow the Demised Premises or any part thereof or any Improvements now or
hereafter erected thereon or any appurtenances thereto to be used or occupied,
for any unlawful purpose or in violation of any certificate of occupancy, and
shall not suffer any act to be done or any condition to exist within the Demised
Premises or any part thereof, or in any Improvements now or hereafter erected
thereon, or on any appurtenance to the Demised Premises, or permit any
article to be brought therein, which may be dangerous, unless safeguarded as
required by law, or which may constitute a nuisance, public or private, or which
may make void or voidable any insurance in force with respect thereto.

 

Lessee shall not do or suffer any waste, damage, disfigurement or injury to the
Demised Premises.

 

Lessee shall not permit the spilling, discharge, release, deposit or placement
on the Demised Premises or any part thereof, whether in containers or other
impoundments, of any substance which is a hazardous or toxic substance within
the meaning of any applicable environmental law.

 

Landlord shall be authorized to build a dock on the Premises and utilize it in a
way to receive income.

 

5.  Condition of Demised Premises

 

Lessee represents that Lessee has examined and is fully familiar with the
physical condition of the Demised Premises, the Improvements thereon, the
sidewalks and structures adjoining the same, subsurface conditions, and uses
thereof.  Lessee accepts the same, without recourse to Lessor, in the condition
and state in which they now are, and agrees that the Demised Premises complies
in all respects with all requirements of this Lease.  Lessor makes no
representation or warranty, express or implied in fact or by law, as to the
nature or condition of the Demised Premises, or its fitness or availability for
any particular use, or the income from or expenses of operation of the Demised
Premises.  Lessor shall not be liable for any latent or patent defect therein.

 

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6.  Maintenance and Repair

 

Lessee, at all times during the Lease Term and at Lessee’s expense, shall keep
the Demised Premises, and all Improvements now or hereafter located thereon, and
all facilities and equipment thereon, and the adjoining sidewalks, curbs, vaults
and vault space, if any, streets and ways, and all appurtenances to the Demised
Premises, in a good and clean order and condition and in such condition as may
be required by all Legal Requirements and Insurance Requirements, and promptly
shall make all necessary or appropriate repairs, replacements and renewals
thereof, whether interior or exterior, structural or nonstructural, ordinary or
extraordinary, or foreseen or unforeseen.  All repairs, replacements and
renewals shall be equal in quality and class to the original work.  Lessee
waives any right created by any law now or hereafter in force to make repairs to
the Demised Premises at Lessor’s expense.

 

Lessee, at Lessee’s expense, shall do or cause others to do every act necessary
or appropriate for the preservation and safety of the Demised Premises by reason
of or in connection with any excavation or other building operation upon the
Demised Premises or any adjoining property, including without limitation all
shoring of foundations and walls of the Improvements or of the ground adjacent
thereto, whether or not the owner of the Demised Premises shall be required by
any Legal Requirement to take such action or shall be liable for failure to do
so.

 

7.  Alterations and Additions

 

Lessee shall not be entitled to make any alterations of or additions to the
Demised Premises without the prior written consent of Lessor in each instance.

 

The title to all additions, repairs and replacements to any Improvements made
during the Lease Term and any renewal thereof, forthwith shall vest in Lessor,
and said Improvements, additions, repairs and replacements shall be and become
the sole and absolute property of Lessor, without any obligation of payment by
Lessor therefor.

 

8.  Impositions

 

Subject to Article 11 relating to contests, Lessee, at Lessee’s expense, shall
bear, pay and discharge all Impositions at least twenty days prior to the last
day upon which the same may be paid without any interest, penalty, fine or cost
being added for the late payment thereof, and shall furnish to Lessor for
inspection within thirty days after request, official receipts of the
appropriate taxing authority or other proof satisfactory to Lessor evidencing
such payment.  If by law any Imposition may be paid in installments, Lessee
shall be obligated to pay only those installments as they become due from time
to time before any interest, penalty, fine or cost may be added thereto.  Any
Imposition relating to the fiscal period of the taxing authority, part of which
is included within the Lease Term and a part of which precedes or extends beyond
the Lease Term, shall, if Lessee shall not be in default hereunder, be
apportioned between Lessor and Lessee as of the commencement or expiration, as
the case may be, of the Lease Term.  An official certificate or statement issued
or given by any sovereign or governmental authority or agency, or any public
utility, showing the existence of any Imposition, or interest or penalties

 

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thereof, the payment of which is the obligation of Lessee as provided herein,
shall be prima facia evidence for all purposes of this Lease of the existence,
amount and validity of such Imposition.

 

Upon the occurrence and continuance of an event of default, at the option of
Lessor, which may be exercised by written notice to Lessee, Lessee shall pay to
Lessor, on each Rent Payment Date during the Lease Term, an amount equal to one
twelfth (1/12th) of all Impositions becoming due within the ensuing twelve
months, as reasonably estimated by Lessor.  Such estimate, and consequently the
monthly installments, may be adjusted at any time by Lessor.  Each year Lessor
shall provide to Lessee an accounting, and if such accounting shows that the
total of the monies received hereunder exceeds the amounts paid by Lessor for
all Imposition, Lessee shall be credited for the difference against the next
installments becoming due hereunder.  If immediately prior to any Rent Payment
Date any Imposition is due, in whole or in part, or if on the rendering of an
accounting as aforesaid a deficiency exists or may reasonably be expected,
Lessee shall pay the same to Lessor on demand.  The obligations of the parties
hereunder shall survive the expiration or termination of the Lease Term.

 

9.  Compliance With Requirements

 

Subject to Article 11 relating to contests, Lessee, at all times during the
Lease Term and at Lessee’s expense, promptly and diligently shall:  comply with
all Legal Requirements and Insurance Requirements, whether or not compliance
therewith shall require structural changes in the Improvements or interfere with
the use and enjoyment of the Demised Premises or any part thereof; comply with
any instruments of record at the time affecting the Demised Premises or any part
thereof;  and procure, maintain and comply with all permits, licenses,
franchises and other authorizations required for any use of the Demised Premises
or any part thereof then being made, including without limitation all permits,
licenses, and franchises which Lessee is required to obtain for the proper
erection, installation, operation or maintenance of the Improvements or Lessee’s
Equipment or any part thereof.

 

From time to time at the request of Lessor, Lessee at Lessee’s expense shall
execute, file and record such certificates of compliance, continuation
statements, and other documents and certificates, and shall pay such fees and
comply with such laws and regulations, as are necessary or appropriate to
preserve and protect any right of Lessor under this Lease.  Lessee shall furnish
to Lessor an opinion satisfactory to Lessor, of counsel satisfactory to Lessor,
with respect to the adequacy of such filings and recording.

 

If Lessee’s use of the Demised Premises is or becomes a legal nonconforming use
under any Legal Requirement, Lessee shall continually occupy and use the Demised
Premises without interruption and comply with such other requirements as may be
necessary or appropriate so that such use does not become illegal and may be
continued by future occupants of the Demised Premises following the expiration
or termination of the Lease Term.

 

Lessee shall not permit all or any part of the Demised Premises to be availed of
to qualify for fulfillment of any municipal or governmental requirements for the
construction or maintenance of any buildings or other improvements on property
other than the Demised

 

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Premises, and no building or other improvement constructed on the Demised
Premises shall rely on other property not demised hereunder in order to qualify
for fulfillment of any governmental requirements.  Lessee shall not by act or
omission impair the integrity of the Demised Premises as a zoning lot or lots
separate and apart from all other property.  Any attempt by Lessee to take any
action which would violate any provision of this paragraph shall be null and
void.

