Document:

Exhibit 10.3

 

AGREEMENT, dated as of November 29, 2005 (“Agreement”),
between Green Bus Lines, Inc. (“Green”), Command Bus Company, Inc. (“Command”),
Triboro Coach Corp. (“Triboro”), and Jamaica Buses, Inc. (“Jamaica”) (Green,
Command, Triboro and Jamaica collectively, the “Transit Alliance Companies”);
Varsity Transit, Inc. (“Varsity”), GTJ Co., Inc. (“GTJ”) and The City of New
York, a municipal corporation acting through the Office of the Mayor, with an
office at City Hall, New York, New York 10007 (“City”) (Transit Alliance
Companies, Varsity, GTJ and the City collectively referred to as the “Parties”).

BACKGROUND:

WHEREAS, the Transit Alliance Companies are engaged in
the business of providing bus transportation service within New York City
pursuant to operating authority granted by the City (hereinafter “Bus Service”);
and

WHEREAS, the City desires to acquire certain assets of
the Transit Alliance Companies and the City and the Metropolitan Transportation
Authority (“MTA”) desire to have the MTA, through its subsidiary, the MTA Bus
Company, Inc. (“MTA Bus Company”), provide bus service in the areas now served
by Transit Alliance Companies;

WHEREAS, the Transit Alliance Companies desire to
dispose of and the City desires to acquire certain assets of Transit Alliance
Companies to facilitate such MTA Bus Company operations on the terms and
subject to the conditions set forth in this Agreement; and

WHEREAS, the City desires to lease certain real
property (such leases are herein referred to collectively as, the “Real
Property Leases”) of Green Bus Lines Holding Corp., Jamaica Bus Holding Corp.
and Triboro Coach Holding Corporation, each a New York

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corporation (hereinafter collectively referred to as “Lessors”),
affiliated entities controlled by the Transit Alliance Companies; and

 

NOW, THEREFORE, in consideration of these premises and
of the mutual representations, warranties, covenants and agreements contained
in this Agreement and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Parties agree as follows:

ARTICLE I: ACQUISITION

1.1           Acquisition.

(a)           On
and subject to the terms and conditions of this Agreement, the Transit Alliance
Companies agree to sell and the City agrees to buy, all of their respective
assets used in connection with the Transit Alliance Companies’ bus operations
(the “Acquired Assets”) free and clear of any mortgage, pledge, security
interest, encumbrance, lien, claim or charge of any kind (“Lien”) other than
Permitted Liens (as defined below in Section 5.2(d)), but expressly excluding
the Excluded Assets (as hereinafter described and defined). The Acquired Assets
include, without limitation by reason of specificity, fixtures, furniture and
equipment, maintenance records, personnel records, operating schedules, the
intangible value of the development, administration, and maintenance of such
assets, including the value related to the development and training of
employees, the value related to the development of routes and operating schedules,
and going concern value or good will.

(b)           Notwithstanding
anything herein to the contrary, specifically excluded from the assets of
Transit Alliance Companies being purchased hereunder are the following
(collectively, the “Excluded Assets”) (it being understood however that nothing
in this paragraph is intended to limit or otherwise affect the City’s or
Transit Alliance Companies’ respective

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rights and obligations with regard to Excluded Assets
under the operating assistance arrangements between the Parties):  (i) all cash, cash equivalents, and
investments of any kind or nature; (ii) all of Transit Alliance Companies’
accounts receivable; (iii) all escrow accounts, non-tail prepaid expenses,
deferred charges, payments due from affiliates or stockholders, and security
deposits; (iv) all assets of Transit Alliance Companies consumed, disposed of
or otherwise used in the ordinary course of business between the date hereof
and up through and including the Transition Date (as defined below); (v) all
individual life insurance policies owned by Transit Alliance Companies; (vi)
all rights of Transit Alliance Companies to claims for tax refunds; (vii)
Transit Alliance Companies’ original corporate and financial books and records,
including minutes of meetings of its board of directors and stockholders;
(viii) any and all equity interests in the Lessors and all real property,
including all structures thereon and leasehold improvements thereto owned by
the Lessors and/or any Transit Alliance Company; (ix) the personal property
identified in Exhibit 1 hereof, Exhibit 1 to be agreed upon prior
to each Applicable Closing Date; (x) third-party software, information,
accounting, or payroll systems licensed rather than owned by the Transit
Alliance Companies, including any software systems or
modifications/enhancements owned by Varsity or GTJ (“Licensed Systems”),
provided that the City is entitled to paper records of the data in the Licensed
Systems relating to Bus Service; and (xi) use of the names and initials for Green
(i.e., GBL), Triboro (i.e., TCC), Jamaica (i.e., JB) and Command (i.e., CB).

 

1.2           Real
Property.

(a)           The Parties acknowledge that the bus
facility used by Command located at 12755 Flatlands Avenue, Brooklyn, New York
(“Command Facility”) is owned by the City. Command’s occupancy of the Command
Facility shall terminate and Command shall vacate the

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Facility
on the Applicable Transition Date (as defined below); provided that at the
Closing the City shall provide to Command a release and waiver as contemplated
by Section 4.2(d).

(b)           As
a material term of this Agreement, the Transit Alliance Companies agree to
cause Lessors, pursuant to the terms of Real Property Leases to be agreed upon
by the City and the Lessors prior to Closing, to lease to the City the property
located at the following locations:

·  Green Bus
Line Depot and Parking Lot, 165-25 147th Ave., Jamaica, bounded by Rockaway
Blvd., 147th Ave., 167th St., 146th Ave., Block 13296, Lots 7, 14 and 101, and
Block 13298, Lot 11, and Block 13302, Lot 171

·  Green Bus
Line Depot and Parking Lot, bounded by Rockaway Beach Blvd, B. 47th St.,
Edgemere Ave., and B.49th St., Block 15855, Lot 1, Block 15841, Lots 5, 7, 8,
10, 14, and 70

·  Triboro
Coach Bus Depot and Parking Lot, 85-01 24th Avenue, bounded
by: 23rd Ave, 85th St., 24th Ave., and 87th St., Block 1080, Lot 1

·  Jamaica
Bus Line Depot and Parking Lot, 114-15 Guy R Brewer Blvd, bounded by Guy R.
Brewer, Linden Blvd., 165th St., and 115th Ave., Block 12327, Lots 1, 8, and 30

Subject
to Article IV hereof, the Parties agree that, for Green, Triboro, and Jamaica,
the closing of the sale and transfer of the Acquired Assets and the City taking
possession pursuant to the Real Property Leases are interdependent; the City
taking possession under the Real Property Leases and the closing of the sale
and transfer of the Acquired Assets shall occur simultaneously and neither may
occur without the other.

(d)           No
Right of Set-Off. No party hereto nor any of its affiliates shall have any
right of set-off against any payments due to any other party or any of its
affiliates pursuant to a Real Property Lease (or payments of deemed Rent
pursuant to Section 4.1(b) hereof) based in whole or in part on any other
agreement or arrangement.

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1.3           Purchase
Price. In consideration of the transfer and sale of the Acquired Assets
hereunder related to each Transit Alliance Company, on the Applicable Closing
Date, the City shall pay to each Transit Alliance Company, in the manner set
forth in Section 4.2 and subject to the true-up described below in this Section
1.3, the following amounts:

(a)           Twenty-Five
Million Dollars ($25,000,000.00), to be paid on the Applicable Closing Date or,
if applicable, the Final Closing Date pursuant to Section 4.1(b) hereof, in the
following amounts:

(i)       Green: Nine Million Four Hundred Sixty
Thousand Dollars ($9,460,000.00);

(ii)      Command: Three Million Four Hundred and
Five Thousand Dollars ($3,405,000.00);

(iii)     Triboro: Eight Million One Hundred
Twenty-Five Thousand Dollars ($8,125,000.00);

(iv)     Jamaica: Four Million Ten Thousand Dollars
($4,010,000.00); and

(b)           An
amount equal to the actual invoiced cost for the Transit Alliance Companies’
inventory of spare parts and fluids (fuel, motor oil, antifreeze, transmission
fluid, brake fluid, etc.), provided that the Transit Alliance Companies shall
represent and warrant to the City that it has paid or will pay such invoiced
cost, and the liability (if any) to pay such cost shall remain with the Transit
Alliance Companies. A joint audit of the inventory of all such items shall be
conducted by the City and the applicable Transit Alliance Company at a mutually
agreeable time prior to the Applicable Closing Date; and

(c)           An
amount equal to the book value (net of accumulated depreciation) of the Transit
Alliance Companies’ other tangible assets (that are Acquired Assets) as of
Closing.

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(d)           The
sums of the amounts listed or described in Sections 1.3(a), (b), and (c) are
hereinafter referred to as the “Purchase Price” for each Transit Alliance
Company. The final Purchase Price for each Transit Alliance Company shall be
determined after the inventory of spare parts and fluids in (b) and based upon
the date of Closing for (c). The City shall pay the amounts listed in Sections
1.3(b) and (c) to the Transit Alliance Companies within thirty (30) days of the
Applicable Closing Date or Final Closing Date, as the case may be. All other
payments (other than the true-up amount) due in connection with the
transactions contemplated hereby or otherwise contemplated hereby to be payable
shall be made within thirty (30) days of the Transit Alliance Companies’
presentation of a valid request therefore accompanied by reasonable and
customary backup documentation (i.e., the type and level of back-up
documentation that is consistent with what is currently required under the
operating assistance arrangements between the Parties). It is understood and
agreed that the Transit Alliance Companies will reallocate the Purchase Price
after the Closing to reflect the relative value of each Transit Alliance
Company based on an appraisal that will not be completed before the Closing.

(e)           If
all of the Claimants in the Non-Unionized
Employees v. New York City Department of Transportation and Green Bus Lines, Inc., et al. (OSP
Case No. 03-13(c)-02) (“13(c) Proceeding”) execute Settlement Authorization
Forms and the City receives copies of such forms in accordance with the terms
of the Settlement Agreement, agreed upon by the City and the Transit Alliance
Companies in connection with the 13(c) Proceeding (the “Settlement Agreement”),
the City will pay the Transit Alliance Companies an additional Five Hundred
Thousand Dollars ($500,000.00), to be paid as additional Purchase Price in the
following manner:

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(i)       Green: 
One Hundred Eighty-Nine Thousand Two Hundred Dollars ($189,200)

(ii)      Command: Sixty-Eight Thousand One Hundred
Dollars ($68,100)

(iii)     Triboro: One Hundred Sixty-Two Thousand
Five Hundred Dollars ($162,500)

(iv)     Jamaica: Eighty Thousand Two Hundred
Dollars ($80,200)

If less than 100%
of the Claimants execute Settlement Authorization Forms, the City will pay the
Transit Alliance Companies an additional amount to be determined by multiplying
the percentage of Claimants who have executed the Forms by $300,000. For
example, if 90% of the Claimants execute Settlement Authorization Forms, the
City will pay an additional $270,000 in compensation for the settlement of the
13(c) Proceeding and the related litigation brought by the individual claimants.
If less than 100% of the Claimants execute Settlement Authorization Forms, the
City’s payment shall be distributed as follows:

(i)       Green: 37.84%

(ii)      Command: 13.62%

(iii)     Triboro: 32.50%

(iv)     Jamaica: 16.04%

The City shall pay the
amounts due under this sub-paragraph 1.3 (e) within ninety (90) days after the
submission of the Settlement Authorization Forms. The Transit Alliance
Companies may make more than one submission for payment hereunder accompanied
by copies of supporting Settlement Authorization Forms. If the City declares
the Settlement Agreement null and void in accordance with the terms of the
Settlement Agreement, no payment under this sub-paragraph 1.3 (e) shall be due.

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1.4                                 Transition
Date. The day that a Transit Alliance Company ceases bus operations
pursuant to the grant of operating authority from the City shall be the
“Transition Date” for that Transit Alliance Company. The Transition Date shall
be December 5, 2005 for Command; January 9, 2006 for Green; January 30, 2006
for Jamaica; February 20, 2006 for Triboro, or such other dates agreed upon by
the Parties, provided that the Applicable Transition Date shall be no earlier
than the Applicable Closing Date.

1.5                                 Assumption
of Liabilities, Indemnification.

(a)                                  In
further consideration of the transfer and sale of the Acquired Assets, on each
Applicable Closing Date, the City shall assume, defend, indemnify and hold the
Transit Alliance Companies, their respective current and former officers,
directors, employees and stockholders harmless from and against the
following  (collectively, the “Assumed
Liabilities”) (it being understood that for all purposes of this Agreement,
when the City has an obligation to defend, the City shall provide and control
the defense with counsel through the New York City Law Department or through
other counsel chosen and paid for by the City, and the Transit Alliance
Companies may retain counsel to participate in the defense through counsel of the
Transit Alliance Companies’ choosing at the Transit Alliance Companies’
expense; provided, however, if a conflict of interest arises between the City
and any of the Transit Alliance Companies or their affiliates, the Transit
Alliance Companies and/or their respective affiliates may engage counsel of
their own choosing and the City shall pay or promptly reimburse the Transit
Alliance Companies for the reasonable attorney’s fees and expenses of such
counsel):

(i)            Irrespective
of when any claim or demand is made, any and all claims, losses or damages for
bodily injury and/or property damage resulting from or alleged to result from
the operation and maintenance of buses as part of the Transit Alliance
Companies’

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Bus Service up
through and including the Applicable Transition Date. The Transit Alliance
Companies shall reasonably cooperate with the City and any third party
administrator identified by the City in the defense of any claim (and the City
shall pay or reimburse the Transit Alliance Companies for  any out-of-pocket third-party costs and
expenses incurred in connection with such cooperation) and the Transit Alliance
Companies shall transfer any claim to the City and/or such third party
administrator at the direction of the City.

(ii)           Without
regard to when any claim or demand is made, any and all claims, losses, and
damages alleged to arise from or relate, directly or indirectly, to the
designation of Jerome Cooper or any in-house counsel of the Transit Alliance
Companies as counsel of record in any or all matters involving any and all
claims, losses or damages for bodily injury and/or property damage resulting
from or alleged to result from the operation and/or maintenance of buses as
part of the Transit Alliance Companies’ Bus Service up to the Applicable
Transition Date. In furtherance hereof, subject to the Transit Alliance
Companies providing the City with a list of pending actions, with venue, index
numbers, and names and addresses of counsel and the parties they represent,
promptly after the Closing (but in no event more than 60 days thereafter) the
City, at its sole cost and expense shall obtain and cause to be filed in all
appropriate jurisdictions, substitutions of counsel forms with respect to all
matters involving any and all claims, losses or damages for bodily injury
and/or property damage resulting from or alleged to result from the operation
and/or maintenance of buses as part of the Transit Alliance Companies’ Bus
Service up to the Applicable Transition Date for which Jerome Cooper or any other
agent or representative of the Transit Alliance Companies or their affiliates
is designated as counsel of record naming counsel selected by the City to be
counsel of record, for each such matter. It is expressly understood and agreed
that from and after the Closing,

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neither Jerome
Cooper nor any other agent or representative of any Transit Alliance Companies
shall be required to appear as counsel in court or otherwise continue to act as
counsel of record in any pending or threatened action except as necessary to
effectuate substitution of counsel or where the Court does not allow a
substitution of counsel (in which case, costs for such case, including
attorney’s fees, will be handled in accordance with the current operating
assistance arrangements subject to the reasonable and customary documentation
of such expenses) .

(iii)          Any
and all claims arising under Section 13(c) (“Section 13 (c)”) of the
federal transit law, codified at 49 U.S.C. §5333(b), relating to this
transaction and/or the transition contemplated hereby. Provided, however, that
if less than 100% of the Claimants in the 13(c) Proceeding execute Settlement
Authorization Forms, the City’s obligation to indemnify and hold harmless will
not apply to any and all claims of the Claimants who do not execute Settlement
Authorization Forms arising under Section 13(c) relating to this transaction or
the transitions contemplated hereby. As a condition of this indemnification,
neither the Transit Alliance Companies, Varsity, GTJ, nor any officer, director,
or executive of any such companies, acting in any personal, official, or
unofficial capacity, will provide any financial support, including payment of
attorney’s fees, for legal services rendered subsequent to the execution of
this Agreement in connection with the filing or prosecution by any individual,
including prosecution of the 13(c) Proceeding or the litigation titled Hanz Andre, et al., v. The City of New York, et. al.,
Index No. 13423/04, currently pending in Supreme Court of the State
of New York, Queens County (“Andre Litigation”) or any other arbitration,
litigation or other judicial or quasi-judicial proceeding based upon,
attributable to, or arising out of the expiration and/or termination of the
franchise or operating authority of the Transit Alliance Companies, or the
commencement by MTA Bus Company of operations in the area and/or over the
routes operated by the Transit

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Alliance
Companies, or any action or decision of the City regarding the performance of
claims work (as that term is used in connection with the Andre Litigation)
performed by the Transit Alliance Companies and/or Varsity and GTJ. It is
understood that the Transit Alliance Companies and/or Varsity and GTJ have paid
as recently as November 16, 2005 for legal fees with respect to such matters
for services previously rendered and the Transit Alliance Companies, Varsity
and GTJ each agree that they will make no further payments for any such
services. In addition, none of the Excluded Employees, as defined in the
Settlement Agreement, shall file a claim in regard to the above. Nothing in
this Agreement is or shall be deemed to be an admission on the part of the City
or the Transit Alliance Companies that either the City or the Transit Alliance
Companies have any liability under Section 13(c).

(iv)          It
is the Parties’ understanding that Jamaica and Triboro are obligated by their
collective bargaining agreement with T.W.U. Local 100 to make certain defined
contributions to the T.W.U. – New York City Private Bus Lines Health Benefit Trust
(“TWU Health Benefit Trust”) and that Jamaica and Triboro have no legal
obligation to make any other payments to, or assume any responsibility for any
deficit in the funding of, the TWU Health Benefit Trust. Further, it is the
Parties’ understanding that Command and Green are obligated by their collective
bargaining agreements with Amalgamated Transit Union (“ATU”) Local 1179 and ATU
Local 1181 to make certain defined contributions to the health trusts relating
to Command and Green (“ATU Health Benefit Trusts”) and that Command and Green
have no legal obligation to make any other payments to, or assume any
responsibility for any deficit in the funding of, the ATU Health Benefit
Trusts. As provided in Section 2.2(f) of this Agreement, the City shall fund the
operating deficit of the TWU Health Benefit Trust and the ATU Health Benefit
Trusts. Operating deficit shall include all expenses in excess of required
contributions

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through the
Applicable Transition Date, including claims for benefits (including run-off of
claims) and administrative expenses through final termination of the plan
(including, but not limited to, preparation of required governmental reports,
filing fees and reasonable actuarial, accounting and legal expenses, and the
cost of providing fiduciary liability insurance for six years following the
applicable termination date [, provided such coverage is available on
commercially reasonable terms]). The City shall defend and hold harmless
Jamaica, Triboro, Green and Command from any third party claim which alleges
that Jamaica, Triboro, Green and Command are obligated to make any payment
other than defined contributions through the Transition Date to the TWU Health
Benefit Trust or the ATU Health Benefit Trusts, as applicable. Jamaica, Triboro,
Green and Command shall reasonably cooperate with the City in the defense of
any such claim and the City shall pay or reimburse for any out-of-pocket
third-party costs and expenses incurred in connection with such cooperation.

(v)           Any
and all funding obligations, claims, losses, damages, fines, costs, and
expenses associated with any withdrawal, termination, freezing, or other
liability related to the T.W.U.-N.Y.C. Private Bus Lines Pension Plan (the
“TWU-NYC Pension Plan”), the Restated Command-Local 1181 Pension Plan (the
“Command-Local 1181 Pension Plan”), the Green Bus Lines Inc. Employees’
Retirement Plan (the “Green Retirement Plan”), the Retirement Plan for Certain
Employees of Green Bus Lines, Inc. (the “Green Non-Union Retirement Plan”), the
Retirement Plan for Certain Employees of Command Bus Company (the “Command
Non-Union Retirement Plan”), the Retirement Plan for Certain Employees of
Triboro Coach Corporation (the “Triboro Non-Union Retirement Plan”) and the
Retirement Plan for Certain Employees of Jamaica Buses, Inc. (the “Jamaica
Non-Union Retirement Plan”), arising out of the transactions set forth in
Section 2.4

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or otherwise
related to the termination of the Transit Alliance Companies’ operations as
contemplated by this Agreement, regardless of whether such liability is
triggered immediately upon the consummation of such transactions or such
termination or as a result of subsequent events. For the avoidance of doubt, if
and to the extent any withdrawal liability, mass withdrawal liability and
reallocation liability is imposed on Jamaica or Triboro as a result of the
transactions contemplated by this Agreement, the City shall timely pay such
liability subject to the conditions set forth below. The TWU-NYC Pension Plan,
Command-Local 1181 Pension Plan, Green Retirement Plan, Green Non-Union
Retirement Plan, Command Non-Union Retirement Plan, Triboro Non-Union
Retirement Plan and Jamaica Non-Union Retirement Plan are collectively referred
to herein as the “Transit Alliance Pension Plans.”  As a condition of this indemnification,
subsequent to execution of this Agreement, and prior to implementation of the
City’s option to proceed with Section 2.4(a)(i) or (ii) below, Sections
2.4(b)(i) or (ii) below, and Sections 2.4(c)(i) or (ii) below, the applicable
Transit Alliance Company shall appoint individuals selected by the City to
replace the Current Trustees as the Employer Trustees or management
representatives with respect to the applicable Transit Alliance Pension Plan.
If a Current Trustee resigns, the City shall promptly select an individual to
be appointed by the applicable Transit Alliance Company. Except that, if an
agreement is reached to merge the Command-Local 1181 Pension Plan or the Green
Retirement Plan with the MTA Plan, then no substitution of trustees will be
required as to such plans. As a further additional condition of this
indemnification, any Transit Alliance Company receiving any written notice or
communication regarding withdrawal or termination liability shall immediately
provide a copy of such notice or communication to the City and, at the City’s
expense, take any reasonable steps directed by

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the City,
including contesting the amount of any liability. It is understood and agreed
that the indemnity provided for herein shall expressly extend in favor of all
Current Trustees of any Transit Alliance Pension Plan. “Current Trustees” shall mean the Employer
Trustees or management representatives as of the date prior to the applicable
Transit Alliance Company appointing individuals selected by the City pursuant
to the provisions of this Agreement.

(vi)          In
regard to both union and non-union employees of the Transit Alliance Companies,
Varsity and GTJ, any and all claims, losses or damages with respect to Accrued
Leave (as hereinafter defined) in accordance with Section 2.2(d), or with
regard to severance in accordance with Section 2.1(c) (other than severance
with respect to which, by the express terms of Section 2.1(b) the City has no
responsibility).

(vii)         Any
claims made by any union or any member of any union arising under any
collective bargaining agreement (“CBA”) and relating to this transaction or any
of the transitions contemplated hereby, including but not limited to whether
the MTA is required to assume the terms of the CBA.

(viii)        The
obligation, if any, to pay additional or retrospective premiums in connection
with any Workers’ Compensation Retrospective Policy.

(ix)           The
obligation to pay accumulated holiday pay under Section 9(b) of the Jamaica TWU
CBA and Section 9(f) of the Triboro TWU CBA or any provision of any other CBA
(as defined in Section 2.1(a));

(x)            Irrespective
of when any claim or demand is made, any and all claims asserted by vendors
(other than Varsity, GTJ or any other affiliated entities) to the Transit
Alliance Companies in regard to Bus Service, up, through, and including the
Transition Date, which shall include late fees, penalties, and interest on any
sums found to be due and owing on

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any vendor claims,
if the sums found to be due and owing are for an eligible operating expense and
the relevant Transit Alliance Company provided the City with a timely request
for reimbursement accompanied by appropriate and customary backup
documentation.

(b)                                 The
City’s obligations to defend and indemnify pursuant to this section are excess
to any insurance covering either the Transit Alliance Companies (other than
self insurance of the Transit Alliance Companies) or Current Trustees of any
Transit Alliance Pension Plan or the City and, if necessary, the Transit
Alliance Companies shall cooperate in obtaining an assignment of any applicable
insurance policy to the City.

(c)                                  Notwithstanding
any other provision to the contrary, the City shall not be required to defend
or be responsible for any attorney’s fees or costs of the Transit Alliance
Companies, Varsity, and GTJ, or any of the Claimants and/or Plaintiffs related
to the 13(c) Proceeding; the Andre Litigation; Green
Bus, et. al., Plaintiffs, v. City of New York, Defendants, Supreme
Court, Queens County Index Number 18770/04;
and Green Bus Lines, Inc. et. al., Plaintiffs, v. City of New York, Defendant, United
States District Court, Eastern District of New York Docket No. 03 Civ. 4849
(RJD)(CLP).

1.6                                 Excluded
Liabilities. Other than the Assumed Liabilities, or as expressly set forth
in another section of this Agreement, including without limitation Section 8.1
hereof, the City shall not hereby assume, become liable for, or agree to
discharge any obligation or liability of the Transit Alliance Companies, known
or unknown, choate or inchoate, absolute or contingent, including without
limitation: (a) any current liabilities, accounts payable or trade liabilities;
(b) any liability or obligation under, related to or arising from any contract
assigned pursuant to Section 3.2 accruing prior to the Closing; (c) any
liability or obligation of the Transit Alliance Companies to any former or
current employee of the Transit Alliance Companies,

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including
any liability or obligation to owners, officers, directors, or executives; or
(d) any obligation or liability of the Transit Alliance Companies arising from
a violation of law or governmental regulation (all of the foregoing being
hereinafter referred to as the “Excluded Liabilities”).

ARTICLE II: EMPLOYEES AND BENEFIT
MATTERS

2.1.                              Offers
of Employment. The City warrants and represents to the Transit Alliance
Companies that the City has arranged with the MTA Bus Company as follows (and
the City shall indemnify, defend, and hold harmless the Transit Alliance
Companies, Varsity and GTJ from any and all costs, losses and damages related
to and obligations arising out of any failure by the MTA or the MTA Bus Company
to act in accordance with the following or in accordance with any other
provision of this Agreement (including without limitation Sections 2.2 – 2.5
hereof) which contemplates any action or behavior by MTA and MTA Bus Company,
except to the extent that the Transit Alliance Companies, Varsity and GTJ take
any action or step (other than actions or steps taken at the request of MTA or
MTA Bus Company) that creates liability to third parties for any such failure
by the MTA or MTA Bus Company to act, it being understood and agreed that the
City is fully responsible to the Transit Alliance Companies, Varsity and GTJ
for any failure by the MTA and/or the MTA Bus Company to comply with the
arrangements set forth in this Agreement):

(a)                                  Prior
to the Transition Date applicable to the individual Transit Alliance Company
(hereinafter “Applicable Transition Date”), the MTA Bus Company shall offer employment
(to commence at 12:01am on the day after the Applicable Transition Date) to (i)
all members of TWU Local 100 employed by Jamaica and Triboro on the Transition
Date on the terms and conditions substantially similar to those contained in
Jamaica’s and Triboro’s current

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collective
bargaining agreement with TWU Local 100 (“TWU CBA”), (ii) all members of ATU
Local 1181 employed by Command on the Transition Date on the terms and
conditions substantially similar to those contained in Command’s current collective
bargaining agreement with ATU Local 1181 (“Command ATU CBA”), and (iii) all
members of ATU Local 1179 employed by Green on the Transition Date on the terms
and conditions substantially similar to those contained in Green’s current
collective bargaining agreement with ATU Local 1179 (“Green ATU CBA”) (the TWU
CBA, Command ATU CBA and Green ATU CBA, each a “CBA”). A list of such employees
is set forth in Exhibit 2. Notwithstanding the above, the MTA Bus
Company shall not be obligated to offer employment to any individual who has
previously been terminated for cause by the MTA or any of its agencies,
affiliates, or subsidiaries. The City understands and agrees that a number of
these employees are inactive and that the offer to each such employee shall remain
open for so long as such employee would have been entitled to return to the
applicable Transit Alliance Company had the Transit Alliance Company continued
to provide Bus Service (such union employees, together with similarly-situated
non-union employees who are offered employment by the MTA Bus Company, the
“Inactive Employees”).

(b)                                 Except
as otherwise provided in this Section 2.1(b), for the non-union employees of
the Transit Alliance Companies and Varsity, prior to the Applicable Transition
Date, the MTA Bus Company will offer employment (to commence at 12:01 am on the
day after the Applicable Transition Date) to those individuals who are set
forth in Exhibit 3, including, without limitation, Inactive Employees.
The offer of employment to any Inactive Employee shall remain open for so long
as such Inactive Employee would have been entitled to return to the applicable
Transit Alliance Company and/or Varsity had the Transit Alliance Company or

 17
 

 

 

Varsity
continued to provide Bus Service after the Applicable Transition Date. Exhibit
4 sets forth terms and conditions of such employment and wages and benefits,
health and welfare and pension plans available with respect to each of the
non-union employees. The Chairman, Chief Executive Officer, President, Vice
President, Chief Financial Officer, Chief Accounting Officer of the Transit
Alliance Companies and any other employee identified on the attached Exhibit 5
are Excluded Employees who will not be offered positions with the MTA Bus
Company. The Transit Alliance Companies may make severance payments to such
Excluded Employees but the Parties agree that such severance payments are not
eligible for reimbursement by the City as operating expenses or for any other
reason and neither the City nor the MTA shall have any responsibility for any
severance paid by the Transit Alliance Companies to any Excluded Employee for
any reason. Any employees who do not accept employment or who are not offered
positions with the MTA Bus Company shall also receive payment from the Transit
Alliance Companies, to the extent they are entitled to such payment, for earned
and unused sick, personal or vacation days (for any employees, whether or not
such employee is an MTA Transit Alliance Company Employee, as such term is
defined below in Section 2.1(d), such leave is herein referred to as “Accrued
Leave”) in accordance with Section 2.2(d) of this Agreement and the City shall
promptly reimburse the Transit Alliance Companies for such payments in respect
of Accrued Leave in the amount actually paid by the Transit Alliance Companies.
To the extent the Transit Alliance Companies make payments in respect of any
Accrued Leave, the Transit Alliance Companies shall be reimbursed by the City
within the period contemplated by the next to last sentence of Section 1.3 of
this Agreement. Non-union employees hired by the MTA Bus Company will receive
severance from the MTA Bus Company if terminated without cause within the first
year of their employment with the MTA Bus Company. The amount of

 18
 

 

 

severance
pay shall equal one month’s base salary (not including benefits) for each full year of service with the
Transit Alliance Company, not to exceed twelve months’ base salary, less the
amount paid to such employee in salary by the MTA Bus Company prior to the date
of termination. However, any non-union employee terminated without cause after
nine months of service with the MTA Bus Company shall be entitled to severance
pay of three months’ base salary (not including benefits).

