Exhibit
10.9


LEASE


THIS LEASE (this “Lease”),
made as of the 1st day of
September, 2003, by and between G.T.J. CO.,
INC., a corporation organized under the laws of the State of New
York, having an office at 165-25 147th Avenue, Jamaica, New York 11434 (“Landlord”) and VARSITY BUS CO., INC., a corporation organized under the laws
of the State of New York, with its principal place of business located at 626
Wortman Avenue, Brooklyn, New York (“Tenant”).


RECITALS:


WHEREAS, Landlord is the owner of the premises
located at 626 Wortman Avenue, Brooklyn, New York and Cozine Avenue, Brooklyn,
New York (collectively, the “Premises”);
and


WHEREAS, Tenant desires to lease from Landlord a
portion of the Premises as set forth in this Lease; and


W I T N E S S E T H:


NOW,
THEREFORE, in consideration of the rents, covenants and agreements herein
contained, Landlord hereby leases the Demised Premises (as hereinafter defined)
to Tenant, and Tenant hereby rents and hires the Demised Premises from
Landlord, upon the following terms and conditions:


ARTICLE 1 - TENANT’S
PORTION OF THE DEMISED PREMISES


Section 1.01.          Demised
Premises.  Landlord hereby demises unto Tenant the exclusive
right to occupy the portion of the Premises set forth in the Exhibit “A”
annexed hereto subject to Landlord’s right of ingress and egress upon the
portion of the Premises set forth in the Exhibit “A,” along with the use of the
fuel pumps, lifts and office space described below (collectively, the “Demised Premises”). In addition to the
designated parking areas and office space, Tenant shall be entitled to
non-exclusive use, jointly and severally with the other tenants, of the
maintenance facilities on the Premises for the maintenance of its vehicles, as
set forth in Exhibit “B”.


Section 1.02.          Fuel
Pumps.  Tenant shall be entitled to non-exclusive use of the fuel
pumps set forth in Exhibit “C” annexed hereto for the fueling of its vehicles
provided Tenant remains fully responsible for its fuel costs and any attendant
taxes resulting from Tenant’s use.


Section 1.03.          Lifts.  Tenant
shall be entitled to non-exclusive use of the hydraulic lifts set forth in
Exhibit “D” annexed hereto.


Section
1.04.          Office Space.  Tenant
shall be entitled to exclusive use of the office space set forth in Exhibit “E”
annexed hereto.









 



 


Section 1.05.          Easement.  At the request of Landlord, Tenant shall
grant Landlord an easement for ingress and egress that may be located within
the Tenant’s Demised Premises.


ARTICLE 2 -
CONDITION OF THE PREMISES


Section 2.01.          Condition.  Tenant
accepts possession of the Demised Premises in AS-IS condition, without
representation or warranty of any kind from Landlord as to the condition of the
Demised Premises or its fitness for the particular use for which Tenant shall
utilize the Demised Premises.


ARTICLE 3 – TERM


Section 3.01.          Initial
Term.  The term of this Lease (the “Initial Term”) shall commence as of September 1, 2003 (the “Commencement Date”). The Initial Term shall
expire on August 31st, 2010, if not sooner terminated (the “Expiration Date”).


ARTICLE 4 - RENT
AND TAXES


Section 4.01.          Minimum
Annual Rent.


(a)           Tenant
shall pay Landlord or Landlord’s designee annual minimum rent (“Basic Rent”) in equal monthly payments to
be received by Landlord or Landlord’s designee on the first (1st) day of each month in advance, as set forth below:




	
  Lease Year

  	
   

  	
  Annual Rent

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  9/1/2003 to
  8/31/2004

  	
   

  	
  $

  	
  200,000.00

  	
   

  
	
  9/1/2004 to
  8/31/2005

  	
   

  	
  $

  	
  200,000.00

  	
   

  
	
  9/1/2005 to
  1/31/2006

  	
   

  	
  $

  	
  231,800.00

  	
   

  
	
  2/1/2006 to 8/31/2006

  	
   

  	
  $

  	
  311,800.00

  	
   

  






 


Thereafter, on the anniversary of the Commencement
Date and for each subsequent year during the Initial Term, Basic Rent shall
increase by the Consumer Price Index (the “CPI”)
for the New York-Northeastern New Jersey area, which is currently published by
the United States Department of Labor, Bureau of Labor Statistics issued in May
of that year (the “CPI Annual Increase”).
All CPI Annual Increases during the term of the Lease shall be cumulative and
compounded as of the anniversary of the Commencement Date based on the Basic
Rent plus CPI Annual Increase for the prior Lease year. If the commencement
date occurs on a day other than the first day of a calendar month, or if the
expiration date occurs on a day other than the last day of a calendar month,
then the Basic Rent for such fractional month shall be prorated on a daily
basis.


(b)           In addition to the Basic Rent
provided for above, all other payments to be made by Tenant to Landlord shall
be deemed to be and shall become additional rent (“Additional Rent”) hereunder whether or not the same be
designated as such, and unless otherwise provided, shall be



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due and payable twenty (20) days after demand therefor accompanied with
an invoice and detailed information, if available. In the event Tenant does not
agree with any detailed information provided, Tenant shall nonetheless make
full payment as set forth in the demand presented and the parties shall resolve
any alleged inconsistencies with the invoices presented. Landlord shall have
the same remedies under this Lease for failure to pay Additional Rent as for
the nonpayment of Basic Rent. Tenant’s obligation to pay Basic Rent or
Additional Rent (collectively and individually referred to as “rent” or “Rent”)
for any portion of the term of the Lease shall survive the expiration or
termination of the term of this Lease.


(c)           In
addition to the Basic Rent provided for above, Tenant shall pay to Landlord as
Additional Rent, Tenant’s Proportionate Share (as defined below) of all sums,
charges, fees, expenses incurred by Landlord, whether on a direct metered basis
or prorated from a master meter charge, for all water, electric, gas, sewer or
other utilities consumed in or servicing the Premises. Landlord will make
arrangements for the above utilities to be provided to the Premises. Landlord
shall use commercially reasonable efforts to insure utilities are provided to
the Premises, uninterrupted during the Term.


(d)           In
addition to the Basic Rent provided for above, Tenant shall pay Landlord as
Additional Rent, Tenant’s Proportionate Share of any HVAC contracts,
maintenance contracts, repairs, cleaning charges, common area maintenance
charges, and any charges that Landlord may incur in connection with the
Premises. Landlord will make arrangements for the above contracts to be
provided for the Premises and shall use commercially reasonable efforts to
ensure such services are provided to Tenant uninterrupted during the Term.


(e)           Landlord’s
failure to prepare and deliver any statements or bills, or Landlord’s failure
to make a demand under this Article 4 or under any other provision of this
Lease, shall not in any way be deemed to be a waiver of or cause Landlord to
forfeit or surrender its rights to collect any items of Additional Rent which
may have become due pursuant to this Lease. This provision shall survive the
expiration or termination of this Lease.


(f)            Tenant’s
proportionate share of such Additional Rent and other charges described in this
Article 4 of the Lease shall be sixty (60%) percent (“Tenant’s Proportionate Share”) of the amount
of such Additional Rent and all other charges and costs paid by the Landlord in
connection with the Premises. In the event the Demised Premises is reduced or
increased during the Term, Tenant’s proportionate share shall be pro-rated
according to the increase or decrease of square footage.


(g)           As
Additional Rent, Tenant shall pay Landlord such other sums of money as become
due and payable by Tenant hereunder including but not limited to those items
specified in Articles 1, 4, 10, 11 and 12 of this Lease, all of which sums
shall be payable to Landlord or Landlord’s designee as expressly provided for
in this Lease.


(h)           All services provided by Landlord
under this Lease and any common area maintenance shall be performed in a
non-discriminatory manner for Tenant as compared to other



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tenants of the Premises, and Tenant shall have no liability hereunder
to the extent such services and/or maintenance are not provided to Tenant.


ARTICLE 5 -
PERMITTED USE


Section
5.01.          Permitted Use.  The
Demised Premises shall be used and occupied during the Initial Term and any
Renewal Term of this Lease solely for office space and Tenant’s storage,
service and maintenance of school buses used in connection with Tenant’s
business and for no other purpose. Tenant shall not use or occupy, nor permit
or suffer, the Demised Premises or any part thereof to be used or occupied for
any unlawful purpose, nor for any purpose or in any way in violation of any
present or future governmental laws, ordinances, requirements, orders, directions,
rules or regulations or the existing certificate of occupancy.