 

During any period of the Lease Term when any perimeter portion of the Demised
Premises shall be unimproved by any structure, wall, fence or gate, Lessee shall
prevent the same from being used by the public, as such, without restriction or
in such manner as might tend to impair Lessor’s title to the Demised Premises or
any part thereof, or in such manner as might create an enforceable claim or
claims of adverse use or possession by the public, or of implied dedication, of
the Demised Premises or any part thereof.  Such perimeter portion of the Demised
Premises so unimproved at all times shall be subject to such rules or directions
as Lessor from time to time may make or give in writing with respect to the
maintenance and use thereof, consistent with Lessor’s protection against a claim
or claims of the public.  All such rules and directions so made or given shall
be deemed to be and become incorporated in this Lease by reference and shall be
complied with and performed fully and promptly by Lessee at Lessee’s expense. 
Lessee hereby acknowledges that Lessor does not hereby consent, expressly or by
implication, to the unrestricted use or possession of any portion of the Demised
Premises by the public.

 

10.  Liens

 

Lessee shall not directly or indirectly create or permit to be created or to
remain, and shall discharge, any mortgage, lien, security interest, encumbrance
or charge on, pledge of or conditional sale or other retention agreement with
respect to the Demised Premises or any part thereof, Lessee’s interest therein,
or any Fixed Rent or other Rent payable under this Lease, other than:  liens for
Impositions not yet payable, or payable without the addition of any fine,
penalty, interest or cost for nonpayment, or being contested as permitted in
Article 11 hereof; and the liens of mechanics, materialmen, suppliers or
vendors, or right thereto, incurred in the ordinary course of business for sums
which under the terms of the related contract are not at the time due, provided
that adequate provision for the payment thereof shall have been made and
provisions of the following paragraph are complied with.

 

If, in connection with any work being performed by or for Lessee or any
subtenant or in connection with any materials being furnished to Lessee or any
subtenant, any mechanic’s lien or other lien or charge shall be filed or made
against the Demised Premises or any part thereof, or if any such lien or charge
shall be filed or made against Lessor, then Lessee, at Lessee’s expense, within
thirty days after such lien or charge shall have been filed or made, shall cause
the same to be canceled and discharged of record by payment thereof or filing a
bond or otherwise.  Lessee promptly and diligently shall defend any suit, action
or proceeding which may be brought for the enforcement of such lien or charge;
shall satisfy and discharge any judgment entered therein within thirty days from
the entering of such judgment by payment thereof or filing a bond or otherwise;
and on demand shall pay all damages, costs and expenses, including reasonable
attorneys’ fees, suffered or incurred by Lessor in connection therewith.

 

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Nothing contained in this Lease shall constitute any consent or request by
Lessor, express or implied, for the performance of any labor or services or the
furnishing of any materials or other property in respect of the Demised Premises
or any part thereof, nor as giving Lessee any right, power or authority to
contract for or permit the performance of any labor or services or the
furnishing of any materials or other property in any fashion that would permit
the filing or making of any lien or claim against Lessor or the Demised
Premises.  Lessor shall have the right, from time to time, to place upon the
Demised Premises in a conspicuous place such sign or other notice as Lessor may
deem necessary so as to give notice to others of the provisions of the preceding
sentence.

 

11.  Permitted Contests

 

Lessee, at Lessee’s expense, after prior written notice to Lessor, may contest,
by appropriate legal proceedings conducted in good faith and with due diligence,
the amount or validity or application, in whole or in part, of any Imposition or
any Legal Requirement, or the application of any instrument of record referred
to in Article 9 hereof, provided that:  Lessee shall first make all contested
payments, under protest if Lessee desires, unless such proceedings shall suspend
the collection thereof from Lessor, from any Rent and from the Demised Premises;
neither the Demised Premises, nor any part thereof or interest therein, nor any
Rent would be in any danger of being sold, forfeited, lost or interfered with;
in the case of a Legal Requirement, Lessor would not be in any danger of any
additional civil or criminal liability for failure to comply therewith and the
Demised Premises would not be subject to the imposition of any lien as a result
of such failure; and Lessee shall have furnished such security, if any, as may
be reasonably requested by Lessor.

 

Prior to any Imposition being contested becoming due, and from time to time
thereafter until payment thereof shall be made or shall be determined not to be
payable by the appropriate body having jurisdiction, Lessee shall deposit and
maintain with Lessor an amount of money, or other security satisfactory to
Lessor, sufficient to pay the items so contested or intended to be contested
together with the interest and penalties thereon which may accrue during such
contest, which amount shall be held by Lessor and may be applied by Lessor to
the payment of such items, interest and penalties, when finally fixed and
determined.  If the amount deposited with Lessor shall exceed the amount of such
items, and any interest and penalties, any excess remaining in Lessor’s hands
after the payment thereof shall be returned to Lessee.  At any time, prior to or
during any such contest, Lessor, after written notice to Lessee, may pay and
apply said money, or so much thereof as may be required, to the payment of any
Impositions, interest and penalties which, in Lessor’s judgment, should be paid
to prevent the sale of the Demised Premises or any part thereof or of the lien
created thereby, or to prevent the commencement of any action of foreclosure or
otherwise, by the holder of any such lien.  To the extent that the amount of
money so deposited with Lessor shall be insufficient fully to satisfy and
discharge any such Imposition, and interest and penalties thereon, Lessor may
pay the same and the deficiency so paid by Lessor shall be and become
immediately due and payable by Lessee to Lessor.

 

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12.  Utility Services

 

Lessee shall pay all charges for all public or private utility services and all
sprinkler systems and protection services at any time rendered to or in
connection with the Demised Premises or any part thereof; shall comply with all
contracts relating to any such services; and shall do all other things required
for the maintenance and continuance of all such services.

 

13.  Insurance

 

Lessee, at all times during the Lease Term and at Lessee’s expense, shall
provide and maintain in full force and effect with insurers approved by Lessor: 
(a) insurance with respect to the Improvements against loss or damage by fire,
lightning, windstorm, hail, explosion, riot, riot attending strike, civil
commotion, aircraft, vehicles, smoke and other risks from time to time included
under “extended coverage” policies, in an amount equal to at least 100% of the
full replacement value of the Improvements, and in any event in an amount
sufficient to prevent Lessor or Lessee from becoming a coinsurer of any loss
under applicable policies, which shall be written on a replacement cost basis;
(b) public liability and property damage insurance protecting Lessor against any
and all liability occasioned by negligence, occurrence, accident or disaster in
or about the Demised Premises or any part thereof, or the Improvements now or
hereafter erected thereon, or adjoining sidewalks, curbs, vaults and vault
space, if any, streets or ways, or any appurtenances thereto, in amounts
approved from time to time by Lessor, which amounts at the date hereof shall be,
in the case of public liability, $1,000,000 per person and $3,000,000 per
accident, and in the case of property damage, $500,000; (c) explosion insurance
in respect of any steam and pressure boilers and similar apparatus located on
the Demised Premises in amounts approved by Lessor, which amount at the date
hereof shall be $500,000; (d) war risk insurance when and to the extent
obtainable from the Federal government or any agency thereof; (e) appropriate
workers’ compensation or other insurance against liability arising from claims
of workers in respect of and during the period of any work on or about the
Demised Premises; (f) if the Demised Premises are located in an area which has
been identified by the Secretary of Housing and Urban Development as a flood
hazard area, flood insurance in an amount at least equal to the maximum limit of
coverage available for the Demised Premises under the National Flood Insurance
Act of 1968; and  (g) insurance against such other hazards and in such amounts
as is customarily carried by prudent owners and operators of similar properties,
and as Lessor reasonably may request.  Lessee shall comply with such other
requirements as Lessor from time to time reasonably may request for the
protection by insurance of Lessor’s interests.