(c)                                  The
Transit Alliance Companies represent and warrant that each employee listed in
Exhibits 2 and 3 is an employee of a Transit Alliance Company or Varsity who as
of the date hereof was engaged in the business of providing Bus Service and is
actively at work or absent in accordance with an established policy of a
Transit Alliance Company or Varsity and has the contractual or legal right to
return to active work within the terms of such policy or of a CBA.

(d)                                 The
employees who receive and accept offers of employment from the MTA Bus Company
and become employees of the MTA Bus Company effective on the day after the
Applicable Transition Date or who are Inactive Employees as of such date and
who are ready, willing and able to become MTA Bus Company employees before the
expiration of their right to return to work shall be referred to in this
Agreement as “MTA Transit Alliance Company Employees.”

2.2                                 Health
and Welfare Benefits. The Transit Alliance Companies shall continue to
provide or cause to be provided (e.g., by payment of contractually required
contributions to their respective union-related plans) (a) to MTA Transit
Alliance Company Employees and MTA Transit Alliance Company Retirees (as
defined below) medical, dental and life insurance benefits through the last day
of the month in which the Applicable Transition Date

 19
 

 

 

occurs, and (b) to
MTA Transit Alliance Company Employees all workers’ compensation, disability
and other welfare benefits through the Applicable Transition Date. The City
shall reimburse the Transit Alliance Companies for all costs associated with
providing such benefits as if such benefits were provided during the operation
of the Transit Alliance Companies prior to the Applicable Transition Date,
including, but not limited to, benefit claims and administrative and other
expenses from the Applicable Transition Date through the last day of the month
in which such Transition Date occurs. For purposes of this Agreement, MTA
Transit Alliance Company Retiree shall mean any retiree of a Transit Alliance
Company who is entitled to receive retiree benefits, under the terms of the
Health and Welfare Plans (as defined below), immediately prior to or due to
retirement on the Applicable Transition Date. The City warrants and represents
to the Transit Alliance Companies that the City has arranged with the MTA Bus
Company as follows:

(a)                                  Responsibility
for Benefits Claims.

(i)                                     The
MTA Bus Company shall be responsible for all medical, dental, life insurance,
workers’ compensation, disability and other welfare benefit claims with respect
to MTA Transit Alliance Company Employees incurred after termination of
benefits under the plans or policies of a Transit Alliance Company, the TWU
Health Benefit Trust, or the ATU Health Benefit Trusts (such plans or policies
and health trusts collectively, the “Health and Welfare Plans”) (i.e., for
workers’ compensation, disability and other welfare benefits commencing on the
Applicable Transition Date and for medical, dental and life insurance benefits
from and after the first day of the month following the month in which the
Applicable Transition Date occurs), in accordance with the applicable Health
and Welfare Plans. The MTA Bus Company shall further be responsible for any
medical, dental or life insurance benefit claims

 20
 

 

 

with respect to
MTA Transit Alliance Company Retirees who are entitled to such benefits under
the terms of the Health and Welfare Plans incurred after the first day of the
month following the month in which the Applicable Transition Date occurs. It is
understood and agreed that for purposes of this Agreement, “claims with respect
to” any individual includes without limitation claims related to
dependents/beneficiaries of such individual who, under the Health and Welfare
Plans, are entitled to the benefits in question.

(ii)                                  The
MTA Bus Company shall further be responsible for all wage claims related to
workers’ compensation and disability benefit claims with respect to MTA Transit
Alliance Company Employees for pay periods ending after the Applicable
Transition Date.

(iii)                               Subject
in each case to the City’s obligation to reimburse each Transit Alliance
Company set forth below:

·                  Each Transit
Alliance Company (or the TWU Health Benefit Trust or ATU Health Benefit Trusts)
shall retain its previous responsibility for all medical, dental and life
insurance benefit claims with respect to MTA Transit Alliance Company Employees
or MTA Transit Alliance Company Retirees incurred on or prior to the last day
of the month in which the Applicable Transition Date occurs. The City shall
reimburse the Transit Alliance Companies for all costs, including, but not
limited to, premium payments, benefit claims and administrative and other
expenses, associated with providing such benefits on and after the Transition
Date as if such benefits were provided during the operation of the Transit
Alliance Companies prior to the Applicable Transition Date.

·                  Each Transit
Alliance Company shall retain its previous responsibility for all workers’
compensation, disability and other welfare benefit claims with respect to MTA
Transit

 21
 

 

 

Alliance Company Employees incurred on or prior to the
Applicable Transition Date and all wage claims related to workers’ compensation
and disability benefit claims with respect to MTA Transit Alliance Company
Employees for pay periods ending on or prior to the Transition Date.

·                  Except as
otherwise provided in this Agreement, each Transit Alliance Company (or the TWU
Health Benefit Trust or ATU Health Benefit Trusts) shall retain its previous
responsibility for all health and welfare benefits claims and obligations with
respect to any other Transit Alliance Company employees or former employees and
in accordance with applicable plans and/or insurance policies.

To the extent
provided for by current City procedures, all expenses of the Transit Alliance
Companies with respect to the foregoing shall be reimbursable as eligible
expenses.

(b)                                 Establishment
of Programs. Prior to the Applicable Transition Date, but effective upon
the termination of benefits provided under the Health and Welfare Plans (i.e.,
for workers’ compensation, disability and other welfare claims as of the
Applicable Transition Date, and for medical, dental and life insurance
benefits, the first day of the month following the month in which the
Applicable Transition Date occurs), the MTA Bus Company shall have established
and shall maintain workers’ compensation, medical, dental, life insurance,
disability benefits and other health and welfare programs that provide the MTA
Transit Alliance Company Employees and MTA Transit Alliance Company Retirees,
and their respective eligible dependents and beneficiaries, with health and
welfare benefits no less favorable in the aggregate than those they had
immediately prior to the Applicable Transition Date. The MTA Bus Company
program shall be responsible for maintaining continuation health coverage under
Section 4980B of the Internal Revenue Code of 1986, as amended (the “Code”) and
Part 6 of 

 22
 

 

 

Title
I of ERISA for those employees of the Transit Alliance Companies who are not
hired by the MTA and who do not continue employment with a Transit Alliance
Company, Varsity, or any other related or affiliated entity, and their
qualified beneficiaries. The MTA Bus Company will cause the waiver of all
pre-existing conditions, exclusionary provisions and waiting period
requirements with respect to coverage of MTA Transit Alliance Company Employees
and MTA Transit Alliance Company Retirees (and their dependents/beneficiaries)
under all health and welfare plans in which such individuals are eligible to
participate after the Transition Date to the extent such individuals were not
subject to any such conditions, exclusions or requirements under the Health and
Welfare Plans immediately prior to the Transition Date. The MTA Bus Company
will credit any MTA Transit Alliance Company Employees and MTA Transit Alliance
Company Retirees (and their respective eligible dependents/beneficiaries) with
any amounts paid during the plan year in which the Applicable Transition Date
occurs for purposes of satisfying deductible amounts, out-of-pocket limits, or
similar limits under any MTA Bus Company plan in which such individuals
participate during the plan year in which the Applicable Transition Date
occurs.

(c)                                  Credit
for Service. The MTA Bus Company will credit MTA Transit Alliance Company
Employees with all service with a Transit Alliance Company, Varsity or with an
affiliate or predecessor of a Transit Alliance Company or Varsity for
eligibility and participation with respect to health and welfare benefits,
including without limitation retiree medical coverage.

(d)                                 Accrued
Vacation and Sick Leave. The MTA Bus Company will permit MTA Transit
Alliance Company Employees to use all Accrued Leave to the extent such use
would be consistent with any Transit Alliance Company or Varsity policy in
effect as of the

 23
 

 

 

Applicable
Transition Date (i.e., such leave must be available to the employee in question
on such date and use of available days may be subject to any limits any Transit
Alliance Company or Varsity policy would put on such use). Each Transit
Alliance Company and Varsity shall cooperate in the transfer of such Accrued
Leave by taking any administrative steps, necessary or desirable, to facilitate
the transfer (i.e., shall provide the MTA with applicable records and policies).
The City shall seek no direct or indirect reimbursement from any Transit
Alliance Company or Varsity in connection with any such Accrued Leave
(including via any break-even or operating assistance calculation) and shall
indemnify and hold each Transit Alliance Company, Varsity, their respective
directors, officers and employees, harmless against any claims of MTA Transit
Alliance Company Employee with respect to such Accrued Leave and shall promptly
(and in no event later than thirty (30) days from written notice together with
backup documentation customarily provided and accepted) reimburse each Transit
Alliance Company or Varsity for any amounts paid by it in respect of any
Accrued Leave. The MTA Bus Company will credit MTA Transit Alliance Company
Employees for service with a Transit Alliance Company, Varsity or their
predecessors or affiliates for purposes of determining entitlement to vacation,
sick and personal days under the MTA Bus Company policies.

(e)                                  Changes
to Health and Welfare Benefits. Notwithstanding anything to the contrary on
Exhibit 4 hereto, the MTA Bus Company shall act in good faith at all times in
making any changes to the health and welfare benefits set forth on Exhibit 4
hereto and will not discriminate against MTA Transit Alliance Company Employees
with respect to any changes in future benefits when making any such changes
(i.e., will treat MTA Transit Alliance Company Employees no less favorably than
comparable employees of the MTA Bus Company when making any such changes).

 

 

 24

 

 

(f)            The
City will continue to fund the operating deficits of the ATU Health Benefit
Trusts. The City will fund the operating deficits of the TWU Health Benefit
Trust related to Triboro upon the Transition Date for Triboro and related to
Jamaica upon the Transition Date for Jamaica. Operating deficits shall include
all expenses remaining after required employer contributions through the
Applicable Transition Date, including claims for benefits (including run-off of
claims) and administrative expenses through final termination of the plan
(including, but not limited to, preparation of required government reports;
filing fees; and reasonable actuarial, accounting and legal expenses).

2.3           Severance.
Each Transit Alliance Company represents and warrants that it has no
contractual obligation to any MTA Transit Alliance Company Employee for
severance or termination pay or similar compensation as a result of any action
or event contemplated by this Agreement.

2.4           Pension Plans.

(a)           Prior to
consummating the transactions involving Jamaica and Triboro contemplated
hereby, the City shall proceed with either, at its sole and exclusive option,
2.4(a)(i) or 2.4(a)(ii) below. The failure of the conditions of
2.4(a)(i) or 2.4(a)(ii) to be satisfied shall not relieve the City of its
obligation to close the transactions, except that the City shall not be
obligated to close if the Transit Alliance Companies have failed to meet their
obligations under 2.4(a).

(i)            The
conditions of 2.4(a)(i) are:

(A)          The
MTA Bus Company, the MTA, the Trustees of the TWU-NYC Pension Plan or an
appropriate party acting on behalf of the TWU-NYC Pension Plan, Jamaica and
Triboro, and/or other appropriate parties, shall have entered into a Pension

 25
 

 

 

Agreement
providing for, all as set forth in the Pension Agreement, (A) the merger of the
TWU-NYC Pension Plan into the Metropolitan Transportation Authority Defined
Benefit Pension Plan (“MTA Plan”); (B) the transfer of all assets of the
TWU-NYC Pension Plan to the MTA Plan; (C) the assumption by the MTA Plan of
liabilities of the TWU-NYC Pension Plan; (D) the transfer of appropriate
records of the TWU-NYC Pension Plan to the MTA Plan; and (E) agreed upon
representations and warranties.

(B)           The
MTA shall have amended the MTA Plan so that effective upon the transfer of
assets from the TWU-NYC Pension Plan, the MTA Plan (i) provides that Eligible
TWU-NYC Pension Plan Beneficiaries be credited with all service with a Transit
Alliance Company or an affiliate of a Transit Alliance Company for purposes of
vesting, eligibility and benefit accrual; and (ii) provides for benefits
for Eligible TWU-NYC Pension Plan Beneficiaries as of the Applicable Transition
Date on substantially the same terms and conditions as the TWU-NYC Pension Plan
provided as of such Transition Date. “Eligible TWU-NYC Pension Plan
Beneficiaries” refers collectively to any individual who, immediately prior to
the Applicable Transition Date, is receiving benefits or is or may be entitled
to benefits under the TWU-NYC Pension Plan, whether or not such individual is
an MTA Transit Alliance Company employee, and each individual’s beneficiaries,
whose pension benefit liabilities are to be assumed by the MTA Plan as
described in Section 2.4.

(ii)           The
conditions of 2.4(a)(ii) are:

(A)          The
MTA shall have amended the MTA Plan so that effective upon the day after the
Applicable Transition Date, the MTA Plan (1) provides that each MTA Transit
Alliance Company Employee who on the Applicable Transition Date was a
participant in the TWU-NYC Pension Plan be credited with all service as
recognized under the TWU-NYC 

 26
 

 

 

Pension Plan for
purposes of vesting and eligibility (including eligibility for early
retirement, disability and other retirement benefits), but not benefit
accrual;  and (2) provides for
benefits for such MTA Transit Alliance Company Employee as of the day after the
Applicable Transition Date on substantially the same terms and conditions as
the TWU-NYC Pension Plan provided as of such Transition Date; and

(B)           The
Transit Alliance Companies shall have provided or caused to have been provided
to MTA Bus Company a complete and accurate schedule listing the name of each
applicable MTA Transit Alliance Employee who on the Applicable Transition Date
was a participant in the TWU-NYC Pension Plan, and each such employee’s (1)
Social Security Number, (2) gender, (3) date of birth, (4) date of initial
participation in the TWU-NYC Pension Plan, and (5) uninterrupted seniority
under the TWU-NYC Pension Plan as of the Applicable Transition Date. In
addition the Transit Alliance Companies shall provide or cause to be provided
true and complete copies of (6) the TWU-NYC Pension Plan (including all
amendments thereto), (7) the most recent summary plan description with respect
to the TWU-NYC Pension Plan, (8) the most recent actuarial valuation report
prepared with respect to the TWU-NYC Pension Plan, (9) the most recent
favorable determination letter issued by the Internal Revenue Service with
respect to the TWU-NYC Pension Plan and (10) any material written communications
delivered to participants in the TWU-NYC Pension Plan. Jamaica and Triboro
shall also have used their best efforts to cause the non-vested benefits of the
MTA Transit Alliance Company Employees in the TWU-NYC Pension Plan to be fully
vested as of the Applicable Transition Date. If such non-vested benefits are so
vested, the City shall pay Jamaica and Triboro an amount equal to the actual
incremental cost of vesting such unvested benefits within thirty (30) days of
such amount being determined and provided to the City, and

 27
 

 

 

Jamaica and
Triboro shall thereupon pay such cost to the NYC-TWU Pension Plan, provided
that the payments contemplated in this sentence do not have to occur prior to
Closing.

(b)           Prior
to consummating the transactions involving Command contemplated hereby, the
City shall proceed with either, at its sole and exclusive option, 2.4(b)(i) or
2.4(b)(ii) below. The failure of the conditions of 2.4(b)(i) or 2.4(b)(ii) to
be satisfied shall not relieve the City of its obligation to close the transactions,
except that the City shall not be obligated to close if the Transit Alliance
Companies have failed to meet their obligations under 2.4(b).

(i)            The
conditions of 2.4(b)(i) are:

(A)          The
MTA Bus Company, the MTA, the Trustees of the Command-Local 1181 Pension Plan
or an appropriate party acting on behalf of the Command-Local 1181 Pension
Plan, and Command, and/or other appropriate parties, shall have entered into a
Pension Agreement providing for, all as set forth in the Pension Agreement, (A)
the merger of the Command-Local 1181 Pension Plan into the MTA Plan;
(B) the transfer of all assets of the Command-Local 1181 Pension Plan to
the MTA Plan;  (C) the assumption by the
MTA Plan of liabilities of the Command-Local 1181 Plan; (D) the transfer of appropriate
records of the Command-Local 1181 Pension Plan to the MTA Plan; and (E) agreed
upon representations and warranties.

(B)           The
MTA shall have amended the MTA Plan so that effective upon the transfer of
assets from the Command – Local 1181 Pension Plan, the MTA Plan
(i) provides that Eligible Command-Local 1181 Beneficiaries be credited
with all service with a Transit Alliance Company or an affiliate of a Transit
Alliance Company for purposes of vesting, eligibility and benefit accrual; and
(ii) provides for benefits for Eligible Command-Local 1181

 28
 

 

 

Beneficiaries as
of the Applicable Transition Date on substantially the same terms and
conditions as the Command-Local 1181 Pension Plan provided as of such
Transition Date. “Eligible Command-Local 1181 Beneficiaries” refers
collectively to any individual who, immediately prior to the Applicable
Transition Date, is receiving benefits or is or may be entitled to benefits
under the Command-Local 1181 Pension Plan, whether or not such individual is an
MTA Transit Alliance Company employee, and each individual’s beneficiaries,
whose pension benefit liabilities are to be assumed by the MTA Plan as
described in this Section 2.4.

(ii)           The
conditions of 2.4(b)(ii) are:

(A)          The
MTA shall have amended the MTA Plan so that effective upon the day after the
Applicable Transition Date, the MTA Plan (1) provides that each MTA Transit
Alliance Company Employee who on the Applicable Transition Date was a
participant in the Command-Local 1181 Pension Plan be credited with all service
as recognized under the Command-Local 1181 Pension Plan for purposes of vesting
and eligibility (including eligibility for early retirement, disability and
other retirement benefits), but not benefit accrual;  and (2) provides for benefits for such MTA
Transit Alliance Company Employee as of the day after the Applicable Transition
Date on substantially the same terms and conditions as the Command-Local 1181
Pension Plan provided as of such Transition Date.

(B)           The
Transit Alliance Companies shall have provided or caused to have been provided
to MTA Bus Company a complete and accurate schedule listing the name of each
applicable MTA Transit Alliance Employee who on the Applicable Transition Date
was a participant in the Command-Local 1181 Pension Plan, and each such
employee’s (1) Social Security Number, (2) gender, (3) date of birth, (4) date
of initial participation in the Command-Local 1181 Pension Plan, and (5)
uninterrupted seniority under the Command-Local 1181

 29
 

 

 

Pension Plan as of
the Applicable Transition Date. In addition the Transit Alliance Companies
shall provide or cause to be provided true and complete copies of the
Command-Local 1181 Pension Plan (including all amendments thereto), (7) the
most recent summary plan description with respect to the Command-Local 1181
Pension Plan, (8) the most recent actuarial valuation report prepared with
respect to the Command-Local 1181 Pension Plan, (9) the most recent favorable
determination letter issued by the Internal Revenue Service with respect to the
Command-Local 1181 Pension Plan and (10) any material written communications
delivered to participants in the Command-Local 1181 Pension Plan. Command shall
also have used its best efforts to cause the non-vested benefits of the MTA
Transit Alliance Company Employees in the Command-Local 1181 Pension Plan to be
fully vested as of the Applicable Transition Date. If such non-vested benefits
are so vested, the City shall pay Command an amount equal to the actual
incremental cost of vesting such unvested benefits within thirty (30) days of
such amount being determined and provided to the City and Command shall
thereupon pay such cost to the Command-Local 1181 Pension Plan, provided that
the payments contemplated in this sentence do not have to occur prior to Closing.

(c)           Prior
to consummating the transactions involving Green contemplated hereby the City
shall proceed with either, at its sole and exclusive option, 2.4(c)(i) or
2.4(c)(ii) below. The failure of the conditions of 2.4(c)(i) or 2.4(c)(ii) to
be satisfied shall not relieve the City of its obligation to close the
transactions, except that the City shall not be obligated to close if the
Transit Alliance Companies have failed to meet their obligations under 2.4(c).

(i)            The
conditions of 2.4(c)(i) are:

 30
 

 

 

(A)          The
MTA Bus Company, the MTA, the Trustees of the Green Retirement Plan or an
appropriate party acting on behalf of the Green Retirement Plan, and Green,
and/or other appropriate parties, shall have entered into a Pension Agreement
providing for, all as set forth in the Pension Agreement, (A) the merger of the
Green Retirement Plan into the MTA Plan; (B) the transfer of all assets of the
Green Retirement Plan to the MTA Plan; (C) the assumption by the MTA Plan of
liabilities of the Green Retirement Plan; (D) the transfer of appropriate
records of the Green Retirement Plan to the MTA Plan; and (E) agreed upon
representations and warranties.

(B)           The
MTA shall have amended the MTA Plan so that effective upon the transfer of
assets from the Green Retirement Plan, the MTA Plan (i) provides that Eligible
Green Retirement Plan Beneficiaries be credited with all service with a Transit
Alliance Company or an affiliate of a Transit Alliance Company for purposes of
vesting, eligibility and benefit accrual; and (ii) provides for benefits for
Eligible Green Retirement Plan Beneficiaries as of the Applicable Transition
Date on substantially the same terms and conditions as the Green Retirement
Plan provided as of such Transition Date. “Eligible Green Retirement Plan Beneficiaries”
refers collectively to any individual who, immediately prior to the Applicable
Transition Date, is receiving benefits or is or may be entitled to benefits
under the Green Retirement Plan, whether or not such individual is an MTA
Transit Alliance Company, and each individual’s beneficiaries, whose pension
benefit liabilities are to be assumed by the MTA Plan as described in this
Section 2.4.

(ii)           The
conditions of 2.4(c)(ii) are:

(A)          The
MTA shall have amended the MTA Plan so that effective upon the day after the
Applicable Transition Date, the MTA Plan (1) provides that each MTA

 31
 

 

 

Transit Alliance
Company Employee who on the Applicable Transition Date was a participant in the
Green Retirement Plan be credited with all service as recognized under the
Green Retirement Plan for purposes of vesting and eligibility (including
eligibility for early retirement, disability and other retirement benefits),
but not benefit accrual; and (2) provides for benefits for such MTA
Transit Alliance Company Employee as of the day after the Applicable Transition
Date on substantially the same terms and conditions as the Green Retirement
Plan provided as of such Transition Date; and

(B)           The
Transit Alliance Companies shall have provided or caused to have been provided
to MTA Bus Company a complete and accurate schedule listing the name of each
applicable MTA Transit Alliance Employee who on the Applicable Transition Date
was a participant in the Green Retirement Plan, and each such employee’s (1)
Social Security Number, (2) gender, (3) date of birth, (4) date of initial
participation in the Green Retirement Plan, and (5) uninterrupted seniority
under the Green Retirement Plan as of the Applicable Transition Date. In
addition the Transit Alliance Companies shall provide or cause to be provided
true and complete copies of the Green Retirement Plan (including all amendments
thereto), (7) the most recent summary plan description with respect to the
Green Retirement Plan, (8) the most recent actuarial valuation report prepared with
respect to the Green Retirement Plan, (9) the most recent favorable
determination letter issued by the Internal Revenue Service with respect to the
Green Retirement Plan and (10) any material written communications delivered to
participants in the Green Retirement Plan. Green shall also have used its best
efforts to cause the non-vested benefits of the MTA Transit Alliance Company
Employees in the Green Retirement Plan to be fully vested as of the Applicable
Transition Date. If such non-vested benefits are so vested, the City shall pay
Green an amount equal to the actual incremental cost of vesting such unvested

 32
 

 

 

benefits within
thirty (30) days of such amount being determined and provided to the City and
Green shall thereupon pay such cost to the Green Retirement Plan, provided that
the payments contemplated in this sentence do not have to occur prior to
Closing.

(d)           Prior
to and as a condition to the Parties’ obligation to close the transactions
involving Green contemplated hereby, the MTA Bus Company, the MTA, the Trustees
of the Green Non-Union Retirement Plan and Green shall have entered into a
Pension Agreement providing for, all as set forth in the Pension Agreement, (A)
the merger of the Green Non-Union Retirement Plan into the MTA Plan; (B) the transfer
of all assets of the Green Non-Union Retirement Plan to the MTA Plan; (C) the
assumption by the MTA Pension Plan of liabilities of the Green Non-Union
Retirement Plan; (D) the transfer of appropriate records of the Green Non-Union
Retirement Plan to the MTA Plan; and (E) agreed upon representations and
warranties.

(e)           Prior
to and as a condition to the Parties’ obligation to close the transactions
involving Green contemplated hereby, the MTA shall have amended the MTA Plan so
that effective upon the transfer of assets from the Green Non-Union Retirement
Plan, the MTA Plan  (i) provides that
Eligible Green Beneficiaries be credited with all service with a Transit
Alliance Company or an affiliate of a Transit Alliance Company for purposes of
vesting, eligibility and benefit accrual; and (ii) provides for benefits for
Eligible Green Beneficiaries as of the Applicable Transition Date on
substantially the same terms and conditions as the Green Non-Union Retirement
Plan provided as of such Transition Date. “Eligible Green Beneficiaries” refers
collectively to any individual who, immediately prior to the Applicable
Transition Date, is receiving benefits or is or may be entitled to benefits
under the Green Non-Union Retirement Plan, whether or not such individual is an
MTA Transit Alliance Company Employee, and each

 33
 

 

 

such individual’s
beneficiaries, whose pension benefit liabilities are to be assumed by the MTA
Plan as described in this Section 2.4.

(f)            Prior
to and as a condition to the Parties’ obligation to close the transactions
involving Command contemplated hereby, the MTA Bus Company, the MTA, the
Trustees of the Command Non-Union Retirement Plan, and Command shall have
entered into a Pension Agreement providing for, all as set forth in the Pension
Agreement, (A) the merger of the Command Non-Union Retirement Plan into the MTA
Plan; (B) the transfer of all assets of the Command Non-Union Retirement Plan
to the MTA Plan; (C) the assumption by the MTA Pension Plan of liabilities of
the Command Non-Union Retirement Plan; (D) the transfer of appropriate records
of the Command Non-Union Retirement Plan to the MTA Plan; and (E) agreed upon
representations and warranties.

(g)           Prior
to and as a condition to the Parties’ obligation to close the transactions
involving Command contemplated hereby, the MTA shall have amended the MTA Plan
so that effective upon the transfer of assets from the Command Non-Union
Retirement Plan, the MTA Plan (i) provides that Eligible Command Beneficiaries
be credited with all service with a Transit Alliance Company or an affiliate of
a Transit Alliance Company for purposes of vesting, eligibility and benefit
accrual; and (ii) provides for benefits for Eligible Command Beneficiaries as
of the Applicable Transition Date on substantially the same terms and
conditions as the Command Retirement Plan provided as of such Transition Date.
“Eligible Command Beneficiaries” refers collectively to any individual who,
immediately prior to the Applicable Transition Date, is receiving benefits or
is or may be entitled to benefits under the Command Retirement Plan, whether or
not such individual is an MTA Transit Alliance Company

 34
 

 

 

Employee, and each
such individual’s beneficiaries, whose pension benefit liabilities are to be
assumed by the MTA Pension Plan as described in this Section 2.4.

(h)           Prior
to and as a condition to the Parties’ obligation to close the transactions
involving Triboro contemplated hereby, the MTA Bus Company, the MTA, the
Trustees of the Triboro Non-Union Retirement Plan and Triboro shall have
entered into a Pension Agreement providing for, all as set forth in the Pension
Agreement, (A) the merger of the Triboro Non-Union Retirement Plan into the MTA
Plan; (B) the transfer of all assets of the Triboro Non-Union Retirement Plan
to the MTA Plan; (C) the assumption by the MTA Pension Plan of liabilities of
the Triboro Non-Union Retirement Plan; (D) the transfer of appropriate records
of the Triboro Non-Union Retirement Plan to the MTA Plan; and (E) agreed
upon representations and warranties.

(i)            Prior
to and as a condition to the Parties’ obligation to close the transactions
involving Triboro contemplated hereby, the MTA shall have amended the MTA Plan
so that effective upon the transfer of assets from the Triboro Non-Union
Retirement Plan, the MTA Plan (i) provides that Eligible Triboro Beneficiaries
be credited with all service with a Transit Alliance Company or an affiliate of
a Transit Alliance Company for purposes of vesting, eligibility and benefit
accrual; and (ii) provides for benefits for Eligible Triboro Beneficiaries as
of the Applicable Transition Date on substantially the same terms and
conditions as the Triboro Non-Union Retirement Plan provided as of such
Transition Date. “Eligible Triboro Beneficiaries” refers collectively to any
individual who, immediately prior to the Applicable Transition Date, is
receiving benefits or is or may be entitled to benefits under the Triboro
Non-Union Retirement Plan, whether or not such individual is an MTA Transit
Alliance Company

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Employee, and each
such individual’s beneficiaries, whose pension benefit liabilities are to be
assumed by the MTA Pension Plan as described in this Section 2.4.

(j)            Prior
to and as a condition to the Parties’ obligation to close the transactions
involving Jamaica contemplated hereby, the MTA Bus Company, the MTA, the
Trustees of the Jamaica Non-Union Retirement Plan, and Jamaica shall have
entered into a Pension Agreement providing for, all as set forth in the Pension
Agreement, (A) the merger of the Jamaica Non-Union Retirement Plan into the MTA
Plan; (B) the transfer of all assets of the Jamaica Non-Union Retirement Plan
to the MTA Plan; (C) the assumption by the MTA Pension Plan of liabilities of
the Jamaica Non-Union Retirement Plan; (D) the transfer of appropriate records
of the Jamaica Non-Union Retirement Plan to the MTA Plan; and (E) agreed upon
representations and warranties.

(k)           Prior
to and as a condition to the Parties’ obligation to close the transactions
involving Jamaica contemplated hereby, the MTA shall have amended the MTA Plan
so that effective upon the transfer of assets from the Jamaica Non-Union
Retirement Plan, the MTA Plan (i) provides that Eligible Jamaica Beneficiaries
be credited with all service with a Transit Alliance Company or an affiliate of
a Transit Alliance Company for purposes of vesting, eligibility and benefit
accrual; and (ii) provides for benefits for Eligible Jamaica Beneficiaries as
of the Applicable Transition Date on substantially the same terms and
conditions as the Jamaica Non-Union Retirement Plan provided as of such
Transition Date. “Eligible Jamaica Beneficiaries” refers collectively to any
individual who immediately prior to the Applicable Transition Date, is
receiving benefits or is or may be entitled to benefits under the Jamaica
Non-Union Retirement Plan, whether or not such individual is an MTA Transit
Alliance Company

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Employee, and each
such individual’s beneficiaries, whose pension benefit liabilities are to be
assumed by the MTA Pension Plan as described in this Section 2.4.