ARTICLE 6 –
ACCESS


Section 6.01           Access.  Tenant
shall have access to the Demised Premises twenty four (24) hours per day, seven
(7) days per week.


ARTICLE 7 - QUIET
ENJOYMENT


Section 7.01           Quiet
Enjoyment.  Landlord covenants and agrees with Tenant that upon
Tenant paying the Basic Rent and Additional Rent and observing and performing
all the terms, covenants, and conditions, on Tenant’s part to be observed and
performed, Tenant may peaceably and quietly enjoy the Demised Premises,
subject, nevertheless, to the terms and conditions of this Lease.


ARTICLE 8 –
SIGNAGE


Section 8.01           Signage.  Tenant
shall not be entitled to erect a sign on or upon the Demised Premises without
Landlord’s prior written consent, which shall not be unreasonably withheld.


ARTICLE 9 -
ASSIGNMENT AND SUBLETTING


Section
9.01.          Restrictions on
Assignment.  Tenant shall not assign this Lease or sublease all
or any part of the Demised Premises, nor permit other persons to occupy or
conduct business in the Demised Premises or any part thereof nor grant any
license, concession management contract or franchise for all or any part of the
Demised Premises without the prior written consent of Landlord, which Landlord
may withhold in its sole and absolute discretion.


Section
9.02.          Transfers of Interests
in Tenant.  Any transfer, by operation of law or otherwise, of
Tenant’s interest in this Lease (in whole or in part) or of a fifty (50%)
percent or greater interest in Tenant or of fifty (50%) percent or more of the
assets of Tenant (whether stock, partnership interest or otherwise) shall be
deemed an assignment of this Lease within the meaning of this Article. If there
has been a previous transfer of less than a fifty (50%) percent interest in
Tenant or Tenant’s assets, then any simultaneous or subsequent transfer of an
interest



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in Tenant or Tenant’s assets which, when added to the total percentage
interest previously transferred, totals a transfer of greater than a fifty
(50%) percent interest in Tenant or Tenant’s assets shall be deemed an
assignment of Tenant’s interest in this Lease within the meaning of this
Article. In the event by operation of law or otherwise Tenant (i) sells or
transfers all or substantially all of its assets (whether stock, partnership
interest or otherwise); (ii) sells or transfers a majority interest in the
Tenant, in a single transaction or in a series of transactions, or (iii)
effectuates a change in the current controlling interest of the Tenant, Landlord
has the right to terminate this Lease with thirty (30) days’ prior written
notice to the Tenant and said termination shall be effective as of the date set
forth in Landlord’s notice. In the event Landlord elects to terminate this
Lease pursuant to Section 9.02, Tenant shall have the right, prior to the
expiration of the thirty (30) day period set forth above, to negotiate with
Landlord and enter into a new lease for the Demised Premises with terms that
shall include, among other things, that the Tenant (i) shall pay the Fair
Market Rental rate (as said term is defined in Article 26) for other similarly
situated premises; (ii) Tenant shall pay its proportionate share of any real
estate taxes for the Premises; and (iii) Tenant shall grant Landlord an easement
for ingress and egress that may be located within the Tenant’s Demised Premises.
Landlord shall have no
liability to Tenant in the event that a Lease cannot be completed between the
Landlord and Tenant or Tenant’s successor in interest for any reason.


Section
9.03.          Inter-Family
Transactions.  Tenant may assign this Lease or transfer its stock or assets to an
entity that is wholly owned by the current shareholders of the Tenant or the
Immediate Family of the current shareholders of the Tenant. For the purposes of
this Section, The term “Immediate Family” shall mean the spouse, siblings, or
lineal or adopted descendants of the current shareholders of the Tenant or a
trust for the benefit of the current shareholders of the Tenant, their spouses,
siblings or lineal or adopted descendants (including a trust that includes as
beneficiaries the spouses of such lineal descendants). Tenant shall deliver
notice of any assignment pursuant to this Section 9.03 within thirty (30) days
of the assignment, along with a copy of the assignment document.


ARTICLE 10 – REPAIRS


Section
10.01.        Repairs.


(a)           Tenant shall pay Tenant’s Proportionate Share of all
structural and non-structural repairs and maintenance in and to the Premises,
which Landlord determines are reasonably necessary or desirable in order to
keep the Premises in good order and repair. Tenant shall take good care of the
Premises and Demised Premises and the fixtures and appurtenances therein. All
damage or injury to the Premises and Demised Premises and to such fixtures and
appurtenances, or to the Building, or to its fixtures, appurtenances and
equipment, caused by Tenant’s moving property in and out of the Building, the
Premises or the Demised Premises, or by installation or removal of fixtures,
furniture or other property, or from any other cause, shall be repaired,
restored or replaced promptly by Tenant, at its sole cost and expense. All
repairs, restorations and replacements shall be in quality and class equal to
the original work or installations. If Tenant fails to make such repairs,
restorations or replacements, the same may be made by Landlord, at Tenant’s
expense, and the amounts spent by Landlord (together with interest thereon at
the per annum rate of ten (10%) percent, or if such rate be illegal then at the
highest



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permissible rate, from the
date of Landlord’s expenditure through the date of Tenant’s payment in full)
shall be collectible as additional rent, to be paid by Tenant within fifteen
(15) days after rendition of a bill and invoices from any contractor utilized
by Landlord (if any). Notwithstanding anything to the contrary contained in
Section 10.01(a), Tenant shall not be responsible for any structural repairs
(i) necessitated by damage or condition that existed prior to the date of this
Lease, or (ii) requested solely by any other tenant of the Premises, unless
said damage has been caused or increased by the Tenant.


(b)           There shall be no allowance to Tenant
for a diminution of rental value, and no liability on Landlord’s part, by
reason of inconvenience, annoyance or injury to Tenant’s business arising from
the making of repairs, alteration, additions or improvements in or to the
Demised Premises or the Premises, or to the fixtures, appurtenances or
equipment thereof, by Landlord, Tenant or others. Landlord will use
commercially reasonable efforts to not interrupt Tenant’s use and enjoyment of
the Demised Premises when making such repairs, alterations, additions or
improvements, but the obligation to use commercially reasonable efforts shall
not require Landlord to employ overtime labor or pay any premium or surcharge
for labor or materials.


(c)           Business machines and mechanical
equipment belonging to Tenant which cause vibration, noise, cold or heat that
may be transmitted to the Building’s structure, or to any leased space therein,
to such a degree as to be objectionable to Landlord or to any other tenant or
occupant at the Premises, shall be placed and maintained by Tenant, at its sole
expense, in settings of cork, rubber or spring-type vibration eliminators or
other means sufficient to absorb and prevent such vibration, noise, cold or
heat.


ARTICLE 11 -
ELECTRICITY


Section
11.01.        Electricity.


(a)           Tenant agrees to pay to Landlord, as
Additional Rent, Tenant’s Proportionate Share of the cost of the electric
service to be furnished by Landlord and consumed by the Tenant in connection
with Tenant’s use of the Demised Premises and any other portion of the
Premises. The reference herein relating to rates, bills or charges of
electricity and to escalation thereof shall be deemed to include and refer to
any and all components of the bill rendered or to be rendered in the future by
the utility company furnishing such electricity (the “Utility Company”), including, but not
limited to time of day charges, fuel adjustments, demand or other charges, and
taxes.


(b)           Landlord will bill Tenant for said
charges, on a monthly or quarterly basis, at Landlord’s option, and Tenant
shall pay the same within twenty (20) days after its receipt of the bill
therefor. Upon Tenant’s failure to pay any such bill for the foregoing charges,
Landlord shall be entitled to collect such charges as in the case of a failure
to pay rent. The provisions of this Article shall survive the expiration or
earlier termination of this Lease.


(c)           Landlord, at Landlord’s cost and expense, hereby reserves
to itself the right, from time to time, to cause a reputable electric
engineering company (the “Engineer”)
to make a survey of Tenant’s electric energy usage requirements to determine
whether Tenant has exceeded its pro-rata share of electricity for the Premises.
In the event Tenant exceeds its pro-rata share of



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electricity, the additional
rent provided for in this Section shall be appropriately increased commencing
with the first day of the month immediately following the completion of such
survey and the submission of a copy thereof to Tenant and the increases shall
be effective as of the date Tenant exceeds its pro-rata share of electricity
use (as determined by the surveyor) with such retroactive payment payable in a
lump sum within thirty (30) days of Landlord’s furnishing Tenant with a bill
therefor.