 

All insurance maintained by Lessee pursuant to this Article 13:  (a) shall,
except for workers’ compensation insurance, name Lessor and Lessee as insureds,
as their respective interests may appear, and shall include an effective waiver
by the issuer of all rights of subrogation against any named insured or such
insured’s interest in the Demised Premises or any income derived therefrom;
(b) shall provide that all insurance claims for losses of less than $50,000
shall be adjusted by Lessee, and all insurance claims for losses of such amount
or more, except for workers’ compensation insurance which shall be adjusted by
Lessee, shall be adjusted by Lessor; (c) shall provide, except in the case of
public liability and workers’ compensation

 

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insurance, that insurance proceeds shall be payable to Lessor for the benefit of
Lessor and Lessee, as their respective interests may appear; (d) shall provide
that any losses shall be payable notwithstanding any act or failure to act or
negligence of Lessor or Lessee or any other person; (e) shall provide that no
cancellation, reduction in amount or material change in coverage thereof shall
be effective until at least ten days after receipt by Lessor and Lessee of
written notice thereof; and (f) shall be satisfactory in all other respects to
Lessor acting reasonably.  Any such insurance, at Lessee’s option, may be
provided through a blanket policy or policies in form and substance satisfactory
to Lessor, provided such policies shall provide in a manner satisfactory to
Lessor for specific allocation to the Demised Premises of the coverage afforded
by such blanket policy or policies, and provided further that such blanket
policy or policies give to Lessor no less protection than that which would be
afforded by separate policies.

 

Upon the execution of this Lease and thereafter not less than fifteen days prior
to the expiration date of any policy delivered pursuant to this Article 13,
Lessee shall deliver to Lessor certificates of the insurer, in form and
substance satisfactory to Lessor, as to the issuance and effectiveness of such
policies and the amounts of coverage afforded thereby, accompanied by copies of
such policies.

 

If at any time Lessee shall neglect or fail to provide or maintain insurance or
to deliver insurance policies in accordance with this Article 13, Lessor may
effect such insurance as agent for Lessee, by taking out policies in companies
selected by Lessor, and the amount of the premiums paid for such insurance shall
be paid by Lessee to Lessor on demand.  Lessor, in addition to Lessor’s other
rights and remedies, shall be entitled to recover as damages for any breach of
this Article 13 the uninsured amount of any loss, liability, damage, claim,
costs and expenses suffered or incurred by Lessor, and shall not be limited in
the proof of damages to the amount of the insurance premium not paid by Lessee
for such insurance.

 

14.  Indemnification By Lessee

 

Lessee shall indemnify and hold Lessor harmless from and against all
liabilities, obligations, claims, damages, fines, penalties, interest, causes of
action, costs and expenses, including reasonable attorneys’ fees (but excluding
any income or excess profits or franchise taxes of Lessor determined on the
basis of general income or revenue or any interest or penalties in respect
thereof), imposed upon or incurred by or asserted against Lessor or the Demised
Premises by reason of the occurrence or existence of any of the following,
whether or not resulting from any negligent act or omission of Lessor: 
ownership of the Demised Premises or any interest therein, or receipt of any
rent or other sum therefrom; any accident, injury to or death of persons
(including workers) or loss of or damage to property occurring, or claimed to
have occurred, on or about the Demised Premises or any part thereof, or any
Improvements now or hereafter erected thereon, or the adjoining sidewalks,
curbs, vaults or vault spaces, if any, streets or ways, or appurtenances
thereto; any use or condition of the Demised Premises or any part thereof, or
any Improvements now or hereafter erect thereon, or the adjoining sidewalks,
curbs, vaults and vault spaces, if any, streets or ways, or appurtenances
thereto; any failure on the part of Lessee promptly and fully to comply with or
perform any of the terms, covenants or conditions of this Lease; or performance
of any labor or services or the furnishing of any

 

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materials or other property in respect of the Demised Premises or any part
thereof.  In the case any suit, action or proceeding is brought against Lessor
or filed against the Demised Premises or any part thereof by reason of any such
occurrence, Lessee, upon Lessor’s request and at Lessee’s expense, shall resist
and defend such suit, action or proceeding, or cause the same to be resisted and
defended by counsel designated by Lessee subject to Lessor’s approval which
approval shall not be unreasonably withheld.  The obligations of Lessee under
this Article 14 shall survive the expiration or termination of the Lease Term.

 

Tenant shall indemnify and hold harmless Landlord and its successors and assigns
from all costs, damages, expenses, liability and harm resulting from any spill,
release or presence of toxic or hazardous materials (hereinafter an
“Environmental Conditions”) and the violation of any federal, state or local
laws addressing environmental matters (hereinafter “Environmental Law”)
occurring or existing with respect to any portion of the demised premises, prior
to the date on which the Tenant first commenced occupancy of such Premises.

 

15.  Damage to or Destruction of the Demised Premises

 

If there is any material damage to or destruction of the Demised Premises or any
part thereof, Lessee promptly shall give written notice thereof to Lessor,
generally describing the nature and extent of such damage or destruction.

 

If there is any damage to or destruction of the Demised Premises or any part
thereof, Lessee, at Lessee’s expense whether or not the insurance proceeds, if
any, on account of such damage or destruction shall be sufficient for the
purpose, promptly shall commence and complete, subject to Unavoidable Delays,
the restoration, replacement or rebuilding of the Demised Premises as nearly as
possible to its value, condition and character immediately prior to such damage
or destruction, with such alterations and additions as may be made at Lessee’s
election pursuant to and subject to the terms, covenants and conditions of
Article 7.  Pending the completion of such Restoration, Lessee shall perform all
temporary work and take all such actions as may be necessary or desirable to
protect and preserve the Demised Premises.

 

Insurance proceeds received by Lessor on account of any damage to or destruction
of the Demised Premises or any part thereof, less the costs and expenses
incurred by Lessor or Lessee in the collection thereof, including without
limitation fees and expenses of adjusters and attorneys, shall be applied as
hereinafter provided.

 

Net insurance proceeds received on account of any damage to or destruction of
the Demised Premises or any part thereof, unless Lessee is in default under this
Lease, shall be paid to Lessee or as Lessee may direct, from time to time as
Restoration progresses, to pay or to reimburse Lessee for the cost of
Restoration, upon written request of Lessee accompanied by evidence,
satisfactory to Lessor that the amount requested has been paid or is then due
and payable and is properly a part of such cost, that there are no mechanics’ or
similar liens for labor or materials theretofore supplied in connection with the
Restoration, and that the balance of said proceeds after making the payment
requested will be sufficient to pay the balance of the cost of Restoration. 
Upon receipt by Lessor of evidence satisfactory to Lessor that the Restoration
has

 

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been completed and the cost thereof has been paid in full, and that there are no
mechanics’ or similar liens for labor or materials supplied in connection
therewith, the balance, if any, of such proceeds shall be paid to Lessor.

 

Any insurance proceeds held by Lessor on any termination of this Lease and not
required to be paid to Lessee pursuant to this Article 15, shall be paid to and
retained by Lessor.

 

16.  Taking of the Demised Premises

 

If there is a Taking of the fee of the entire Demised Premises, other than for a
temporary use, this Lease shall terminate as of the date of such Taking.  In
case of a Taking, other than for temporary use, of such perpetual easement on
the entire Demised Premises, or of such a substantial part of the Demised
Premises, as shall result, in the good faith judgment of Lessor, in the Demised
Premises remaining after such Taking (even after Restoration where made) being
unsuitable for the use contemplated in this Lease, Lessee may terminate this
Lease by written notice to Lessor given within sixty days after such Taking, as
of a date specified in such notice within ninety days after such Taking.  Any
Taking of the Demised Premises of the character referred to in this Article 16,
which results in the termination of this Lease, is referred to herein as a
“Total Taking”.

