Document:

Exhibit 10.1

 

 

 

CONTRACT OF SALE

 

 

dated November 22, 2005

 

 

between

 

 

MIDWAY LEASING INC.

 

                    as Seller

 

and

 

 

CONTINENTAL FINANCE CORPORATION

 

                    as Purchaser

 

 

Affecting Premises known as 7 NORTH STREET, 3 NORTH STREET, 2153
RICHMOND TERRACE, STATEN ISLAND, NEW YORK.

 

 

 

	
   

  	
  Article 1

  	
  Purchase Price

  	
   

  
	
   

  	
  Article 2

  	
  State of Title

  	
   

  
	
   

  	
  Article 3

  	
  Representations

  	
   

  
	
   

  	
  Article 4

  	
  Covenants

  	
   

  
	
   

  	
  Article 5

  	
  Leases

  	
   

  
	
   

  	
  Article 6

  	
  Violations

  	
   

  
	
   

  	
  Article 7

  	
  Closing Date

  	
   

  
	
   

  	
  Article 8

  	
  Conditions of Closing

  	
   

  
	
   

  	
  Article 9

  	
  Closing Documents

  	
   

  
	
   

  	
  Article 10

  	
  Adjustments and Costs

  	
   

  
	
   

  	
  Article 11

  	
  Escrow Conditions

  	
   

  
	
   

  	
  Article 12

  	
  Brokerage

  	
   

  
	
   

  	
  Article 13

  	
  Notices

  	
   

  
	
   

  	
  Article 14

  	
  Miscellaneous

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Exhibit A

  	
  Property
  Description

  	
   

  
	
   

  	
  Exhibit B

  	
  Permitted
  Exceptions

  	
   

  
	
   

  	
  Exhibit C

  	
  Schedule of
  Leases

  	
   

  
	
   

  	
  Exhibit D

  	
  Service
  Contracts/Agreements

  	
   

  

 

 

CONTRACT OF SALE

 

AGREEMENT, made November 22,
2005, between MIDWAY LEASING INC., a NEW YORK corporation, having an address at
7 NORTH STREET, STATEN ISLAND, NEW YORK (“Seller”), and CONTINENTAL FINANCE
CORPORATION, a DELAWARE corporation, having an address at 216 EAST 49TH STREET,
NEW YORK, NEW YORK 10017 (“Purchaser”), assignable to a special purpose entity
formed to own the subject real property.

 

W I T N E S S E T H
:

 

Seller agrees to sell and Purchaser agrees to purchase, upon the terms
and conditions hereinafter set forth,

 

ALL those certain
plots, pieces or parcels of land, with the buildings and improvements thereon
erected, situate, lying and being in The City of New York, the County of
RICHMOND and the State of New York, being more particularly described in Exhibit A
attached hereto and made a part hereof,

 

TOGETHER with all
right, title and interest, if any, of Seller in and to any streets and roads
abutting the aforesaid premises to the center lines thereof,

 

TOGETHER with the
appurtenances and all the estate and rights of Seller in and to said premises,

 

(the aforesaid
land, buildings and improvements being hereinafter referred to as the “Premises”).

 

The Premises is identified as Section 5, Block 1070 and Lots 1, 31
and 20.

 

This sale includes all right, title and interest, if any, of Seller in
and to any land lying in the bed of any streets or roads, opened or proposed,
in front of or adjoining the Premises, to the center lines thereof, and all
right, title and interest, if any, of Seller in and to any unpaid award made or
to be made in lieu thereof or for any change of grade of any such street or
road.  Seller shall execute and deliver
to Purchaser at the closing or thereafter, upon request, all proper instruments
for the conveyance of such title and the assignment of such award.

 

This sale includes all right, title and interest of Seller in and to
the buildings and improvements located on the Premises, all tenements,
hereditaments and appurtenances thereunto belonging or appertaining, and all
fixtures, equipment and machinery, now situate on or appurtenant to the
Premises.

 

1

 

1. 
Purchase Price

 

The Purchase Price for the Premises is Four Million Two Hundred
Thousand Dollars ($4,200,000.00), payable as follows:

 

(a)  One Hundred Thousand Dollars ($100,000.00) upon execution of
this Agreement.  Said check is payable to
the order of the Escrow Agent hereinafter identified, and the proceeds of said
check shall be held in escrow as hereinafter provided.

 

(b)  Four Million One Hundred Thousand Dollars ($4,100,000.00) at
the closing by a cashier’s or certified check drawn to the order of Seller on a
bank which is a member of the New York Clearing House Association.

 

2. 
State of Title

 

The Premises are sold subject to the following (collectively the “Permitted
Exceptions”):

 

(a)  Zoning regulations and ordinances of The City of New York
which are not violated by existing structures and which do not prohibit the
present use of the Premises.

 

(b)  The covenants, restrictions, easements and agreements
affecting the Premises.

 

(c)  Any state of facts which would be shown by a current survey
or inspection of the Premises.