(l)            Prior
to and as a condition to the Parties’ obligation to close the transactions
contemplated hereby, the MTA shall have amended the MTA Plan so that effective
as of the first Transition Date, the MTA Plan (i) provides that Eligible Varsity
Beneficiaries be credited with all service with a Transit Alliance Company or
an affiliate of a Transit Alliance Company, including Varsity, for purposes of
vesting, eligibility and benefit accrual; (ii) provides for benefits for
Eligible Varsity Beneficiaries as of the Transition Date on the same terms and
conditions as the Retirement Plan for Certain Employees of GTJ & Affiliates
(the “GTJ Plan”) provided as of the Transition Date; and (iii) provides that,
an Eligible Varsity Beneficiary’s benefit under the MTA Plan will be reduced by
the amount of such Eligible Varsity Beneficiary’s accrued benefit under the GTJ
Plan as of the Transition Date. “Eligible Varsity Beneficiaries” refers
collectively to MTA Transit Alliance Company Employees who are employees of
Varsity and participants in the GTJ Plan on the Transition Date, the names of
whom are listed on Schedule 2.4(o) hereto (the “Varsity Participants”), and
their beneficiaries. Varsity and GTJ shall have provided or caused to have been
provided to MTA Bus Company and the MTA Plan a complete and accurate schedule
listing the name of each Varsity Participant and such participant’s (i) Social
Security Number, (ii) gender, (iii) date of birth, (iv) date of initial
participation in the GTJ Plan, and (v) years of service in the GTJ Plan as of
the Applicable Transition Date.

(m)          It
is the understanding, intent, and agreement of the Parties that the MTA Bus and
the MTA, or their successors, shall not permit or cause the MTA Plan to reduce
the accrued benefit as of the applicable Effective Date, of any Alliance
Company Plan Participant

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under any Alliance
Company Plan for any reason at any time except and only to the extent that the
Internal Revenue Service, or any court or other agency with jurisdiction over
the matter requires such a reduction; provided that each affected Alliance
Company Plan Participant be timely notified of any potential reduction and
shall have the right, at his or her own expense, to intervene in any such
action or appeal to prevent such reduction of his or her accrued benefit.

(n)           The
Transit Alliance Companies shall be responsible for the preparation of required
government reporting (including, but not limited to, IRS Forms W-2P, 1099 and
5500) with respect to the Transit Alliance Company Plans referenced in Sections
2.4(d), (f), (h), and (j) hereof for all periods prior to the Applicable
Transition Date and the City shall pay or reimburse the Transit Alliance
Companies for the reasonable fees, costs and expenses related thereto.

2.5           401(k)
Plans. Upon the request of the trustees or the administrator of any of the
401(k) Plans listed in this Section 2.5, the City shall arrange for MTA Bus to
facilitate the rollover of distributions from such 401(k) Plan into a 401(k)
plan or its equivalent to be offered by the MTA or MTA Bus Company to
participants in such 401(k) Plan. The 401(k) Plans are: (i) the A.T.U. Local
1179 and Green Bus Lines, Inc. 401(k) Plan; (ii) the ATU Local 1181 and Command
Bus Company, Inc. 401(k) Plan; (iii) the T.W.U.–N.Y.C. Private Bus Lines 401(k)
Savings Plan; (iv) the GTJ & Affiliates 401(k) Plan; and (v) the Jamaica
Buses, Inc. 401(k) Plan. Any rollover or transfer of participant loans, if any,
shall be subject to MTA approval and after-tax contributions, if any, may not
be rolled over or transferred. The City shall pay charges, if any, that are
agreed upon charges (set forth in Exhibit 6 to this Agreement) associated with
the rollovers or distributions from the applicable 401(k) plan.

 

 

 38

 

 

ARTICLE III:  MTA BUS COMPANY

3.1                                 Cooperation.
During the period after the execution of this Agreement and before the
Applicable Transition Date, each Transit Alliance Company, Varsity and GTJ will
cooperate in good faith with the City and the MTA Bus Company in order to
facilitate the MTA Bus Company being able to provide bus service beginning on
the Applicable Transition Date; provided that the foregoing shall not require
any Transit Alliance Company to make any changes to its business operations and
access to employees shall be at the applicable bus depot and subject to
employee time availability, the applicable Transit Alliance Company’s bus
operations and maintenance of good labor relations. To the extent that MTA Bus
Company elects to enter any applicable bus depot prior to the Applicable
Transition Date, MTA Bus Company shall assume all risks associated with such
entrance and performance, and the City shall indemnify and hold harmless the
applicable Transit Alliance Company from any and all claims, losses and damages
arising out of such entrance. Throughout this period, and subject to the
foregoing, each Transit Alliance Company, Varsity, and GTJ shall provide the
MTA Bus Company with reasonable access to its facilities, records, and
employees on prior notice at agreed upon times during regular business hours,
provided however that the MTA Bus Company shall not remove any records or any
copies of records from the premises without the applicable Transit Alliance
Company’s written permission until after the Applicable Transition Date. Each
Transit Alliance Company shall provide such information, data and technical
assistance as is reasonably required by the City’s and the MTA’s
representatives in order to accomplish the technical changes, staff acquisition
and training as may be necessary to assure uninterrupted bus service to begin
immediately after the Applicable Transition Date.

 

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3.2                                 Assignment
of Licensed Systems. As set forth in Section 1.1(b)(x), the acquisition
does not include third-party software, information, accounting, or payroll
systems licensed rather than owned by the Transit Alliance Companies, including
any software systems or modifications/enhancements owned by Varsity or GTJ
(“Licensed Systems”). The Parties will explore the possibility of the City
and/or the MTA Bus Company obtaining licenses or other authorization to use
such Licensed Systems. If requested, the Transit Alliance Companies will
consent to an assignment of such Licensed Systems to the City and/or the MTA
Bus Company without further compensation to the Transit Alliance Companies, but
only to the extent that any such assignment does not interfere, limit or
ultimately cause the Transit Alliance Companies or their subsidiaries,
affiliates or successor(s) to forfeit any rights to use or continue to use the
Licensed Systems. Any assignment or authorization to use Licensed Systems owned
by Varsity or GTJ is contingent upon the City and Varsity and/or GTJ reaching
an agreement on appropriate compensation to be paid by the City to Varsity or
GTJ.

3.3                                 Assignment
of Contracts Other Than Licensed Systems. Except as provided in Section
3.2, the Transit Alliance Companies will endeavor to make its vendors available
to the MTA and will consent to assignment of its contracts to the MTA after the
Applicable Transition Date upon request by the MTA. Effective on the Applicable
Transition Date, the City shall assume or shall cause the MTA to assume all the
Transit Alliance Companies’ obligations under the contracts related to the
Transit Alliance Companies’ ordinary course of operations and set forth on Exhibit
7 hereto. Exhibit 7 shall be agreed upon prior to each Applicable
Closing Date. Each contract listed on Exhibit 7 is a valid and binding
agreement of the applicable Transit Alliance Company and is in full force and
effect. Except as otherwise provided in Exhibit 7, there has been no
breach or default by a Transit Alliance

 

 40
 

 

 

Company
under any Contract listed on Exhibit 7 except for breaches or defaults
that have been cured, or waived, or are not material.

3.4                                 Mass
Transportation Lease and Service Agreement. The Mass Transportation Lease
and Service Agreement between the City and a Transit Alliance Company relating
to the lease of buses, project equipment and/or project vehicles (collectively “Buses”)
from the City to the applicable Transit Alliance Company shall terminate at
11:59 PM on the Applicable Transition Date provided that the City shall provide
to the applicable Transit Alliance Company a release and waiver as contemplated
by Section 4.2(e) hereof. The Transit Alliance Companies shall return all Buses
to the City on that date at the appropriate depot. Prior to the Applicable
Transition Date, the Parties will discuss how the MTA Bus Company intends to
address the leasing of tires for the Buses; provided that no Transit Alliance
Company will be obliged to remove any Transit Alliance Company-owned or Transit
Alliance Companies -leased tires from the Buses. The City will arrange for the
MTA Bus Company to remove any Transit Alliance Company identification from each
bus after the Applicable Transition Date and prior to inception of its
operation by the MTA Bus Company.

3.5                                 Access
to Books and Records. Following the Applicable Transition Date, for a
period of six (6) years, the City, the MTA and/or the MTA Bus Company and their
respective counsel, accountants, and other representatives, will be permitted,
upon reasonable notice to the Transit Alliance Companies, during normal
business hours, reasonable access to the books, records, files, documents,
correspondence and other data pertaining to the Transit Alliance Companies’
operations (including the computer systems in which such records and other data
is stored) that are part of the Excluded Assets with respect to the period
prior to the Closing to the extent that such access may be reasonably required
by the City to facilitate (a) the

 

 41
 

 

 

investigation,
litigation and final disposition of any claims which are or have been made
against the Transit Alliance Companies (other than claims brought by the City,
MTA , or MTA Bus Company), or which are made against the City with respect to
Bus Service provide by the Transit Alliance Companies, or (b) insurance or
government audits. Such access shall include without limitation the right to
make copies of all such books, records, files, documents, correspondence and
other data. For such 6 year period, upon reasonable notice, the Transit
Alliance Companies or their successor shall make reasonably available at their
sole expense, without charge to the City or MTA Bus Company, employees with
knowledge of such records (including computer records) for purpose of data
retrieval and records assembly for the foregoing purposes, and shall make
reasonable office space available at a facility in which the City or MTA Bus
Company and/or its representatives can review and assemble the applicable
records and data. For a period of six (6) years after the Closing, the Transit
Alliance Companies or their successor will not dispose of any such books,
records, files, records, correspondence and other data (including data stored
in electronic form) without giving 30 days prior written notice to the City and
MTA Bus Company and providing the opportunity for the City and MTA Bus Company
to examine and take possession of such books, records, files, documents,
correspondence, and data.

ARTICLE IV: CLOSING

4.1                                 The
Closing.    (a)  There
shall be a closing with respect to this Agreement for each Transit Alliance
Company (individually, a “Closing” and collectively, the “Closings”). All Closings
shall take place at the offices of the New York City Law Department, 100 Church
Street, New York, New York, at 10:00 a.m., and the Closing for (i) Command
shall be on December 2, 2005; (ii) for Green shall be on January 6, 2006; (iii)
for Jamaica shall be on January 27, 2006; and (iv) for Triboro shall be on
February 17, 2006; or such other places, times

 

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and
dates as the Parties may agree. The actual time and dates of the Closings for
each of the respective Closings are each herein referred to as the “Applicable
Closing Date(s).”  The Parties agree to
use their best efforts to cause each Applicable Closing Date to occur as soon
as practicable consistent with the provisions of this Agreement.

(b)                                 If one or more Closings do not occur on their
respective Applicable Closing Date due to the entry of an order in the Andre
Matter, enjoining one or more of the Parties from taking actions contemplated
herein and thereby delaying the occurrence of any Applicable Transition Date,
then within thirty (30) days of the earliest to occur of: (i) the last date to
appeal such order, if no notice of appeal is filed; or (ii) the final and
non-appealable resolution of the validity of such order (whether upholding or
reversing the grant of such relief (the “Final Closing Date”, as the case may
be), the Parties shall close the transactions contemplated by this Agreement
without any further extension of time. In the event of an injunction that
delays the Applicable Transition Date, the City shall pay the Transit Alliance
Companies in accordance with the terms of the operating assistance agreements,
as currently applied by the Parties, the following amounts for the use of the
applicable bus depot facility:

·      Triboro: 
$215,416.67/month

·      Green; 
(both facilities combined): $283,333.34/month

·      Jamaica: 
$126,250.00/month

(the
“Deemed Rent”) All payments on account of Deemed Rent shall commence on the
first day of the first month immediately following the date that would have
been the Applicable Transition Date for each of the Transit Alliance Companies
but for the imposition of the injunction and shall continue to be paid during
the pendency of the injunction.

 

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4.2                                 Deliveries
by the City. On the terms and subject to the conditions of this Agreement,
at each Closing, for the Transit Alliance Company that is the subject of the
Closing, the City shall deliver to such Transit Alliance Company the following:

(a)                                  The
Purchase Price in accordance with Section 1.3(e) by wire transfer pursuant to
wire transfer instructions provided by each Transit Alliance Company:

(b)                                 Good
and sufficient instruments of assumption of the Assumed Liabilities, in form
and substance reasonably satisfactory to such Transit Alliance Company;

(c)                                  A
certificate of an officer of the City that all actions by the MTA, the MTA Bus
Company, and the City required to be undertaken prior to the Closing have been
fully performed, including without limitation all actions required by Section 2
hereof;

(d)                                 Instruments
of release and waiver regarding the matters contemplated by Sections 1.2 and
3.3 above substantially in the form of Exhibit 8 hereto;

(e)                                  All
payments related to the applicable Real Property Lease which are due and
payable on the Applicable Closing Date.

(f)                                    Copies
of all environmental assessment studies obtained by the City with respect to
any of the Real Property, including without limitation, all Phase I studies;
and

(g)                                 Such
other instruments or documents, in form and substance reasonably acceptable to
such Transit Alliance Company, as may be necessary to effect the Closing.

4.3                                 Deliveries
by the Transit Alliance Companies. On the terms and subject to the
conditions of this Agreement, at each Closing, the applicable Transit Alliance
Company shall deliver to the City the following:

(a)                                  Good
and sufficient bills of sale and instruments of assignment and transfer,
conveying, assigning and transferring to the City good and marketable title to
the

 

 44
 

 

 

Acquired
Assets of such Transit Alliance Company consistent with the provisions of
Section 1.1 of this Agreement;

(b)                                 Evidence
of shareholder approval of this Agreement and the transactions contemplated
hereunder;

(c)                                  Such
other instruments or documents in form and substance reasonably acceptable to
the City, as may be necessary to effect the Closing.

4.4                                 Non-Union
Pension Agreements And Other Pre-Requisites to Closing. On the terms and
subject to the conditions of this Agreement, each Closing shall not occur prior
to (i) the execution of applicable non-union pension agreements in accordance
with Section 2.4, (ii) the applicable amendment of the MTA Plan in accordance
with Section 2.4, (iii) the execution and delivery of the Real Property Leases
described in Section 1.2 (c) hereof, and (iv) the occurrence of all actions
that pursuant to the terms of this Agreement are to occur prior to the Closing.

ARTICLE
V:  REPRESENTATIONS AND WARRANTIES

5.1                                 Operating
Authority Beyond November 30, 2005. The Parties acknowledge that the legal
authority for the Transit Alliance Companies to continue to operate Bus Service
in the City after November 30, 2005 is dependent upon the adoption of a local
law authorizing the New York City Department of Transportation, subject to the
approval of the New York City Franchise and Concession Review Committee, or
such other action that the City determines is sufficient to extend the Transit
Alliance Companies’ operating authority beyond November 30, 2005. If necessary,
the City shall diligently pursue the extension of the Transit Alliance
Companies’ operating authority, subject to the same terms and conditions as the
Transit Alliance Companies are currently operating under.

 

 45
 

 

 

5.2                                 Representations
and Warranties of the Transit Alliance Companies. Each Transit Alliance
Company represents and warrants to the City as follows:

(a)                                  Due
Organization. The Transit Alliance Company is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of New York and has full corporate power and authority to own all of its
properties and assets and to carry on its businesses as they are now being
conducted.

(b)                                 Authorization
and Validity of Agreement. The Transit Alliance Company has all requisite
corporate power and authority to execute and deliver this Agreement and,
subject to Section 5.1 above, to consummate the transactions contemplated
hereunder. The execution, delivery and performance by the Transit Alliance
Company of this Agreement and the consummation by the Transit Alliance Company
of the transactions contemplated hereby have been duly and validly authorized
by all necessary corporate action and no other corporate action on the part of
the Transit Alliance Company is necessary to authorize the execution, delivery
and performance of this Agreement and the consummation by the Transit Alliance
Company of the transactions contemplated hereby, except the consent of the
shareholders of the Transit Alliance Company. Each Transit Alliance Company
will diligently take such steps as are necessary to obtain shareholder
approval. This Agreement has been duly executed and delivered by the Transit
Alliance Company and, assuming the due authorization, execution and delivery
hereof by the City, is a valid and legally binding obligation of the Transit
Alliance Company, enforceable against the Transit Alliance Company in
accordance with its terms, except to the extent that its enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other laws
relating to or affecting creditors’ rights generally and by general equity
principles regardless of whether such enforceability is considered in a
proceeding in equity or at law.

 

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(c)                                  No
Conflict; Consents. The execution, delivery and performance by the Transit
Alliance Company of this Agreement and the consummation by the Transit Alliance
Company of the transactions contemplated hereby:  (i) will not violate, or result in the
violation of, any provision of any judgment or decree specifically applicable
to the Transit Alliance Company; and (ii) subject to the approval of
shareholders, will not violate any provision of the certificate of
incorporation or by-laws or other organizational documents of the Transit
Alliance Company.

(d)                                 Title
to Acquired Assets; Liens and Encumbrances. As of the date of this
Agreement, the Transit Alliance Company has good, valid and marketable title to
all the Acquired Assets of the Transit Alliance Company and all such Acquired
Assets are free and clear of all Liens except (i) liens that will be eliminated
prior to or at the Closing, (ii) any interest in the Acquired Assets already
owned by the City, (iii) liens for current taxes not yet due and payable, (iv)
liens imposed by law, (v) the Assumed Liabilities and liens related thereto,
(vi) other minor imperfections in title not material in nature or amount and
not materially detracting from the value or impairing the use of the property
subject thereto (the types of liens identified in clauses (i) — (vi) above
being herein referred to as “Permitted Liens”).

(e)                                  Legal
Proceedings. To the actual knowledge of the Transit Alliance Company and
except as set forth on Exhibit 9 hereto, (i) there is no action,
proceeding or governmental investigation currently pending against the Transit
Alliance Company which seeks to restrain or enjoin the consummation of the
transactions contemplated by this Agreement; (ii) there is no action,
proceeding or governmental investigation currently pending against the Transit
Alliance Company which could reasonably be expected to have a Material Adverse
Effect; and (iii) the Transit Alliance Company is not in violation of any term of
any judgment,

 

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decree,
injunction or order entered by any court of competent jurisdiction and
outstanding against it, which violation would have a Material Adverse Effect.
For purposes of this Agreement, “Material Adverse Effect” means any effect that
is, either individually or together with other effects, materially adverse to
the assets, properties, business, operations, net income or financial condition
of the Transit Alliance Company’s bus operation, taken as a whole.

(f)                                    Environmental
Matters. To the actual knowledge of the Transit Alliance Company, there are
no Environmental Liabilities (as defined below) relating to the Transit
Alliance Company’s bus operation or the Acquired Assets except those are set
forth in the attached Exhibit 10. “Environmental Liabilities” means any
and all liabilities which (i) arise under Environmental Laws and (ii) are based
upon actions occurring or conditions existing on or prior to the applicable
Transition Date. As used in this Agreement, “Environmental Laws” means any and
all applicable federal, state, local or municipal laws, rules, orders,
regulations, statutes, ordinances, codes, injunctions, orders or decrees
regulating or imposing liability or standards of conduct concerning pollution,
hazardous materials or protection of the environment, in effect as of the date
of this Agreement.

(g)                                 Absence
of Certain Liabilities and Changes. From the date of this Agreement and
through the Applicable Transition Date, none of the Transit Alliance Companies,
Varsity or GTJ will (i) grant (or enter into an agreement to grant) any general
increase (“general increase”, for purposes hereof, means an increase generally
applicable to a class or group of employees of a company but does not include
increases granted to individual employees for merit, length of services, change
in position or responsibility or other reasons applicable to specific employees
and not generally to a class or group) in any rate or rates of salaries or
compensation to directors, officers or employees or agents or any specific
increase in the salary

 

 48
 

 

 

or
compensation to any officer, agent or employee; (ii) fail to inform the City of
any material damage, destruction or loss to any Acquired Asset, whether or not
covered by insurance; or (iii) establish any new plan, program or arrangement
or, except as expressly provided for hereby, adopt a material modification or
amendment or provision for material increases in any existing plan, program or
arrangement, or written interpretation or announcement by a Transit Alliance
Company, Varsity or GTJ under any Plan which would materially increase the
expense of maintaining such Plan. For purposes of this section, “Plan” means
any plan, program, policy, fund, arrangement, or agreement providing for
benefits for employees of a Transit Alliance Company, Varsity or GTJ,
including, without limitation, any “employee benefit plan” as that term is
defined in Section 3(3) of the ERISA, all retirement, pension benefit, profit
sharing, medical, dental, disability, vacation, hospitalization, incentive,
bonus, executive compensation, deferred compensation, and any other similar
material fringe or employee benefit plan, fund, program or arrangement, whether
or not covered by ERISA, which is maintained by a Transit Alliance Company,
Varsity or GTJ for the benefit of, or relates to, any or all present or former
employees or directors of such Transit Alliance Company, Varsity or GTJ.
Notwithstanding the foregoing, the parties hereto recognize and agree that
certain Transit Alliance Companies are contributing employers to either
multi-employer or single employer pension and health and welfare plans for such
Transit Alliance Companies’ unionized employees, and that the boards of
trustees for such plans have the authority to modify or amend the plans;
provided, however, to the extent appropriate, such Transit Alliance Companies
shall advise the trustees that it has appointed that it prefers that such
trustees vote against any such modification or amendment that increases the
cost of any such multi-employer plan; and provided further that, to the extent
practicable, the Transit Alliance Companies shall give the City and the MTA
advance written

 

 49
 

 

 

notice
of any modification or amendment and, unless MTA Bus Company otherwise agrees,
if such modification or amendment increases any cost of MTA Bus Company or the
MTA with respect to any Transit Alliance Company Eligible Beneficiaries, MTA
Bus Company and the MTA shall not be obligated to provide or fund such
increase.

(h)                                 No
Broker. None of the Transit Alliance Companies, Varsity or GTJ have
employed or utilized the services of any broker, finder, or investment banker
who is entitled to a commission in connection with this Agreement or the
transactions contemplated by it.

(i)                                     Licenses
and Permits. Exhibit 11 is a list, together with a brief
description, of all licenses and permits material to the Transit Alliance
Companies’ business, issued or registered in the name of any Transit Alliance
Company. Except as set forth in Exhibit 11, all licenses held by any Transit
Alliance Company are in full force and effect.

(j)                                     Each
Transit Alliance Company has made all required contributions to their
respective pension plans and all required contractual contributions to their
respective health trusts.

5.3                                 Representations
and Warranties of the City. The City represents and warrants to the Transit
Alliance Companies as follows:

(a)                                  Due
Organization and Power of the City. The City is a municipal corporation,
duly established and validly existing under the constitution and laws of the
State of New York and The City of New York and is authorized by the laws of the
State of New York and The City of New York to enter into this Agreement and
perform its obligations hereunder.

(b)                                 Authorization
and Validity of Acquisitions. The City has all requisite power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereunder. The execution and delivery by the City of
this Agreement have been

 

 50
 

 

 

duly
authorized by all necessary action, no other action on the part of the City is
necessary to authorize the performance by the City of this Agreement and the
consummation by it of the transactions contemplated hereby. This Agreement has
been duly executed and delivered by the City, and, assuming the due authorization,
execution and delivery by the Transit Alliance Companies, is a valid and
legally binding obligation of the City to the limit of the available
appropriation and enforceable against the City in accordance with its terms,
except to the extent that enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium, or other laws relating to or affecting
creditors’ rights generally and by general equity principles, regardless of
whether such enforceability is considered in a proceeding in equity or law.

(c)                                  No
Conflict; Consents. The execution, delivery and performance by the City of
this Agreement and the consummation by the City of the transactions
contemplated hereby:  (i) will not
violate, or result in the violation of, any provision of any judgment or decree
specifically applicable to the City;  and
(ii) will not violate any provision of the New York City Charter, the New York
City Administrative Code, or the Rules of the City of New York.

(d)                                 Legal
Proceedings. To the actual knowledge of the City, except as set forth in
Exhibit 12, there is no action, proceeding or governmental investigation
currently pending against the City which seeks to restrain or enjoin the
consummation of the transactions contemplated by this Agreement.

ARTICLE VI: COVENANTS AND
TRANSACTIONS PRIOR TO CLOSING

6.1                                 Conduct
of the Business Prior to the Applicable Transition Date. Each Transit
Alliance Company agrees that, except as permitted, required or specifically
contemplated by this Agreement or as otherwise consented to or approved in
writing by the City, during the period commencing on the date of this Agreement
and ending at the Applicable Transition Date:

 

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(a)                                  The
bus operations shall be conducted only in the ordinary course of business
consistent with past practice;

(b)                                 Subject
to the following provisos, each Transit Alliance Company will use reasonable
efforts to preserve intact its business organization, to keep available the
services of its present officers and key employees, and to preserve the good
will of those having business relationships with them, provided, however, that
none of the Transit Alliance Companies may increase compensation or benefits or
pay any special bonuses and provided further that none of the Transit Alliance
Companies shall be obligated to take any steps outside of the ordinary course
of their business in respect of the foregoing obligations;

(c)                                  Each
Transit Alliance Company shall promptly notify the City in writing of, and
furnish to City information reasonably requested by the City with respect to
them individually, the occurrence of any event or the existence of any state of
facts that would result in any of the Transit Alliance Company’s
representations and warranties not being true in all material respects;

(d)                                 Each
Transit Alliance Company shall maintain its books, accounts and records (manual
and automated) in the ordinary course, consistent with past practice, and make
no material change in the accounting methods or practices with respect to their
business or the Acquired Assets; and

(e)                                  Each
Transit Alliance Company, prior to undertaking any negotiation or discussion
with any labor union as to recognition, labor contracts, or other matters of
like import relating to its business, will first notify and consult with the
City, the MTA and the MTA Bus Company and furnish to the City, the MTA and/or
the MTA Bus Company such information relating thereto as the City, the MTA,
and/or the MTA Bus Company may reasonably request.

 

 52

 

 

6.2           Further
Actions. Subject to the terms and conditions of this Agreement, each of the
Parties agrees to use its best efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary, proper or
advisable to consummate and make effective the transactions contemplated by
this Agreement, including, but not limited to, using its best efforts:  (i) to obtain any licenses, permits,
consents, approvals, authorizations, qualifications and order of governmental
authorities as are required in connection with the consummation of the
transactions contemplated hereby; (ii) to effect all necessary registrations
and filings; (iii) to defend any lawsuits or other legal proceedings, whether
judicial or administrative, challenging this Agreement or the consummation of
the transactions contemplated hereby; and (iv) to furnish to each other such
information and assistance as is reasonably requested in connection with the
foregoing. Without limiting the generality of the foregoing, from and after the
date hereof and following the Closing, the Parties shall execute and deliver
such further documents and instruments and do such other acts and things as the
Transit Alliance Companies or the City, as the case may be, may reasonably
request in order to effectuate the transactions contemplated by this Agreement.

ARTICLE VII:  CONDITIONS PRECEDENT

7.1           Conditions
Precedent to the Obligation of the Transit Alliance Companies. The
obligations of each Transit Alliance Company to consummate the transactions
contemplated by this Agreement are subject to the satisfaction (or waiver by
such Transit Alliance Company) at or prior to the Closing of each of the
following additional conditions:

(a)           Accuracy of Representations and
Warranties. The representations and warranties of the City contained herein
shall have been true and correct in all material respects on and as of the date
thereof and (except to the extent such representations and warranties speak

 

 53
 

 

 

of an
earlier date) shall continue to be true and correct in all material respects as
of the Closing Date, except as otherwise contemplated by this Agreement.

(b)           Performance
of Agreement. The City shall have performed in all material respects all
obligations and agreements, and complied in all material respects with all
covenants and conditions, contained in this Agreement to be performed or
complied with by it prior to or on the Closing Date, and each of the MTA and
MTA Bus Company shall have performed and undertaken all actions and matters
contemplated by this Agreement to be performed by it prior to the Closing.

7.2           Conditions
Precedent to Obligation of the City. The obligations of the City to
consummate the transactions contemplated by this Agreement are subject to the
satisfaction (or waiver by the City) at or prior to the Closing of each of the
following additional conditions:

(a)           Accuracy
of Representations and Warranties. The representations and warranties of
the Transit Alliance Companies and Varsity Transit contained herein shall have
been true and correct in all material respects on and as of the date hereof and
(except to the extent such representations and warranties speak of an earlier
date) shall continue to be true and correct in all material respects as of the
Closing Date, except as otherwise contemplated by this Agreement.

(b)           Performance of Agreement. The
Transit Alliance Companies shall have performed and complied in all material
respects with all obligations and agreements, and complied in all material
respects with all covenants and conditions, contained in this Agreement to be
performed or complied with by them individually prior to or on the Closing
Date.

 

 54
 

 

 

ARTICLE VIII:  EXPIRATION OF THE TRANSIT ALLIANCE COMPANIES’

OPERATING AUTHORITY

8.1           The City will promptly pay those
ongoing operating expenses generally referred to as “break-even” payments for
any period of time after the Applicable Transition Date, within 30 days of the
Transit Alliance Companies’ submission of reasonable and customary
documentation of such expenses (i.e., the level and type of documentation that
is consistent with what is currently required or customarily provided and
accepted under the operating assistance arrangements between the Parties). In
addition, the City will promptly pay, within 30 days of the Transit Alliance
Companies’ submission of reasonable documentation, (i) post-termination
expenses in accordance with current City procedures, including without
limitation retroactive worker’s compensation adjustments, insurance premiums
and cancellation payments, if any; and (ii) operating expenses incurred or paid
by the Transit Alliance Companies after the Closing which are reimbursable in
accordance with current City procedures that the Transit Alliance Companies
learns about or incurs upon or after the Closing, and which the City
acknowledges and agrees shall include without limitation final taxes,
preparation of final payroll records and financial statements,  post-termination expenses related to health
coverage, or any COBRA related expenses for those who do not obtain such
coverage from MTA Bus Company benefit plans, and such other expenses related to
the wind-down of the Transit Alliance Companies’ business as the Parties may
agree.

8.2           Release by the Transit Alliance
Companies. In consideration of the payments and performance of the
obligations set forth in this Agreement, effective on the Applicable Transition
Date, and subject to the other terms and conditions of this Agreement, each
Transit Alliance Company, Varsity and GTJ releases the City and all of the City’s
present

 

 55
 

 

 

or
former agents, employees, subdivisions, agencies or departments from any and
all causes of action, suits, debts, claims, sums of money, accounts, balances,
retainages, reckonings, bonds, bills, covenants, contracts, agreements,
controversies, promises, variances, trespasses, judgments, executions and
demands whatsoever, in law, admiralty and in equity, which such Transit
Alliance Company, Varsity and GTJ and their successors and assigns ever had,
now has or hereafter can, shall or may have, for, upon, or by reason of any
matter, cause or thing whatsoever (i) from the beginning of the world until the
Applicable Transition Dates and arising out of the Transit Alliance Company,
Varsity and GTJ providing bus service pursuant to any and all operating
authority granted by the City of New York including any agreement between the
Transit Alliance Company and the City for reimbursement of operating expenses
or for any monies due or to become due thereunder, except for the payments in
accordance with Section 8.1 above; and (ii) from the beginning of the world
until the applicable Transition Dates and arising out of expiration and/or
termination of the operating authority granted the Transit Alliance Company by
the City for the operation of buses on the streets of the City; but expressly
excluding from the terms of this release, all obligations of the City, MTA and
MTA Bus Company under this Agreement, the Real Property Leases, the Pension
Agreements, and the transactions contemplated hereby and thereby.