 

If there is a Taking of the Demised Premises other than a Total Taking, this
Lease shall remain in full force and effect as to the principal of the Demised
Premises remaining immediately after such Taking, without any abatement or
reduction of Rent, except as may be expressly provided in this Article 16, and
Lessee, at Lessee’s expense whether or not the awards or payments, if any, on
account of such Taking will be sufficient for the purpose, promptly shall
commence and complete, subject to Unavoidable Delays, Restoration of the Demised
Premises as nearly as possible to its value, condition and character immediately
prior to such Taking, except for any reduction in area caused thereby, provided
that in case of a Taking for temporary use Lessee shall not be required to
effect Restoration (other than temporary work and actions necessary or desirable
for the protection of the Demised Premises) until such Taking for a temporary
use is terminated.

 

Awards and other payments on account of a Taking, less fees, costs and expenses
incurred in connection therewith, shall be applied as follows:

 

(a)  Net awards and payments received on account of a Taking, other than a
Taking for temporary use or a Total Taking, shall be held and applied from time
to time as Restoration progresses, to pay or to reimburse Lessee for the cost of
Restoration, upon written request of Lessee accompanied by evidence,
satisfactory to Lessor, that the amount requested has been paid or is then due
and payable and is properly a part of such cost, that there are no mechanics’ or
similar liens for labor or materials theretofore supplied in connection with the
Restoration, and that the balance of said proceeds after making the payment
requested will be sufficient to pay the balance of the cost of Restoration. 
Upon

 

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the completion of the Restoration, the balance, if any, of such awards and
payments shall be paid to and retained by Lessor.

 

(b)  Net awards and payments received on account of a Taking for temporary use
shall be held and applied to the payment of Rent until such Taking for temporary
use is terminated and Restoration, if any, has been completed, provided that, if
any portion of such award or payment is made by reason of any damage to or
destruction of the Demised Premises, such portion shall be held and applied as
provided in the first sentence of clause (a) of this Article 16.  The balance,
if any, of such awards and payments, unless Lessee is in default hereunder,
shall be paid to Lessee.

 

(c)  All awards and payments received on account of a Total Taking shall be paid
to Lessor.

 

Notwithstanding the foregoing, if at the time of any Taking or at any time
thereafter, Lessee shall be in default under this Lease and such default shall
be continuing, Lessor is hereby authorized and empowered, in the name and on
behalf of Lessee and otherwise, to file and prosecute Lessee’s claim, if any,
for an award on account of any Taking and to collect such award and apply the
same, after deducting all fees, costs and expenses incident to the collection
thereof, to the curing of any then existing default under this Lease.

 

If any portion of an award or other payment received on account of a Taking
shall be paid to Lessor pursuant to the second sentence of clause (a) of this
Article 16, each installment of Fixed Rent hereunder shall be reduced,
commencing with the first Rent Payment Date following the date of such payment,
by an amount to be computed by multiplying such installment in effect prior to
such date by a fraction, the numerator of which is the amount of the award or
payment made to Lessor in connection with such Taking after deduction of
Lessor’s expenses in the collection of such awards and payments, including
without limitation fees and expenses of appraisers and attorneys, and the
denominator of which is the fair market value of the Demised Premises as of the
commencement date of this Lease as determined by Lessor, acting reasonably, as
reduced by the amount of any other such award or payment previously made to
Lessor pursuant to the second sentence of clause (a) of this Article 16.

 

Revocation by any public authority of any license or permit to maintain or use
any vault or other area within the streets adjoining the Demised Premises, shall
not affect this Lease, or diminish any Rent payable by Lessee hereunder, or
diminish any of Lessee’s other obligations hereunder.  Lessee shall comply with
and perform all laws, rules, orders, ordinances, regulations and requirements
relating to said vaults and other street areas.  Lessee shall pay all fees,
charges, taxes and other amounts imposed by reason of the existence or use of
said vaults or other street areas.

 

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17.  Quiet Enjoyment

 

Lessor covenants that so long as Lessee is not in default hereunder in the
payment of any Rent or compliance with or the performance of any of the terms,
covenants or conditions of this Lease on Lessee’s part to be complied with or
performed, Lessee shall not be hindered or molested by Lessor in Lessee’s
enjoyment of the Demised Premises.

 

18.  Right to Cure Lessee’s Default

 

If Lessee fails to make any payment or to comply with or perform any term,
covenant or condition of this Lease to be complied with or performed by Lessee,
Lessor may, but shall be under no obligation to, after thirty days’ notice to
Lessee (or upon shorter notice, or without notice, if necessary to meet an
emergency situation or time limitation of a Legal Requirement), make such
payment or perform or cause to be performed such work, labor, services, acts or
things, and take such other steps as Lessor may deem advisable, to comply with
any such term, covenant or condition which is in default.  Entry by Lessor upon
the Demised Premises for such purpose shall not waive or release Lessee from any
obligation or default hereunder.  Lessee shall reimburse Lessor (with interest
at the rate of ten percent per annum) for all sums so paid by Lessor and all
costs and expenses incurred by Lessor in connection with the making of any
payments, the performance of any act or other steps taken by Lessor pursuant to
this Article 18.

 

19.  Events of Default and Termination

 

If any one or more of the following events (“Events of Default”) shall occur:

 

(a)  if Lessee shall fail to pay any Fixed Rent when as the same becomes due and
payable; or

 

(b)  if Lessee shall fail to pay any Rent, other than Fixed Rent, when and as
the same becomes due and payable and such failure shall continue for more than
ten days after notice to Lessee; or

 

(c)  if Lessee shall fail to comply with or perform any term, covenant or
condition of Articles 8, 9, 10 or 13, and such failure shall continue for more
than thirty days after Lessee receives notice of such failure, regardless of the
source of such notice; or

 

(d)  if Lessee shall fail to comply with or perform any other term, covenant or
condition hereof, and such failure shall continue for more than thirty days
after notice thereof from Lessor, and Lessee within said period, subject to
Unavoidable Delays, shall not commence with due diligence and dispatch the
curing of such default, or, having so commenced, thereafter shall fail or
neglect to prosecute or complete with due diligence and dispatch the curing of
such default for reasons other than Unavoidable Delays; or

 

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(e)  if Lessee shall make a general assignment for the benefit of creditors, or
shall admit in writing Lessee’s inability to pay Lessee’s debts as they become
due, or shall file a petition in bankruptcy, or shall be adjudicated a bankrupt
or insolvent, or shall file a petition seeking any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under any
present or future statute, law or regulation, or shall file an answer admitting,
or shall fail to contest, the material allegations of a petition filed against
Lessee in any such proceeding, or shall seek or consent to or acquiesce in the
appointment of any trustee, receiver or liquidator of Lessee or any material
part of Lessee’s properties; or

 

(f)  if, within ninety days after the commencement of any proceeding against
Lessee seeking any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any present or future statute,
law or regulation, such proceeding shall not have been dismissed, or if, within
ninety days after the appointment without the consent of acquiescence of Lessee,
of any trustee, receiver or liquidator of Lessee or of any material part of
Lessee’s properties, such appointment shall not have been vacated; or

 

(g)  if a final judgment for the payment of money in excess of $50,000 shall be
rendered against Lessee and, within sixty days after the entry thereof, such
judgment shall not have been discharged or execution thereof stayed pending
appeal, or if, within sixty days after the expiration of any such stay, such
judgment shall not have been discharged;

 

then, and in any such Event of Default, regardless of the pendency of any
proceeding which has or might have the effect of preventing Lessee from
complying with the terms, covenants or conditions of this Lease, Lessor, at any
time thereafter may give a written termination notice to Lessee, and on the date
specified in such notice (which shall be not less than 15 days after such
notice) this Lease shall terminate and, subject to Article 25, the Lease Term
shall expire and terminate by limitation, and all rights of Lessee under this
Lease shall cease, unless before such date (i) all arrears of Rent (with
interest at the rate of ten percent per annum) and all costs and expenses,
including reasonable attorneys’ fees, incurred by or on behalf of Lessor
hereunder, shall have been paid by Lessee, and (ii) all other defaults at the
time existing under this Lease shall have been fully remedied to the
satisfaction of Lessor.  Lessee shall reimburse Lessor for all costs and
expenses, including reasonable attorneys’ fees, incurred by or on behalf of
Lessor occasioned by or in connection with any default by Lessee under this
Lease.