(d)           Landlord reserves the right to
discontinue furnishing such electric energy to Tenant at any time, upon giving
not less than sixty (60) days prior written notice to Tenant to such effect,
and from and after such effective date of termination, Landlord shall no longer
be obligated to furnish Tenant with electric energy. If Landlord exercises such
right of termination, this Lease shall remain unaffected thereby, and continue
in full force and effect, and thereafter Tenant shall arrange to obtain
electric service direct from the public utility company servicing the Premises,
utilizing the then existing electric feeders, risers and wiring serving the Demised
Premises to the extent that the same are available, suitable and safe for such
purpose. Landlord, at Tenant’s expense, shall do all work necessary to provide
such direct service, including installations of meters, additional wiring and
panel board, as may be necessary therefor, so as to enable Tenant to receive
its electric current directly from the Utility Company without any expense to
Landlord. Landlord shall make a commercially reasonable effort to prevent any
interruption in electrical service in the event Landlord elects to discontinue
furnishing electrical service. In the event Landlord discontinues electric
service pursuant to this Section 11.01(d) and Tenant obtains electrical service
which benefits any non-exclusive portions of the Demised Premises, Tenant shall
have the right to charge Landlord or any other tenants of the Premises their
pro-rata share of such electrical use.


ARTICLE 12 -
PUBLIC LIABILITY AND INSURANCE


Section 12.01.        Indemnity of Landlord. Tenant shall defend (with
counsel reasonably satisfactory to Landlord) and indemnify and hold harmless
Landlord and Landlord’s directors, officers, employees, members and agents
against any claim, expense, loss, or liability paid, suffered or incurred as
the result of (a) any breach, violation or non-performance by Tenant, its
agents, directors, officers, employees, contractors (and its and their
employees), visitors and/or licensees, guests or customers of any covenant,
condition or agreement of this Lease on Tenant’s part to be fulfilled, kept,
observed and performed, (b) any and all claims against Landlord of whatever
nature arising from any act, omission or negligence of Tenant, its agents,
directors, officers, employees, contractors (and its and their employees),
visitors and/or licensees, guests or customers, (c) all claims against Landlord
arising from any accident, injury or damage whatsoever caused to any person or
to the property of any person and occurring during the term of this Lease in or
about the Demised Premises, excluding, however, such claims resulting from any
work or thing done in or about the Demised Premises by Landlord or Landlord’s
employees, agents or contractors, and (d) all claims against Landlord arising
from any accident, injury or damage occurring outside of the Demised Premises
but anywhere within or about the Building, where such accident, injury or
damage results or is claimed to have resulted from an act or omission of Tenant
or Tenant’s agents, directors, officers, employees, contractors (and its and
their employees), visitors and/or licensees, guests or customers. Tenant’s
obligations under the indemnity described in this Section 12.01 shall not
include any claims resulting from the



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negligence of Landlord or Landlord’s
employees, agent or invitees. Tenant shall not be entitled to assert any claims
for damages to personal property, fixtures, installations or improvements, or
to assert a claim that Tenant has been constructively evicted from all or any
portion of the Demised Premises, because of a condition resulting from Landlord’s
fault or from the action or omission of any other tenant of leased space in the
Building, unless Tenant shall have first informed Landlord, and such other
persons as are entitled to notice pursuant to the provisions of Section 18
hereof, in writing, of the objectionable condition or conditions, and Landlord,
or such other persons referred to in Section 18 hereof, shall have failed
within a reasonable time after receipt of such notice to remedy the condition
or conditions complained of. The Tenant’s obligations to Landlord pursuant to
this Article shall survive the termination of this Lease.


Section
12.02.        Liability Insurance.


(a)           Commencing on the Commencement Date,
Tenant shall, at its expense, during the Initial Term, as well as any Renewal
Term of this Lease, maintain comprehensive general public liability insurance
in amounts reasonably required by the Landlord and naming Landlord and its
designees as additional insured parties as their interest may appear;


(b)           Tenant shall maintain at its own cost
and expense:  Comprehensive General Liability Insurance covering the
Demised Premises on an occurrence basis with a deductible not exceeding Five
Thousand ($5,000.00) Dollars, with minimum limits of liability in an amount
equal to One Million ($1,000,000.00) Dollars for bodily injury, personal injury
or death to any one person and One Million ($1,000,000.00) Dollars for bodily
injury, personal injury or death to more than one (1) person, or a single limit
of One Million ($1,000,000.00) Dollars for bodily injury, personal injury or
death per occurrence, and with a separate limit of One Million ($1,000,000.00)
Dollars for Products/Completed Operations per occurrence, such policy shall
name Landlord, the holder of any mortgage and/or over, ground or master lease
on all or any portion of Landlord’s interest in the Premises, as additional
named insureds to the extent of Tenant’s acts or omissions or the acts or
omissions of Tenants’ contractors, agents, its and their employees and its
guests, customers or invitees and shall provide that the same may not be
cancelled or terminated without at least thirty (30) days’ written notice to
Landlord and the additional named insureds by the insurance company issuing
such policy, and that no act or omission to act of Tenant shall invalidate such
insurance as to Landlord and the other additional named insureds;


(c)           Worker’s
Compensation and Employer’s Liability Insurance in accordance with the laws of
the State of New York;


(d)           Umbrella
liability insurance with maximum limits of liability in an amount equal to
Seven Million ($7,000,000.00) Dollars per occurrence with a Seven Million
($7,000,000.00) Dollar minimum aggregate;


(e)           Tenant shall (i) at its sole cost and
expense, and (ii) to the extent that Tenant is able after commercially
reasonable efforts, keep the Demised Premises, and all replacements,
alterations and additions of or to the foregoing, insured for the benefit of
Tenant, Landlord and Landlord’s Mortgagee (if any), as their respective
interests may appear, against all risk of loss or



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damage, including loss or damage by fire and other perils included in a
so-called “extended coverage endorsement” or “multi-peril endorsement”, for the
full replacement cost thereof; and


(f)            Tenant
shall deliver to Landlord and to any other party designated by Landlord duly
executed certificates of insurance or endorsements and duplicate original
insurance policies reflecting Tenant’s maintenance of the insurance required
under this Lease. Such policies shall not be subject to cancellation or
modification on less than thirty (30) days’ notice to Landlord.


ARTICLE 13 -
LANDLORD’S ENTRY ON PREMISES


Section
13.01.        Entry.  Landlord
and their respective representatives may enter the Demised Premises at any time
during business hours upon prior notice to the Tenant, to inspect the Demised
Premises, to enforce the provisions of this Lease, to make repairs required of
them hereunder and to rectify defaults of Tenant pursuant to the rights granted
to Landlord hereunder. Nothing herein contained shall be deemed or construed to
impose upon Landlord any obligation or responsibility whatsoever for the care,
maintenance or repair of the Demised Premises, except as otherwise specifically
provided in this Lease.


ARTICLE 14 – ALTERATIONS


Section
14.01.        Alterations.  Tenant
shall make no alterations in or to the Demised Premises without Landlord’s
prior written consent. All alterations shall be accomplished at Tenant’s sole
cost and expense. All permanent installations installed in the Demised Premises
at any time, either by Tenant or by Landlord on behalf of Tenant, shall, upon
installation, become the property of Landlord and shall remain upon and be
surrendered with the Demised Premises unless Landlord, by written notice to
Tenant no later than twenty (20) days prior to the Expiration Date, elects to
have them removed by Tenant, in which event the same shall be removed by Tenant
at Tenant’s expense prior to the Expiration Date.