 

(d)  The leases and tenancies listed in the Schedule of
Leases annexed hereto as Exhibit C (collectively the “Leases”).

 

(e)  The agreements pertaining to the operation or maintenance of
the Premises listed in Exhibit D attached hereto and made a part hereof
(the “Service Contracts and Agreements”).

 

3. 
Representations and Warranties

 

Seller represents and warrants to Purchaser that:

 

(a)  Exhibit D lists all service, maintenance, supply and
management contracts and agreements affecting the Premises, and the information
thereon is accurate.  Seller further
represents and warrants that the copies of such contracts and agreements
heretofore delivered to Purchaser’s attorneys are true and complete copies of
the original contracts and agreements; none of them have been further amended
or modified; Seller has not received any notice of default under any of such
contracts

 

2

 

or agreements which default remains uncured; and to the best of Seller’s
knowledge and belief, no event of default exists thereunder.

 

(b)  The copy of the certificate of occupancy heretofore delivered
to Purchaser’s attorneys is a true and complete copy of the original, and said
certificate has not been amended.

 

(c)  Seller is the sole owner of the Premises, and subject to the
conditions set forth herein, has full power, authority and right to execute,
deliver and perform this Agreement.  The
parcels and plots which comprise the Premises are all contiguous.

 

(d)  All fixtures included in this sale are owned by Seller, free
from all liens, claims and encumbrances.

 

(e)  Seller has no knowledge of any incinerator, boiler or other
burning equipment on the Premises being operated in violation of any applicable
law.  The copies of the certificates of
operation for said equipment heretofore delivered to Purchaser’s attorneys are
true copies of the originals.

 

(f)  There are no pending proceedings for the taking of all or any
portion of the Premises by condemnation or eminent domain, and to the best of
Seller’s knowledge no such proceeding is about to be commenced.

 

(g)  There are no legal actions or proceeding affecting the
Premises except as set forth herein.

 

(h)  Seller is not a “foreign person” as defined in Section 1445(f)(3) of
the Internal Revenue Code of 1986, as amended (the “Code”).  If Seller fails or refuses to deliver to
Purchaser at the closing a certificate evidencing that Seller is not a “foreign
person”, or if Seller is a “foreign person”, then Purchaser shall be entitled
to withhold from the Purchase Price a tax equal to ten percent of the Purchase
Price, as required by Section 1445 of the Code.  In the event of such a withholding, Purchaser
shall remit such tax to the Internal Revenue Service and shall file the
required return, and the closing hereunder shall not be otherwise
affected.  Seller hereby waives any
action or claim against Purchaser pertaining to any such withholding, and
agrees to look solely to the Internal Revenue Service for any refund of such
tax.

 

(i) Seller has no knowledge of any environmental issues in
connection with the Premises. Seller has not received any notices from any
governmental agencies relating to environmental issues in connection with the
Premises, other than notices concerning issues which have been resolved.

 

4.  Covenants

 

Seller covenants and agrees that:

 

3

 

(a)  Seller until the closing shall maintain in full force and
effect all insurance presently maintained with respect to the Premises.  Renewals or replacements of existing
insurance policies shall expire no later than one year after the closing.

 

(b)  Seller shall continue to operate and maintain the Premises in
the same manner as the Premises has been operated and maintained in the
preceding year.  Seller shall afford
access to the Premises to Purchaser and Purchaser’s representatives, at
reasonable times after notice.

 

(c)  No fixtures or equipment included in this sale shall be
removed from the Premises unless the same are replaced prior to the closing with
similar items of at least equal quality, free from all liens, claims and
encumbrances.

 

5.
Leases

 

Seller represents and warrants that the Schedule of Leases annexed
hereto as Exhibit C is an accurate schedule of all Leases affecting
the Premises on the date hereof, including all amendments, extensions and other
modifications thereof; the copies of the Leases heretofore delivered to
Purchaser’s attorneys are true and complete copies of the original Leases; all
Leases are valid and in full force and effect. 
There are no arrears in rent in excess of one month, except as may be
set forth on the Schedule of Leases; the Schedule of Leases
accurately sets forth all tenant security deposits; Seller has not sent any
notice to any tenant claiming that the tenant is in default, which default
remains uncured, except as may be set forth in the Schedule of Leases; no
action or proceeding pertaining to the Leases is pending in any court, except
as may be set forth in the Schedule of Leases; and to the best of Seller’s
knowledge neither the landlord nor the tenant is in default under any of the
Leases, except as may be set forth in the Schedule of Leases.

 

6.  Violations

 

All notes and notices of violations of law, ordinances, orders or
requirements issued prior to the date of this Agreement by any governmental
authority having jurisdiction over the Premises shall be removed by
Seller.  All liens which attach to the
Premises prior to the Closing Date pursuant to the Administrative Code of The
City of New York shall be removed by Seller. 
Seller shall furnish Purchaser upon request written authorization to
make searches for violations and liens. 
Seller represents and warrants that Seller has not received any notice
of any violation of any law, ordinance, regulation, order or requirement issued
by any governmental authority having jurisdiction over or affecting the
Premises or the use or improvement thereof, which violation remains
uncured.  The provisions of this Article 6
shall survive the closing.