 

20.  Repossession

 

If an Event of Default shall have occurred and be continuing, Lessor, whether or
not the Lease Term shall have been terminated pursuant to Article 19, may enter
upon and repossess the Demised Premises or any part thereof by force, summary
proceedings, ejectment or otherwise, and may remove Lessee and all other persons
and any and all property therefrom.

 

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21.  Reletting

 

At any time or from time to time after the repossession of the Demised Premises
or any part thereof pursuant to Article 20, whether or not the Lease Term shall
have been terminated pursuant to Article 19, Lessor may (but shall be under no
obligation to) relet the Demised Premises or any part thereof for the account of
Lessee, for such term or terms (which may be greater than or less than the
period which would otherwise have constituted the balance of the Lease Term) and
on such conditions (which may include concessions or free rent) and for such
uses as Lessor, in Lessor’s absolute discretion, may determine, and may collect
and receive the rents therefrom.  Lessor, at Lessor’s option, may make such
alterations and decorations in the Demised Premises as Lessor, in Lessor’s sole
judgment, considers necessary or advisable for the purpose of reletting the
Demised Premises or any part thereof, and the making of such alterations and
decorations shall not operate or be construed to release Lessee from any
liability under this Lease.  Lessor shall not be responsible or liable for any
failure to relet the Demised Premises or any part thereof or for any failure to
collect any rent due upon any such reletting.

 

22.  Assignment of Subrents

 

Lessee hereby irrevocably assigns to Lessor all rents due or to become due from
any assignee of Lessee’s interest hereunder and any sublessee or any tenant or
occupant of the Demised Premises or any part thereof, together with the right to
collect and receive such rents, provided that, so long as Lessee is not in
default under this Lease, such assignment shall not become effective and Lessee
shall have the right to collect such rents for Lessee’s own use and purposes. 
Upon any default by Lessee under this Lease, Lessor shall have absolute title to
such rents and the absolute right to collect the same.  Lessor shall apply to
the Rent due under this Lease the net amount (after deducting all costs and
expenses incident to the collection thereof and the operation and maintenance,
including repairs, of the Demised Premises) of any rents so collected and
received by Lessor.  Lessee shall not demand or accept from any sublessee,
tenant or occupant of the Demised Premises or any part thereof, any payment,
prepayment or advance payment in respect of more than one rental period under
the applicable sublease and in no event shall Lessee demand or accept any
payment, prepayment or advance payment for a period exceeding one month.

 

23.  Lessee’s Equipment

 

All Lessee’s Equipment shall be the property of Lessee.

 

Any Lessee’s Equipment not removed by Lessee, at Lessee’s expense, within thirty
days after any repossession of the Demised Premises, whether or not this Lease
has been terminated, shall be considered abandoned by Lessee and may be
appropriated, sold, destroyed or otherwise disposed of by Lessor without notice
to Lessee and without obligation to account therefor; and Lessee shall pay
Lessor, on demand, all costs and expenses incurred by Lessor in removing,
storing or disposing of any of Lessee’s Equipment.  Lessee shall immediately
repair at Lessee’s expense all damage to the Demised Premises caused by any
removal of Lessee’s

 

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Equipment therefrom, whether effected by Lessee or by any other person.  Lessor
shall not be responsible for any loss or damage to Lessee’s Equipment.

 

24.  Security Deposit

 

Lessee has deposited with Lessor the sum of $59,500.00 as security for the full
and faithful observance and performance by Lessee of the terms, covenants and
conditions of this Lease.  If Lessee defaults in the observance or performance
of any term, covenant or condition of this Lease, including without limitation
the payment of Rent, Lessor may use, apply or retain the whole or any part of
the security so deposited to the extent required for the payment of any Rent or
any other sum as to which Lessee is in default or for any sum which Lessor may
expend or may be required to expend by reason of Lessee’s default, including
without limitation any damages or deficiency accrued before or after summary
proceedings or other reentry by Lessor.  If Lessee shall fully and faithfully
observe and perform all of the terms, covenants and conditions of this Lease,
the security, without interest, shall be returned to Lessee after the end of the
Lease Term and after delivery of entire possession of the Demised Premises to
Lessor.

 

In the event of a sale, transfer or leasing of the Demised Premises by Lessor,
Lessor shall have the right to transfer the security to the vendee, transferee
or lessee, and Lessor thereupon shall be released by Lessee from all liability
for the return of such security.  Lessee agrees to look solely to such new owner
or landlord for the return of said security.  The provisions of this paragraph
shall apply to every transfer or assignment of the security to a new owner or
landlord.  Lessee shall not assign or encumber or attempt to assign or encumber
the security, and neither Lessor nor the successors or assigns of Lessee shall
be bound by any such assignment, encumbrance, or attempted assignment or
encumbrance.

 

If Lessor applies or retains all or any portion of the security, Lessee on
demand shall pay to Lessor the amount so applied or retained which shall be
added to the security so that the same shall be replenished to its former amount
and so that at all times the amount deposited shall be $59,500.00.

 

25.  Survival of Lessee’s Obligations and Damages

 

No expiration or termination of the Lease Term pursuant to this Lease, by
operation of law or otherwise (except as expressly provided herein), and no
repossession of the Demised Premises or any part thereof pursuant to this Lease
or otherwise, shall relieve Lessee of Lessee’s obligations or liabilities
hereunder, all of which shall survive such expiration, termination or
repossession.

 

In the event of any such expiration, termination or repossession, Lessee shall
pay to Lessor all Rent up to the time of such expiration, termination or
repossession, together with all costs and expenses incurred by Lessor in
connection with such termination or repossession including attorneys’ fees, and
thereafter Lessee, until the end of what would have been the Lease Term in the
absence of such expiration, termination or repossession, and whether or not the

 

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Demised Premises or any part thereof shall have been relet, shall be liable to
Lessor for, and shall pay to Lessor, as liquidated and agreed and current
damages for Lessee’s default, (a) all Rent which would be payable under this
Lease by Lessee in the absence of such expiration, termination or repossession,
less (b) all net rents collected by Lessor from the tenants or subtenants of the
Demised Premises, if any, and the net proceeds, if any, of any reletting
affected for the account of Lessee pursuant to Article 21 after deducting from
such proceeds all Lessor’s expenses in connection with such reletting and other
sums owed Lessor, including without limitation all repossession costs, brokerage
commissions, legal and accounting expenses, attorneys’ fees, employees’
expenses, promotional expenses, reasonable alteration costs, and expenses of
preparation for such reletting.  Lessee shall pay such current damages monthly
on the Rent Payment Dates applicable in the absence of such expiration,
termination or repossession, and Lessor shall be entitled to recover the same
from Lessee on each such date.  Any suit brought to collect said amounts for any
month or months shall not prejudice in any way the rights of Lessor to collect
the deficiency for any subsequent month by similar action or proceeding.