ARTICLE 15 – COMPLIANCE WITH LAWS


Section 15.01.        Compliance
with Laws.  Tenant, at Tenant’s own expense, shall comply with
all requirements of law, rules, ordinances or regulations, present or future,
of any federal, state, municipal or other public authority having jurisdiction
over the Demised Premises, and with all requirements of the New York Fire
Insurance Exchange, or similar body, and of any liability insurance company
insuring Landlord against liability for accidents in or connected with the
Premises and Demised Premises, and shall not at any time use or occupy the
Demised Premises in violation of the Certificate of Occupancy for the Building,
or be in conflict with fire insurance policies covering the Premises, or the
fixtures and property therein. Tenant shall comply with all reasonable rules,
regulations and orders of Landlord designed to promote the safety, good order
and character of the Premises, and with respect to the placing of safes,
machinery or other heavy material, and with the recommendations of any
insurance carrier. Any increase in the fire insurance premium applicable to the
Premises resulting from Tenant’s failure to comply with the foregoing or from
the manner in which Tenant uses and occupies the Demised Premises, or any other
expense caused to Landlord by reason of Tenant’s failure to comply with



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the foregoing, shall be paid by Tenant to Landlord, as additional rent
on the first day of the month immediately following the effective date of such
increase or the incurring of such expense, as the case may be. Tenant shall be
responsible for the cost of any repairs, replacements, upgrades (structural or
non-structural in nature) or any other alterations to both the Premises and the
Demised Premises necessitated by Tenant’s specific manner of use of the Demised
Premises and Tenant’s obligations under this Section. Notwithstanding the
foregoing, if repairs, replacements and upgrades (structural or non-structural
in nature) or any other alterations to the Premises are required in order for
the Premises to be in compliance with applicable laws (as described above) and
are not necessitated by the Tenant’s or any other tenant’s specific manner of
use, the cost of said repairs, replacements, upgrades or alterations shall be
shared on a pro-rata basis between the Landlord and Tenant.


ARTICLE 16 – EFFECT OF CONVEYANCE BY LANDLORD


Section 16.01.        Conveyance by Landlord. If
Landlord shall validly assign or transfer this Lease and deliver to Tenant an
agreement executed by the assignee or transferee whereupon such assignee or
transferee agrees to assume performance of all the covenants to be performed by
Landlord from and after the date of such delivery to Tenant, then Landlord
shall be relieved and discharged from any and all liabilities thereafter
accruing under this Lease and Tenant shall look solely to the assignee or
transferee.


ARTICLE 17 -
DEFAULTS AND REMEDIES


Section
17.01.        Defaults and Remedies.


(a)           Any of the following events shall be
a default of Tenant: (a) Tenant’s default in the payment on the due date of the
Basic Rent and/or additional rent and/or any other payment required of Tenant
by this Lease, unless Tenant shall cure such default within five (5) days after
the due date of such Basic Rent and/or additional rent and/or other payment
required of Tenant hereunder; (b) Tenant’s default in the performance of any of
the other covenants of Tenant or conditions of this Lease, unless Tenant shall
cure such default within thirty (30) days after notice of such default given by
Landlord (or if any such default is of such nature that it cannot be completely
cured within such period, then unless Tenant shall commence such curing within
thirty (30) days after notice of such default given by Landlord and shall
thereafter proceed with reasonable due diligence and in good faith to cure such
default and shall succeed in curing such default within a reasonable period of
time; (c) the sale by or under execution or other legal process of Tenant’s
leasehold interest hereunder and/or substantially all of Tenant’s other assets;
(d) the initiation of legal proceedings 
to effect, or resulting in, the seizure, sequestering or impounding of
any of Tenant’s goods or chattels used in, or incident to, the operation of the
Demised Premises by Tenant; (e) assignment by operation of law of Tenant’s
leasehold interest hereunder; (f) any attempt by Tenant to assign the within
Lease or sublet the Demised Premises without the express prior written consent
of the Landlord; (g) the appointment of a receiver to take possession of all or
substantially all of the assets of Tenant, or (h) a general assignment by
Tenant for the benefit of the creditors; or (i) any action taken or suffered by
Tenant, voluntarily or involuntarily, under any insolvency or bankruptcy or
reorganization act or law.



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(b)           Upon any default of Tenant as set
forth in Section 17.01 of this Lease, Landlord, at Landlord’s sole option, may
elect and enforce any one of the remedies hereinafter provided in this Article
17; provided, however, that Landlord may, at Landlord’s sole option, elect and
enforce multiple remedies from among those remedies hereinafter provided to the
extent such remedies are not inconsistent and are not legally mutually
exclusive and to the extent Landlord, in Landlord’s reasonable judgment, deem
the enforcement of such multiple remedies necessary or appropriate to indemnify
and make Landlord whole from any loss or damage as a result of the default or
defaults of Tenant; and provided further that Landlord, at Landlord’s sole
discretion, may successively elect and enforce any number of the remedies
hereinafter provided to the extent that Landlord, in Landlord’s reasonable
judgment, deems necessary or appropriate to indemnify and make Landlord whole
from any loss or damage as a result of the default or defaults of Tenant:


(i)            Landlord shall have the right to terminate this Lease
forthwith, and upon notice of such termination given by Landlord to Tenant in
accordance with the notice provisions of this Lease, Tenant’s right to
possession, use and enjoyment of the Demised Premises shall cease, and Tenant
shall immediately quit and surrender the Demised Premises to Landlord, but
Tenant shall remain liable to Landlord as hereinafter provided. Upon such
termination of this Lease, Landlord may at any time thereafter re-enter and
resume possession of the Demised Premises by any lawful means and remove Tenant
and/or other occupants and their goods and chattels. In any case where Landlord
has recovered possession of the Demised Premises by reason of Tenant’s default,
Landlord may, at Landlord’s option, occupy the Demised Premises or cause the
Demised Premises to be redecorated, altered, divided, consolidated with other
adjoining Demised Premises, or otherwise changed or prepared for reletting, and
may (but has no obligation to) relet the Demised Premises or any part thereof
as agent of Tenant or otherwise, for a term or terms to expire prior to, at the
same time as, or subsequent to, the original expiration date of this Lease, at
Landlord’s sole option, and Landlord shall receive the rent therefore. Rent so
received shall be applied first to the payment of such expenses as Landlord may
have incurred in connection with the recovery of possession, redecorating,
altering, dividing, consolidating with other adjoining Demised Premises, or
otherwise changing or preparing for reletting, and the reletting, including
brokerage and reasonable attorney’s fees, and then to the payment of the
damages in amounts equal to the rent (Basic and additional) and other payments
required of Tenant hereunder and to the costs and expenses of performance of
the other covenants of Tenant as herein provided. Tenant agrees, in any such
case, whether or not Landlord has relet, to pay to Landlord damage equal to the
Basic and additional rent and other sums herein agreed to be paid by Tenant,
less the net proceeds of the reletting, if any, as ascertained from time to
time, and the same shall be payable by Tenant on the several rent days above
specified. Tenant shall not be entitled to any surplus accruing as a result of
any such reletting. In reletting the Demised Premises as aforesaid, Landlord
may grant rent concessions, and Tenant shall not be credited therewith. No such
reletting shall constitute a surrender and acceptance or be deemed evidenced
thereof.



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(ii)           Whether or not Landlord shall have
collected damages as provided in subsection (a) above, Landlord shall be
entitled to recover from Tenant, and Tenant shall pay to Landlord, on demand,
in lieu of any further damages thereunder (other than Landlord’s expenses as
described above), as and for liquidated and agreed final damages, and not as
penalty, a sum equal to the amount by which the sum of the Basic Rent and
additional rent (excluding utilities) reserved in this Lease for the period
which otherwise would have constituted the unexpired portion of the Term,
including any Renewal Term exercised by Tenant prior to the termination of this
Lease or re-entry by Landlord (conclusively presuming the additional rent to be
the same as was payable for the year immediately preceding such termination or
re-entry) exceeds the then fair and reasonable rental value of the Demised
Premises for the same period, both discounted to the then present value of such
sum at the rate equal to the rate of U.S. Treasury obligations having a
maturity closest to such unexpired portion of the Term, and less the aggregate
amount of damages (other than Landlord’s expenses) theretofore collected by
Landlord pursuant to the provisions of subdivision (a) above, for the same
period; it being agreed and understood by Tenant that if before presentation of
proof of such liquidated damages to any court, commission or tribunal, the
Demised Premises, or any part thereof, shall have been relet in a bona fide arm’s length transaction by
Landlord for the period which otherwise would have constituted the unexpired
portion of the Term, or any part thereof, the amount of rent reserved upon such
reletting shall be conclusively deemed, prima
facie, to be fair and reasonable rental value for the part of the
whole of the Demised Premises so relet during the term of the reletting.


(iii)          Landlord may accelerate and recover
all of the Basic Rent and additional rent due and payable after Tenant abandons
the Demised Premises or is evicted or dispossessed.