8.3           Release by City. In
consideration of the Acquired Assets and performance of the obligations set
forth in this Agreement, effective upon the Applicable Transition Date and
subject to the other terms and conditions of this Agreement, the City releases each
Transit Alliance Company, Varsity and GTJ and their respective directors,
officers and employees, from any and all causes of action, suits, debts,
claims, sums of money, accounts, balances, retainages, reckonings, bonds,
bills, covenants, contracts, agreements, controversies, promises, variances,

 

 56
 

 

 

trespasses,
judgments, executions and demands whatsoever, in law, admiralty and in equity,
which the City and its successors and assigns ever had, now has or hereafter
can, shall or may have, for, upon, or by reason of any matter, cause or thing
whatsoever (i) from the beginning of the world until the Transition Date and
arising out of the Transit Alliance Company providing bus service pursuant to
any and all operating authority granted by the City of New York including any
agreement between the Transit Alliance Company, Varsity and GTJ and the City
for reimbursement of operating expenses or for any monies due or to become due
thereunder, except for the payments in accordance with Section 8.1 above; and
(ii)  from the beginning of the world
until the Applicable Transition Date and arising out of expiration and/or
termination of the operating authority granted the Transit Alliance Company by
the City for the operation of buses on the streets of the City; but expressly
excluding from the terms of this release, all obligations of the Transit
Alliance Company, Varsity and GTJ under this Agreement, the Real Property
Leases, the Pension Agreements and the transactions contemplated hereby and
thereby.

8.4           Discontinuance of Legal
Proceedings. In consideration of this Agreement, on the last of the
Applicable Closing Dates or the Final Closing Date, as the case may be, (the
“Operative Date”) the Transit Alliance Companies, who are plaintiffs in Green Bus Lines, Inc., et al. v. The City of New York, et al., Index
No. 18770/04, currently pending in Supreme
Court of the State of New York, Queens County (“State Court Green Bus
Litigation”), and appellants in Green Bus Lines, Inc. v.
The City of New York, Docket No. 05-CV-1399, currently pending in
the United States Court of Appeals for the Second Circuit (“Federal Court Green
Bus Litigation”), agree (1) to withdraw all motions and discontinue, with
prejudice, all claims or causes of action in the State Court Green Bus Litigation,
and (2) to withdraw their appeal in the Second Circuit in the Federal Court
Green Bus Litigation. On the Operative Date, the Parties to this Agreement

 

 57
 

 

 

who
are also parties in the State Court Green Bus Litigation and the Federal Court
Green Bus Litigation agree to have their counsel execute stipulations of
discontinuance with prejudice and without costs in those matters in the forms
annexed hereto as Exhibits 13 and 14. Such stipulations shall be so-ordered,
where appropriate, in the respective tribunals in which such matters are
pending (with notification to the Appellate Division Second Department to the
extent any matter is pending at the Second Department).

8.5           No Admission or Prejudice.
Nothing in this Agreement is or shall be deemed to be an admission on the part
of the City that the City has any liability to the Transit Alliance Companies,
Varsity or GTJ for any claims to compensation from the City arising out of the
expiration and/or termination of any franchise or operating authority granted the
Transit Alliance Companies by the City for the operation of buses on the
streets of the City, and/or the City’s or the MTA’s commencement of operations
in the area and/or over the routes operated by the Transit Alliance Companies
or provision of service comparable to that provided by the Transit Alliance
Companies and any related activities. Nothing in this Agreement is or shall be
deemed to be an admission by the Transit Alliance Companies or the City as to
the actual value of the Transit Alliance Companies’ assets that are anticipated
to be acquired by the City, and the Transit Alliance Companies’ willingness to
provide access to the City, the MTA and the MTA Bus Company prior to the
Closing of its books, records, facilities and employees, as contemplated by
section 3.1 above, shall not operate to prejudice any the Transit Alliance
Companies claim for compensation from the City arising out of the expiration
and/or termination of any franchise or operating authority granted the Transit
Alliance Companies by the City for the operation of buses on the streets of the
City, and/or the City’s or the MTA’s use of such books, records, facilities and
employees and commencement of operations in the area and/or

 

 58
 

 

 

over the routes
operated by  the Transit Alliance Companies
or provision of service comparable to that provided by the Transit Alliance
Companies and any related activities. Nothing in this Agreement is or shall be
deemed to be an admission on the part of the City or the Transit Alliance
Companies that either the City or the Transit Alliance Companies has any
liability under Section 13(c).

ARTICLE IX:  MISCELLANEOUS

9.1           Fees
and Expenses. Except as specifically provided elsewhere in this Agreement,
whether or not the transactions contemplated hereby are consummated, each of
the Parties shall pay its own fees and expenses incident to the negotiation,
preparation and execution of this Agreement, including attorneys’, accountants’
and other advisors’ fees in connection with such negotiation, preparation and
execution. The City shall, however, 
reimburse the Transit Alliance Companies for reasonable fees and
expenses  incurred by it in connection
with pension and labor matters related to the transactions contemplated hereby
and/or incurred in connection with fulfilling its obligations pursuant to
Section 6.2 hereof. In addition, fees and expenses that pursuant to this
paragraph are to be borne by the Transit Alliance Companies without
reimbursement are not allowable expenses under the expense account for the
reimbursement of operating expenses.

9.2           Notices. All notices,
requests, demands, waivers and other communications required or permitted to be
given under this Agreement shall be in writing delivered (i) by hand, or (ii)
by facsimile with an additional copy to be sent by U.S. mail, and

 

 59
 

 

 

shall
be deemed to have been duly given or made when delivered by hand, or, in the
case of facsimile, when received by the addressee, addressed as follows:

If to the Transit Alliance Companies, Varsity or GTJ:

Jerome
Cooper

444 Merrick
Road, Suite 370

Lynbrook, New York 11563

With a copy to:

Douglas
A. Cooper

Ruskin
Moscou Faltischek, P.C.

1425
Reckson Plaza

15th
Floor, East Tower

Uniondale, New York 11556-1425

If to the City:

Mark
Page, Director

New
York City Office of Management and Budget

75
Park Place, 6th Floor

New York, New York 10007

With copies to:

Steven
Stein Cushman

Chief,
Contracts and Real Estate

New
York City Law Department

100
Church Street, Room 3-176

New
York, New York 10007

 

and

Tom
Savage, President

MTA
Bus Company

347
Madison Avenue

New York, New York 10017

or to such other persons
or addresses as any party shall specify as to itself by notice in writing to
the other Parties.

 

 60
 

 

 

9.3           Severability.
If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any rule of law, or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner adverse to any party. Upon
such determination that any term or other provision is invalid, illegal or
incapable of being enforced, the Parties hereto shall negotiate in good faith
to modify this Agreement so as to effect the original intent of the Parties as
closely as possible in an acceptable manner to the end that the transactions
contemplated hereby are fulfilled to the fullest extent possible.

9.4           Entire
Agreement. This Agreement (including the attached Exhibits) constitutes the
entire agreement between the Parties hereto and supersedes all prior agreements
and understandings, oral and written, between the Parties hereto with respect
to acquisition of the Acquired Assets and the commencement by the MTA Bus
Company of bus service in the areas currently served by the Transit Alliance
Companies.

9.5           Binding
Effect; Assignability. This Agreement shall inure to the benefit of and be
binding upon the Parties hereto and their respective successors and assigns.
This Agreement shall not be assigned by either of the Parties hereto without
the prior written consent of the other party.

9.6           No Third Party Beneficiaries.
Except as expressly provided in the following sentence, nothing in this
Agreement, expressed or implied, is intended to confer on any Person other than
the Parties hereto or their respective successors and assigns, any rights,
remedies, obligations or liabilities under or by reason of this Agreement.
Notwithstanding the foregoing, the Parties agree and acknowledge that the
Current Trustees of any Transit Alliance

 

 61
 

 

 

Company
Plan are third party beneficiaries of Section 1.5(a)(v) of this Agreement, but
that no other person is or shall be a third party beneficiary.

9.7           Amendment
and Waiver. This Agreement may not be amended, modified or supplemented
except by a written instrument authorized and executed on behalf of all the
Parties at any time prior to the Closing Date with respect to any of the terms
contained herein. No waiver by any party of any of the provisions shall be effective
unless explicitly set forth in writing and executed by the party so waiving.
Except as provided in the preceding sentence, no action taken pursuant to this
Agreement, including without limitation, any investigation by or on behalf of
any party, shall be deemed to constitute a waiver by the party taking such
action of compliance with any representations, warranties, covenants, or
agreements contained in this Agreement, and in any documents delivered or to be
delivered pursuant to this Agreement and in connection with the Closing. The
waiver by any Party of a breach of any provision of this Agreement shall not
operate or be construed as a waiver of any other or subsequent breach.

9.8           Section
Headings. The section headings contained in this Agreement are inserted for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement.

9.9           Counterparts.
This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original, and all of which together shall be deemed to be
one and the same instrument.

9.10         Governing Law. This Agreement
and the legal relations between the Parties shall be governed by and construed
in accordance with the law of the State of New York without regard to conflicts
of law principles.

 

 62
 

 

 

9.11         Venue.
The parties agree that any and all claims asserted arising under this Agreement
or related thereto shall be heard and determined either in the courts of the
United States located in New York City or in the courts of the State of New
York located in the City and County of New York.

9.12         Survival.
All obligations expressly contemplated to occur on or after the Closing or the
Transition Date, all indemnification and hold harmless provisions, and all
provisions which by their nature or the particular circumstances at issue can
reasonably only be fulfilled after the Closing, shall survive the Closing.

9.13         Allocation
of Purchase Price. The Purchase Price shall be allocated among the
Purchased Assets as determined by the Transit Alliance Companies in accordance
with Code Section 1060 and the applicable regulations and authorities
thereunder. The Transit Alliance Companies shall prepare and complete its
income tax returns and reports, including Internal Revenue Service Form 8594,
on a basis consistent with such allocations and the City shall not take a
position before any taxing authority or in any judicial proceeding that is in
any way inconsistent with such allocations.

9.14         Payments and reimbursement made
pursuant to the provisions of this Agreement that are not made within thirty
(30) days of written notice thereof together with

 

 63
 

 

 

backup
documentation customarily provided and accepted shall accrue interest at the
prime rate announced by JP Morgan Chase from time to time until paid in full.

IN
WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the date
first above written.

 

 

	
  

  	
  GREEN BUS LINES, INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Jerome Cooper

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Jerome Cooper

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  COMMAND BUS COMPANY, INC.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Jerome Cooper

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Jerome Cooper

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  TRIBORO COACH CORP.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Jerome Cooper

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Jerome Cooper

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 64
 

 

 

	
  

  	
  JAMAICA BUSES, INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Jerome Cooper

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Jerome Cooper

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  VARSITY TRANSIT, INC.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Jerome Cooper

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Jerome Cooper

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  GTJ CO., INC.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Jerome Cooper

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Jerome Cooper

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  THE CITY OF NEW YORK

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Marc V. Shaw

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Marc V. Shaw

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Deputy Mayor of Operations

  	
   

  
	
   

  	
   

  	
   

  
	
  Approved as to
  Form and

  	
   

  	
   

  
	
  Certified as to
  Legal Authority

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Steve Stein
  Cushman

  	
   

  	
   

  
	
  Acting
  Corporation Counsel

  	
   

  	
   

  

 

 65Exhibit 10.4

 

AGREEMENT OF LEASE

BETWEEN

GREEN BUS HOLDING CORP., Landlord

AND

THE CITY OF NEW YORK, Tenant

 

PREMISES

49-19 Rockaway Beach Boulevard

Arverne, New York

Section 4, Block 15841, Lots 5, 7, 8, 10, 14 & 70

and

Section 4, Block 15855, Lot 1

 

TABLE OF CONTENTS

	
  ARTICLE 1

  	
   

  	
   

  
	
  DEMISED PREMISES

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE 2

  	
   

  	
   

  
	
  TERM

  	
   

  	
  2

  
	
   

  	
   

  	
   

  
	
  ARTICLE 3

  	
   

  	
   

  
	
  RENT

  	
   

  	
  3

  
	
   

  	
   

  	
   

  
	
  ARTICLE 4

  	
   

  	
   

  
	
  USE OF DEMISED
  PREMISES

  	
   

  	
  7

  
	
   

  	
   

  	
   

  
	
  ARTICLE 5

  	
   

  	
   

  
	
  IMPOSITIONS

  	
   

  	
  8

  
	
   

  	
   

  	
   

  
	
  ARTICLE 6

  	
   

  	
   

  
	
  [INTENTIONALLY
  OMITTED]

  	
   

  	
  10

  
	
   

  	
   

  	
   

  
	
  ARTICLE 7

  	
   

  	
   

  
	
  REPAIRS AND
  MAINTENANCE OF THE DEMISED PREMISES

  	
   

  	
  10

  
	
   

  	
   

  	
   

  
	
  ARTICLE 8

  	
   

  	
   

  
	
  TENANT’S
  ALTERATIONS

  	
   

  	
  12

  
	
   

  	
   

  	
   

  
	
  ARTICLE 9

  	
   

  	
   

  
	
  UTILITIES

  	
   

  	
  16

  
	
   

  	
   

  	
   

  
	
  ARTICLE 10

  	
   

  	
   

  
	
  PRE EXISTING
  ENVIRONMENTAL CONDITIONS;

  	
   

  	
   

  
	
  ENVIRONMENTAL
  COMPLIANCE DURING PERIOD OF TENANCY;

  	
   

  	
   

  
	
  REQUIREMENTS OF
  LAW

  	
   

  	
  16

  
	
   

  	
   

  	
   

  
	
  ARTICLE 11

  	
   

  	
   

  
	
  INSURANCE

  	
   

  	
  21

  
	
   

  	
   

  	
   

  
	
  ARTICLE 12

  	
   

  	
   

  
	
  DAMAGE OR
  DESTRUCTION

  	
   

  	
  25

  
	
   

  	
   

  	
   

  
	
  ARTICLE 13

  	
   

  	
   

  
	
  ASSIGNMENT AND
  SUBLETTING

  	
   

  	
  29

  

 

 

 

	
  ARTICLE 14

  	
   

  	
   

  
	
  INDEMNIFICATION

  	
   

  	
  36

  
	
   

  	
   

  	
   

  
	
  ARTICLE 15

  	
   

  	
   

  
	
  CONDEMNATION

  	
   

  	
  37

  
	
   

  	
   

  	
   

  
	
  ARTICLE 16

  	
   

  	
   

  
	
  RIGHT TO INSPECT

  	
   

  	
  40

  
	
   

  	
   

  	
   

  
	
  ARTICLE 17

  	
   

  	
   

  
	
  [INTENTIONALLY
  OMITTED]

  	
   

  	
  41

  
	
   

  	
   

  	
   

  
	
  ARTICLE 18

  	
   

  	
   

  
	
  DEFAULT
  PROVISIONS

  	
   

  	
  41

  
	
   

  	
   

  	
   

  
	
  ARTICLE 19

  	
   

  	
   

  
	
  ATTORNEYS’ FEES

  	
   

  	
  45

  
	
   

  	
   

  	
   

  
	
  ARTICLE 20

  	
   

  	
   

  
	
  WAIVER OF
  REDEMPTION; COUNTERCLAIM; TRIAL BY JURY

  	
   

  	
  45

  
	
   

  	
   

  	
   

  
	
  ARTICLE 21

  	
   

  	
   

  
	
  NO WAIVER

  	
   

  	
  45

  
	
   

  	
   

  	
   

  
	
  ARTICLE 22

  	
   

  	
   

  
	
  END OF TERM

  	
   

  	
  46

  
	
   

  	
   

  	
   

  
	
  ARTICLE 23

  	
   

  	
   

  
	
  BROKER

  	
   

  	
  48

  
	
   

  	
   

  	
   

  
	
  ARTICLE 24

  	
   

  	
   

  
	
  QUIET ENJOYMENT

  	
   

  	
  48

  
	
   

  	
   

  	
   

  
	
  ARTICLE 25

  	
   

  	
   

  
	
  NON-LIABILITY OF
  LANDLORD

  	
   

  	
  48

  
	
   

  	
   

  	
   

  
	
  ARTICLE 26

  	
   

  	
   

  
	
  APPLICABLE LAW
  AND CONSTRUCTION

  	
   

  	
  49

  
	
   

  	
   

  	
   

  
	
  ARTICLE 27

  	
   

  	
   

  
	
  BINDING EFFECT OF
  LEASE

  	
   

  	
  50

  
	
   

  	
   

  	
   

  
	
  ARTICLE 28

  	
   

  	
   

  
	
  NOTICES

  	
   

  	
  50

  

 

 ii
 

 

 

	
  ARTICLE 29

  	
   

  	
   

  
	
  FEE MORTGAGES

  	
   

  	
  51

  
	
   

  	
   

  	
   

  
	
  ARTICLE 30

  	
   

  	
   

  
	
  ESTOPPEL
  CERTIFICATES

  	
   

  	
  52

  
	
   

  	
   

  	
   

  
	
  ARTICLE 31

  	
   

  	
   

  
	
  REPRESENTATIONS

  	
   

  	
  52

  
	
   

  	
   

  	
   

  
	
  ARTICLE 32

  	
   

  	
   

  
	
  MISCELLANEOUS

  	
   

  	
  54

  
	
   

  	
   

  	
   

  
	
  ARTICLE 33

  	
   

  	
   

  
	
  ROOF RIGHTS; AIR
  RIGHTS

  	
   

  	
  55

  
	
   

  	
   

  	
   

  
	
  ARTICLE 34

  	
   

  	
   

  
	
  INVESTIGATIONS

  	
   

  	
  57

  
	
   

  	
   

  	
   

  
	
  ARTICLE 35

  	
   

  	
   

  
	
  SIGNIFICANT
  RELATED PARTY TRANSACTIONS

  	
   

  	
  59

  

 

List of Schedules

Schedule A - Description of the Real Property

 iii

 

 

AGREEMENT OF LEASE

AGREEMENT
OF LEASE (the “Lease”) made as of the         
day of                     ,
2005 between GREEN BUS HOLDING CORP., a corporation organized and existing
under the laws of the State of New York, with offices located at 444 Merrick
Road, Suite 370, Lynbrook, New York 11563, Attention:  Jerome Cooper (the “Landlord”), and
THE CITY OF NEW YORK, a municipal corporation of the State of New York, acting
through the Department of Citywide Administrative Services, with offices
located at One Centre Street, New York, New York 10007 (the “Tenant”).

ARTICLE 1

DEMISED PREMISES

Section
1.01 - Description of Demised Premises. In consideration of
and subject to the terms, covenants, agreements, provisions, conditions and
limitations set forth in this Lease, Landlord has agreed to demise and lease
unto Tenant and Tenant has agreed to hire and take from Landlord that certain
parcel of real property known as 49-19 Rockaway Beach Boulevard, Arverne,
County of Queens and State of New York, as more particularly described on Schedule
A annexed hereto and made a part hereof (the “Land”), together with
all buildings and improvements erected or to be erected thereon (the “Improvements”),
and together with all of Landlord’s right, title and interest in all easements,
rights and other matters appurtenant to the Land or the Improvements and in and
to any land lying in the bed of any roads adjacent to the Land, except that
rights to use the roof, air rights and transferable development rights are
specifically excluded and shall not be demised or leased to Tenant under this
Lease subject to the provisions of Article 33 hereof (such Land, Improvements,
easements and rights being hereinafter collectively referred to as the “Demised
Premises”).

Section
1.02 – Condition of Demised Premises. Tenant acknowledges and
agrees that it shall hire and take the Demised Premises from Landlord in its
present state of title, subject to all existing liens, charges, encumbrances
and any other matters affecting title. Except as specifically set forth in this
Lease, Tenant agrees to accept the Demised Premises “as is,” in the existing
condition and state of repair as of the date hereof and without recourse to
Landlord. Tenant further agrees that no representations, statements or warranties,
express or implied, have been made by or on behalf of Landlord and Tenant has
not relied on any representations, statements or warranties, express or
implied, in respect of the Demised Premises or in respect of the condition
thereof or the present or future use or occupation that may be made thereof,
the zoning or other Requirements (as hereinafter defined), transferable
development rights, encumbrances thereon, appurtenances, or title thereto
(except as may be expressly set forth in this Lease). Without limiting the
generality of the foregoing, Tenant has not relied on any representations or
warranties other than as expressly set forth herein as to (1) the current or
future real estate tax liability, assessment or valuation of the Demised
Premises, (2) the potential qualification of the Demised Premises for any and
all

 4
 

 

 

benefits conferred by
federal, state or municipal laws, whether for subsidies, special real estate
tax treatment, insurance, mortgages, or any other benefits, whether similar or
dissimilar to those enumerated, (3) the compliance of the Demised Premises, in
its current or any future state, with applicable zoning ordinances and the
ability to obtain a change in the zoning or a variance with respect to the
Demised Premises’ non-compliance, if any, with said zoning ordinances, (4) the
availability of any financing for the purchase, alteration or operation of the
Demised Premises from any source, (5) the current or future use of the Demised
Premises, including, but not limited to, the Demised Premises’ use for
residential or commercial purposes, (6) the present or future structural and
physical condition of any building, (7) the presence or absence of any
Requirements and any violations thereof, and (8) the presence or absence of any
Hazardous Materials (as hereinafter defined), and the compliance or
non-compliance with any Environmental Laws (as hereinafter defined). Landlord
shall in no event whatsoever be liable for any latent or patent defects in the
Demised Premises. Requirements shall mean any and all present and future laws,
rules, orders, ordinances, regulations, statutes and requirements of any
Governmental Authority (as hereinafter defined) relating in any way to the
Demised Premises.

ARTICLE 2

TERM

Section
2.01 – Term. This Lease shall be for a term (the “Term”)
of twenty-one (21) years, which shall commence on the date (the “Commencement
Date”) of the closing under that certain Asset Purchase Agreement between
Landlord or its parent and Tenant of even date and shall end at midnight on the
day which is the twenty-first (21st)
anniversary of the Commencement Date (the “Expiration Date”), unless
such Term shall sooner cease or expire as hereinafter provided. This Lease
shall be of no force and effect if the closing under that certain Asset
Purchase Agreement between Landlord or its parent and Tenant of even date does
not occur.

Section
2.02 – Renewal Option. Tenant shall have the right and option
(“Renewal Option”) to renew the Term of this Lease for two (2)
successive periods of fourteen (14) years each (each, a “Renewal Term”).
Tenant shall give notice to Landlord of Tenant’s exercising of such option
(each a “Renewal Notice”) not later than twelve (12) months prior to the
then effective Expiration Date, TIME BEING
OF THE ESSENCE with respect to giving of the Renewal Notice by
Tenant to Landlord; provided, however, that the Renewal Notice shall be validly
and effectively given only if, on the date that Tenant shall exercise its
Renewal Option (the “Exercise Date”) this Lease shall not have been
previously terminated or cancelled and there shall be no uncured Event of
Default. If Tenant shall validly exercise its Renewal Option in accordance with
the provisions of this Section 2.02, this Lease shall be deemed to be extended
pursuant to the Renewal Notice, subject to the provisions of this Lease. Notwithstanding
anything to the contrary contained in this Section 2.02, if on the commencement
of a Renewal Term there shall be an uncured Event of Default, then Landlord, in
Landlord’s sole and absolute discretion, may elect, by written notice to

 5
 

 

 

Tenant, to void
Tenant’s exercise of the Renewal Option, in which case Tenant’s exercise of the
Renewal Option shall be of no force or effect, and the Term shall end on the
Expiration Date of this Lease, unless sooner cancelled or terminated pursuant
to the provisions of this Lease or by law. The applicable Renewal Term shall
commence on the day following the then effective Expiration Date and shall end
at midnight on the date that is fourteen (14) Lease Years thereafter. All of
the terms, covenants and conditions of this Lease shall continue in full force
and effect during the applicable Renewal Term, except that during the first
Renewal Term, Tenant shall have an option to extend the Term of this Lease for one
(1) Renewal Term pursuant to this Article, and during the last Renewal Term,
Tenant shall have no further right to extend the Term of this Lease.

ARTICLE 3

RENT

Section
3.01 - Fixed Rent.

(a)           Tenant covenants and agrees, as
conditions to this Lease, to keep and abide by all of the terms, covenants and
conditions of this Lease on the part of Tenant to be performed and to pay to
Landlord a fixed annual rent (“Fixed Rent”) during the Term as follows:

	
  Lease Year

  	
   

  	
  Fixed Rent

  	
   

  	
  Monthly Installments

  	
   

  
	
  1-5

  	
   

  	
  $

  	
  605,000.00

  	
   

  	
  $

  	
  50,416.67

  	
   

  
	
  6-10

  	
   

  	
  665,500.00

  	
   

  	
  55,458.33

  	
   

  
	
  11-15

  	
   

  	
  732,050.00

  	
   

  	
  61,004.17

  	
   

  
	
  16-20

  	
   

  	
  805,255.00

  	
   

  	
  67,104.58

  	
   

  
	
  21

  	
   

  	
  885,781.00

  	
   

  	
  73,815.09

  	
   

  
								

 

(b)           Tenant covenants and agrees, as
conditions to this Lease, to keep and abide by all of the terms, covenants and
conditions of this Lease on the part of Tenant to be performed and to pay to
Landlord a fixed annual rent (“Fixed Rent”) during the first Renewal
Term, if exercised, as follows:

	
  Lease Year

  	
   

  	
  Fixed Rent

  	
   

  	
  Monthly Installments

  	
   

  
	
  1-4

  	
   

  	
  $

  	
  885,781.00

  	
   

  	
  $

  	
  73,815.09

  	
   

  
	
  5-9

  	
   

  	
  974,359.00

  	
   

  	
  81,196.58

  	
   

  
	
  10-14

  	
   

  	
  1,071,794.00

  	
   

  	
  89,316.17

  	
   

  
								

 

(c)           Tenant covenants and agrees, as
conditions to this Lease, to keep and abide by all of the terms, covenants and
conditions of this Lease on the part of Tenant to be performed and to pay to
Landlord a fixed annual rent (“Fixed Rent”) during the

 6
 

 

 

second Renewal Term, if exercised, as follows:

	
  Lease Year

  	
   

  	
  Fixed Rent

  	
   

  	
  Monthly Installments

  	
   

  
	
  1-5

  	
   

  	
  $

  	
  1,178,974.00

  	
   

  	
  $

  	
  98,247.79

  	
   

  
	
  6-10

  	
   

  	
  1,296,871.00

  	
   

  	
  108,072.58

  	
   

  
	
  11-14

  	
   

  	
  1,426,558.00

  	
   

  	
  118,879.83

  	
   

  
								

 

(d)           Tenant shall pay Fixed Rent upon the
Commencement Date for the remainder of the month in which the Commencement Date
occurs and the subsequent month.

(e)           For purposes of this Lease, the term “Lease
Year” shall mean for (i) the first (1st) Lease Year, the one (1) year period
commencing on the Commencement Date plus, if the Commencement Date is not the
first day of a calendar month, the number of days between the Commencement Date
and the end of the month in which the Commencement Date occurs, and (ii) for
each Lease Year thereafter, the one (1) year period commencing on the
expiration of the preceding Lease Year.

Section
3.02 – Manner of Payment. Tenant covenants and agrees to pay
Landlord the Fixed Rent at the principal office of Landlord, or at such place
as Landlord shall from time to time direct in writing without any abatement,
reduction, setoff, counterclaim or deduction for any reason whatsoever. The
Fixed Rent shall be paid in such coin or currency of the United States of
America as at the time of payment shall be legal tender for the payment of
private and public debts. If requested by Landlord, Tenant shall pay Fixed Rent
by wire transfer in accordance with wire instructions to be provided by
Landlord. For Tenant’s convenience, Fixed Rent shall be payable by Tenant in
equal monthly installments in arrears on the last day of each calendar month
included in the Term. Landlord shall submit monthly invoices to Tenant no later
than the 15th day of the month for the Fixed Rent; provided,
however, that Landlord’s failure to provide such invoice shall not be deemed a
waiver and Fixed Rent shall nevertheless be due and owing on the dates set
forth herein.

Section
3.03 – Proration of Fixed Rent. For any portion of a calendar
month included at the beginning or end of the Term, Tenant shall pay 1/30th of
the then applicable monthly installment of Fixed Rent for each day of such
portion, payable in advance at the end of such portion.

Section
3.04 – Late Payment. In any case in which any payment of
Fixed Rent due Landlord by Tenant under this Lease is not paid within five (5)
days of the day when same is due, such payment shall bear interest at the per
annum rate of seven (7%) percent over the then prevailing prime rate of
interest (which, for the purposes hereof, includes any equivalent or successor
interest rate to the prime rate, however the same may be denominated) of
JPMorgan Chase Bank, or Citibank N.A. if JPMorgan Chase Bank shall not then
have an established prime rate, or the prime rate of any major banking
institution doing business in New York City as selected by Landlord (the “Prime

 7
 

 

 

Rate”), if neither
of the aforementioned banks shall be in existence or have an established prime
rate (the “Default Rate”) from the date such payment was due and payable.
In any case in which any payment of Additional Rent (as hereinafter defined) or
any other sum due Landlord by Tenant under this Lease is not paid within ten
(10) days that such sum is due, such payment shall bear interest at the Default
Rate from the date such payment was due and payable. If Tenant shall reduce,
abate, setoff, counterclaim or deduct any sum from Fixed Rent or Additional
Rent payable to Landlord, the amount of such reduction, abatement, setoff,
counterclaim or deduction shall bear interest at the Default Rate from the date
such amount was reduced, abated, setoff, counterclaimed or deducted by Tenant. Tenant
agrees that the Default Rate imposed herein is fair and reasonable, complies
with all laws, regulations and statutes, and constitutes an agreement between
Landlord and Tenant as to the estimated compensation for costs and
administrative expenses incurred by Landlord due to the late payment to
Landlord by Tenant. The Default Rate shall be in addition to any other right or
remedy hereunder and shall be due and payable as Additional Rent. Tenant
further agrees that the Default Rate does not constitute a lender or
borrower/creditor relationship between Landlord and Tenant. In addition, Tenant
shall pay upon demand by Landlord any reasonable and actual attorneys’ fees,
costs and disbursements incurred by Landlord in connection with the imposition,
collection or payment of said interest, said amounts to be deemed Additional
Rent.