 

At any time after such expiration, termination or repossession, whether or not
Lessor shall have collected any current damages as aforesaid, Lessor shall be
entitled to recover from Lessee, and Lessee shall pay to Lessor on demand, as
and for liquidated and agreed final damages for Lessee’s default and in lieu of
all current damages beyond the date of such demand, an amount equal to the
excess, if any, of (a) all Rent which would be payable under this Lease from the
date of such demand (or, if it be earlier, the date to which Lessee shall have
satisfied in full Lessee’s obligation under the preceding paragraph of this
Article 25 to pay current damages) until what would be the then unexpired Lease
Term in the absence of such expiration, termination or repossession, over
(b) the then fair net rental value of the Demised Premises for the same period. 
In determining said fair net rental value, the rent realized by any reletting of
the Demised Premises, if such reletting is upon terms (other than rental
amounts) generally comparable to the terms of this Lease, shall be deemed to be
said fair net rental value.  Upon the payment of such final damages, this Lease,
if not already terminated, shall be deemed terminated.  If any statute or
rule of law shall validly limit the amount of such liquidated final damages to
less than the amount above agreed upon, Lessor shall be entitled to the maximum
amount allowable under such statute or rule of law.

 

26.  Injunction

 

Lessor, in addition to all other rights, powers and remedies and notwithstanding
the concurrent pendency of summary or other dispossess proceedings, at Lessor’s
option, shall have the right at all times during the Lease Term to restrain by
injunction any violation or attempted violation by Lessee of any of the terms,
covenants or conditions of this Lease, and to enforce by injunction any of such
terms, covenants or conditions.

 

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27.  Waivers

 

To the extent permitted by law, Lessee waives:  any notice of reentry or of the
institution of legal proceedings to that end; any right of redemption, reentry
or repossession; any right to trial by jury in any action or proceeding or in
any matter in any way connected with this Lease or the Demised Premises; and the
benefit of any laws now or hereafter in force exempting property for rent or for
debt.

 

No failure by Lessor or Lessee to insist upon the strict performance of and
compliance with any term, covenant or condition hereof or to exercise or enforce
any right, power or remedy consequent upon a breach thereof, and no submission
by Lessee or acceptance by Lessor of full or partial Rent during the continuance
of any such breach, shall constitute a waiver of any such breach or of any such
term, covenant or condition.  No waiver of any breach of any term, covenant or
condition of this Lease shall affect or alter this Lease, which shall continue
in full force and effect, or the respective rights, powers or remedies of Lessor
or Lessee with respect to any other then existing or subsequent breach.

 

28.  Lessor’s Remedies Cumulative

 

All of the rights, powers and remedies of Lessor provided for in this Lease or
now or hereafter existing at law or in equity, or by statute or otherwise, shall
be deemed to be separate, distinct, cumulative and concurrent.  No one or more
of such rights, powers or remedies, nor any mention of reference to any one or
more of them in this Lease, shall be deemed to be in the exclusion of, or a
waiver of, any other rights, powers or remedies provided for in this Lease, or
now or hereafter existing at law or in equity, or by statute or otherwise.  The
exercise or enforcement by Lessor of any one or more of such rights, powers or
remedies shall not preclude the simultaneous or later exercise or enforcement by
Lessor of any or all of such other rights, powers or remedies.

 

29.  Assignment, Subletting and Mortgages

 

Lessee expressly covenants that Lessee shall not voluntarily or involuntarily
assign, encumber, mortgage or otherwise transfer this Lease, or sublet the
Demised Premises or any part thereof, or suffer or permit the Demised Premises
or any part thereof to be used or occupied by others, by operation of law or
otherwise, without the prior written consent of Lessor in each instance which
consent shall not be unreasonably withheld.  Absent such consent, any act or
instrument purporting to do any of the foregoing shall be null and void.

 

If this Lease is assigned, whether or not in violation of the terms of this
Article 29, Lessor may collect Rent from the assignee.  If the Demised Premises
or any part thereof are sublet or occupied by anybody other than Lessee, Lessor,
after any default by Lessee, may collect rent from the subtenant or occupant,
and apply the net amount collected to the Rent due hereunder.  Such collection
of rent by Lessor shall not be deemed a waiver of the provisions hereof, the
acceptance of the assignee, subtenant or occupant as a tenant, or a release of
Lessee from the further observance and performance by Lessee of the terms,
covenants and conditions of this Lease.

 

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The consent by Lessor to an assignment, encumbrance, transfer or subletting
shall not in any way be deemed consent to any further assignment, encumbrance,
transfer or subletting.  In no event shall any permitted sublessee assign or
encumber its sublease or further sublet all or any portion of its sublet space,
or otherwise suffer or permit the sublet space or any part thereof to be used or
occupied by others, without the prior written consent of Lessor in each
instance, and each permitted sublease shall so provide in its terms.

 

If Lessee requests Lessor’s consent to a specific assignment or subletting,
Lessee shall first submit to Lessor in writing:  the name and address of the
proposed assignee or sublessee; a counterpart of the proposed agreement of
assignment or sublease and all other instruments or agreements pertaining
thereto; such information as to the nature and character of the business of the
proposed assignee or sublessee and as to the nature of its proposed use of the
space, as Lessor reasonably may request; banking, financial or other credit
information relating to the proposed assignee or sublessee sufficient to enable
Lessor to determine the financial responsibility and character of the proposed
assignee or sublessee; and a statement of all sums or other consideration paid
or to be paid to Lessee by or for the account of the assignee or sublessee for
or in connection with such assignment or sublease, including without limitation
sums paid or to be paid for the sale or rental of Lessee’s fixtures, leasehold
improvements, equipment, furniture, furnishings or other personal property.

 

Any such consent of Lessor shall be subject to the terms of this Lease and
conditional upon there being no default by Lessee, beyond any grace period,
under any term, covenant or condition of this Lease at the time that Lessor’s
consent is requested and on the date of the commencement of the term of any such
proposed sublease or the effective date of any such proposed assignment.

 

Upon receiving Lessor’s written consent, a duly executed copy of the sublease or
assignment shall be delivered to Lessor within thirty days after execution
thereof.  Any such sublease shall provide that the sublessee shall comply with
all applicable terms, covenants and conditions of this Lease to be observed or
performed by Lessee hereunder.  Any such assignment shall contain an assumption
by the assignee of all of the terms, covenants and conditions of this Lease to
be observed or performed by Lessee.

 

The transfer of a majority of the issued and outstanding capital stock of any
corporate tenant or subtenant of this Lease or of a majority of the total
interest in any partnership tenant or subtenant, however accomplished, and
whether in a single transaction or in a series of related or unrelated
transactions, shall be deemed an assignment of this Lease or of such sublease. 
The transfer of outstanding capital stock of any corporate tenant or subtenant,
for purposes of this Article 29, shall not include a sale of such stock by
persons other than those deemed “insiders” within the meaning of the Securities
Exchange Act of 1934 as amended, effected through any “over the counter” market
or recognized stock exchange.