(iv)          Landlord shall have the right to
enforce Tenant’s specific performance of each and every covenant, condition and
other provision of this Lease.


(v)           Tenant hereby waives all right of
redemption to which Tenant or any person under Tenant might be entitled by any
law now or hereafter in force.


(vi)          Landlord’s remedies hereunder are in
addition to any remedy allowed by law or in equity.


(vii)         The remedies set forth above shall be
non-exclusive and the Landlord’s election to enforce any remedy shall not be
deemed a waiver of any other remedy Landlord may be entitled to hereunder or as
allowed by law or in equity.


ARTICLE 18 -
NOTICES


Section
18.01.        Notices.


(a)           All notices from
either party to the other under this Lease shall be sent by registered or
certified mail, return receipt requested, or shall be hand delivered with
signed receipt or by nationally recognized overnight courier. Whenever in this
Lease reference is made to a notice to be given, such notice shall be deemed to
be given when posted or hand delivered to



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the proper notice address of the party to be notified or one day after
delivery to a nationally recognized overnight courier, as the case may be.


(b)           Notices to Landlord shall be
addressed to it at the address above indicated with a copy to be simultaneously
delivered to Landlord’s counsel, Ruskin Moscou Faltischek P.C., 1425 Reckson
Plaza, East Tower, 15th Floor, Uniondale, New York 11556-1425, Attn:
David P. Leno, Esq. Notices to Tenant shall be addressed to it at the Demised
Premises or at the address of Tenant first set forth above with a copy to be
simultaneously delivered to Tenant’s counsel, Kenneth Faltischek, Esq., 26
Harbor Park Drive, Port Washington, New York 11050. Either party may, from time
to time, designate a different address for receiving notices, by giving the
other party notice of the change of address in the manner above specified.


ARTICLE 19 – SUBORDINATION


Section
19.01.        Subordination.  This
Lease is, and at all times shall continue to be, subject and subordinate to (i)
all mortgages and/or over, ground or master leases which may now or hereafter
affect all or any portion of the Land, Premises and other improvements now or
hereafter erected on the Land and any and all further advances on all such
mortgages, and (ii) any renewals, spreaders, increases, modifications,
consolidations, replacements and extensions of such mortgages or leases. This
clause shall be self-operative, and no further instrument of subordination
shall be required, except Tenant, if requested by any such mortgagee or
Landlord or proposed mortgagee or Landlord, agrees to confirm this
subordination by promptly executing (in recordable form) any certificate or
other document that Landlord may reasonably request in confirmation of such
subordination. Landlord shall use commercially reasonable efforts to obtain a
non-disturbance agreement from any lender to which Tenant may provide a
subordination agreement.


ARTICLE 20 –
MISCELLANEOUS PROVISIONS


Section
20.01.        Entire Agreement.  This
Lease contains the final agreement between the parties hereto. Landlord shall
not have any obligation not expressly set forth herein; and neither party shall
be bound by any promises or representations prior to the date hereof which are
not expressly set forth herein.


Section
20.02.        Obligations Surviving
Termination.  Any termination hereof by reason of a default of
the Tenant shall not affect any obligation or liability of Tenant under this
Lease which accrued prior to the effective date of termination, and all such
obligations and liabilities of Tenant shall survive such termination.


Section 20.03.        Partial Invalidity.  If any term, covenant
or condition of this Lease or the application thereof to any person or
circumstance shall, to any extent, be invalid or unenforceable, the remainder of
this Lease, or the application of such term, covenant or condition to persons
or circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby and every other term, covenant or
condition of this Lease shall be valid and enforced to the fullest extent
permitted by law.



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Section
20.04.        Brokers.  Each
party warrants and represents to the other that the former party dealt with no
broker in connection with this transaction and had no conversations or dealings
with any broker in connection with this transaction and each party hereby
indemnifies the other against any claims of any broker or party by reason of
said broker or party having had any conversations or dealings with the
indemnifying party in connection with this transaction and does hereby
indemnify the other against the same and agrees to reimburse the other for any
damages the other might sustain by reason of such claims including the other’s
cost of defending any action, including reasonable legal fees, in connection
therewith.


Section
20.05.        Surrender of the Demised
Premises.  At the expiration of the tenancy hereby created, or
upon any re-entry by Landlord into the Demised Premises after a default by
Tenant, Tenant shall surrender the Demised Premises in good condition and
repair and shall deliver all keys for the Demised Premises to Landlord at the
place then fixed for the payment of rent, and shall inform Landlord of all
combinations on locks, safes and vaults, if any, in the Demised Premises. Tenant
shall remove all of its personal property which Landlord requires to be removed
before surrendering the Demised Premises as aforesaid, and shall repair any
damage to the Demised Premises caused by such removal. Tenant’s obligations to
observe or perform this covenant shall survive the expiration or other
termination of the term of this Lease.


Section 20.06.        Successors.  The
respective rights and obligations provided in this Lease shall bind and inure
to the benefit of the parties hereto, their successors and assigns; provided,
however, that no rights shall inure to the benefit of any successors of Tenant
unless Landlord’s written consent for the transfer to such successor and/or
assignee has first been obtained as provided in Article 9 hereof or as set
forth in Article 9.03.


Section
20.07.        Governing Law.  This
Lease shall be construed, governed and enforced in accordance with the laws of
the State of New York, without regard to principles relating to conflicts of
law.


Section
20.08.        Captions.  Marginal
captions, titles or exhibits and riders and the table of contents in this Lease
are for convenience and reference only, and are in no way to be construed as
defining, limiting or modifying the scope or intent of the various provisions
of this Lease.


Section
20.09.        Gender.  As
used in this Lease, the word “person”
shall mean and include, where appropriate, an individual, corporation,
partnership or other entity; the plural shall be substituted for the singular,
and the singular for the plural, where appropriate; and the words of any gender
shall mean to include any other gender.


Section
20.10.        Counterparts.  This
Lease may be executed in any number of counterparts, each of which when taken
together shall be deemed to be one and the same instrument.


Section 20.11.        Telefax Signatures.  The
parties acknowledge and agree that notwithstanding any law or presumption to
the contrary a telefaxed signature of either party whether upon this Lease or
any related document shall be deemed valid and binding and admissible by either
party against the other as if same were an original ink signature.



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Section
20.12.        Calculation of Time.  In
computing any period of time prescribed or allowed by any provision of this
Lease, the day of the act, event or default from which the designated period of
time begins to run shall not be included. The last day of the period so
computed shall be included, unless it is a Saturday, Sunday or a legal holiday,
in which event the period runs until the end of the next day which is not a
Saturday, Sunday, or legal holiday. Unless otherwise provided herein, all
Notices and other periods expire as of 5:00 p.m. on the last day of the Notice
or other period.


Section
20.13.        No Merger.  There
shall be no merger of this Lease or of the leasehold estate hereby created with
the fee estate in the Premises or any part thereof by reason of the fact that
the same person, firm, corporation, or other legal entity may acquire or hold,
directly or indirectly, this Lease of the leasehold estate and the fee estate
in the Premises or any interest in such fee estate, without the prior written
consent of Landlord’s mortgagee.


Section
20.14.        No Presumption Against
Drafter.  Landlord and Tenant understand, agree, and acknowledge
that:  (i) this Lease has been freely
negotiated by both parties; and (ii) that, in the event of any controversy,
dispute, or contest over the meaning, interpretation, validity, or
enforceability of this Lease, or any of its terms or conditions, there shall be
no inference, presumption, or conclusion drawn whatsoever against either party
by virtue of that party having drafted this Lease or any portion thereof.


Section
20.15.        WAIVER OF TRIAL BY JURY.
LANDLORD AND TENANT WAIVE THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING BASED UPON, OR RELATED TO, THE SUBJECT MATTER OF THIS LEASE. THIS
WAIVER IS KNOWINGLY, INTENTIONALLY, AND VOLUNTARILY MADE BY TENANT AND TENANT
ACKNOWLEDGES THAT NEITHER LANDLORD NOR ANY PERSON ACTING ON BEHALF OF LANDLORD
HAS MADE ANY REPRESENTATIONS OF FACT TO INDUCE THIS WAIVER OF TRIAL BY JURY OR
IN ANY WAY TO MODIFY OR NULLIFY ITS EFFECT. TENANT FURTHER ACKNOWLEDGES THAT IT
HAS BEEN REPRESENTED (OR HAS HAD THE OPPORTUNITY TO BE REPRESENTED) IN THE
SIGNING OF THIS LEASE AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL
COUNSEL, SELECTED OF ITS OWN FREE WILL, AND THAT IT HAS HAD THE OPPORTUNITY TO
DISCUSS THIS WAIVER WITH COUNSEL. TENANT FURTHER ACKNOWLEDGES THAT IT HAS READ
AND UNDERSTANDS THE MEANING AND RAMIFICATIONS OF THIS WAIVER PROVISION AND AS
EVIDENCE OF SAME HAS EXECUTED THIS LEASE.