Section
3.05 – Additional Rent. Unless another time shall be herein
expressly provided, any additional rent, charges or sums payable by Tenant
under this Lease (collectively, “Additional Rent”) shall be due and
payable within thirty (30) days after written demand by Landlord with
supporting documentation, and Landlord shall have the same remedies for failure
to pay the Additional Rent as for a non-payment of Fixed Rent. Unless otherwise
specifically instructed by Landlord, all Additional Rent shall be paid in the
same currency and, at the same place as is the Fixed Rent required to be paid
hereunder, or by wire transfer if requested by Landlord, and shall be paid
without any abatement, reduction, setoff, counterclaim or deduction for any
reason whatsoever. Tenant shall timely pay all items of Additional Rent. In the
event Tenant has any reasonable objections or inquiries as to the supporting
documentation, Tenant may withhold payment as to the disputed amount. In the
event Landlord elects not to pay the disputed amount, and it is determined that
Tenant’s objection was unfounded, Tenant will be liable for all interest and
penalties arising from such non-payment by Tenant, however, Tenant will not be
responsible for late payment amounts under Section 3.04. In the event Landlord
elects to pay such disputed amount, and it is determined that Tenant’s
objection was unfounded, Tenant will promptly reimburse Landlord for the amount
paid by Landlord, plus late charges under Section 3.04 as to such amounts commencing
from the date of Landlord’s payment. Notwithstanding the foregoing, any
potential civil or criminal liability to Landlord shall not, in and of itself,
require Tenant to pay any disputed amounts under this Section 3.05.

Section
3.06 – Landlord Cure Rights. If Tenant shall default in
making any payment required to be made by Tenant or in performing any
obligation of Tenant under

 8
 

 

 

this Lease which
shall require the expenditure of money, including, but not limited to
Impositions (as hereinafter defined), and such default shall continue for a
period of ten (10) days after written notice thereof from Landlord to Tenant,
or in the case of such a default or a contingency which cannot with due
diligence and in good faith be cured within ten (10) days, and Tenant fails to
proceed promptly and with due diligence and in good faith to cure the same and
thereafter to prosecute the curing of such default with due diligence and in
good faith (it being intended that in connection with a default that is not
susceptible of being cured with due diligence and in good faith within ten (10)
days, that the time of the Tenant within which to cure the same shall be
extended for such a period as may be necessary for the curing thereof promptly
with due diligence and in good faith), Landlord may, but shall not be obligated
to, make such payment on behalf of Tenant or expend such sum as may be
necessary to perform or fulfill such obligation. Any sums so paid by Landlord
shall be deemed Additional Rent.

Section
3.07 – Net Lease. The Fixed Rent hereinabove provided for
shall be in addition to all other payments to be made by Tenant as herein
provided. It is the purpose and intent of the parties hereto that the Fixed
Rent shall be absolutely net to Landlord, so that this Lease shall yield, net
to the Landlord, the Fixed Rent and that all costs, expenses and obligations of
every kind and nature whatsoever relating to the Demised Premises which may
arise or become due during the Term of this Lease shall be paid by Tenant and
that Landlord shall be indemnified and saved harmless by Tenant from and
against the same.

Section
3.08 – Rent Regulations. If all or any part of the Fixed Rent
or Additional Rent shall at any time become uncollectible, reduced or required
to be refunded by virtue of any Requirements (including rent control or
stabilization laws, however denominated), then for the period prescribed by
said Requirements, Tenant shall pay to Landlord the maximum amounts permitted
pursuant to said Requirements (but in no event to exceed the amounts which
would otherwise be due and payable under this Lease as if such Requirements
were not in effect), and Tenant shall execute and deliver such agreement(s) and
take such other steps as Landlord may reasonably request to permit Landlord to
collect the maximum fixed rent and additional rent which, from time-to-time
during the continuance of such legal rent restriction, may be legally
permissible (and not in excess of the amounts then reserved therefor under this
Lease). Upon the expiration or other legal termination of the applicable period
of time during which such amounts shall be uncollectible, reduced or
refunded:  (a) the Fixed Rent and
Additional Rent shall become and shall thereafter be payable in accordance with
the amounts reserved herein for the periods following such expiration or
termination, and (b) Tenant shall pay to Landlord as Additional Rent, within
ten (10) days after demand or such longer period as is legally permissible if
ten (10) days shall not be lawful, all uncollected, reduced or refunded amounts
that would have been payable for the above-said period absent such
Requirements.

Section
3.09 – Survival. The provisions of this Article 3 shall
survive the expiration or earlier termination of this Lease. Landlord’s failure
to bill Tenant for Fixed 

 9
 

 

 

Rent or Additional
Rent or any sum due under this Lease shall in no way excuse Tenant from its
obligation to pay Fixed Rent or Additional Rent or any sum due under this
Lease, or constitute a waiver of Landlord’s right to thereafter bill and
collect such Fixed Rent or Additional Rent or any sum due under this Lease from
Tenant in accordance with the terms of this Lease.

ARTICLE 4

USE OF DEMISED PREMISES

Section
4.01 – Use.

(a)           Subject to the provisions of Section
4.01(b), Tenant (through any of its agencies) shall use the Demised Premises,
for the maintenance, repair and storage of passenger buses, administrative
offices and for all other legal purposes (the uses identified in this
subsection are hereinafter, the “Permitted Use”). Tenant may not use the
Demised Premises for any other purposes. If Tenant or an assignee or subtenant
of Tenant shall use the Demised Premises for other than a Permitted Use, a
default shall be deemed to have occurred under Section 18.01(b).

(b)           In no event shall the Demised
Premises be used for any of the following: (i) gambling activities; (ii)
conduct of obscene, pornographic or disreputable activities; (iii) offices of
an agency, department or bureau of the United States Government or any foreign
government, or any political subdivision of any of them; (iv) offices of any
charitable, religious, union or other not-for-profit organization; (v) offices
of any tax exempt entity within the meaning of Section 168(h)(2) of the
Internal Revenue Code of 1986, as amended, or any successor or substitute
statute, or rule or regulation applicable thereto; (vi) any manufacturing use;
(vii) residential facility, single room occupancy facility, hotel, motel,
apartment hotel, rooming house, dormitory, however denominated; (viii)
restaurant, bar and lounge, tavern, grill, catering facility, dance or social
club, theatre, night club, cabaret, disco, amusement center, movie theatre,
game room, video or amusement arcade or any other establishment whose primary
business is providing food or beverage or on-premises consumption or providing
entertainment; (ix) swimming pool, skating rink, dance hall, spa, health club,
gym, exercise facility or salon; (x) any retail use, catalog sales or
fulfillment center use; or (xi) for
any purpose which would constitute a public or private nuisance (each, a “Prohibited
Use”).

Section
4.02 – Compliance with Requirements. Tenant shall at all
times conduct its activities on the Demised Premises in full compliance with
all Requirements of any or all of the federal, state, city, county and borough
governments and rules, regulations, orders and directives of any and all
departments, subdivisions, bureaus, agencies or offices thereof, and of any
other governmental, public or quasi-public authorities having jurisdiction over
the Demised Premises, and the direction of any public officer pursuant to law,
whether nor or hereafter in force (“Governmental Authority”).

 10
 

 

 

ARTICLE 5

IMPOSITIONS

Section
5.01 – Impositions. The term “Impositions” shall mean
all real estate taxes, assessments, payments in lieu of taxes, water meter and
water charges, sewer rentals, excises, levies, license and permit fees, charges
for public utilities or other taxes, charges for any prospective easement or
agreement maintained for the benefit of the Demised Premises which has been
consented to by Tenant, charges or burdens assessed, imposed or becoming a lien
upon or with respect to the use or ownership of the Demised Premises or any
other taxable interest therein, or upon the Improvements and other improvements
erected thereupon; whether any such Impositions are general or special,
ordinary or extraordinary, foreseen or unforeseen and whether same are imposed
by a Governmental Authority or any other taxing authority having jurisdiction over
the Demised Premises of every character, kind and nature whatsoever, but shall
not include income, intangible, franchise, capital stock, excise, rent, sales,
excess profits or gross profits, estate or inheritance taxes of Landlord
(unless the same shall be in lieu of “Impositions” as herein defined by
whatever name the tax may be designated).

Section
5.02 – Payment of Impositions. Tenant shall, during the Term
of this Lease, pay and discharge, as Additional Rent, all Impositions prior to
the day any fine, penalty, interest or cost may be added thereto as imposed by
law for the non-payment thereof, if such day is used to determine the due date
of the respective item; provided, however, that if, by law, any Imposition may
at the option of the taxpayer be paid in installments (whether or not interest
shall accrue on the unpaid balance of such Imposition), Tenant may exercise the
option to pay the same in such installments, provided such installment payments
are not prohibited by the terms of any Mortgage (as hereinafter defined). From
and after the Commencement Date, Tenant shall be designated to receive Tax
bills and, if at any time after taxes are issued for any Tax Year, Tenant shall
receive a Real Estate Tax bill, Tenant shall furnish Landlord with a copy of
such bill. Upon the Expiration Date, Tenant will cooperate in designating
Landlord or its designee to receive Tax bills. Tenant shall pay all Real Estate
Taxes, as and when due and payable, directly to the applicable taxing authority.
Simultaneously with the payment of any of such Impositions directly to the
imposing authority, Tenant shall send to Landlord written evidence of such
timely payment by Tenant. Landlord shall provide Tenant with timely written
notice of any Impositions to be paid by Tenant. A copy of the Imposition
invoice or demand from the applicable imposing authority shall be sufficient
evidence of the amount of the subject Impositions. Tenant shall also pay or
cause to be paid, in the same manner as Impositions are paid, any occupancy taxes
arising under or in connection with this Lease. Tenant shall be responsible for
and shall pay as Additional Rent all penalties, fees, fines, interest, late
charges and other similar amounts for the late payment of any Impositions. Tenant
shall pay for all utilities directly to the applicable entity.

If at
any time during the Term Tenant shall default in the payment of any
Impositions, or if required by the holder of any Mortgage, Landlord shall have
the right 

 11
 

 

 

to require Tenant
(for all or any portion of the remainder of the Term) to pay to Landlord, or to
the holder of any Mortgage, in advance, in equal monthly installments, the
Impositions estimated by Landlord to be due for the subsequent tax year, such
amounts to be held in escrow by Landlord or to the holder of any Mortgage, to
ensure the full and timely payment of all Impositions thereafter. Any
certificate, invoice, advice or bill of the applicable imposing authority of
nonpayment of an Imposition shall be prima
facie evidence that such Imposition is due and unpaid at the time or
date stated therein.

Section
5.03 – Landlord’s Demand. The provisions of this Article 5
shall survive the expiration or other termination of this Lease. Landlord’s
failure during the term of this Lease to prepare and deliver any Imposition
bill, invoice or demand or Landlord’s failure to make a demand for Additional
Rent due hereunder shall not in any way waive or cause Landlord to forfeit or
surrender its rights to collect any of the foregoing items of Additional Rent
which may have become due during the Term of this Lease.

Section
5.04 – Proration of Impositions. Any Imposition, other than
an Imposition which has been converted into installment payments as referred to
in Section 5.02 hereof, relating to a fiscal period of the taxing authority, a
part of which period is included within the Term of this Lease and a part of
which is included in a period of time before the Term and/or after the
expiration or other termination of the Term of this Lease, shall (whether or
not such Imposition shall be assessed, levied, confirmed, imposed upon or in
respect of or become a lien upon the Demised Premises, or shall become payable
during the Term of this Lease) be apportioned between Landlord and Tenant as of
the Commencement Date and/or as of the expiration or other termination of the
Term of this Lease, so that Tenant shall pay that portion of such Imposition
which that part of such fiscal period included in the period of time on and
after the Commencement Date and/or prior to the expiration or other termination
of the Term of this Lease bears to such fiscal period, and Landlord shall pay
the remainder thereof, provided, however, that Tenant shall not be entitled to
receive any apportionment if there be an Event of Default hereunder.

Section
5.05 – Right to Contest. Only Landlord shall be eligible to
institute proceedings to reduce the assessed valuation of the Demised Premises.
In the event the Landlord shall obtain a tax refund or reduction as a result of
any such tax certiorari proceedings
or as a result of any other litigation or agreement involving the relevant
taxing authorities (collectively, a “Proceeding”), then, provided Tenant
is not then in default under the terms of this Lease and after all applicable
grace periods have expired and after the final conclusion of all appeals or
other remedies, Tenant shall be entitled to the net refund applicable to any
period as to which Tenant has paid Impositions pursuant to this Article 5. Tenant’s
net refund may be applied by Landlord to any amounts payable to Landlord under
this Lease. As used herein the term “net refund” means the refund plus
interest, if any, thereon, paid by the governmental authority less appraisal,
engineering, expert testimony, consultant, architect, printing, administrative
and filing fees and all other Landlord costs and expenses of a Proceeding,
except for attorneys fees. If Landlord prevails in a Proceeding, Tenant shall
pay to Landlord all

 12

 

 

appraisal, engineering,
expert testimony, printing and filing fees and all other reasonable costs and
expenses incurred by Landlord in connection with any such Proceeding (up to the
amount of the tax savings resulting from the Proceeding.

ARTICLE 6

[INTENTIONALLY OMITTED]

ARTICLE 7

REPAIRS AND MAINTENANCE OF THE DEMISED PREMISES

Section
7.01 – Maintenance of Demised Premises. Tenant shall, at its
sole cost and expense, take good care of the Demised Premises, including
without limitation, the roof, structure, exterior and interior walls and
finishes, foundations, mechanical, plumbing, electrical and sanitary systems,
water and sewage facilities and drains, drywells, cesspools, pipes, fencing,
landscaping, paving, curbing, all alleyways, passageways, vaults, ramps,
sidewalks adjoining the Demised Premises (“Appurtenances”) and shall
keep same in good order and condition and make all repairs thereto, ordinary
and extraordinary, foreseen and unforeseen as and when needed to keep them in
good order and condition. Except as otherwise provided herein, Landlord shall
have no responsibility and shall not be required to furnish any services, make
any repairs or to perform any other maintenance work in or about the Demised
Premises, and Tenant hereby assumes the full and sole responsibility, at its
sole cost and expense for same, and for the condition of the Demised Premises,
including, but not limited to keeping the Demised Premises and Appurtenances,
at its own sole cost and expense, in a clean and orderly condition, free of
snow, ice, rubbish and obstructions. Tenant covenants to keep Landlord’s
interest in the Demised Premises free of liens and other foreclosable
impositions arising through Tenant and shall have no obligation with respect to
liens arising through Landlord. Tenant’s obligations to maintain the Demised
Premises shall not extend to conditions caused by the negligence or intentional
misconduct of Landlord or Landlord’s employees, agents and contractors, or to
repairs necessitated by Pre-Existing Environmental Conditions as set forth in
Article 10.

Section
7.02 – Landlord Cure Rights. In the event (a) Tenant fails to
maintain the Demised Premises in accordance with Section 7.01 above to Landlord’s
reasonable satisfaction or (b) repairs to the Demised Premises or Appurtenances
are made necessary by reason of the acts, omissions or negligence of Tenant,
its agents, directors, shareholders, officers, employees, subtenants,
assignees, customers, licensees or invitees, then in any of such event(s),
Landlord may give Tenant thirty (30) days written notice within which to make
such repairs, or if such repairs cannot be made within such thirty (30) day
period, to commence such repairs within thirty (30) days and diligently pursue
them to completion thereafter. In the event Tenant fails timely to make such
repairs as aforesaid, Landlord shall be entitled, but shall not be obligated,
to make such repairs at Tenant’s expense without incurring any liability to
Tenant by reason 

 13
 

 

 

thereof upon
reasonable notice to Tenant. Notwithstanding anything herein to the contrary,
if, in Landlord’s sole, reasonable discretion, emergency repairs are necessary,
Landlord may, if Landlord so elects, to make such repairs at any time without
notice to Tenant, at Tenant’s expense for all actual and reasonable costs, and
shall provide written notice with supporting documentation to Tenant that such
repairs are being or have been made on the first business day after commencing
such repairs. All reasonable and actual sums expended by Landlord under this
Section 7.02 shall be deemed Additional Rent and payable on demand by Landlord.
Tenant shall pay all amounts required under this Section 7.02. In the event
Tenant has any reasonable objections or inquiries as to the supporting
documentation, Tenant may withhold payment as to the disputed amount, and it is
determined that Tenant’s objection was unfounded, Tenant will be liable for all
interest and penalties arising from such non-payment by Tenant, however, Tenant
will not be responsible for late payment amounts under Section 3.04. In the
event Landlord elects to pay such disputed amount, and it is determined that
Tenant’s objection was unfounded, Tenant will promptly reimburse Landlord for
the amount paid by Landlord, plus late charges under Section 3.04 as to such
amounts commencing from the date of Landlord’s payment. Notwithstanding the
foregoing, any potential civil or criminal liability to Landlord shall not, in
and of itself, require Tenant to pay any disputed amounts under this Section
3.05.

Section
7.03 - Shoring. Tenant shall do, or cause others to do, all
necessary shoring of foundations, supporting walls and the walls of the
Improvements and shall comply with all Requirements with respect thereto and
shall do every other act or thing for the safety and preservation of the
Demised Premises (including the Improvements and any and all other improvements
erected thereon) which may be necessary by reason of any excavation, subsurface
construction, remodeling or other building operation upon any adjoining
property or street, avenue, alley or passageway.

ARTICLE 8

TENANT’S ALTERATIONS

Section 8.01 -
Alterations. During the Term, Tenant shall have the
right, without Landlord’s prior written consent but on thirty (30) days’ notice
to Landlord, to make any alterations or modifications to the Demised Premises
(collectively, “Alterations”), provided, however, that within fifteen
(15) days after Landlord’s receipt of any such notice, Landlord shall notify
Tenant of those Alterations that shall be removed by Tenant at the expiration
or other termination of the Lease in accordance with Article 22 of this Lease. Tenant
shall obtain all necessary certificates and authorizations required by any
Governmental Authority in connection with the Alterations.

Section
8.02 – Plans and Specifications. Prior to performing any
Alterations which affect the roof, structure, exterior walls, foundations,
mechanical, plumbing, electrical and sanitary systems, water and sewer
facilities and drains, drywells and cesspools (collectively, “Structural
Alterations”), Tenant covenants and agrees that 

 14
 

 

 

Tenant will
provide Landlord with detailed plans and specifications (“Plans and
Specifications”) satisfying the requirements of Section 8.10(a), in
accordance with the succeeding Sections of this Article, for the construction
of Tenant’s Structural Alterations and Tenant will promptly thereafter proceed
diligently and expeditiously to complete the Structural Alterations using
licensed, and reputable contractors, architects and engineers, prior to the
expiration of all time frames set forth in any building permit issued in
connection with the Structural Alterations. Tenant shall provide Landlord with
prior notice of the identities of the contractors, architects and engineers.

Section
8.03 – Compliance with Law; Labor Harmony. All Alterations
shall be performed and completed in compliance with all applicable Requirements
and comply with all zoning laws and ordinances. All Alterations, including
without limitation, Structural Alterations, shall be done in a manner, which
does not create any labor disharmony or dispute at the Demised Premises.

Section
8.04 – Commencement of Construction of Structural Alterations.
Tenant shall not commence any Structural Alterations unless and until Tenant
shall have delivered to Landlord:

(a)           Copies of all necessary permits,
certificates and authorizations required by any Governmental Authority in
connection with the Structural Alterations, together with evidence that such
permits, certificates and authorizations have been paid for in full. Landlord
shall not unreasonably refuse to join in the application for such permits,
certificates or authorizations and shall reasonably cooperate with Tenant,
without charge except to the extent Landlord’s participation required is more
than de minimus in which case
Tenant agrees to pay to Landlord, upon demand as Additional Rent hereunder, a
reasonable fee and Landlord’s costs paid or incurred in connection therewith. Landlord
shall not be subject to any liability for the payment of any costs or expenses
in connection with any such applications, and Tenant hereby indemnifies and
agrees to defend and hold Landlord harmless from and against any and all such
costs and expenses;

(b)           Plans and Specifications for the
proposed Structural Alterations satisfying the requirements of Section 8.10(a)
hereof. Tenant may not materially change the Plans and Specifications without
prior written notice to Landlord;

(c)           A contract for the construction of
the Structural Alterations in accordance with the Plans and Specifications and
satisfying the requirements of Section 8.10(b); and

(d)           Tenant shall use its best efforts to
obtain an agreement from Tenant’s architect and general contractor to continue
to perform for the benefit of Landlord, if Landlord so requests, their
respective obligations under their contracts with Tenant in the event of
termination of this Lease or upon Landlord’s re-entry upon the Demised Premises
following a default by Tenant prior to completion of the Structural
Alterations, provided such architect and/or general contractor are paid for
their respective services 

 15
 

 

 

in accordance with such contracts.

Section
8.05 – Insurance. At all times during and until the
completion of the Structural Alterations, Tenant shall, at Tenant’s sole cost
and expense, maintain, or cause to be maintained, in addition to the insurance
required under Article 11 hereof, one hundred percent (100%) completed value
builders’ risk insurance; workmen’s compensation insurance covering all persons
employed in connection with the Structural Alterations and with respect to whom
death or bodily injury claims could be asserted against Landlord or Tenant; and
general comprehensive commercial liability insurance for the mutual benefit of
Tenant and Landlord expressly covering the additional hazards due to the
construction, with combined single coverage limits of not less than Five
Million and 00/100 Dollars ($5,000,000.00) in the event of death or bodily
injury or property damage. The policy of general comprehensive commercial
liability insurance, in so far as it relates to property damage, shall not
contain any restrictive clauses relating to excavating, sheet piling, moving,
shoring, underpinning, removal and rebuilding of structural supports or
subsurface work or any similar restrictive clauses. The general comprehensive
commercial liability insurance provided for in this Section may be affected by
an appropriate endorsement, if obtainable, upon the insurance required to be
maintained by Tenant pursuant to Section 11.01(d) hereof. All insurance of the
character in this Subsection described, shall be effected under valid and
enforceable policies issued by insurers of recognized responsibility and which
have been approved in writing by Landlord as to qualification of insurers and
the amounts of insurance to be written by each, which approval Landlord agrees
shall not be unreasonably withheld. The general comprehensive commercial
liability insurance policy and the builder’s risk insurance policies above
mentioned shall name Landlord and Tenant as the insured as their respective
interests may appear and may also include as the insureds, if required by
Landlord, any Mortgagee. The loss, if any, under any of the builder’s risk
policies above mentioned shall be adjusted by and shall be payable to Tenant
and such proceeds paid to Tenant shall be held in trust and disbursed only for
the purposes of completing the construction. All such policies or certificates
therefor issued by the respective insurers shall be delivered to Landlord. Within
ten (10) days after the premium of each such policy shall become due and
payable and the amount thereof shall be determined, Tenant agrees to pay said
premium or cause the same to be paid, and Landlord shall be furnished with
evidence satisfactory to it of such payment. Tenant may satisfy any of the
obligations under this Section through self-insurance, the extent and
sufficiency of which is subject to the sole and absolute discretion of Landlord
and, in any event, Landlord’s benefits and protection under this Section 8.05
shall in no manner be reduced or impaired by reason of Tenant’s self-insurance.

Section 8.06 –
[Intentionally Omitted].

Section
8.07 – Final Completion of Structural Alterations. Tenant
covenants and agrees that:

(a)           the construction of the Structural
Alterations shall be performed in a 

 16
 

 

 

good and
workmanlike manner in accordance with (i) the Plans and Specifications as
approved by Landlord; (ii) all applicable permits, certificates and
authorizations and building and zoning laws and ordinances and with all other
Requirements; and (iii) the terms, covenants and conditions of this Lease; and

(b)           throughout the course of such
construction and at and after Final Completion of the Structural Alterations
(as hereinafter defined), and in connection with any alterations, Landlord’s
fee estate in the Demised Premises will be free and clear of all liens and
encumbrances arising out of or connection with such construction. Upon
completion of the Structural Alterations, Tenant shall furnish to Landlord (i)
a certificate from Tenant’s architect certifying that the Structural
Alterations have been completed in accordance with the Plans and
Specifications; (ii) copies of either the temporary certificates of occupancy
or the permanent certificate of occupancy for the Structural Alterations; (iii)
a complete set of “as built” plans within six (6) months after Final Completion
of the Structural Alterations; (iv) a survey of the Land showing the Structural
Alterations as built thereon certified to Landlord by a surveyor reasonably
acceptable to Landlord, provided that the Structural Alterations include
additional improvements outside the present footprint of the existing
improvements; and (v) evidence reasonably satisfactory to Landlord of proof of
payment in full for the Structural Alterations, including, without limitation,
lien waivers in recordable form received from all architects, engineers,
contractors, subcontractors, materialmen and laborers providing supplies and/or
performing work in connection with the Structural Alterations. “Final
Completion of the Structural Alterations” shall be deemed to have occurred
on the date when all of the above have been fully satisfied and delivered to
Landlord in accordance with the terms hereof.

Section
8.08 – [Intentionally Omitted].

Section
8.09 – Landlord’s Approval of Plans. Landlord’s
retention of the Plans and Specifications or any other action taken with
respect thereto by Landlord or any Mortgagee shall not constitute an opinion or
representation by Landlord or the Mortgagee as to the sufficiency of said Plans
and Specifications or impose any responsibility for the sufficiency thereof
upon Landlord or the Mortgagee.

Section
8.10 – Plans and Specifications; Construction Contract.

(a)           Plans and Specifications shall be
prepared by a licensed architect and which Plans and Specifications shall meet
with the approval thereof by any Governmental Authority then exercising
jurisdiction with regard to such work and such Plans and Specifications shall
be and become the sole and absolute property of Landlord in the event that, for
any reason, this Lease shall be terminated.

(b)           The Structural Alterations contract
shall be made with a licensed contractor, providing for the completion of all
work, labor and materials necessary for completion of the Structural
Alterations in accordance with the Plans and Specifications.

 17
 

 

 

ARTICLE 9

UTILITIES

Section
9.01 - Utilities. Tenant shall provide, at its own cost and
expense, fuel, heat, water, sewer, electricity, telephone and all other
utilities or services required in connection with its use of the Demised
Premises. Tenant shall be responsible for all deposits required by the
respective utilities for service. Tenant shall comply with all requirements of
the utilities supplying said service.

ARTICLE 10

PRE-EXISTING ENVIRONMENTAL CONDITIONS;

ENVIRONMENTAL COMPLIANCE DURING PERIOD OF TENANCY;

REQUIREMENTS OF LAW

Section
10.01 – Pre-existing Environmental Conditions.

(a)           With respect to any and all
Pre-existing Environmental Conditions (as hereinafter defined), Landlord, at
its sole expense, shall conduct and complete all investigations, studies,
samplings, and testing, and all remedial, removal, and other response actions
necessary to clean up, remove and/or abate all Hazardous Materials (as
hereinafter defined), on, from, or affecting the Demised Premises (i) in
accordance with all then 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. Alternatively,
Landlord may elect to request Tenant, at Landlord’s sole expense, to directly
oversee the response contractor’s work. “Pre-existing Environmental Conditions”
means the presence of any Hazardous Materials existing as of the Commencement
Date in the air, soil, surface water or groundwater, and in, on and under any
structure on the Demised Premises.

(b)           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 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 

 18
 

 

 

defined in the Atomic Energy Act of 1954, 42 U.S.C. §
3011 et seq.

(c)           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.

(d)           Tenant shall not cause, consent to,
suffer or permit the installation or maintenance of any underground storage
tanks upon, under or within the Demised Premises.

(e)           Tenant agrees to take occupancy of
the Demised Premises on the Commencement Date and to cooperate with Landlord
and its response contractors in addressing the Pre-existing Environmental
Conditions. Landlord shall use commercially reasonable efforts to minimize
interruption with Tenant’s business in performing its obligations hereunder.

(f)            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 or indirect 

 19
 

 

 

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 Pre-existing
Environmental Conditions or the actions, operations, activities, or
non-compliance of Landlord, Landlord’s contractor’s or agents, or Landlord’s
invitees, with Environmental Laws at the Demised Premises. During the Term of
this Lease, Landlord agrees to require Landlord’s contractors or agents which
perform work on the Demised Premises in connection with environmental
remediation to maintain insurance in a form and amount as are commonly maintained
for such work in cases of properties that are similarly situated, and that
Tenant, Metropolitan Transit Authority (“MTA”) and MTA Bus Company (“MTA Bus”)
will be named as additional insureds, as their interests may appear, on
insurance policies maintained by Landlord’s contractors or agents which perform
work on the Demised Premises in connection with environmental remediation. The
foregoing indemnity shall survive the expiration or other termination of this
Lease.

Section
10.02 –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 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. Nothing in this paragraph in any way
alters the Landlord’s obligations and responsibilities under Section 10.01 for
all Pre-existing Environmental Conditions.

(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

 20
 

 

 

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 that is
not a Pre-existing Environmental Condition and which occurred, was created or
aggravated during the Lease Term (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 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. Nothing in this paragraph, however, alters
or relieves Landlord from its obligations under Section 10.01 to be responsible
for any and all Pre-existing Environmental Conditions.

(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 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)            If Tenant receives any notice of (i)
the happening of any event 

 21
 

 

 

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.

(g)           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
10.03 – [Intentionally Omitted].

Section
10.04 – 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 10.

(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.