 

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30.  Subordination and Attornment

 

This Lease, and all rights of Lessee hereunder, are and shall be subject and
subordinate in all respects to all mortgages which may now or hereafter affect
the Demised Premises, whether or not such mortgages shall also cover other lands
or buildings, to each and every advance made or hereafter to be made under such
mortgages and to all renewals, modifications, replacements, spreaders,
consolidations and extensions of such mortgages provided such mortgage shall
include a non disturbance provision with respect to this Lease.  In the event of
any sale of the Demised Premises in a foreclosure of any such mortgage or the
exercise by the holder of any such mortgages of any other remedies provided for
by law or in such mortgage, Lessee, upon written request of the holder of the
mortgage or the purchaser at such foreclosure or any person succeeding to the
interest of the holder of the mortgage, shall attorn to such holder, purchaser
or successor in interest, as the case may be, without change in the terms,
covenants or conditions of this Lease.  This Lease shall not be deemed to be
terminated by any foreclosure proceedings or other remedies for the enforcement
of the mortgage by such holder, purchaser or successor in interest.  The
provisions of this Article 30 shall be self-operative and no further instrument
of subordination and/or attornment shall be required.  In confirmation of such
subordination and/or attornment, Lessee promptly shall execute and deliver at
Lessee’s expense any instrument that Lessor or the holder of any such mortgage
may reasonably request to evidence such subordination and/or attornment; and
Lessee hereby irrevocably constitutes and appoints Lessor as Lessee’s
attorney-in-fact, coupled with an interest, to execute, acknowledge and deliver
any such instruments for and on behalf of Lessee.

 

31.  Entry by Lessor

 

Lessor and the authorized representatives of Lessor shall have the right to
enter the Demised Premises at all reasonable times for the purpose of inspecting
the same or for the purpose of doing any work permitted to be done by Lessor
under this Lease, and to take all such actions thereon as may be necessary or
appropriate for any other purpose.  Nothing contained in this Lease shall create
or imply any duty on the part of Lessor to make any such inspection or do any
such act.  Lessor and representatives of Lessor shall have the right to enter
the Demised Premises at all reasonable times for the purpose of showing the
Demised Premises to prospective purchasers or mortgagees, and at any time during
the twelve month period preceding the expiration or termination of this Lease
for the purpose of showing the same to prospective tenants, and within said
period to display on the Demised Premises advertisements for sale or letting if
such advertisements do not interfere unreasonably with the business then
conducted on the Demised Premises.  No such entry shall constitute an eviction
of Lessee.

 

32.  Conveyance by Lessor

 

If the original or any successor Lessor shall convey or otherwise dispose of the
Land and Improvements, Lessor shall thereupon be released from all obligations
and liabilities of Lessor under this Lease (except those accruing prior to such
conveyance or other disposition), and such obligations and liabilities shall be
binding solely on the then owner of the Land and Improvements.

 

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In any action brought to enforce the obligations or liabilities of Lessor under
this Lease, any judgment or decree shall be enforceable against Lessor only to
the extent of Lessor’s interest in the Land and Improvements, and no such
judgment shall be the basis of execution on, or be a lien on, assets of Lessor
other that Lessor’s interest in the Land and Improvements.

 

33.  No Merger of Title

 

There shall be no merger of the leasehold estate created by this Lease with the
fee estate in the Demised Premises by reason of the fact that the same person
may own or hold (a) the leasehold estate created by this Lease or any interest
therein, and (b) the fee estate in the Demised Premises or any interest in such
fee estate.  No such merger shall occur unless and until all persons having any
interest in the leasehold estate created by this Lease, and in the fee estate in
the Demised Premises, shall join in a written instrument effecting such merger
and shall duly record the same.

 

34.  Acceptance of Surrender

 

No modification, termination or surrender of this Lease or surrender of the
Demised Premises or any part thereof or of any interest therein by Lessee shall
be valid or effective unless agreed to and accepted in writing by Lessor, and no
act by any representative or agent of Lessor, other than such a written
agreement and acceptance, shall constitute an acceptance thereof.

 

35.  Holdover Tenancy

 

If Tenant holds possession of the Premises after the term of this Lease, Tenant
shall become a tenant from month to month under the provisions herein provided,
but at a monthly rental of One Hundred Fifty Percent (150%) of the rent for the
last month of the expired term without the requirement for demand or notice by
Landlord to Tenant demanding delivery of possession of said Premises which sum
shall be payable in advance on the first day of each month, and such tenancy
shall continue until terminated by Landlord, or until Tenant shall have vacated
the Premises.

 

36.  End of Lease Term

 

Upon the expiration or termination of the Lease Term, Lessee shall quit,
surrender and deliver to Lessor the Demised Premises with the Improvements
thereon in good order and condition, ordinary wear and tear excepted, and shall
remove all Lessee’s Equipment therefrom.

 

If Lessee vacates the Demised Premises at any time prior to the expiration or
termination of this Lease, Lessee shall cause the Demised Premises to be
patrolled by armed guards on a 24 hour basis so as to prevent vandalism or other
damage to the Demised Premises.

 

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37.  Options to Extend Lease Term

 

Lessee shall have two options to extend the Lease Term each for an additional
FIVE YEARS, subject to all of the terms, covenants and conditions of this
Lease.  During the first such five year extension period, Lessee shall pay fixed
rent at the rate of $450,000  per annum, and during the second five year
extension period of said extended Lease Term, Lessee shall pay Fixed Rent at the
fair market value rate at the time of the exercise of the option Lessee shall
pay all other items of Rent during both such extension periods.

 

If the aforesaid first option has been duly exercised, Lessee shall have a
second option to extend the Lease Term for an additional FIVE YEARS, subject to
all of the terms, covenants and conditions of this Lease.  During said second
extension of the Lease Term, Lessee shall pay Fixed Rent at the fair market
value rent at the time of the exercise of the second option and shall pay all
other items of Rent.

 

To be effective, Lessee must give Lessor written notice of Lessee’s election to
extend the Lease Term not less than 180 DAYS prior to the expiration of the then
existing Lease Term.  Lessee’s right to extend the Lease Term pursuant to this
Article 36 shall be conditioned upon there being no default by Lessee in the
observance or performance of any of the terms, covenants and conditions of this
Lease either at the time of the exercise of the option or on the expiration of
the then existing Lease Term.

 

38.  Brokerage

 

Lessor and Lessee each represents and warrants to the other that such party has
not dealt with any broker or finder in connection with the Demised Premises or
this Lease.  Lessor and Lessee each agrees to indemnify and hold the other
harmless from and against any and all commission, liability, claim, loss, damage
or expense, including reasonable attorneys’ fees, arising from any claims for
brokerage or any other fee or commission by any person with whom such party has
dealt.

 

39.  Definitions

 

As used in this Lease, the following terms have the following respective
meanings:

 

“default” — any condition or event which constitutes, or which after notice or
lapse of time or both would constitute, an Event of Default.

 

“Demised Premises” — as defined in Article 1.

 

“Event of Default” — as defined in Article 19.

 

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“Fixed Rent” — as defined in Article 2.

 

“Impositions” — all taxes, assessments (including without limitation all
assessments for public improvements or benefits, whether or not commenced or
completed prior to the date hereof and whether or not to be completed within the
Lease Term), water and sewer rents and charges, charges for public utilities,
excises, levies, license fees, permit fees, inspection fees and other
authorization fees and other charges of every nature and kind whatsoever
(including all interest and penalties thereon), in each case, whether general or
special, ordinary or extraordinary, foreseen or unforeseen, of every character,
which at any time during or in respect of the Lease Term may be assessed,
levied, charged, confirmed or imposed on or in respect of or be a lien upon
(a) the Demised Premises or any part thereof or any rent therefrom or any
estate, right or interest therein, or (b) any occupancy, use or possession of or
activity conducted on the Demised Premises or any part thereof.  The term
“Impositions” shall exclude, however, any income taxes assessed against Lessor,
franchise, estate, inheritance or transfer taxes of Lessor, or any tax or charge
in replacement or substitution of the foregoing or of a similar character;
provided, however, that if at any time during the Lease Term the then prevailing
method of taxation or assessment shall be changed so that the whole or any part
of the Impositions theretofore payable by Lessee as above provided, shall
instead be levied, charged, assessed or imposed whole or partially on the rents
received by Lessor from the Demised Premises, or shall otherwise be imposed
against Lessor in the form of a franchise tax or otherwise, then Lessee shall
pay the same (and the same shall be deemed Impositions) at least twenty days
prior to the last day upon which the same may be paid without interest or
penalty for the late payment thereof.