Section
20.16.        Consent To Jurisdiction.  Tenant
hereby consents to the exclusive jurisdiction of the state courts located in
Kings and Queens County, New York and to the federal courts located in the in
the Eastern District of New York.


ARTICLE 21 –
ESTOPPEL CERTIFICATES


Section 21.01.        Tenant’s
Estoppel Certificate.  Tenant shall, upon not less than fifteen
(15) days’ prior written request from Landlord, execute and deliver to Landlord
(i) a statement certifying that this Lease is unmodified and in full force and
effect (or if there have been



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modifications,
that the same is in full force and effect as so modified) the Commencement
Date, the Expiration Date and the dates to which the Basic Rent, additional
rent and other charges have been paid, and whether or not, to the best
knowledge of the Tenant that there are any then existing defaults on the part
of either Landlord or Tenant in the performance of the covenants, conditions or
other provisions of this Lease, and, if so, specifying the default of which the
Tenant has knowledge; and (ii) any reasonable estoppel certificate or documents
requested by Landlord’s mortgagee, proposed mortgagee or potential purchaser of
the Premises.


ARTICLE 22 –
CONDEMNATION


Section
22.01.        Total Condemnation.  If
all, or substantially all, of the Premises shall be lawfully condemned or taken
in any manner for any public or quasi-public use, this Lease shall cease and
terminate as of the date of vesting of title in the condemnor.


Section
22.02.        Partial Condemnation.
If a portion of the Premises shall be so condemned or taken, but if such taking
shall substantially affect the Demised Premises or if such condemnation or
taking shall be of a substantial part of the Demised Premises, and Tenant is
prevented thereby from operating its business in the Demised Premises, Landlord
and Tenant shall each have the right, by delivery of notice in writing to the
other party, to terminate this lease and the term and estate hereby granted, as
of the date of the vesting of title in the condemnor. If neither party shall so
elect, this Lease shall be and remain unaffected by such condemnation or
taking, except that, effective as of the date of actual taking, the Basic Rent
and/or fixed rent payable by Tenant shall be diminished by an amount which
shall bear the same ratio to the Basic Rent and/or fixed rent as the rentable
square foot floor area of the portion of the Demised Premises taken bears to
the rentable square foot floor area of the Demised Premises.


Section
22.03.        In the event of the
termination of this Lease in accordance with the provisions of Section 22.01 or
22.02 hereof, the Basic Rent, fixed rent and the additional rent shall be
apportioned and prorated accordingly. In the event of any taking, partial or
otherwise, Tenant shall not be entitled to claim or receive any part of any
award or compensation which may be awarded in any such condemnation proceeding,
or as a result of such condemnation or taking, whether the same be for the
value of the unexpired term of this Lease or otherwise, or to any damages
against Landlord and/or the condemning authority.


ARTICLE 23 –
ENVIRONMENTAL COMPLIANCE

DURING PERIOD OF TENANCY; REQUIREMENTS OF LAW.


Section 23.01.        Definitions.


(a)           The term “Hazardous Materials” includes, but shall not be limited to,
(i) asbestos in any form, except to the extent such asbestos in its present
condition may remain in place pursuant to and in compliance with all
Environmental Laws; (ii) urea formaldehyde foam insulation; (iii) transformers
or other equipment which contain dialectic fluid containing levels of
polychlorinated byphenyls (PCBs) in excess of 50 parts per million; (iv) lead
paint; (v) any substance deemed hazardous or toxic, or required to be
investigated, disclosed, reported, treated, removed, disposed of or cleaned up
by an applicable Environmental Law; (vi) any substance or



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mixture which is or shall be listed, defined, or otherwise determined
by any agency or court to be hazardous, toxic, dangerous or otherwise
regulated, affected, controlled or giving rise to liability under any
Environmental Law; (vii) polychlorinated biphenyls (PCBs); (viii) radon gas;
(ix) laboratory wastes; (x) experimental products, including genetically
engineered microbes and other recombinant DNA products; (xi) petroleum, crude
oil, natural gas, natural gas liquid, liquefied natural gas, other petroleum
products, or synthetic gas useable as fuel; and (xii) “source,” “special
nuclear” and “by-products” material, as defined in the Atomic Energy Act of
1954, 42 U.S.C. § 3011 et seq.


(b)           The
term “Environmental Law” shall
mean any federal, state or local environmental or health or safety law,
regulation or rules, as the same may be amended from time to time, including,
without limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986, 42 U.S.C. § 9601 et seq.; the Solid Waste Disposal
Act, as amended by the Resource Conservation and Recovery Act of 1976, as
amended by the Solid and Hazardous Waste Amendments of 1984, 42 U.S.C. § 6901
et seq.; the Federal Water Pollution Control Act, as amended by the Clean Water
Act of 1977, 33 U.S.C. § 1251 et seq.; the Toxic Substances Control Act of
1976, 15 U.S.C. § 2601 et seq.; the Emergency Planning and Community
Right-to-Know Act of 1986, 42 U.S.C. § 11001 et seq.; the Clean Air Act of
1966, as amended, 42 U.S.C. § 741 et seq.; the National Environmental Policy
Act of 1975, 42 U.S.C. § 4321; the Rivers and Harbors Act of 1899, 33 U.S.C. §
401 et seq.; the Endangered Species Act of 1973, as amended, 16 U.S.C. § 1531
et seq.; the Occupational Safety and Health Act of 1970, as amended, 29 U.S.C.
§ 651 et seq.; the Safe Drinking Water Act of 1974, as amended, 42 U.S.C. §
300(f) et seq.; the Hazardous Materials Transportation Act, 42 U.S.C. §§ 1471,
1472, 1655m 1801 et seq.; the Federal Insecticide, Fungicide & Rodenticide
Act, 7 U.S.C. § 136 et seq.; the Atomic Energy Act, 42 U.S.C. § 3011 et seq.,
and any other rule, guidance or common law which relates to (i) the existence
and/or remedy of contamination on property, (ii) the protection of persons,
property, animals, or the environment from any exposure to or contamination by
Hazardous Materials radiation or other emanations; (iii) the use generation,
storage, removal, recovery, treatment, transport, disposal, and control of
Hazardous Materials, including hazardous wastes and building materials; (iv)
the prevention of, control of, or response to the exposure of tenants,
employees or other persons to any Hazardous Material or radiation; or (v) the
prevention of, control of, or response to the emission or discharge of
Hazardous Materials in the workplace or environment.


Section 23.02.        Environmental
Compliance During Period of Tenancy, Requirements of Law.


(a)           In the operation and occupancy of its
business on the Demised Premises, Tenant shall promptly execute and comply with
all statutes, ordinances, rules, orders, regulations and requirements
(including those which require structural alterations) of and permits issued by
the federal, state, county and local government and of any and all their
departments and bureaus applicable to the Demised Premises, including, without
limitation, those for the correction, prevention or abatement of nuisances or
other grievances in, upon, or connected with the Demised Premises during the
Term; and shall also promptly comply with and execute all rules, orders and
regulations of the New York Board of Fire Underwriters for the prevention of
fires at



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the
Tenant’s own cost and expense. The Tenant’s obligations pursuant to this
provision pertain solely to conditions that, in whole or in part, arise or
develop during the term of its tenancy.


(b)           Tenant
shall operate and occupy the Demised Premises in compliance with all
Environmental Laws. Without limiting the foregoing, Tenant shall not cause or
permit the Demised Premises to be used to generate, manufacture, refine,
transport, treat, store, handle, dispose, transfer, produce or process
Hazardous Materials, except in compliance with all applicable federal, state
and local laws or regulations nor shall Tenant cause or permit, as a result of
any intentional or unintentional act or omission on the part of Tenant or
Tenant’s directors, officers, members, managers, employees, agents and
contractors, a release of Hazardous Materials onto the Demised Premises or onto
any other property. Tenant shall obtain and comply with any and all approvals,
registrations or permits required under applicable Environmental Laws,
including, without limitation, air quality and fuel storage permits.