ARTICLE 11

INSURANCE

Section
11.01 – Insurance. Tenant may satisfy, in whole or in part,
any or all of the obligations under this Article 11 through self-insurance,
provided (i) Landlord’s benefits and interests under this Article 11 are not
decreased or impaired thereby, (ii) Tenant’s indemnity obligations under this
Lease are not decreased or expanded thereby, and (iii) the self-insurance
obligation shall not extend responsibility to Tenant for the negligent or
willful misconduct of Landlord, or Landlord’s officers, employees, agents, or
contractors, or for Landlord’s obligations under Article 10 for any
Pre-Existing Environmental Condition, or as to the installation repair,
relocation or removal of any 

 22
 

 

 

antennae pursuant to Section 33.01. The Tenant’s
obligations as self-insurer shall be governed by the requirements set forth
below. Tenant shall, at its sole cost and expense, during the Term of this
Lease:

(a)           Keep all Improvements, building
fixtures and equipment (other than Tenant’s trade fixtures and business
equipment) and other property on, in or appurtenant to the Demised Premises, or
used in connection with the operation and maintenance of the Demised Premises,
and all replacements, alterations and additions of or to the foregoing, insured
for the benefit of Tenant (except as otherwise specifically noted), Landlord
and for the benefit of the Mortgagee (under a standard New York Mortgage
Endorsement) and for the benefit of any other party designated by Landlord who
has an insurable interest in the Demised Premises, as their respective
interests may appear, against all risk of loss or damage, including loss or
damage by fire and other perils included in a so-called “extended coverage
endorsement” or “multi-peril endorsement”, vandalism and malicious mischief,
collapse, lightning, windstorm, hail, explosion, riot, riot attending a strike,
civil commotion, aircraft, vehicles, smoke, and water damage and against such
other risks as are normally or customarily insured against by owners or
operators of similar properties as Landlord may from time-to-time reasonably
request, and containing Replacement Cost endorsements. Such coverage shall be
in amounts at all times sufficient to prevent Landlord, Tenant or any
additional insured from becoming a co-insurer under the terms of the applicable
policies, but in any event in amounts not less than the full replacement value
of the Improvements. Tenant shall cause full replacement value to be determined
from time-to-time at the request of Landlord, but not more frequently than once
every calendar year, by an insurance appraisal or other valuation method
reasonably acceptable to Landlord. Such policies shall name Landlord, and/or
the Mortgagee, and/or any other party having an insurable interest as Landlord
may designate, as loss payee(s).

(b)           If a sprinkler system is located in
the Demised Premises or any Improvement located thereon, provide sprinkler
leakage insurance in amounts reasonably satisfactory to Landlord, and provide
and keep in force a sprinkler supervisory, maintenance and alarm service
contract.

(c)           Provide boiler and machinery broad
form insurance covering fire, damage and explosion in respect of steam and
pressure boilers and similar apparatus, if any, located in or upon the Demised
Premises in the amount of Five Million ($5,000,000.00) Dollars.

(d)           Provide comprehensive general
liability and broad form property damage insurance, written on an occurrence
basis, including elevator, escalator, machinery and contractual liability
insurance, protecting and indemnifying Landlord, Tenant and others having an
insurable interest against any and all claims (including all costs and expenses
of defending against same) for personal injury, disease or death and for damage
or injury to or destruction of property (including loss of use) occurring on,
in or about the Demised Premises, sidewalks, gutters, curbs, vaults or vault
spaces appurtenant to the Demised Premises, which insurance shall have a
combined single 

 23
 

 

 

limit of not less than Fifty Million and 00/100
($50,000,000.00) Dollars. The insurance carried pursuant to this Section 11.01(d)
shall include coverage for contractual liability, independent contractors’
liability and completed operations liability with a personal injury endorsement
covering claims arising out of arrest, false imprisonment, libel, slander,
wrongful eviction and invasion of privacy.

(e)           Provide automobile liability
insurance covering all vehicles operated or owned by Tenant in connection with
the Demised Premises.

(f)            Provide for the benefit of Landlord
and any Mortgagee only, business interruption and rent loss insurance in an
amount equal to at least the sum of twelve (12) months’ Fixed Rent and
Additional Rent (including Impositions), plus twelve (12) months’ insurance
premiums and the estimated amount of annual maintenance costs for the Demised
Premises.

(g)           Provide workers’ compensation
insurance to the extent required by applicable law.

(h)           At any time prior to undertaking and
during the duration of any Alteration or any construction or Alteration of any
Improvements on the Demised Premises, provide Builder’s Risk All Risk
Non-Reporting property insurance for the full replacement value of such
Alterations, work and construction of Improvements, with Replacement Cost and
Agreed Amount endorsements.

(i)            Provide and keep in force such other
insurance covering such risks and in such amounts as may from time-to-time be
reasonably required by Landlord or any Mortgagee against any other insurable
hazards as are commonly insured against in cases of properties similarly
situated.

(j)            Provide garagekeeper’s liability coverage
in amounts reasonably satisfactory to Landlord, if Tenant provides, directly or
indirectly, valet parking or in any other way exercises care, custody or
control over vehicles in the parking areas of the Demised Premises.

(k)           Maintain environmental insurance in
form and amounts reasonably satisfactory to Landlord throughout the Lease Term.
Tenant shall name Landlord as an additional insured under Tenant’s
environmental insurance policy maintained for the Demised Premises.

Tenant
agrees that the limits of insurance required by this Article may be increased
at the request of Landlord or any Mortgagee consistent with limits of coverage
for properties similarly situated provided, however, that in no event shall the
limits of insurance be reduced below the amounts of coverage required at the
commencement of the Term of this Lease.

Section
11.02 – Evidence of Insurance. Contemporaneous with the
execution of this Lease, Tenant shall deliver to Landlord and to any Mortgagee
and to any other 

 24
 

 

 

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
Section 11.01 of this Lease, together with proof of payment of the premiums and
shall thereafter furnish to Landlord, at least ten (10) days prior to the
expiration of any policies and any renewal thereof, evidence of renewal or
continued coverage together with evidence of the payment of premiums thereon.
The insurance required under Section 11.01 shall not have any deductible or
retention in excess of Fifty Thousand and 00/100 ($50,000.00) Dollars and shall
provide that the same may not be otherwise materially changed or cancelled on
less than thirty (30) days’ prior written notice to Landlord and any Mortgagee.
Landlord shall have the right, to be exercised upon prior reasonable notice to
Tenant, to review and copy Tenant’s insurance policies to confirm compliance
with Section 11.01.

Section
11.03 – Additional Requirements. Landlord, Landlord’s
managing agent and any Mortgagee shall be named as additional insureds as their
interests may appear in the policies of liability insurance described in
Section 11.01, but shall nevertheless be protected against all liability
occasioned by an occurrence insured against to the same extent and limits as
Tenant is protected and insured under said policies, which policies shall
provide primary coverage for Landlord, Landlord’s managing agent and any
Mortgagee. All policies of insurance shall be: (i) written as “occurrence”
policies, (ii) written as primary coverage and not contributing with or in
excess of any coverage which Landlord or any management agent, or Mortgagee may
carry, (iii) issued in form acceptable to Landlord by insurance companies reasonably
acceptable to Landlord carrying a General Policyholder’s Service Rating of not
less than “A/X” as rated in the most current Best’s Insurance Reports (or any
successor rating guide acceptable to Landlord), and licensed to do business in
New York State and authorized to issue such policy or policies; and (iv)
contain an endorsement that Landlord, Landlord’s managing agent and all
Mortgagees, although named as additional insureds as their interests may
appear, nevertheless shall be entitled to recover under said policies for any
loss or damage occasioned to their respective servants, agents, employees and
contractors by reason of the negligence of Tenant, its servants, agents,
employees and contractors. In addition, the policies referred to in Sections 11.01(a),
11.01(b), 11.01(c), 11.01(f) and 11.01(h) shall name Landlord and any
Mortgagees designated by Landlord as Loss Payee(s) for all losses, claims and
insurance proceeds pertaining to, arising out of, or in connection with the
Demised Premises.

Section
11.04 – Payment of Premiums.

(a)           Tenant shall pay all premiums and
charges for all of said policies of insurance and, if Tenant shall fail to make
any payment when due or carry any such policy, Landlord may but shall not be
obligated to, following an uncured Insurance
Notice (hereinafter defined), make such payment or procure such
insurance coverage (which may be maintained under a blanket policy of insurance
maintained by Landlord or any affiliate of Landlord), and the amount paid by
Landlord or its affiliate, with interest thereon at the Default Rate, shall be
repaid to Landlord by Tenant on demand, and all such amounts so repayable,
together with such interest, shall be 

 25
 

 

 

deemed to constitute Additional Rent hereunder. Payment
by Landlord of any such premium, or the carrying by Landlord or its affiliates
of any such policy, shall not be deemed to waive or release the default of
Tenant with respect thereto.

(b)           As used herein, the term “Insurance Notice” shall mean a
notice with respect to the Tenant’s failure to pay any insurance charges or
premiums following the giving of which Tenant shall have ten (10) days to cure
such default, provided, however, if the insurance policy or coverage shall
lapse by reason of such non-payment, within said ten (10) day period, Tenant’s
time to cure shall expire ten (10) business days prior to the lapse of such
insurance policy or coverage.

Section
11.05 - Waiver of Subrogation. Tenant shall cause each insurance
policy carried by Tenant and insuring the Demised Premises and Tenant’s
leasehold improvements, equipment, furnishings, fixtures and contents against
loss, damage, or destruction by fire or other casualty, including business
interruption, and other special coverages, to be written in a manner so as to
provide that the insurer waives all rights of recovery against Landlord in
connection with any loss or damage covered by any such policy, including all
rights of subrogation. Landlord shall not be liable to Tenant and Tenant hereby
releases Landlord from any such liability for the amount of such loss or damage.
If Landlord procures any casualty insurance concurrent with or supplemental to
any casualty insurance procured by Tenant pursuant to this Lease, such policy
or policies shall provide that the insurer waives all rights of recovery
against Tenant in connection with any loss or damage covered by such policy,
including all rights of subrogation.

Section
11.06 - Binding on Subtenants.
In the event of any sublease or occupancy by a person other than Tenant of all
or a portion of the Demised Premises, irrespective of whether permitted by this
Lease or made in violation thereof, all of the covenants and obligations on the
part of Tenant set forth in this Article 11 shall bind and be fully applicable
to the subtenant or occupant (as if such subtenant or occupant were Tenant
hereunder) for the benefit of Tenant and Landlord, but nothing contained herein
shall be deemed a consent to such subletting if in contradiction of the terms
of this Lease.

Section
11.07 - Tenant’s Supplemental Insurance.
The limits of insurance specified in Section 11.01 hereof are the minimum
limits of insurance required of Tenant pursuant to this Lease. Nothing
contained herein shall prevent Tenant from maintaining separate property
insurance in respect of Tenant’s personalty, inventory, trade fixtures and
business interruption expenses. Except with respect to the insurance required
by Sections 11.01(d) and 11.01(j) hereof, Tenant shall not take out separate
insurance concurrent in form or contributing in the event of loss with that
required by Sections 11.01(a), 11.01(b), 11.01(c), 11.01(f) and 11.01(h) to be
furnished by Tenant unless Landlord is included therein as the insured, with
loss payable as in this Lease, provided Tenant shall promptly notify the
Landlord of the placing of any such separate insurance.

 26

 

 

ARTICLE 12

DAMAGE OR DESTRUCTION

Section
12.01 – Damage or Destruction to Improvements.

(a)           If any Improvements shall be
destroyed or damaged by any cause whatsoever, Tenant shall promptly notify
Landlord and shall, at Tenant’s sole cost and expense, restore, repair, replace
or rebuild the same as nearly as possible to their condition and character
immediately prior to the damage or destruction, reasonable wear and tear
excepted (“Casualty Restoration”).

(b)           Casualty Restoration shall be commenced promptly and prosecuted to
completion with reasonable diligence. Landlord shall join with Tenant in the
adjustment and settlement of any insurance claim. The net insurance proceeds,
if any, payable by reason of such damage or destruction (other than insurance
proceeds for the loss of Tenant’s personalty and other than insurance proceeds
for loss of Rents, Impositions and/or maintenance, irrespective of whether paid
to Tenant or Landlord) shall be paid to Landlord and made available by Landlord
for the payment of the cost of the Casualty Restoration and shall be disbursed
in the manner provided in Section 12.03.

(c)           Notwithstanding the provisions of
Sections 12.01(a) and 12.01(b) to the contrary, if all or substantially all of
the Improvements are damaged or destroyed at a time when there is fewer than
two (2) years remaining in the Term, then at Tenant’s option, to be exercised
by notice given within fifteen (15) days following the date of such substantial
damage or destruction, this Lease shall be terminated effective as of the date
such notice is given, whereupon Tenant shall be released from its obligation to
repair or restore the Demised Premises (except as otherwise specifically set
forth in this Section 12.01(c)), any insurance proceeds paid or payable to Tenant
shall be paid to Landlord free of any claim by Tenant, Landlord shall have the
exclusive right to adjust and settle any insurance claim on account of or
relating to any such damage or destruction and Tenant shall pay Landlord the
amount of any deductible or retention limit under the applicable policy or
policies, and pay to Landlord, contemporaneously with such election, the amount
of Fixed Rent and Additional Rent payable through the Expiration Date. If
Tenant elects to terminate this Lease as aforesaid, Tenant shall, at its sole
cost and expense, promptly remove all remaining portions of the Improvements,
including all debris, and fill in and level the area to proper grade. Notwithstanding,
anything stated herein to the contrary if Tenant self-insures, upon a Casualty
in last two (2) years of the Term, or Renewal Term as the case may be, if
Tenant elects not to restore, this Lease shall be deemed terminated only upon
payment of all Fixed Rent and Additional Rent through the end of the Lease, and
payment to Landlord of the cost of restoration of the Demised Premises to the
condition existing immediately prior to the Casualty.

Section 12.02 –
No Abatement of Rent. Except as otherwise set forth in
Section 12.01(c), no destruction of or damage to the Demised Premises, or to
any Improvement, furniture, furnishings, fixtures, equipment or other property,
shall permit Tenant to surrender this Lease or shall relieve Tenant from its
liability to pay the full Fixed Rent or 

 27
 

 

 

Additional Rent payable under this Lease or from any
of its other obligations under this Lease. This Section shall be deemed to be
an agreement expressly providing otherwise within the meaning of Section 227 of
the Real Property Law of the State of New York and any successor law of like
impact.

Section
12.03 – Disbursement of Insurance Proceeds.

(a)           If and for so long as Tenant is not
in default of any of its obligations for the payment of Fixed Rent or
Additional Rent, and no uncured Event of Default has occurred which is
continuing, and Tenant is conducting the Casualty Restoration in accordance
with this Lease, the Casualty Proceeds shall be paid out from time-to-time, but
not more frequently than once per month, to pay for all work, labor and
material installed and completed at the Demised Premises as the Casualty
Restoration progresses (subject to Landlord’s approval which shall not be
unreasonably withheld), upon the written request of Tenant, which request shall
be accompanied by the following:

(i)       A
certificate signed by the architect or engineer in charge of the Casualty
Restoration, reasonably satisfactory to Landlord and Mortgagee, dated not more
than fifteen (15) days prior to such request, setting forth:

(A)          that the sum then requested either has
been paid by Tenant or is justly due to contractors, sub-contractors,
materialmen, engineers, architects or other persons who have rendered services
or furnished materials for the work specified, and stating that no part of such
expenditures has been or is being made on the basis of any previous or then
pending request for the disbursement of the Casualty Proceeds;

(B)           a copy of the requisition(s)
submitted by Tenant and/or its contractor(s) setting forth a brief description
of the services and materials supplied to and completed for the Casualty Restoration,
subtotaled by trade;

(C)           that, except for the amount described
in Section 12.03(a)(i)(A), there is no outstanding indebtedness known to the
persons signing such certificate, after due inquiry, which is then due for
labor, materials, or services in connection with the Casualty Restoration; and

(D)          that the cost, as estimated by the
persons signing such certificate, of the work required to complete the Casualty
Restoration does not exceed the amount of the remaining Casualty Proceeds, plus
any amount deposited by Tenant to defray the expenses of Casualty Restoration;

(ii)           Lien waivers (following completion of
any portion of the work), title insurance endorsements or such other evidence,
reasonably satisfactory to Landlord, to the effect that all work, labor and
materials installed and completed at the Demised Premises have been paid for,
or shall be paid for out of the amount then 

 28
 

 

 

requested, and that there has not been filed with
respect to the Demised Premises, any vendor’s, mechanic’s, laborer’s,
materialmen’s or other lien which has not been discharged or record, except
such as will be discharged by payment of the amount then requested and a waiver
of the right to file any lien in connection with any work or material covered
by the requisition and all prior requisitions (all of the documents referred to
in this clause (ii) are individually and collectively referred to as “Lien Waivers”);

(iii)          dual obligee payment and performance
bonds or such other security for the benefit of the Landlord and the Mortgagee
in form and substance reasonably satisfactory to the Landlord and Mortgagee;

(iv)          the written undertaking of each
architect, engineer, construction manager, general contractor and major
subcontractor to continue performance on Landlord’s behalf under their
respective agreements in the event of a default by the Tenant under this Lease;

(v)           complete copies of the construction
management agreement, general construction contract, major subcontracts, all
change orders, amendments and modifications to each of the foregoing, all plan
revisions and supplements and all payment requisitions, Lien Waivers, architect’s
certifications and proof of payment for all work, labor and materials and
material notices relating to or incorporated in the Casualty Restoration prior
to the date of such requisition, provided, however, that any of the foregoing
which have been delivered with a prior requisition do not have to be
re-delivered with each subsequent requisition, unless the same have been
modified or amended; and

(vi)          such other documentation regarding the
Casualty Restoration (including concrete, soil, steel, welding and other
testing certifications, surveys, engineers certificates, building or other
permits, paid invoices, data sheets and the like) as applicable governmental or
public agencies, the Mortgagee or a construction consultant or engineer engaged
by Landlord or the Mortgagee shall reasonably require.

(b)           Tenant shall, prior to the
commencement of the Casualty Restoration, furnish to Landlord and the Mortgagee
an estimate of the total cost of the Casualty Restoration certified by the
architect or engineer in charge of the Casualty Restoration. If such cost
estimate or any subsequent estimate shall show that the cost of completing the
Casualty Restoration is in excess of the amount of the Casualty Proceeds then
available (a “Shortfall”),
Tenant shall promptly deposit with the Landlord an amount equal to such
Shortfall. The amount, if any, so deposited shall be included in the Casualty
Proceeds for all purposes of this Article.

(c)           Upon compliance by Tenant with the
foregoing provisions of this Article, Landlord shall pay to Tenant or the
persons named in the certificate referred to in Section 12.03(a)(i), from the
Casualty Proceeds, an amount equal to ninety (90%) 

 29
 

 

 

percent of the cost of the Casualty Restoration which
is evidenced by the request. Upon compliance by Tenant with the foregoing
provisions of this Article, at the completion of the Casualty Restoration, the
balance of the Casualty Proceeds, to the extent of and as required to complete
the payment of the costs of Casualty Restoration, shall be paid to the persons
named in the certificates referred to in Section 12.03(a)(i) for the balance of
any sums justly due, and upon payment in full for the Cost of the Casualty
Restoration, any sums remaining shall be paid to Tenant upon Tenant’s delivery
to Landlord of final Lien Waivers and evidence reasonably satisfactory to the
Landlord that the Casualty Restoration has been paid in full.

(d)           If the amount of any Casualty
Proceeds shall exceed the entire cost of the Casualty Restoration, such excess,
upon completion of the Casualty Restoration, and upon compliance by Tenant with
the foregoing provisions of this Article, shall be paid to and retained by Tenant.

(e)           If prior to the completion of any
Casualty Restoration, this Lease shall terminate or expire for any reason,
including a termination by reason of an Event
of Default (hereinafter defined), then Landlord shall have the right to
receive and retain any Casualty Proceeds to the extent that they shall not have
been applied to the payment of the costs and expenses of the Casualty
Restoration, and if such termination or expiration shall be by reason other
than an Event of Default, Tenant shall thereupon be discharged from any and all
obligations to complete such Casualty Restoration provided said Casualty
Proceeds are sufficient to complete such Casualty Restoration. If, in such
case, the Casualty Proceeds are insufficient to pay the full cost of the
Casualty Restoration, Tenant shall pay the amount of any shortfall to Landlord.
The provisions of this Section 12.03(e) shall survive the expiration or earlier
termination of this Lease.

Section 12.04 – Lease
Supersedes. This Lease shall be considered an express agreement
governing any case of damage to or destruction of the Demised Premises or any
part thereof by fire or other casualty, and Section 227 of the Real Property
Law of the State of New York and any other law of like import now or hereafter
in force, are hereby waived by Tenant and shall have no application in such
case.

ARTICLE 13

ASSIGNMENT AND SUBLETTING

Section 13.01 – Landlord
Consent. Tenant shall not assign, mortgage or encumber this
Lease, its interest hereunder or the estate granted hereby, nor sublet or
suffer or permit the Demised Premises or any part thereof to be used by others,
without the prior written consent of Landlord in each instance.

Section 13.02 –
Collection of Rent. If Tenant should assign its interest in
this Lease, or if all or any part of the Demised Premises be underlet or
occupied by anybody other than Tenant, Landlord may, after default by Tenant,
collect rent from the assignee, under-tenant or occupant, as the case may be,
and apply the net amount to the Fixed 

 30
 

 

 

Rent and Additional Rent herein reserved, but no such
assignment, underletting, occupancy or collection shall be deemed a waiver of
this covenant, or the acceptance of the assignee, under-tenant or occupant as
Tenant, or a release of Tenant from the further performance by Tenant of the
covenants on the part of Tenant contained herein. The consent by Landlord to
any assignment or underletting shall not in any way be construed to relieve
Tenant from obtaining the express consent in writing of Landlord to any further
assignment or underletting.

 31
 

 

 

Section 13.03 - Recapture.

(a)           If Tenant shall desire to assign this
Lease, or to sublet the Demised Premises, it shall, no later than thirty (30)
days prior to the proposed effective date of the assignment or sublet, submit
to Landlord a written request for Landlord’s consent to such assignment or
subletting (“Tenants Offer Notice”),
which shall contain the following information: 
(i) the name and address of the proposed assignee or subtenant; (ii) the
terms and conditions of the proposed assignment or subletting; (iii) the nature
and character of the business of the proposed assignee or subtenant and its
proposed use of the Demised Premises; and (iv) current financial information
and any other information Landlord may reasonably request.

(b)           Tenant’s Offer Notice shall be deemed
an offer from Tenant to Landlord whereby Landlord (or Landlord’s designee) may,
at Landlord’s option, (i) sublease such space from Tenant (if the proposed
transaction is a sublease of all or part of the Demised Premises), (ii) have
this Lease assigned to it or terminate this Lease (if the proposed transaction
is an assignment or a sublease of all or substantially all of the Demised
Premises or a sublease of a portion of the Demised Premises which, when aggregated
with other subleases then in effect, covers all or substantially all of the
Demised Premises), or (iii) terminate this Lease with respect to the space
covered by the proposed sublease (if the proposed transaction is a sublease of
part of the Demised Premises). Said option may be exercised by Landlord by
notice to Tenant within sixty (60) days after a Tenant’s Offer Notice, together
with all information required pursuant to Section 13.03(a), has been given by
Tenant to Landlord.

(c)           If Landlord exercises its option
under Section 13.03(b) to terminate this Lease, then this Lease shall terminate
on the proposed assignment or sublease commencement date specified in the
applicable Tenant’s Offer Notice and all Fixed Rent and Additional Rent shall
be paid and apportioned to such date.

(d)           If Landlord exercises its option
under Section 13.03(b) to have this Lease assigned to it (or its designee),
then Tenant shall assign this Lease to Landlord (or Landlord’s designee) by an
assignment in form and substance reasonably satisfactory to Landlord, effective
on the proposed assignment or sublease commencement date specified in the
applicable Tenant’s Offer Notice. Tenant shall not be entitled to consideration
or payment from Landlord (or Landlord’s designee) in connection with any such
assignment. If the Tenant’s Offer Notice provides that Tenant will pay any
consideration or grant any concessions in connection with the proposed
assignment or sublease, then Tenant shall pay such consideration and/or grant
any such concessions to Landlord (or Landlord’s designee) on the date Tenant
assigns this Lease to Landlord (or Landlord’s designee).

(e)           If Landlord exercises its option
under Section 13.03(b) to terminate this Lease with respect to the space
covered by a proposed sublease, then (i) this Lease shall terminate with
respect to such part of the Demised Premises on the effective date of the
proposed sublease, (ii) from and after such date the Fixed Rent and 

 32
 

 

 

Additional Rent shall be
adjusted, based upon the proportion that the rentable area of the Demised
Premises remaining bears to the total rentable area of the Demised Premises,
and (iii) Tenant shall pay to Landlord, upon demand, the costs incurred by
Landlord in demising separately such part of the Demised Premises and in
complying with any applicable laws and regulations relating to such demise.

(f)            If Landlord exercises its option
under Section 13.03(b) to sublet the space Tenant desires to sublet, such
sublease to Landlord or its designee (as subtenant) shall be in form and
substance reasonably satisfactory to Landlord at the rental rate per rentable
square foot of Fixed Rent and Additional Rent then payable pursuant to this
Lease and shall be for the term set forth in the applicable Tenant’s Offer
Notice, and:

(i)            shall be subject to all of the terms
and conditions of this Lease except such as are irrelevant or inapplicable, and
except as otherwise expressly set forth to the contrary in this Section 13.03;

(ii)           shall be upon the same terms and
conditions as those contained in the applicable Tenant’s Offer Notice and
otherwise on the terms and conditions of this Lease, except such as are
irrelevant or inapplicable and except as otherwise expressly set forth to the
contrary in this Section 13.03;

(iii)          shall permit the sublessee, without
Tenant’s consent, freely to assign such sublease or any interest therein or to
sublet all or any part of the space covered by such sublease and to make any
and all alterations and improvements in the space covered by such sublease;

(iv)          shall provide that any assignee or
further subtenant of Landlord or its designee may, at the election of Landlord,
make alterations, decorations and installations in such space or any part
thereof, any or all of which may be removed, in whole or in part, by such
assignee or subtenant, at its option, prior to or upon the expiration or other
termination of such sublease, provided that such assignee or subtenant, at its
expense, shall repair any damage caused by such removal; and

(v)           shall provide that (i) the parties to
such sublease expressly negate any intention that any estate created under such
sublease be merged with any other estate held by either of said parties, (ii)
any assignment or subletting by Landlord or its designee (as the subtenant) may
be for any purpose or purposes that Landlord shall deem appropriate, (iii)
Landlord, at Tenant’s expense, may make such alterations as may be required or
deemed necessary by Landlord to demise separately the subleased space and to
comply with any applicable laws and regulations relating to such demise, and
(iv) at the expiration of the term of such sublease, Tenant shall accept the
space covered by such sublease in its then existing condition, subject to the
obligations of the sublessee to make such repairs thereto as may be necessary
to preserve such space in good order and condition.

 33
 

 

 

(g)           In the case of a proposed sublease,
Tenant shall not sublet any space to a third party at a rental which is less
(on a per rentable square foot basis) than the rental (on a per rentable square
foot basis) specified in Tenant’s Offer Notice with respect to such space,
without complying once again with all of the provisions of this Section 13.03
and re-offering such space to Landlord at such lower rental. In the case of a
proposed assignment, Tenant shall not assign this Lease to a third party where
Tenant pays greater consideration or grants a greater concession to such third
party for such assignment then the consideration offered to be paid or
concession offered to be granted to Landlord in Tenant’s Offer Notice without
complying once again with all of the provisions of this Section 13.03 and
re-offering to assign this Lease to Landlord and pay such consideration or
grant such concession to Landlord.

Section 13.04 – Landlord
Consent. If Landlord shall not exercise its option to
terminate this Lease pursuant to Section 13.03(b) above, except as set forth in
Section 13.13, Landlord shall not unreasonably delay, condition or withhold its
consent to the proposed assignment or subletting referred to in Tenant’s Offer
Notice, provided that the following further conditions shall be fulfilled:

(a)           The Demised Premises shall not,
without Landlord’s prior consent, have been listed or otherwise publicly
advertised for assignment or subletting at a rental less than the Fixed Rent
and Additional Rent. However, this shall not be deemed to prohibit Tenant from
negotiating or consummating a sublease at a lower rental if Tenant shall first
have offered to sublet the space involved to Landlord for the same rent and
term by notice given with or after Tenant’s request for consent to the
subletting or assignment. Landlord may accept such offer within thirty (30)
days from receipt of such request for consent or twenty (20) days after receipt
of the offer, whichever is later;

(b)           Tenant shall not then be in default
hereunder beyond the time herein provided, if any, to cure such default;

(c)           The proposed assignee or subtenant
shall have a financial standing, be of a character, be engaged in a business,
and propose to use the Demised Premises in a manner consistent with the extent
of the obligations undertaken by the proposed assignee or subtenant;

(d)           No subletting shall end later than
one (1) day before the Expiration Date of this Lease or shall be for a term of
less than two (2) years unless it commences less than two (2) years before the
Expiration Date;

(e)           There should be no more than three
(3) subtenants in the Demised Premises;

(f)            Tenant shall reimburse Landlord on
demand for any actual costs that may be incurred by Landlord in connection with
said assignment or sublease, including, without limitation, the costs of making
investigations as to the acceptability of the proposed assignee or subtenant,
and legal costs incurred in connection with the 

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granting of any
requested consent; and

(g)           The proposed assignee or subtenant is
engaged in a business and the Demised Premises will be used in a manner, which
is limited to the Permitted Use.

Section 13.05 -
Attornment. Every subletting hereunder is subject to the
express condition, and by accepting a sublease hereunder each subtenant shall
be conclusively deemed to have agreed, that if this Lease should be terminated
prior to the Expiration Date or if Landlord should succeed to Tenant’s estate
in the Demised Premises, then at Landlord’s election the subtenant shall either
surrender the Demised Premises to Landlord within sixty (60) days of Landlord’s
request therefor, or attorn to and recognize Landlord as the subtenant’s
landlord under the sublease and the subtenant shall promptly execute and
deliver any instrument Landlord may request to evidence such attornment.

Section 13.06 –
Counterpart/Insurance.

(a)           Tenant shall furnish Landlord with a
counterpart (which may be a reproduced copy) of each sublease or assignment
made hereunder within ten (10) days after the date of its execution.

(b)           No sublease shall be valid, and no
subtenant shall take possession of the Demised Premises or any part thereof,
until there has been delivered to Landlord, both (i) an executed counterpart of
such sublease, and (ii) a certificate of insurance evidencing that (x) Landlord
and its designees are additional insureds under the insurance policies required
to be maintained by occupants of the Premises pursuant to Article 11, and (y)
there is in full force and effect, the insurance otherwise required by Article
11.

Section 13.07 – Tenant
Liability. Except where Landlord exercises its option under
Section 13.3(b) to sublet the entire Demised Premises, notwithstanding any
sublease or any assignment and assumption by the assignee of all or any part of
the obligations of Tenant hereunder, Tenant herein named, and each immediate or
remote successor in interest of Tenant named herein, shall remain liable
jointly and severally (as a primary obligor) with its assignee and subtenant
and all subsequent assignees and subtenants for the performance of Tenant’s
obligations hereunder, and, without limiting the generality of the foregoing,
shall remain liable to Landlord for all acts and omissions on the part of any
assignee and subtenant subsequent to it in violation of any of the obligations
of this Lease.