 

“Improvements” — as defined in Article 1.  The term “Improvements” shall include
all fixtures, equipment and machinery now situate on or appurtenant to the
Improvements referred to in Article 1, other than Lessee’s Equipment.

 

“Insurance Requirements” — all terms of any insurance policy covering or
applicable to the Demised Premises or any part thereof, all requirements of the
issuer of any such policy, and all orders, rules, regulations and other
requirements of the National Board of Fire Underwriters, or its successor or any
other body exercising similar functions, applicable to or affecting the Demised
Premises or any part thereof or any use or condition of the Demised Premises or
any part thereof.

 

“Land” — as defined in Article 1.

 

“Lease” — this Lease, as at the time amended, modified or supplemented.

 

“Lease Term” — as defined in Article 1, as the same may be extended or renewed.

 

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“Legal Requirements” — all laws, statutes, codes, acts, ordinances, orders,
judgments, decrees, injunctions, rules, regulations, permits, licenses,
authorizations, directions and requirements of all governments, departments,
commissions, boards, courts, authorities, agencies, officials and officers,
foreseen or unforeseen, ordinary or extraordinary, which now or at any time
hereafter may be applicable to the Demised Premises or any part thereof, or the
Improvements now or hereafter located thereon, or the facilities or equipment
therein, or any of the adjoining sidewalks, curbs, vaults or vault space, if
any, streets or ways, or the appurtenances to the Demised Premises or the
franchises and privileges connected therewith, or any use or condition of the
Demised Premises or any part thereof.  Legal Requirements shall include the
Comprehensive Environmental Response Compensation and Liability Act, 42 U.S.C.
Section 9601 et seq., the Resource Conservation and Recovery Act, 42 U.S.C.
Section 6901 et seq., and all other applicable environmental laws and
regulations, and all requirements to be complied with pursuant to any
certificate of occupancy affecting the Demised Premises.

 

“Lessee’s Equipment” — all fixtures, machinery, apparatus, furniture,
furnishings and other equipment and all temporary or auxiliary structures
installed by or at the request of Lessee in or about the Demised Premises or any
part thereof, which (a) are not used and are not procured for use, in whole or
in part, in connection with the operation, maintenance or protection of the
Demised Premises, and (b) are removable provided any damage to the Demised
Premises caused by such removal shall be repaired at Lessee’s expense.

 

“person” — an individual, a corporation, an association, a partnership, a joint
venture, an organization, or other business entity, or a governmental or
political unit or agency.

 

“Rent Payment Date” — as defined in Article 2.

 

“Restoration” — all restorations, replacements, rebuildings, alterations,
additions, temporary repairs and property protection to be performed in
connection with a Taking of the Demised Premises or the damage to or destruction
of the Demised Premises.

 

“Taking” — a taking during the Lease Term of all or any part of the Demised
Premises, or any leasehold or other interest therein or right accruing thereto,
as the result of the exercise of the right of condemnation or eminent domain or
a sale in lieu or in anticipation of such exercise or a change or grade
affecting the Demised Premises or any part thereof.

 

“Total Taking” — as defined in Article 16.

 

“Unavoidable Delays” — delays due to strikes, acts of God, governmental
restrictions, enemy action, riot, civil commotion, fire, unavoidable casualty or

 

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other causes beyond the control of Lessee, provided that no delay shall be
deemed an Unavoidable Delay if the Demised Premises or any part thereof or
interest therein or any Rent would be in any danger of being sold, forfeited,
lost or interfered with, or if Lessor or Lessee would be in danger of incurring
any civil or criminal liability for failure to perform the required act.  Lack
of funds shall not be deemed a cause beyond the control of Lessee.

 

40.  Notices

 

All notices, demands, elections and other communications desired or required to
be delivered or given under this Lease shall be in writing, and shall be deemed
to have been delivered and given when delivered by hand, or on the third
business day after the same have been mailed by first class registered or
certified mail, postage prepaid, enclosed in a securely sealed envelop addressed
to the party to which the same is to be delivered or given at such party’s
address as set forth in this Lease or at such other address as said party shall
have designated in writing in accordance with this Article 39.

 

41.  Communications Tower

 

Landlord shall have the right to locate communication tower or towers on the
Premises provided structure and related equipment housing and related
constructions does not materially interfere with Tenant’s business. Landlord
reserves the right for reasonable access for itself and other in connection with
such Tower(s).

 

41.  Miscellaneous

 

All rights, powers and remedies provided herein may be exercised only to the
extent that the exercise thereof does not violate any applicable law, and are
intended to be limited to the extent necessary so that they will not render this
Lease invalid, unenforceable or not entitled to be recorded under any applicable
law.  If any term, covenant or condition of this Lease shall be held to be
invalid, illegal or unenforceable, the validity of the other terms, covenants
and conditions of this Lease shall in no way be affected thereby.  If any
interest provided for herein shall be deemed to be in excess of the maximum
amount permitted under applicable law, Lessee shall be deemed to be entitled to
the maximum amount permitted under applicable law.

 

Lessor and Lessee agree that a memorandum of this Lease, but not this Lease, may
be recorded by Lessee, at Lessee’s expense.

 

The headings in this Lease are for purposes of reference only and shall not
limit or define the meaning hereof.  This Lease may be executed in any number of
counterparts, each of which is an original, but all of which shall constitute
one instrument.

 

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This Lease may be changed or modified only by an instrument in writing signed by
the party against which enforcement of such change or modification is sought.

 

Subject to Articles 29 and 32, this Lease shall be binding upon and inure to the
benefit of and be enforceable by the respective successors and assigns of the
parties hereto.

 

IN WITNESS WHEREOF, Lessor and Lessee have executed this Lease on the date first
above written.

 

 

 

 

 CONTINENTAL FINANCE CORPORATION

 ATTEST:

 

 

 

 

 By

 

 

 

 

 President

 

 

 

 

 

 By

 

 

 

 

 

 Secretary

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ATLANTIC EXPRESS TRANSPORTATION CORP.

 

 

 

 

 

 

 

 

 By

 

 

 

 

 

 President

 

 

 

 

 

 By

 

 

 

 

 Secretary

 

 

 

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EXHIBIT A

 

The Demised Premises

 

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Acknowledgment for CONTINENTAL FINANCE CORPORATION :

 

STATE OF NEW YORK, COUNTY OF                     , ss.

 

On the      day ofNovember, 2005, before me, the undersigned, personally
appeared                                                   , personally known to
me or proved to me on the basis of satisfactory evidence to be the individual(s)
whose name(s) is (are) subscribed to the within instrument and acknowledged to
me that he/she/they executed the same in his/her/their capacity, and that by
his/her/their signature(s) on the instrument, the individual(s), or the person
upon behalf of which the individual(s) acted, executed the instrument.

 

 

 

 

 

 

Notary Public

 

 

 My commission expires on

 

 

Acknowledgment for ATLANTIC EXPRESS TRANSPORTATIONCORP:

 

STATE OF NEW YORK, COUNTY OF                     , ss.

 

On the      day ofNovember, 2005, before me, the undersigned, personally
appeared                                                   , personally known to
me or proved to me on the basis of satisfactory evidence to be the individual(s)
whose name(s) is (are) subscribed to the within instrument and acknowledged to
me that he/she/they executed the same in his/her/their capacity, and that by
his/her/their signature(s) on the instrument, the individual(s), or the person
upon behalf of which the individual(s) acted, executed the instrument.

 

 

 

 

 

 

Notary Public

 

 

 My commission expires on

 

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