(c)           In
the event a Hazardous Material in the air, soil, surface water or groundwater,
or in, on and/or under any structure on the Demised Premises is identified at
the Demised Premises and which occurred, was created or aggravated during the
Lease Term and was caused by the Tenant (a “Tenant
Environmental Condition”), Tenant shall (i) conduct and complete all
investigations, studies, samplings, and testing, and all remedial, removal, and
other actions necessary to clean up, remove and/or abate all Tenant
Environmental Conditions in accordance with all applicable federal, state and
local laws, ordinances, rules, regulations, and policies, and (ii) in
accordance with the orders and directives of all federal, state, and local
governmental authorities.


(d)           In
the event a Tenant Environmental Condition has been identified, at the
expiration of this Lease or in the event this Lease is terminated, or Tenant is
dispossessed, Tenant shall be responsible with respect to any and all such
Tenant Environmental Conditions to (i) deliver the Demised Premises to Landlord
in a condition that conforms with all applicable federal, state and local laws,
ordinances, rules or regulations affecting the Demised Premises including,
without limitation, Environmental Laws, and (ii) deliver to Landlord a Phase
One Environmental Report and, if reasonably necessary, a Phase Two
Environmental Report and tank testing reports showing no leaks, prepared by an
environmental consultant reasonably satisfactory to Landlord, or if
commercially reasonable, a no-action letter or closure letter, certifying to
Landlord that the Tenant Environmental Condition or Conditions has been
appropriately remediated or abated.


(e)           In the event a Tenant Environmental
Condition has been identified, Tenant covenants and agrees to defend, indemnify
and hold harmless Landlord, from and against, and pay or reimburse Landlord
for, any and all claims, liabilities, obligations, losses, fines, costs,
royalties, proceedings, deficiencies or damages (whether absolute, accrued,
conditional or otherwise and whether or not resulting from third party claims,
but excluding consequential, special and indirect damages and lost profits),
including out-of-pocket expenses and reasonable attorneys,’ consultants’ and
accountants’ fees incurred in the investigation or defense of any of the same
or in asserting any of their respective rights hereunder resulting from or
arising out of Tenant Environmental Conditions at the Demised Premises,
including the presence of Hazardous Materials, or the discharge or release of
Hazardous Materials, and liabilities under Environmental



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Laws that arise from actions, conditions, or the disposal or release of
Hazardous Materials or the actions, operations, activities, or non-compliance
of Tenant, Tenant’s agents, or Tenant’s invitees, with Environmental Laws at
the Demised Premises. The foregoing indemnity shall survive the expiration or
other termination of this Lease.


(f)            In
the event of any environmental condition that is not a Tenant Environmental
Condition or created or aggravated by the Tenant, Landlord covenants and agrees
to defend, indemnify and hold harmless Tenant, from and against, and pay or
reimburse Tenant for, any and all claims, liabilities, obligations, losses,
fines, costs, royalties, proceedings, deficiencies or damages (whether
absolute, accrued, conditional or otherwise and whether or not resulting from
third party claims, but excluding consequential, special and indirect damages
and lost profits), including out-of-pocket expenses and reasonable attorneys,’
consultants’ and accountants’ fees incurred in the investigation or defense of
any of the same or in asserting any of their respective rights hereunder  The foregoing indemnity shall survive the
expiration or other termination of this Lease.


(g)           If
Tenant receives any notice of (i) the happening of any event involving the
presence, spill, release, leak, seepage, discharge or cleanup of any Hazardous
Material on, to or from the Demised Premises, or (ii) any complaint, order,
citation or notice with regard to air emissions, water discharge or any other
environmental, health or safety matter affecting Tenant or the Demised
Premises, then Tenant shall promptly notify Landlord in writing of said notice
and shall contemporaneously send to the Landlord a copy of any notice sent to
any governmental agency.


(h)           During
the Term, Landlord or its designee, provided Landlord has a reasonable basis to
believe that the Demised Premises has been affected by Hazardous Materials,
may, at Landlord’s sole cost and expense, and upon prior notice to Tenant,
conduct such investigations and tests as Landlord reasonably deems necessary to
determine whether the Demised Premises and the operation thereof are in compliance
with all Environmental Laws, provided that any such investigations and tests do
not materially interfere with Tenant’s Permitted Use of the Demised Premises or
the operation of its business thereon.


Section 23.03         Environmental
Insurance.


(a)           Except as specifically provided in
this Lease, neither the maintenance of any insurance policy required under this
Lease nor the minimum insurance limits specified herein shall be deemed to
limit or restrict in any way the Tenant’s liability for environmental matters
under this Article 23.


(b)           With respect to third-party claims
arising from or related to, directly or indirectly, in whole or in part: (i)
the threatened or actual release of any Hazardous Materials in, on, under or
from the Demised Premises; and (ii) any environmental liability or remedial
action associated with the Demised Premises for any activities conducted on the
Demised Premises; both parties shall be covered and such losses, costs,
expenses, claims, demands, obligations and liabilities will be satisfied to the
extent environmental insurance provides coverage. This provision shall survive
the Lease Term.



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ARTICLE 24 – RIGHT OF FIRST
OFFER.


Section 24.01         Right
of First Offer. Landlord shall notify Tenant (“Landlord’s Initial Notice”) of the availability of any vacant
and available space at the Premises (the “Option Space”) that may become
available during the Term. Landlord’s Initial Notice shall include Landlord’s
good faith proposal of the Rent and additional charges and other material
economic terms for said Option Space. Within fifteen (15) days of receipt of
Landlord’s Initial Notice, Tenant shall have the right to notify Landlord (“Tenant’s Notice”) in the event Tenant
desires to lease the Option Space, TIME BEING OF THE ESSENCE with respect to
such fifteen (15) day period. Tenant’s failure to send Tenant’s Notice within
the fifteen (15) day period shall be deemed to be an automatic expiration of
Tenant’s right of first offer hereunder as to the Option Space identified in
Landlord’s Initial Notice. If Tenant elects not to lease the Option Space, or
fails to respond to Landlord within fifteen (15) days of receipt of Landlord’s
Initial Notice, Landlord shall be free to lease the Option Space to any other
party on any terms Landlord elects. If Landlord does not present a good faith
proposal in Landlord’s Initial Notice, Landlord shall be deemed in default of
this Lease.


Section 24.02         Lease
Agreement. If Tenant elects to lease the Option Space from Landlord
pursuant to the terms hereof, Tenant and Landlord shall promptly enter into a
lease or lease amendment incorporating such terms with Landlord. Such terms shall
include, among other things, that the (i) Tenant shall pay its proportionate
share of any real estate taxes for the Premises; and (ii) Tenant shall grant
Landlord an easement for ingress and egress that may be located within the
Tenant’s Demised Premises.


Section 24.03         No
Default. Landlord’s obligation to offer the Option Space to Tenant shall be
strictly conditioned upon there being no event of default beyond any applicable
cure period on the part of Tenant under this Lease which at the time of Tenant’s
receipt of Landlord’s Initial Notice, is continuing beyond the applicable
period for notice and cure, either at the time of Landlord’s receipt of Tenant’s
Notice or as of the commencement of the term of the lease of the Option Space.
Notwithstanding anything to the contrary contained in this Lease, if, on any of
the dates set forth in this Section 24.01, Tenant is in default beyond any
applicable cure period under the terms of this Lease which continues unremedied
after notice and the expiration of any applicable cure period, then Landlord,
in Landlord’s sole and absolute discretion, may elect, by written notice to
Tenant, to void Tenant’s exercise of its right of first offer under this
Section 24, in which case Tenant’s exercise shall be of no force or effect, and
Tenant’s right of first offer hereunder as to the Option Space shall
automatically expire.


ARTICLE 25 – EARLY TERMINATION
RIGHT.