Section 13.08 -
Partnership Tenant. If at any time Tenant is a partnership,
the following shall apply:

(a)           the liability of each of the parties
comprising Tenant shall be joint and several;

(b)           each of the parties comprising Tenant
hereby consents to, and 

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agrees to be bound by,
any written instrument which may hereafter be executed, changing, modifying or
discharging this Lease, in whole or in part, or surrendering all or any part of
the Demised Premises to Landlord or renewing or extending this Lease and by any
notices, demands, requests or other communications which may hereafter be
given, by Tenant or by any of the parties comprising Tenant;

(c)           any bills, statements, notices,
demands, requests or other communications given or rendered to Tenant or to any
of the parties comprising Tenant shall be deemed given or rendered to Tenant
and to all such parties and shall be binding upon Tenant and all such parties;

(d)           if Tenant shall admit new partners,
all of such new partners shall, by their admission to Tenant, be deemed to have
assumed performance of all of the terms, covenants and conditions of this Lease
on Tenant’s part to be observed and performed;

(e)           Tenant shall give prompt notice to
Landlord of the admission of any partner or partners, and upon demand of
Landlord, shall cause each such partner to execute and deliver to Landlord an
agreement in form satisfactory to Landlord, wherein each such new partner shall
assume performance of all of the terms, covenants and conditions of this Lease
on Tenant’s part to be observed and performed (but neither Landlord’s failure
to request any such agreement nor the failure of any such new partner to
execute or deliver any such agreement to Landlord shall vitiate the provisions
of this Section 13.08;

(f)            on each anniversary of the
Commencement Date, Tenant shall deliver to Landlord a list of all partners
together with their current residential addresses;

(g)           For
so long as Tenant shall not be in default under the terms of this Lease, if any
partner in Tenant, as now or hereafter constituted, shall resign or retire from
Tenant, or shall die, then in any such event the equity partner so retiring, or
resigning or the estate of an equity partner or shareholder thereof who has
died, as the case may be, shall be released from any liability or
responsibility under this Lease from and after the date of such retirement,
resignation or death provided that only the first such equity partner or
shareholder resigning, retiring, or dying within any given calendar year shall
be so released in that calendar year, with any subsequent equity partner or
shareholder resigning, retiring or dying within said calendar year being released,
in chronological order, in the next-subsequent calendar year or calendar years.
Tenant shall give Landlord prompt notice of such resignation, retirement or
death; and

Section 13.09 - Profit.           If Tenant shall sublet the Demised
Premises to anyone for rents which for any period shall exceed the Fixed Rent
payable under this Lease for the same period, Tenant shall pay Landlord, as
Additional Rent hereunder, the amount of any rents, additional charges or other
consideration payable under the sublease to Tenant by the subtenant which is in
excess of the Fixed Rent and Additional Rent accruing during the term of the
sublease in respect of the Demised Premises 

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pursuant to the terms
hereof. The sums payable under this Section 13.09 shall be paid to Landlord as
Additional Rent as and when payable by the subtenant to Tenant.

Section 13.10 – 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 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.

Section 13.11 – Corporate
Reorganization. Notwithstanding the provisions of Section 13.10
hereof, without the consent of Landlord, this Lease may be assigned to (i) an
entity created by merger, reorganization or recapitalization of or with Tenant
or (ii) a purchaser of all or substantially all of Tenant’s assets; provided,
in the case of both clause (i) and clause (ii), that (A) Landlord
shall have received a notice of such assignment from Tenant, (B) the assignee
assumes by written instrument satisfactory to Landlord all of Tenant’s
obligations under this Lease, (C) such assignment is for a valid business
purpose and not to avoid any obligations under this Lease, and (D) the assignee
is a reputable entity of good character and shall have, immediately after
giving effect to such assignment, an aggregate net worth (computed in
accordance with GAAP) at least equal to the aggregate net worth (as so
computed) of Tenant immediately prior to such assignment or on the date of this
Lease, whichever is greater.

13.12 – Metropolitan
Transit Authority. Notwithstanding any provisions of this
Article to the contrary, without the consent of Landlord, Tenant may sublet, in
whole or in part, the Demised Premises to MTA and/or MTA Bus, provided Tenant
provides Landlord with a copy of the executed sublease. Sections 13.02,
13.04(b), 13.04(d), 13.05, 13.06, 13.07 and 13.09 of this Lease shall apply to
such sublease.

13.13 – Non-Compliance
with Article. In the event that (i) Landlord fails to
exercise any of its options under this Article 13 and (ii) Tenant fails to
execute and deliver the assignment or sublease to which Landlord consented
within forty-five (45) days after the giving of such consent, then, Tenant
shall again comply with all of the provisions and conditions of this Article 13
before assigning its interest in this Lease or subletting the Demised Premises.

ARTICLE 14

INDEMNIFICATION

Section
14.01 - Indemnity. Tenant shall indemnify, defend, save and
hold harmless Landlord and its affiliates, trustees, agents, members,
employees, officers, directors, successors and assigns (each, an “Indemnified
Party”) from and against any 

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and all liability
and damages and any and all injury, loss, claim, damage or suit of every kind
and nature, including Landlord’s reasonable counsel fees and disbursements, to
any person, firm, association or corporation or to any property, arising out of
or based upon, related to, or in any way connected with, a breach of Tenant’s
obligations under this Lease, the actions or omissions of Tenant or any Tenant
Party or the use or occupancy of the Demised Premises, except that Tenant shall
not indemnify Landlord for Landlord’s negligence or willful misconduct or the
negligence or willful misconduct of any Indemnified Party, or for any
Pre-Existing Environmental Condition in Article 10.

Section
14.02 - Notice of Proceedings. An Indemnified Party which
becomes entitled to indemnification under this Agreement shall promptly notify
Tenant of any claim or proceeding in respect of which it is to be indemnified. Such
notice shall be given as soon as reasonably practicable after the Indemnified Party
obligated to give such notice becomes aware of such claim or proceeding and
shall include a complete copy of all notices, pleadings and other papers
related thereto. Failure to give such notice shall not excuse an
indemnification obligation except to the extent failure to provide notice
adversely affects Tenant’s interests.

Section
14.03 - Conduct of Claim. Tenant shall assume the defense of
the claim or proceeding with counsel designated by Tenant; provided, however,
that the Indemnified Party shall have the right to participate fully in any
claim or proceeding and to retain its own counsel, but the fees and expenses of
such counsel will be at its own expense unless (i) Tenant shall have agreed to
the retention of such counsel for both Tenant and the Indemnified Party or (ii)
the named parties to any action or proceeding include the Tenant and the
Indemnified Party and representation of both such parties has been determined
in the reasonable and good faith judgment of either party to be inappropriate under
applicable standards of professional conduct due to actual or potential
conflicting interests between them. In the event the Tenant is defending or
prosecuting any claim or proceeding, (a) the Indemnified Party shall not admit
any liability with respect to, or settle, compromise or discharge such claim or
proceeding without Tenant’s prior written consent, and (b) the Indemnified
Party will agree to any settlement, compromise or discharge of the suit, action
or proceeding which the Tenant may recommend and which by its terms obligates
Tenant to pay the full amount of liability in connection with such claim or
proceeding; provided, however, that without the Indemnified Party’s consent,
which consent may not be unreasonably withheld or delayed, Tenant may only
consent to the entry of any judgment or enter into any settlement that does not
provide for injunctive or other non-monetary relief affecting the Indemnified
Party. If Tenant fails to assume the defense of a claim, the indemnification of
which is required under this Lease, the Indemnified Party may, at the expense
of Tenant, contest, settle, or pay such claim. Except as otherwise expressly
set forth herein, Tenant shall not compromise or settle a claim hereunder
without the prior written consent of the Indemnified Party

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ARTICLE 15

CONDEMNATION

Section 15.01 –
Condemnation/Notice. If Landlord or Tenant receives
written notice of a Taking
(hereinafter defined) or a proposed Taking, it shall promptly notify the other
thereof, but no such notice of intention shall confer any rights upon Tenant
under this Article, all of which rights shall come into effect only upon the
vesting of title in the Taking authority. As used herein, a “Taking” shall mean the
appropriation, condemnation or taking of all or any portion of the Demised Premises
by any governmental or public authority for public or quasi-public use under
any right of eminent domain, condemnation or other law, or the giving of a deed
in lieu thereof.

Section 15.02 –
Material Taking.

(a)           (i)            In
the event of a Taking of the entire Demised Premises, this Lease shall
automatically cease and terminate upon the date that title is vested in the
Taking authority and all Fixed Rent and Additional Rent shall be paid up to
that date. In the event of a Taking of the entire Demised Premises during the
Term, in addition to any award received by Landlord and in addition to all
other payments required to be made by Tenant hereunder, and in the event such
Taking is effected by the City of New York or any of its agencies or
instrumentalities, or by the MTA, or by New York State on behalf of the MTA,
Tenant shall pay Landlord an additional amount equal to twenty-five (25%)
percent of the award received by Landlord in the condemnation proceeding (which
award, for purposes of calculating the additional amount paid to Landlord,
shall not be reduced by such amount). Landlord and Tenant agree that this
additional amount represents Landlord’s recovery of its loss of business
opportunity and such amount is not a penalty.

(ii)         In the event of a Taking of less than
the entire Demised Premises, this Lease shall continue in full force and effect
as to the portion of the Demised Premises not Taken and Section 15.03 shall
apply.

(b)           In the event of a Taking, Landlord
and any Mortgagee designated by Landlord shall have the exclusive right to file
any claim or to commence any action or proceeding to collect any Proceeds
payable out of or in connection with such Taking, except for any separate award
to which Tenant may be entitled pursuant to Section 15.05, and Tenant and
everyone claiming by, under or through Tenant waives all right to assert any
claim against Landlord or the Taking authority in such proceeding. The term “Proceeds” shall mean any award,
settlement, compensation or proceeds payable by reason of or in connection with
any Taking, including the value of the interests of Landlord and Tenant in the
Demised Premises and this Lease, any Improvements made by Tenant and Landlord
respectively, the value of all awards for severance and indirect damage, and the
right to receive any advance payment or interest thereon. Tenant shall, at
Tenant’s own cost and expense, cooperate with Landlord and take all actions and
execute all documents reasonably required by Landlord or required by the Taking
authority to collect such Proceeds, and if Tenant shall fail or refuse to take
any act and/or execute any document which is reasonably required by Landlord or
required by the Taking authority to collect such Proceeds (or any part
thereof), then Tenant shall be 

 39
 

 

 

responsible to
Landlord for the sum of all Proceeds, including interest at the Default Rate,
and for all damages, expenses and fees incurred by Landlord as a result of
Tenant’s failure or refusal to act or execute any document as aforesaid,
including, but not limited to, attorneys’ fees and suspension of interest by
the Taking authority, which sums shall be Additional Rent under this Lease and
which Landlord may offset from any share of such Proceeds to which Tenant may
be entitled pursuant to Sections 15.02, 15.03 and 15.04. The provisions of this
Section are in addition to any other remedies available to Landlord.

(c)           In the event of a Taking of the
entire Demised Premises and a termination of this Lease, all Proceeds shall be
paid to Landlord who shall within forty-five (45) days thereafter (or within
thirty (30) days following any final determination in any arbitration
proceeding pursuant to Section 15.07 hereof, as hereinafter set forth) disburse
the net Proceeds of such Taking to Landlord and Tenant in proportion to their
interests in the Demised Premises, as follows:

(i)            to the Landlord for the value of the
Landlord’s interest in the Demised Premises, valuing the Demised Premises free
and clear of this Lease and at its highest and best use as of the date of the
Taking, except that consideration shall be given to this Lease to the extent it
is relevant in determining the highest and best use of the Demised Premises,
including Landlord’s reversionary interest, and any consequential damages,
including severance damages, out of which Landlord shall pay any sums due any
Mortgagee; and

(ii)           provided that no uncured Event of
Default has occurred which is then continuing and provided further that there
are at least two (2) years remaining in the Term on the date on which title to
the Demised Premises is vested in the Taking authority to Tenant for the value
of Tenant’s leasehold estate, giving consideration to the terms of this Lease,
as though there had been no Taking. Any dispute between Landlord and Tenant
concerning the pro rata portions of Proceeds
payable to Landlord and Tenant in accordance with clauses (i) and (ii) above
shall be promptly submitted to binding arbitration in accordance with Section
15.07 hereof.

Section 15.03 – Taking of Less Than Entire Demised
Premises.

(a)           If a Taking involves less than the
Entire Demised Premises, this Lease shall terminate as to the area so Taken
from and after the vesting of title in such Taking and shall continue as to the
remainder of the Demised Premises; provided, however, from and after the date
on which possession of the portion of the Demised Premises is Taken, the Tenant
shall proceed diligently and in good faith to close in and restore the
Improvements. The Fixed Rent shall be reduced as of the vesting date
proportionally to account for the area of the Improvements so taken. Notwithstanding
the foregoing, in the event of a taking of less than the Entire Demised
Premises, this Lease shall automatically terminate as to the area so taken by
or given to the Taking Authority and shall continue as to the remainder of the
Demised Premises. In the event of a Taking of less than the Entire Demised
Premises during the Term, in addition to any award 

 40
 

 

 

received by
Landlord and in addition to all other payments required to be made by Tenant
hereunder and in the event such Taking is effected by the City of New York or
any of its agencies or instrumentalities, or by the MTA, or by New York State
on behalf of the MTA,, Tenant shall pay Landlord an additional amount equal to
twenty-five (25%) percent of the award received by Landlord in the condemnation
proceeding (which award, for purposes of calculating the additional amount paid
to Landlord, shall not be reduced by such amount). Landlord and Tenant agree
that this additional amount represents Landlord’s recovery of its loss of
business opportunity and such amount is not a penalty. From and after the date
on which title the possession of the portion of the Demised Premises is Taken,
the Tenant shall proceed diligently and in good faith to close in and restore
the Improvements.

(b)           Landlord shall be entitled to receive
all Proceeds and Tenant shall have no part thereof or claim thereto nor shall
Tenant have any claim for the value of the portion of the leasehold estate so
Taken. Landlord shall pay all fees, costs and expenses of every character and
kind of Landlord incurred in connection with such Taking and obtaining the
Proceeds therefor.

Section 15.04 –
Temporary Taking. If possession of all or any portion
of the Demised Premises shall be Taken for occupancy for a limited period (a “Temporary Taking”), this Lease
shall continue in full force and effect and Tenant shall continue to pay in
full the Fixed Rent, Additional Rent and other charges herein reserved without
reduction or abatement. Landlord shall receive out of the Proceeds of such
Temporary Taking (and Tenant shall be credited with) an amount equal to the
total of the Fixed Rent, Additional Rent and other charges due to Landlord or
to be paid by Tenant under the terms of this Lease for the period of such
Temporary Taking (less any amounts theretofore paid by Tenant to Landlord) and
the balance thereof shall be divided equally between Landlord and Tenant.

Section
15.05 – Tenant’s Claim for Fixtures. In any condemnation
proceeding, Tenant may submit a separate claim against the Taking authority for
the value of Tenant’s trade fixtures, the cost of removal or relocation,
goodwill, inventory, equipment and going concern values if such separate claims
are allowable as such and, provided that such Proceeds shall not include an
amount of such claims of Tenant, such separate claims shall not reduce the
amount of Proceeds otherwise payable to Landlord.

(a)           Section 15.06 – Costs of Taking.
Landlord and Tenant shall be solely responsible for their respective legal,
appraisal, engineering and other fees, costs and expenses arising out of or in
connection with any claim allocable or attributable to any item which each is
permitted to separately claim under this Article 15; provided, however, that
the Landlord’s legal, appraisal, engineering and other fees and expenses
incurred in connection with the collection of any Proceeds pursuant to Section
15.02 shall be allocated and paid by Landlord and Tenant in proportion to the
amount of Proceeds disbursed to Landlord and Tenant respectively.

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ARTICLE 16

RIGHT TO INSPECT

Section
16.01 – Right to Inspect. Tenant shall permit Landlord or
Landlord’s agents to enter the Demised Premises at all reasonable hours and
upon reasonable notice to Tenant for the purpose of (i) inspecting the same;
(ii) confirming that Tenant is complying with terms of this Lease; (iii) making
repairs which Tenant neglects or refuses to make; (iv) exhibiting the Demised
Premises to prospective mortgagees; (v) exhibiting the Demised Premises to
brokers and prospective purchasers; and (vi) during the two (2) years preceding
the expiration of this Lease, exhibiting the Demised Premises to brokers and
prospective purchasers and lessees  (it
being understood that Landlord shall have no obligation to do any of the
foregoing acts); provided, in each and every case, Landlord shall use
commercially reasonable efforts not to unreasonably interfere with the conduct
of Tenant’s business at the Demised Premises.

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ARTICLE 17

[INTENTIONALLY OMITTED]

ARTICLE 18

DEFAULT PROVISIONS

Section
18.01 - Events of Default. If any one or more of the
following events (in this Lease sometimes called “Events of Default”)
shall happen:

(a)           (i)            if
default shall be made in the due and punctual payment of any Fixed Rent payable
under this Lease or any part thereof when and as the same shall become due and
payable, and such default shall continue for a period of thirty (30) days after
written notice thereof from Landlord to Tenant; provided, however, that such
thirty (30) day period shall be reduced to ten (10) days after the third (3rd)
default in any twelve (12) month period, and further reduced to five (5) days
if such default occurs four (4) or more times in any twelve (12) month period;

(ii)           if default shall be made in the due
and punctual payment of any Additional Rent or other charges payable under this
Lease or any part thereof when and as the same shall become due and payable,
and such default shall continue for a period of thirty (30) days after written
notice thereof from Landlord to Tenant;

(b)           if default shall be made by Tenant in
keeping, observing or performing any of the terms, covenants, agreements,
provisions, conditions or limitations contained in this Lease on Tenant’s part
to be kept, observed or performed, other than those referred to in the
foregoing subdivision (A) of this Section, which do not expose the Landlord to
criminal liability, and such default shall continue for a period of thirty (30)
days after written notice thereof from Landlord to Tenant, or in the case of
such a default or a contingency which cannot with due diligence and in good
faith be cured within thirty (30) days, and Tenant fails to proceed promptly
and with due diligence and in good faith to cure the same and thereafter to
prosecute the curing of such default with due diligence and in good faith (it
being intended that in connection with a default which does not expose Landlord
to criminal liability, and is not susceptible of being cured with due diligence
and in good faith within thirty (30) days, that the time of the Tenant within
which to cure the same shall be extended for such a period as may be necessary
for the curing thereof promptly with due diligence and in good faith);

(c)           if Tenant shall file a voluntary
petition in bankruptcy and shall be adjudicated a bankrupt or insolvent, or
shall file any petition or answer seeking any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under the
present or any future federal bankruptcy act or any other present or future
applicable federal, state or other statute or law, or shall seek or consent to
or acquiesce in the appointment of any trustee, receiver or liquidator of
Tenant or of all or any substantial part of its properties or of the Demised
Premises or of Tenant’s interest therein; or

 43
 

 

 

(d)           if within ninety (90) days after the
commencement of any proceeding against Tenant seeking any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under the present or any future federal bankruptcy act or any other
present or future applicable federal, state or other statute or law, such
proceeding shall not have been dismissed or if, within ninety (90) days after
the appointment, without the consent or acquiescence of Tenant, of any trustee,
receiver or liquidator of Tenant or of all or any substantial part of its
properties or of the Demised Premises or of Tenant’s interest therein, such
appointment shall not have been vacated or stayed on appeal or otherwise, or
if, within forty-five (45) days after the expiration of any such stay, such
appointment shall not have been vacated;

then and in any
such event Landlord at any time thereafter during the continuance of any such
Event of Default may give written notice to Tenant, specifying such Event of
Default or Events of Default and stating that this Lease and the term hereby
demised shall expire and terminate on the date specified in such notice, which
shall be at least thirty (30) days after the giving of such notice, and upon
the date specified in such notice, subject to the provisions of Section 18.03,
this Lease and the term hereby demised and all rights of Tenant under this
Lease, including all rights of renewal whether exercised or not, shall expire
and terminate, as if the date specified in such notice were the day herein
definitely fixed for the end and expiration of this Lease and the term thereof.

Section
18.02 - Bankruptcy. Any such proceeding or action involving
bankruptcy, insolvency, reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under the present or any future
federal bankruptcy act or any other present or future applicable federal, state
or other statute or law, above set forth in subdivisions (c) and (d) of Section
18.01 of this Article, shall be grounds for the termination of this Lease
pursuant to the terms, covenants, agreements, provisions, conditions and
limitations of this Article 18, only when such proceeding, action or remedy
shall be taken or brought by or against Tenant or any assignee of this Lease,
while such Tenant or such assignee is the owner of this Lease.

Section
18.03 – Termination of Lease. Upon any expiration or
termination of this Lease, Tenant shall quit and peacefully surrender the
Demised Premises to Landlord, and Landlord, upon or at any time after any such
expiration or termination, may without further notice, enter upon and reenter
the Demised Premises and possess and repossess itself thereof, by force,
summary proceedings, ejectment or otherwise, and may dispossess Tenant and
remove Tenant and all other persons and property from the Demised Premises and
may have, hold and enjoy the Demised Premises and the right to receive all
rental and other income of and from the same.

Section
18.04 – Reletting of Demised Premises. At any time or from
time to time after any such expiration or termination, Landlord may relet the
Demised Premises or any part thereof, in the name of Landlord or otherwise, for
such term or terms (which 

 44
 

 

 

may be greater or
less than the period which would otherwise have constituted the balance of the
Term of this Lease) and on such conditions (which may include concessions or
free rent) as Landlord, in its uncontrolled discretion, may determine and may
collect and receive the rents therefor. Landlord shall in no way 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.

Section
18.05 - Damages. No such expiration or termination of the
Lease shall relieve Tenant of its liabilities and obligations under this Lease,
and such liabilities and obligations shall survive any such expiration or
termination. In the event of any such expiration or termination, whether or not
the Demised Premises or any part thereof shall have been relet, Tenant shall
pay to Landlord a sum equal to the Fixed Rent and the Additional Rent required
to be paid by Tenant up to the time of such expiration or termination of this
Lease, and thereafter Tenant, until the end of what would have been the Term of
this Lease in the absence of such expiration or termination, shall be liable to
Landlord for, and shall pay to Landlord, as and for liquidated and agreed
current damages for Tenant’s default, at the election of Landlord, either:

(a)           (i)            the
equivalent of the amount of the Fixed Rent and the Additional Rent which would
be payable under this Lease by Tenant if this Lease were still in effect, less

(ii)           the net proceeds of any reletting
effected pursuant to the provisions of Section 18.04 hereof, after deducting
all Landlord’s expenses in connection with such reletting, including, without
limitation, all repossession costs, brokerage commissions, legal expenses,
reasonable attorneys’ fees, alteration costs, and expenses of preparation for
such reletting.

Tenant shall pay such
current damages (herein called “deficiency”) to Landlord quarterly on
the first day of each calendar quarter, commencing with the next succeeding
calendar quarter, and Landlord shall be entitled to recover from Tenant each
deficiency as the same shall arise. If the Demised Premises or any part thereof
be relet by the Landlord for the unexpired Term of this Lease, or any part
thereof, before presentation of proof of such liquidated damages to any court,
commission or tribunal, the amount of rent reserved upon such reletting shall, prima facie, be the fair and reasonable
rental value for the part or the whole of the premises so relet during the term
of the reletting.

Nothing
contained in this Section 18.05 shall limit or prejudice the right of the
Landlord to prove for and obtain as liquidated damages by reason of such
expiration or termination, an amount equal to the maximum allowed by any
statute or rule of law in effect at the time when, and governing the
proceedings in which, such damages are to be proved, whether or not such amount
be greater, equal to, or less than the amount of the sums referred to above.

 45
 

 

 

Section
18.06 – Tenant’s Waiver of Notice to Re-enter. Tenant hereby expressly
waives, so far as permitted by law, the service of any notice of intention to
enter or re-enter provided for in any statute, or of the institution of legal
proceedings to that end, and Tenant, for and on behalf of itself and all
persons claiming through or under Tenant (including but not limited to any
leasehold mortgagee or other creditor) also waives any and all right of
redemption or re-entry or re-possession or to redeem or to restore the
operation of this Lease in case Tenant shall be dispossessed by a judgment or
by warrant of any court or judge or in case of entry, re-entry or re-possession
by lessor or in case of any expiration or termination of this Lease. Landlord
and Tenant, so far as permitted by law, hereby waive trial by jury in any action,
proceeding or counterclaim brought by either of the parties hereto against the
other on any matters whatsoever arising out of, or in any way connected with
this Lease, including but not limited to, the relationship of Landlord and
Tenant, Tenant’s use or occupancy of the Demised Premises or any claim of
injury or damage. The terms “enter”, “re-enter”, “entry” or re-entry”, as used
in this Lease are not restricted to their technical legal meaning.

Section
18.07 – Threatened Breach. In the event of any breach or
threatened breach by Tenant of any of the terms, covenants, agreements,
provisions, conditions or limitations contained in this Lease, Landlord shall
be entitled to enjoin such breach or threatened breach and shall have the right
to invoke any right or remedy allowed at law or in equity or by statute or
otherwise as though entry, re-entry, summary proceedings, and other remedies
were not provided for in this Lease.

Section
18.08 – Remedies Cumulative. Each right or remedy of Landlord
provided for in this Lease shall be cumulative and shall be in addition to
every other right or remedy provided for in this Lease or now or hereafter
existing at law or in equity or by statute or otherwise, and the exercise or
the beginning of the exercise by Landlord of any one or more of the rights or
remedies provided for in this Lease or now or hereafter existing at law or in
equity or by statute or otherwise shall not preclude the simultaneous or later
exercise by Landlord of any or all other rights or remedies provided for in
this Lease or now or hereafter existing at law or in equity or by statute or
other law.

 46

 

 

ARTICLE 19

ATTORNEYS’ FEES

Section
19.01 – Attorneys’ Fees. If at any time there shall occur an
Event of Default hereunder, and if Landlord shall institute an action or
summary proceedings against Tenant based upon such Event of Default and prevail
in such action or summary proceeding, then Tenant shall reimburse Landlord for
the expenses of reasonable and actual attorneys’ fees and disbursements
incurred by Landlord. The amount of such expenses shall be deemed to be “Additional
Rent” hereunder and shall be due from Tenant on demand from Landlord.

ARTICLE 20

WAIVER OF REDEMPTION; COUNTERCLAIM; TRIAL BY JURY

Section
20.01 - Waiver. Tenant hereby expressly (i) waives any and
all rights of redemption granted by or under any present or future laws in the
event of Tenant being evicted or dispossessed for any cause, or in the event of
Landlord obtaining possession of the Demised Premises by reason of the
violation by Tenant of any of the covenants and conditions of this Lease or
otherwise; (ii) waives all rights to stay summary proceedings except in
connection with a “Yellowstone” injunction; and (iii) agrees that it shall not
interpose any counterclaim in any summary proceeding or any action based on
non-payment of Fixed Rent, Additional Rent or any other payments or charges
required to be made by Tenant to Landlord. Nothing contained herein shall
prevent Tenant from asserting any such counterclaim as a cause of action in a
separate action or proceeding, but Tenant shall not seek a consolidation or
joint trial of such separate action or proceeding with any summary proceeding
or other action or proceeding commenced by Landlord for non-payment of Fixed
Rent, Additional Rent or any other payments or charges required to be made by
Tenant to Landlord. Landlord and Tenant hereby waive trial by jury in any
action, proceeding or counterclaim brought by either of them against the other
with respect to any matters arising out of or connected with this Lease, the
relationship of Landlord and Tenant, Tenant’s use or occupancy of the Demised
Premises, and/or any claim of injury or damage and any emergency statutory or
any other statutory remedy.

ARTICLE 21

NO WAIVER

Section
21.01 – No Waiver. No act or thing done by Landlord or
Landlord’s agents during the Term hereby demised shall be deemed an acceptance
of a surrender of the Demised Premises, and no agreement to accept such
surrender shall be valid unless in writing signed by Landlord. The failure of
Landlord or Tenant to seek redress for violation of, or to insist upon the
strict performance of, any covenant or condition of this Lease shall not
prevent a subsequent act, which would have originally constituted a violation,
from having all the force and effect of an original violation. The receipt by
Landlord of Fixed Rent or Additional Rent with knowledge of the breach of any
covenant 

 47
 

 

 

of this Lease shall not be deemed a waiver of such
breach. No provision of this Lease shall be deemed to have been waived by
Landlord or Tenant unless such waiver is in writing signed by the Party against
whom such waiver is to be enforced.

ARTICLE 22

END OF TERM

Section
22.01 – Surrender of Demised Premises.

(a)           Tenant shall, at the expiration or
other termination of this Lease quit and surrender to Landlord the Demised
Premises, broom clean and in good condition and repair, reasonable wear and
tear and casualty excepted, and the roof shall be free of leaks. Tenant shall
surrender all keys for the Demised Premises to Landlord at Landlord’s office,
and shall inform Landlord of all combinations of locks, safes, vaults, alarms
and other encoded devices or facilities if any, located in the Demised Premises.
If the last day of the Term shall fall on a Saturday, Sunday or legal holiday,
the Term of this Lease shall expire on the business day immediately preceding
such date.

(b)           All personal property, furniture,
furnishings and trade fixtures furnished by or at the expense of Tenant, other
than those affixed to the Demised Premises so that they cannot be removed
without damage, shall remain the property of Tenant and may be removed by
Tenant from time-to-time prior to the expiration or other termination of this
Lease. Tenant shall notify Landlord in writing not less than sixty (60) days
prior to the expiration of the Term specifying any such items of property which
Tenant does not wish to remove. If, within thirty (30) days after the service
of such notice, Landlord shall request Tenant to remove any of said items,
Tenant shall, at Tenant’s expense, remove said items prior to the expiration of
the Term.

(c)           In any case where Tenant removes any
property or Alterations pursuant to Sections 22.01(a) or 22.01(b), or
otherwise, Tenant shall immediately repair all structural damage caused by said
removal and shall restore the Demised Premises to good condition at Tenant’s
expense, and if Tenant fails to do so, Landlord may do so at Tenant’s cost and
Tenant shall reimburse Landlord therefor upon demand for reasonable and actual
costs incurred by Landlord.

(d)           Upon failure of Tenant to remove any
property in accordance with Sections 22.01(a) and 22.01(b), or upon failure of
Tenant to notify Landlord of any property it does not wish to remove from the
Demised Premises in accordance with Section 22.01(b), then, as to such
property, upon termination of this Lease, Landlord may, at Tenant’s expense:
(i) remove all such property which Landlord may require Tenant to remove
pursuant  to Sections 22.01(a) and
22.01(b), (ii) cause the same to be placed in storage, and (iii) repair any
damage caused by said removal. Tenant shall, upon demand, reimburse Landlord
for all of the aforesaid expenses.

(e)           [Intentionally Omitted].

 48
 

 

 

(f)            Notwithstanding anything to the
contrary contained in this Section 22.01, any items of property or Alterations
not removed by Tenant may, at the election of Landlord, be deemed to have been
abandoned by Tenant, and Landlord may retain and dispose of said items without
any liability to Tenant and without accounting to Tenant for the proceeds
thereof.

Section
22.02 - Ownership of Improvements. Upon the termination of
this Lease, whether by expiration of the Term or by reason of default on the
part of Tenant, or for any other reason whatsoever, all Improvements then
located on the Premises including all affixed lighting fixtures, heating,
ventilating and air conditioning equipment, pipes, ducts, conduits, wiring,
paneling, partitions, railings, mezzanine floors, galleries and the like,
shall, except as provided otherwise in Section 8.01, remain upon and be
surrendered with the Demised Premises as a part thereof and shall then merge
with the freehold estate and become the property of Landlord as a part of the
realty, free and clear of any liens, encumbrances or burdens placed upon Tenant’s
leasehold estate.

Section
22.03 – Holdover.

(a)           If the Demised Premises shall not be
surrendered as and when aforesaid and in the condition required hereunder,
Tenant shall pay to Landlord as use and occupancy for each month or fraction
thereof during which Tenant continues to occupy the Demised Premises from and
after the Expiration Date (the “Continued
Occupancy Period”), an amount of money (the “Occupancy Payment”) equal to one
hundred fifty (150%) percent of one-twelfth (1/12th) of the aggregate Fixed Rent and
Additional Rent paid or payable by Tenant during the first twelve (12) months
immediately preceding such holding over. Tenant shall make the Occupancy
Payment, without notice or previous demand therefor, on the first day of each
and every month during the Continued Occupancy Period.

(b)           The receipt and acceptance by Landlord
of the Occupancy Payment shall not be deemed a waiver or acceptance by Landlord
of Tenant’s breach of Tenant’s covenants and agreements under this Article 22,
or a waiver by Landlord of Landlord’s right to institute any summary holdover
proceedings against Tenant, or a waiver by Landlord of Landlord’s rights to
enforce any of Landlord’s rights or pursue any of Landlord’s remedies against
Tenant in such event other than the payment of Fixed Rent as provided for in
this Lease or under law. This Section shall be deemed to be an agreement
expressly providing otherwise within the meaning of Section 232-c of the Real
Property Law of the State of New York and any successor law of like import.

(c)           No holding over by Tenant shall be
deemed nor operate as an extension of the Term of this Lease.

Section
22.04 – Survival. Tenant’s obligation to observe or perform
each and every one of the covenants set forth in this Article shall survive the
expiration or other termination of the Term.

 49
 

 

 

ARTICLE 23

BROKER

Section
23.01 - Broker. Tenant and Landlord each represent that to
the other that it has dealt with no broker in connection with this Lease other
than Lighthouse Real Estate Management, LLC (“Broker”). Landlord shall
pay Broker any commission earned pursuant to a separate agreement between
Landlord and Broker. Tenant hereby agrees to indemnify and hold Landlord
harmless of and from any and all losses, costs, damages or expense (including,
without limitation, attorneys’ fees and disbursements) incurred by Landlord by
reason of any claim of or liability to any broker, other than the Broker, who
claims to have dealt with Tenant in connection with this Lease, which indemnity
shall survive the expiration or other termination of this Lease.

ARTICLE 24

QUIET ENJOYMENT

Section
24.01 – Quiet Enjoyment. Landlord covenants that if and so
long as Tenant pays the Fixed Rent and Additional Rent and other charges
reserved by this Lease, and performs all the terms, covenants and conditions of
this Lease on the part of Tenant to be performed, Tenant shall quietly enjoy
the Demised Premises subject, however, to the terms of this Lease.

ARTICLE 25

NON-LIABILITY OF LANDLORD

Section
25.01 – Non-Liability of Landlord.

(a)           Landlord and Landlord’s affiliates,
trustees, agents, members, employees, officers, directors, successors and
assigns shall not be liable for, and Tenant waives all claims for, loss or
damage to Tenant’s business or damage to person or property sustained by Tenant
resulting from any accident or occurrence, including, but not limited to,
claims for damage resulting from: (i) any equipment or appurtenances becoming
out of repair; (ii) injury done or occasioned by wind, rain, fire, storm or
other occurrence of nature; (iii) any defect in or failure of plumbing, heating
or air conditioning equipment, electric wiring or installation thereof, gas,
water, or steam pipes, stairs, porches, railings or walks; (iv) broken glass;
(v) the backing up of any sewer pipe or downspout; (vi) the bursting, leaking
or running of any tank, tub, washstand, water closet, waste pipe, drain or
other pipe or tank in, upon or about the Demised Premises; (vii) the escape of
steam or hot water; (viii) water, snow or ice being upon or coming through the
roof, skylight, trapdoor, stairs, doorways, windows, walks or any other place
upon or near the Demised Premises or otherwise; (ix) the falling of any
fixture, plaster, tile or stucco; and (x) any act, omission or negligence of
Tenant, any Tenant Party or of any other persons or occupants of the
Improvements or of adjoining or contiguous buildings or improvements or of
owners of adjacent or contiguous property.

(b)           Landlord shall be under no personal
liability with respect to its 

 50
 

 

 

obligations under this Lease. Tenant shall look solely
to the equity of the Landlord in the Land and Improvements constituting the
Demised Premises for the satisfaction of Tenant’s remedies, and in no event
shall Tenant attempt to secure any personal judgment against any individual or
any member, principal, partner, employee, officer, director or agent of
Landlord by reason of such default by Landlord.

(c)           The word “Landlord” as used herein
means only the owner in fee for the time being of the Demised Premises, and in
the event of any sale of the Demised Premises, Landlord shall be and hereby is
entirely freed and relieved of all covenants and obligations of Landlord
hereunder and it shall be deemed and construed without further agreement
between the parties or between the parties and the purchaser of the Demised
Premises, that such purchaser has assumed and agreed to carry out any and all
covenants and obligations of Landlord hereunder.

ARTICLE 26

APPLICABLE LAW AND CONSTRUCTION

Section
26.01 – Applicable Law and Construction. The laws of the
State of New York shall govern the validity, performance and enforcement of
this Lease without giving effect to any principle of such law as would result
in the selection or application of law of any other jurisdiction. The
invalidity or unenforceability of any provision of this Lease shall not affect
or impair any other provision. The headings of the several articles and
sections contained herein are for convenience only and do not define, limit or
construe the contents of such articles or sections. Whenever herein the
singular number is used, the same shall include the plural, and the neuter
gender shall include the masculine and feminine genders. Neither this Lease nor
any provision hereof may be changed, waived, discharged or terminated orally,
but only by an instrument in writing signed by the party against whom
enforcement of the change, waiver, discharge or termination is sought. This
Lease shall be given a fair and reasonable construction in accordance with the
intentions of the parties hereto, and without regard to or aid of canons
requiring construction against the party drafting this Lease.

 51
 

 

 

ARTICLE 27

BINDING EFFECT OF LEASE

Section
27.01 - Binding Effect of Lease. The covenants, agreements
and obligations contained in this Lease shall, except as herein otherwise
provided, extend to, bind and inure to the benefit of the parties hereto and
their respective successors and permitted assigns. Each covenant, agreement,
obligation or other provision herein contained shall be deemed and construed as
a separate and independent covenant of the party bound by, undertaking or
making the same, not dependent on any other provision of this Lease unless
otherwise expressly provided.

ARTICLE 28

NOTICES

Section
28.01 - Notice. All notices to be given hereunder shall be in
writing and given by hand delivery, by certified or registered mail, or by
recognized overnight courier (e.g. Fed Ex) addressed to either of the parties
at the address listed below or at any other subsequent mailing address they may
indicate by written notice. Any notice given hereunder by mail shall be deemed
delivered upon receipt or rejection of delivery by the addressee.

	
  If to Landlord:

  	
  Mr. Jerome Cooper

  
	
   

  	
  444 Merrick Road, Suite 370

  
	
   

  	
  Lynbrook, New York 11563

  
	
   

  	
   

  
	
  With a copy to:

  	
  Ruskin Moscou Faltischek, P.C.

  
	
   

  	
  1425 Reckson Plaza, East Tower, 15th Floor

  
	
   

  	
  Uniondale, New York 11556-1425

  
	
   

  	
  Attn: Chairman, Real Estate Department

  
	
   

  	
   

  
	
  If to Tenant:

  	
  Assistant
  Commissioner for Acquisitions,

  and Construction Services

  
	
   

  	
  Department of Citywide Administrative Services

  
	
   

  	
  Division of Real Estate Services

  
	
   

  	
  1 Centre Street, 20th Floor North

  
	
   

  	
  New York, New York 10007

  
	
   

  	
   

  
	
  And

  	
  Metropolitan Transportation Authority

  
	
   

  	
  347 Madison Avenue

  
	
   

  	
  New York, New York 10017

  
	
   

  	
  Attn: Director of Real Estate

  
	
   

  	
   

  
	
  With a copy to:

  	
  Office of General Counsel

  
	
   

  	
  Metropolitan Transportation Authority

  
	
   

  	
  347 Madison Avenue

  
	
   

  	
  New York, New York 10017

  

 

 52
 

 

 

ARTICLE 29

FEE MORTGAGES

Section
29.01 – Landlord’s Right to Mortgage. Nothing herein
contained shall limit Landlord’s right to place any mortgage on the interest of
Landlord in the Demised Premises including, without limitation, any
modifications, consolidations, extensions, renewals and replacements thereof (“Mortgage”).

Section
29.02 – Mortgagee’s Right to Cure. If any act or omission of
Landlord would give Tenant the right, immediately or after lapse of a period of
time, to cancel or terminate this Lease, or to abate the payment of rent or to
claim a partial or total eviction, Tenant shall not exercise such right (a)
until it has given written notice of such act or omission to Landlord and the
holder of each Mortgage; provided the name and address of the holder of any
such Mortgage shall previously have been furnished to Tenant, and (b) until
thirty (30) days shall have elapsed following the giving of such notice if the
same can be remedied within such thirty (30) day period or if the same cannot
be remedied within thirty (30) days until a reasonable period of time has
elapsed to cure provided such cure has commenced within the thirty (30) day
period, and, further, provided the holder of such Mortgage shall with due
diligence continue to remedy such act or omission.

Section
29.03 – Tenant’s Attornment. If the holder of any Mortgage,
or any designee of any such holder, shall succeed to the rights of Landlord
under this Lease, whether through possession or foreclosure action or delivery
of a new lease or deed, then Tenant shall automatically attorn to and recognize
such party so succeeding to Landlord’s rights (“Successor Landlord”) as
Tenant’s landlord under this Lease and shall promptly execute and deliver any
instrument (“Attornment Agreement”) that such Successor Landlord may
reasonably request to evidence such Attornment. Upon such Attornment, this
Lease shall continue in full force and effect as a direct lease between the
Successor Landlord and Tenant upon all of the terms, conditions and covenants
as are set forth in this Lease, except that the Successor Landlord shall not
(a) be liable for any previous act or omission of Landlord under this Lease;
(b) be subject to any offset, not expressly provided for in this Lease, which
theretofore shall have accrued to Tenant against Landlord; (c) be bound by any
previous modification of this Lease or by any previous prepayment of more than
one (1) month’s rent, unless such modification or prepayment shall have been
expressly approved in writing by the holder of the Mortgage; or (d) be
obligated to make any improvements to, or perform any work at, or furnish any
services to, the Demised Premises.

Section
29.04 – Priority of Lease. This Lease and all rights of
Tenant hereunder are and shall be subject and subordinate to every underlying
lease, the rights of the overlandlord or overlandlords under each underlying
lease, all Mortgages heretofore or 

 53
 

 

 

hereafter placed on or affecting any underlying lease,
alone or with other property, and to all advances heretofore or hereafter made
under such leasehold mortgage, and to the lien of all renewals, modifications,
consolidations, replacements, substitutions, spreaders, additions and
extensions of any such leasehold mortgage, and (b) any Mortgage now or
hereafter affecting the Demised Premises or any part or parts of such real
property, or such real property and other property, and to each advance made or
hereafter to be made under any such Mortgage and to all renewals,
modifications, consolidations, replacements, substitutions, spreaders,
additions and extensions of any such underlying lease or leases and/or
Mortgages. In confirmation of such subordination, Tenant shall execute and deliver
promptly any certificate reasonably approved by Tenant’s counsel that Landlord
or its successors in interest may reasonably request.

ARTICLE 30

ESTOPPEL CERTIFICATES

Section
30.01 – Tenant’s Estoppel Certificate. Tenant shall, upon not
less than fifteen (15) days’ prior written request from Landlord, execute and
deliver to Landlord a statement certifying that this Lease is unmodified and in
full force and effect (or if there have been modifications, that the same is in
full force and effect as so modified) and stating whether there are any
defaults under this Lease of which Tenant has actual knowledge and specifying
such defaults, if any, and stating such other factual information which
Landlord reasonably requests.

Section
30.02 – Landlord’s Estoppel Certificate. Landlord shall, upon
not less than fifteen (15) days’ prior written request from Tenant, execute and
deliver to Tenant a statement certifying that this Lease is unmodified and in
full force and effect (or if there have been modifications, that the same is in
full force and effect as so modified) and stating whether there are any
defaults under this Lease of which Landlord has actual knowledge and specifying
such defaults, if any, and stating such other factual information which Tenant
reasonably requests.

ARTICLE 31

REPRESENTATIONS

Section
31.01 – Tenant’s Representations. Tenant represents and
warrants that:

(a)           Tenant is a municipal corporation
duly organized, validly existing and in good standing under the laws of the
State of New York and has all requisite power and authority to own and operate
its properties, to carry on its business as now conducted and to execute,
deliver and perform this Lease. The Lease has been duly authorized by all
necessary action on the part of the Tenant.

(b)           The execution, delivery and
performance of the Lease and the consummation of the transactions contemplated
hereby will not result in violation of or be in conflict with or constitute a
default under any term or provision of Tenant’s 

 54
 

 

 

governing organization documents or under any term or
condition of any contract, agreement, lease or instrument to which Tenant is a
party or by which Tenant is bound or any term of any judgment, decree, statute,
rule, regulation, ordinance, franchise, certificate, permit or the like
applicable to the Tenant.

(c)           There is no action, suit, proceeding
or investigation pending or threatened or any basis therefor known to Tenant
which would question the validity of any of the foregoing representations or
the validity of this Lease.

The foregoing representations and warranties
shall be deemed made as of the date hereof and as of the Commencement Date.

Section
31.02 – Landlord’s Representations. Landlord represents and
warrants that:

(a)           Landlord is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New York and has all requisite power and authority to own and operate
properties, to carry on its business as now conducted, and to execute, deliver
and perform this Lease. The Lease has been duly authorized by all necessary
action on the part of the Landlord.

(b)           The execution, delivery and
performance of the Lease and the consummation of the transactions contemplated
hereby and thereby will not result in violation of or be in conflict with or constitute
a default under any term or provision of the Certificate of Incorporation or
By-Laws of the Landlord or any term of any judgment, decree, statute, rule,
regulation, ordinance, franchise, certificate, permit or the like applicable to
the Landlord.

(c)           There is no action, suit, proceeding
or investigation pending or threatened or any basis therefor known to Landlord
which would question the validity of any of the foregoing representations or
the validity of this Lease.

(d)           The shareholder of the Landlord is
Green Bus Lines, Inc. and the officers of the Landlord are as follows:  Jerome Cooper, President; Stephen Eagar, Vice
President; and John Brettschneider, Secretary and Treasurer.

The foregoing
representations and warranties shall be deemed made as of the date hereof and
as of the Commencement Date.

 55

 

 

ARTICLE 32

MISCELLANEOUS

Section
32.01 - Taxes. Tenant shall be responsible for any taxes,
including, but not limited to, New York State transfer taxes, payable by reason
of the execution of this Lease. Landlord shall complete and sign any required
tax return.

Section 32.02 –
Venue; Service of Process. Landlord and Tenant and any
subtenant under this Lease, hereby expressly consent to the jurisdiction of the
Supreme Court of the County of Queens (or any successor thereto), the Supreme
Court of the State of New York and the United States District Court with
respect to any action or proceeding between Landlord and Tenant or such party
with respect to this Lease or any rights or obligations of either party
pursuant to or in connection with this Lease, and each of such subtenant,
Landlord and Tenant agree that venue shall lie in Queens County. Tenant and any
subtenant further waive any and all rights to commence any such action or
proceeding against Landlord before any other court. Without limiting any other
methods of obtaining jurisdiction, personal jurisdiction of the Tenant in any
action or proceeding may be obtained within and without the jurisdiction of any
court located in the State of New York, and that process or notice of motion or
other application in connection with such action or proceeding may be served
upon the Tenant by registered or certified mail at the last known address of
the Tenant, whether such address be within or without the jurisdiction of any
such court, and service shall be deemed complete three (3) business days after
when mailed even if delivery is refused by the addressee.

Section 32.03 –
Lease Not an Offer. The submission of this Lease to
Tenant shall not be construed as an offer, nor shall Tenant have any rights
with respect thereto or the Demised Premises unless and until Landlord shall
execute a counterpart of this Lease and deliver the same to Tenant. Until such
execution and delivery, any action taken or expense incurred by Tenant in
connection with this Lease or the Demised Premises shall be solely at Tenant’s
own risk and account.

Section
32.04 - Memorandum of Lease. This Lease shall not be
recorded by Landlord or Tenant. At the request of either party, Landlord and
Tenant shall execute and deliver to the other party a short form memorandum of
lease in form for recording. Such memorandum of lease shall not set forth any
of the financial terms of this Lease and shall set forth the Initial Term of
this Lease and shall provide that the memorandum of lease shall automatically
expire at the Expiration Date of the Term.

Section
32.05 – No Waiver. Except as otherwise expressly provided in
this Lease, the failure of Landlord to enforce its rights for violation of, or
to insist upon the strict performance of any covenant, agreement, term, provision
or condition of this Lease, or any of the rules and regulations, shall not
constitute a waiver thereof, and Landlord shall have all remedies provided
herein and by applicable law with respect to any subsequent act which would
have originally constituted a violation. The receipt by Landlord or the payment
by Tenant, as the case may be, of rent with knowledge of the 

 56
 

 

 

breach of any covenant, agreement, term, provision or
condition of this Lease shall not be deemed a waiver of such breach. Except as
otherwise expressly provided in this Lease, no provision of this Lease shall be
deemed to have been waived by Landlord unless such waiver be in a writing
signed by the party against whom enforcement shall be enforced. The remedies
provided in this Lease shall be cumulative and shall not in any way abridge,
modify or preclude any other rights or remedies to which Landlord may be
entitled under this Lease, at law or in equity.

Section 32.06 –
Landlord’s Consent. In any instance in which Landlord’s
consent, approval or other action or exercise of judgment or discretion shall
be made or shall be required by this Lease, or otherwise requested by Tenant,
and Tenant disputes Landlord’s reasonableness in granting, exercising, delaying
or withholding the same, Tenant in no event shall be entitled to make, nor
shall Tenant make, any claim for, and Tenant hereby waives, any claim for
damages or any remedy not specifically authorized herein; nor shall Tenant
claim any damages by way of setoff, counterclaim or defense but Tenant’s sole
remedy shall be an action or proceeding to enforce any such provision, or for
specific performance or declaratory judgment.

Section
32.07 – Counterparts. This Lease may be executed in multiple
counterparts, each of which shall be an original, and all of which shall
constitute one and the same instrument.

ARTICLE 33

ROOF RIGHTS; AIR RIGHTS

Section
33.01 – Roof Rights. Provided that Landlord does not
interfere with Tenant’s use of the Demised Premises, Landlord shall retain
rights to utilize the roof and/or to lease rights to utilize the roof for the
installation, relocation or repair of transmitting/receiving antennae. Landlord
shall require Landlord’s contractors or agents which perform work on the
Demised Premises regarding the installation, relocation or repair of the
antennae to maintain insurance in a form and amount as are commonly maintained
for such work in cases of properties that are similarly situated, and further
provided that Tenant, MTA and MTA Bus are named as additional insureds, as
their interest may appear (during the Term of this Lease) on insurance policies
maintained by those contractors or agents which perform work on the Demised
Premises regarding the installation, relocation or repair of the antennae.
Landlord shall, at its expense, be responsible for obtaining all permits from
all applicable agencies in connection with utilization of the roof. Tenant
shall cooperate with Landlord in performing any alterations required to permit
use of the roof by Landlord. Landlord shall be responsible to make any roof
repairs necessitated by Landlord’s use of the roof. If it is reasonably
determined by the Tenant that Landlord’s antennae interferes with Tenant’s
Permitted Use of the Demised Premises, Landlord shall relocate the antennae within
a reasonable time after being notified by Tenant.

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Section
33.02 – Air Rights.

(a)           Landlord shall retain air rights and
transferable development rights (collectively “Air Rights”) to the Demised
Premises. Subject to the provisions of this Section 33.02 Landlord may transfer
any and all Air Rights, either to a non-related party or an affiliate, provided
Landlord’s affiliate is an adjoining property owner (if the adjoining ownership
requirement is then existing under the Zoning Resolution of the City of New
York) and further provided that the offer to purchase the Air Rights is a bona
fide offer. Prior to transferring any Air Rights, Landlord shall transmit a
written notice to Tenant (the “Air Rights Request Notice”) setting forth the
material terms of the proposed transfer (the “Material Terms”), no later than
forty-five (45) days prior to the effective date of such transfer. Tenant may
by written notice to Landlord (the “Air Rights Response Notice”) within
forty-five (45) days of receipt of the Air Rights Request Notice  elect to either (i) approve the transfer,
(ii) purchase the Air Rights on the Material Terms, (iii) terminate the Lease
or (iv) disapprove the transfer, in which event Tenant, contemporaneously with
the transmittal of the Air Rights Response Notice, shall pay Landlord an amount
equal to the Air Rights Payment (as hereinafter defined). In the event Tenant
elects either (ii) or (iii) above, Landlord by written notice (the “Air Rights
Withdrawal Notice”) transmitted within thirty (30) days of Landlord’s receipt
of the Air Rights Response Notice, may withdraw the Air Rights Request Notice
and Tenant shall have no right to acquire the Air Rights or terminate the
Lease, as the case may be. In the event Tenant elects (ii) above, and Landlord
does not transmit an Air Rights Withdrawal Notice within the required time
period, Tenant may assign its right to acquire the Air Rights to the New York
City Economic Development Corporation (“EDC”).

(b)           The Air Rights Payment shall be the
amount equal to the consideration stated in the Air Rights Request Notice
multiplied by an amount equal to the Prime Rate plus 3%, payable monthly for
the balance of the Term and all Renewal Terms, which Air Rights Payment shall
be increased in the same percentage and contemporaneously with the increased
Fixed Rent under Section 3.01. If Tenant does not respond to Landlord’s Air
Rights Request Notice within forty-five (45) days of Tenant’s receipt of the
Air Rights Request Notice, Tenant shall be deemed to have approved the Transfer.
Landlord shall not seek Tenant’s approval for the transfer of Air Rights for
the first five (5) years of the Term and for the first two (2) years of each
Renewal Term. Landlord is permitted to transfer Air Rights during the last five
(5) years of the last Renewal Term without seeking Tenant’s approval. If a
Renewal Option is not exercised, Landlord shall not be required to seek Tenant’s
approval to transfer Air Rights. Under no circumstances will the use of any Air
Rights by Landlord or its transferee interfere with the Tenant’s current
operations.

ARTICLE 34

INVESTIGATIONS

Section
34.01 – Cooperation. The parties to this agreement agree to
cooperate fully and faithfully with any investigation, audit or inquiry
conducted by a State of New York (State) or City of New York (City)
governmental agency or authority that is empowered directly or by designation
to compel the attendance of witnesses and to examine witnesses under oath, or
conducted by the Inspector General of a 

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governmental
agency that is a party in interest to the transaction, submitted bid, submitted
proposal, contract, lease, permit, or license that is the subject of the
investigation, audit or inquiry.

Section
34.02 - Testimony

(a)           If any person who has been advised
that his or her statement, and any information from such statement, will not be
used against him or her in any subsequent criminal proceeding refuses to
testify before a grand jury or other governmental agency or authority empowered
directly or by designation to compel the attendance of witnesses and to examine
witnesses under oath concerning the award of or performance under any
transaction, agreement, lease, permit, contract, or license entered into with
the City, the State, or any political subdivision or public authority thereof,
or the Port Authority of New York and New Jersey, or any local development
corporation within the City, or any public benefit corporation organized under
the laws of the State of New York, or;

(b)           If any person refuses to testify for
a reason other than the assertion of his or her privilege against
self-incrimination in an investigation, audit or inquiry conducted by a City or
State governmental agency or authority empowered directly or by designation to
compel the attendance of witnesses and to take testimony under oath, or by the
Inspector General of the governmental agency that is a party in interest in,
and is seeking testimony concerning the award of, or performance under, any
transaction, agreement, lease, permit contract, or license entered into with
the City, the State, or any political subdivision thereof or any local
development corporation within the City, then;

Section 34.03 – Failure to Testify.
The commissioner or agency head whose agency is a party in interest to the
transaction, submitted bid, submitted proposal, contract, lease, permit, or
license shall convene a hearing, upon not less than five (5) days written
notice to the parties involved to determine if any penalties should attach for
the failure of a person to testify.

Section
34.04 - Penalties. The penalties which may attach after a
final determination by the commissioner or agency head may include but shall
not exceed:

(a)           The disqualification for a period not
to exceed five (5) years from the date of an adverse determination for any
person, or any entity of which such person was a member at the time the
testimony was sought, from submitting bids for, or transacting business with,
or entering into or obtaining any contract, lease, permit or license with or
from the City; and/or

(b)           The cancellation or termination of
any and all such existing City contracts, leases, permits or licenses that the
refusal to testify concerns and that have not been assigned as permitted under
this agreement, nor the proceeds of which pledged, to an unaffiliated and
unrelated institutional lender for fair value prior to the issuance of the 

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notice scheduling the
hearing, without the City incurring any penalty or damages on account of such
cancellation or termination; monies lawfully due for goods delivered, work
done, rentals, or fees accrued prior to the cancellation or termination shall
be paid by the City.

Section
34.05 – Agency Considerations. The commissioner or agency
head shall consider and address in reaching his or her determination and in assessing
an appropriate penalty the factors in paragraphs (a) and (b) below. He or she
may also consider, if relevant and appropriate, the criteria established in
paragraphs (c) and (d) below in addition to any other information which may be
relevant and appropriate:

(a)           The party’s good faith endeavors or
lack thereof to cooperate fully and faithfully with any governmental
investigation or audit, including but not limited to the discipline, discharge,
or disassociation of any person failing to testify, the production of accurate
and complete books and records, and the forthcoming testimony of all other
members, agents, assignees or fiduciaries whose testimony is sought.

(b)           The relationship of the person who
refused to testify to any entity that is a party to the hearing, including, but
not limited to, whether the person whose testimony is sought has an ownership
interest in the entity and/or the degree of authority and responsibility the
person has within the entity.

(c)           The nexus of the testimony sought to
the subject entity and its contracts, leases, permits or licenses with the
City.

(d)           The effect a penalty may have on an
unaffiliated and unrelated party or entity that has a significant interest in
an entity subject to penalties under 1.4 above, provided that the party or
entity has given actual notice to the commissioner or agency head upon the
acquisition of the interest, or at the hearing called for in 1.3(a) above gives
notice and proves that such interest was previously acquired. Under either
circumstance the party or entity must present evidence at the hearing
demonstrating the potential adverse impact a penalty will have on such person
or entity.

Section
34.06 - Definitions.

(a)           The term “license” or “permit” as
used herein shall be defined as a license, permit, franchise or concession not
granted as a matter of right.

(b)           The term “person” as used herein
shall be defined as any natural person doing business alone or associated with
another person or entity as a partner, director, officer, principal or
employee.

(c)           The term “entity” as used herein
shall be defined as any firm, partnership, corporation, association, or person
that receives monies, benefits, licenses, leases, or permits from or through
the City or otherwise transacts business with the City.

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(d)           The term “member” as used herein
shall be defined as any person associated with another person or entity as a
partner, director, officer, principal or employee.

Section 34.07 -
Termination. In addition to and notwithstanding any
other provision of this Agreement, the Commissioner or agency head may in his
or her sole discretion terminate this Agreement upon not less than three (3)
days written notice in the event contractor fails to promptly report in writing
to the Commissioner of Investigation of the City of New York any solicitation
of money, goods, requests for future employment of other benefit or thing of
value, by or on behalf of any employee of the City or other person, firm,
corporation or entity for any purpose which may be related to the procurement
or obtaining of this Lease by the Landlord, or affecting the performance of
this Lease.

ARTICLE 35

SIGNIFICANT RELATED PARTY TRANSACTIONS

Section
35.01 – Significant Related Party Transactions. Landlord
shall be required to disclose and notify Tenant of any transactions with
significant related parties, including subsidiaries and affiliates of Landlord,
the costs of which are charged to Tenant as Rent or Additional Rent. Landlord
shall provide Tenant with written notice of such transactions upon submission
of invoices for rent or at the end of the calendar year in which the
transactions to be billed as rent were performed by significant related
parties. When such transactions occur, prices of same must be in line with
normal industry practice in New York City. Landlord’s failure to notify Tenant
of such related party transactions shall result in a disallowance of such costs
that would otherwise be billed as Rent. If such related party transactions
occurred and were disclosed, but it is found by Tenant that the costs thereof
exceed normal industry costs in an arms length third party transaction in New
York City, then such excessive charges shall be disallowed.

IN WITNESS WHEREOF, the
parties have executed this Agreement of Lease as of the day and year first
above written.

	
   

  	
  GREEN BUS HOLDING CORP., Landlord

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jerome
  Cooper

  
	
   

  	
   

  	
  Jerome Cooper

  
	
   

  	
   

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  THE CITY OF NEW YORK,

  
	
   

  	
  Tenant

  

 

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  By:

  	
  /s/ Lori
  Fierstein

  
	
   

  	
   

  	
  Name:

  	
  Lori Fierstein

  
	
   

  	
   

  	
  Title:

  	
  Deputy Commissioner

  
					

 

 62

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