Section
25.01         Early Termination Right.
Provided (i) this Lease has not been terminated previously pursuant to the provisions
of this Lease or pursuant to law; and (ii) Tenant is not then in default beyond
the applicable period (x) under any of the terms, covenants or conditions of
this Lease on Tenant’s part to be observed or performed (other than the
covenant to pay Fixed Rent) beyond the applicable notice and cure periods set
forth in this Lease or (y) of the covenant to pay Fixed Rent, Tenant shall have
the right to terminate this Lease and the Term as of the last day of any
calendar month (which day is referred to as the “Earlier Termination Date”) by notice to



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Landlord exercising such right at least six (6) months prior to the
Earlier Termination Date. Tenant shall continue to pay the Fixed Rent and any
Additional Rent payable by Tenant under the provisions of this Lease up to and
including the Earlier Termination Date. Time is of the essence with respect to
the giving of such notice and any notice given after the date as defined above
purporting to exercise such option shall be void and of no force or effect. Such
notice of termination shall be given in accordance with the provisions of
Article 18. In the event Tenant shall give any such notice of termination
pursuant to the provisions of this Section and shall otherwise comply with the
conditions of the exercise of Tenant’s right to terminate this Lease, this
Lease and the Term shall come to an end and expire on the Tenant’s Earlier
Termination Date with the same force and effect as though said date were the
Expiration Date, unless sooner terminated pursuant to any other term, covenant
or condition of this Lease or pursuant to law.


ARTICLE
26 - RENEWAL OPTION/RENT UPON RENEWAL


Section
26.01         Renewal Option. Provided
that, as of the date of the exercise of the foregoing option to renew and as of
the commencement of the Renewal Term (as hereinafter defined) (i) this Lease is
in full force and effect, and (ii) Tenant shall not then be in default beyond
the applicable period pursuant to the terms of the Lease, Tenant shall have the
right to renew this Lease for four (4) additional renewal terms (each, the “Renewal Term”) of five (5) years each,
commencing on the first day after the Expiration Date or any previous Renewal
Term Expiration Date and ending at midnight on the date which is five (5) years
thereafter (the “Renewal Term Expiration Date”)
(or until such term shall sooner cease and expire as hereinafter provided), by
giving to Landlord written notice of its election to so exercise said option to
renew no later than six (6) months prior to the Expiration Date (or in the
event Tenant has already elected to renew this Lease, six (6) months prior to
the expiration of the Renewal Term Expiration Date) (TIME BEING OF THE ESSENCE
with respect to Tenant’s notice to renew), and further provided, that such
Renewal Term shall be substantially upon the same terms, provisions, covenants,
and conditions as are contained in this Lease, except as for the duration of
the term hereof, the absence of any further right to renew the Term of this
Lease, and the rental rate and such provisions in this Lease which by its terms
are only applicable to the initial Term of the Lease. Notwithstanding the
foregoing, any Renewal Term to be granted by the Landlord shall be subject to
Tenant paying its pro-rata share of any real property taxes (however denominated)
attributable to the Premises.


Section 26.02         Renewal Rent. The rent during
the Renewal Term shall be a sum equal to ninety (90%) percent of the Fair
Market Rental for the Demised Premises subject to annual cumulative and
compounded increases based upon CPI as set forth in Section 4.01 herein. Within
thirty (30) days of the date upon which Tenant shall exercise its renewal
option, Landlord shall give notice (“Valuation
Notice”) to Tenant setting forth an amount which Landlord determines
to be the Fair Market Rental for the Renewal Term. If Tenant shall dispute
Landlord’s determination of Fair Market Rental, Tenant shall give notice to
Landlord of such dispute within fifteen (15) days of Tenant’s receipt of the
Valuation Notice. Notwithstanding the above, with respect to the Renewal Term,
in the event the parties fail to reach an agreement as to the Fair Market
Rental of the Demised Premises to be paid by the Tenant during the Renewal Term
within sixty (60) days after the Tenant delivers written notice to the Landlord
of Tenant’s objection to the Valuation Notice, such amount shall be determined
by appraisers appointed and



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who shall qualify and act as
provided in subsections (i) - (iv) hereof. Prior to the determination of the
arbitrators, Tenant shall pay as the Basic Rent and Additional Rent Tenant is
obligated to pay under this Lease, the amount set forth in the Valuation Notice
and in the event the arbitrators determine that the Basic Rent and Additional
Rent payable pursuant to this Section is greater than that set forth in the
Valuation Notice, then Tenant shall pay promptly to Landlord the amount of its
underpayment of Basic Rent and Additional Rent for the period commencing on the
first day of the Renewal Term, or if the arbitrators determine that the Basic
Rent and Additional Rent payable pursuant to this Section is less than that set
forth in the Valuation Notice, then Tenant shall be entitled to a credit in the
amount of its overpayment for the period commencing on the first day of the Renewal
Term with interest on such overpayment at the prime rate as such rate is
published by the Wall Street Journal, which credit shall be applied to the next
succeeding payment or payments of Basic Rent. In no event shall the Basic Rent
payable during the first month of the Renewal Term be less than the Basic Rent
payable in the last month of the term as increased by CPI compounded annually.


(i)            Landlord and Tenant each shall
appoint an appraiser within ten (10) days after either of them shall have
requested an appraisal. If either Landlord or Tenant shall have failed to do so
within a period of five (5) days after the date of the notice from the other
party requesting same, then upon the request of either Landlord or Tenant, as
the case may be, such other appraiser shall be appointed by a Justice of the
Supreme Court of the State of New York, 
Kings County, or any successor court;


(ii)           The two (2) appraisers appointed as above provided shall
select a third appraiser and if they fail to do so within ten (10) days after
their appointment, such third appraiser shall be appointed as above provided
for the appointment of an appraiser where either party has failed to do so;


(iii)        Each appraiser shall be a person with at least ten (10) years
experience in appraising real estate, or in acting as a real estate broker in
the County of Kings, and who is a member in good standing of the American
Institute of Real Estate Appraisers or its successors or of a like body if such
institute is not in existence and has no successor and whose appraisals are
generally acceptable to institutional lenders;


(iv)        The three (3) appraisers selected as aforesaid shall convene
and commence hearings within ten (10) days after the appointment of the third
appraiser and shall proceed to conclude such hearings within a reasonable time
thereafter. The decision of such appraisers shall be in writing and made within
ten (10) days after the final hearing unless extended by agreement between
Landlord and Tenant and the vote of the majority of them shall be the decision
of all and binding upon Landlord and Tenant. Duplicate original counterparts of
the decision shall be sent to both Landlord and Tenant. Landlord and Tenant
each shall pay for the expenses and fees of their respective attorneys and of the
appraiser appointed by or on behalf of each of them. All other expenses of the
appraisal shall be borne by Landlord and Tenant equally.


Section 26.03         Factors
for Determination. In determining the fair market annual rental value of
the Demised Premises pursuant to this Article, the appraisers shall take into
consideration as appropriate all of the following:  (i) the Landlord and Tenant are well informed



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and well advised and each is acting in what it
considers its own best interest; (ii) a reasonable time under then existing
market conditions is allowed for exposure of the Demised Premises on the open
market; (iii) the Demised Premises are fit for immediate occupancy and use “as
is” and require no additional work by Landlord; (iv) market rents then being charged
for comparable space in other similar properties in the same area; (v) expense
stops and operating expenses and taxes. The appraisers shall consider all
testimony and documentary evidence which may be presented at the hearing.
Landlord and Tenant shall have the right to be represented by counsel and to
cross-examine the witnesses. In no event shall said determination include any
amount for leasehold improvements or free rent in excess of that which are then
being allowed to existing tenants in spaces of similar condition.


Section 26.04         Term. Wherever the word “Term” or “term”
is used in this Lease, it shall be deemed to include the Renewal Term if the
sense of such use shall be appropriate.


Section 26.05         Exercise of Option. The exercise
by the Tenant of the renewal option granted by this Article shall be deemed
irrevocable and not subject to withdrawal.


[THE
REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]



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IN
WITNESS WHEREOF, the parties hereto have executed this Lease under their
respective hands and seals as of the day and year first above written.


	
  

  	
  LANDLORD:

  
	
   

  	
   

  
	
   

  	
  G.T.J. CO., INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Jerome Cooper

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Jerome Cooper

  	
   

  
	
   

  	
   

  	
  Title:

  	
  President

  	
   

  
	
   

  	
   

  
	
   

  	
  TENANT:

  
	
   

  	
   

  
	
   

  	
  VARSITY BUS CO., INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Andrew Brettschneider

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Andrew
  Brettschneider

  	
   

  
	
   

  	
   

  	
  Title:

  	
  President

  	
   

  
								



 



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