 

7.  Closing Date

 

The closing of title pursuant to this Agreement (the “Closing”) shall
be held at the offices of JANOFF & GUREVICH, LLP, 216 EAST 49TH
STREET, NEW YORK, NY 10017, at 10 A.M. on or about December 1, 2005
(the “Closing Date”).

 

4

 

8. 
Conditions of Closing

 

I.                                         It
shall be a condition to Purchaser’s obligation to close title that:

 

(a) Purchaser shall have a period of thirty (30) days from the
date of full execution of this Agreement by all parties (the “Due Diligence Period”)
to perform any and all inspections and studies relating to the Premises,
including, without limitation, a title search, survey, environmental
investigations and reports, zoning, building and feasibility studies, a review
of all regulatory approvals for the Premises and a physical inspection of the
Premises including, without limitation, drilling, soil boring, surveying, soil
sampling and any other testing as may be desired by Purchaser (collectively,
the “Inspections”), provided, the Purchaser shall not conduct any such
drilling, soil boring, surveying and soil sampling unless the Purchaser, its
agents, consultants, affiliates and representatives, including its
environmental consultants, is not under any obligation to disclose to the
Seller, its agents, consultants, affiliates and representatives or to any other
third-party, including, without limitation, any governmental agency, the
results of such drilling, soil boring, surveying or soil sampling. The parties
acknowledge and agree that Purchaser may terminate this contract at any time
during the Due Diligence Period by providing written notice to that effect to
Escrow Agent.

 

(b)  The representations and warranties of Seller set forth herein
shall be true as of the Closing Date.

 

(c)  The covenants of Seller set forth herein shall have been
complied with as of the Closing Date.

 

(d)  Seller shall convey to Purchaser marketable and insurable
title to the Premises, subject only to the Permitted Exceptions, in accordance
with this Agreement.

 

(e)  Seller shall deliver possession of the Premises to Purchaser
on the Closing Date in the condition required by this Agreement and in
accordance with the terms, covenants and conditions of this Agreement.

 

(f)                                    Seller
shall fully comply with the terms of the lease to be entered into between the
parties hereto. A copy of the proposal is attached hereto as Exhibit A and
made a part hereof. Further, all representations contained in the lease
proposal shall survive the closing and become a part of the lease. The lease entered
into by the parties hereto shall be duly recorded by the Purchaser.

 

(g)                                 The
Seller and Purchaser shall have entered into a lease in accordance with the
proposal attached hereto as Exhibit A.

 

5

 

Without limiting the other rights of Purchaser, Seller shall permit
Purchaser and such agents and experts of Purchaser as Purchaser shall designate
full access to the Premises and all records concerning the Premises during
reasonable business hours, for purposes of such independent investigation as
Purchaser shall desire to conduct.

 

In the event that any of the aforesaid conditions are not satisfied by
Seller or waived by Purchaser on or prior to the Closing Date, Purchaser shall
be entitled to terminate this Agreement by written notice to Seller.  In the event of such termination Seller shall
direct Escrow Agent to refund to Purchaser all payments made by Purchaser on
account of the Purchase Price.

 

II.                                     It shall be a
condition to Seller’s obligation to close title that:

 

(a)                                  the
Boards of Directors of Seller and its parent corporation shall approve the sale
herein.

 

(b)                                 All
conditions and limitations regarding the sale of the Premises arising with
respect to any contract, indenture, trust, instrument or other agreement to
which the Seller is a party shall have been satisfied in accordance with the
terms of such agreement or waived by the relevant party to such agreement.

 

(c)                                  Seller
shall have obtained an opinion of an independent expert as to the fair value of
the Premises as required under the Trust Indenture Act of 1939, as amended, and
the Indenture dated April 22, 2004 (the “Indenture”) which opinion
concludes that the Purchase Price is not less than the fair market value of the
Premises and that the release of security interest in the Premises does not
impair the security under the Indenture in contravention of the provisions
thereof.

 

(d)                                 The
Seller and Purchaser shall have entered into a lease in accordance with the
proposal attached hereto as Exhibit A.

 

9. 
Closing Documents

 

Seller shall deliver to Purchaser at the closing:

 

(a)  A bargain and sale deed with covenant against grantor’s acts,
containing the covenant required by Section 13 of the Lien Law, executed
in proper form for recording, and sufficient to convey marketable and insurable
title to the Premises in accordance with this Agreement.

 

(b)  A bill of sale for all fixtures and equipment included in
this sale, with Seller’s warranty that the same are free of all lien, claim or
encumbrance.

 

(c)  An assignment of the landlord’s interest under all Leases
affecting the Premises, together with the originals of all Leases and records
and files of Seller pertaining thereto, and a letter to the tenants advising
them of the change of ownership.  All
security deposits under the Leases and any interest thereon, except security
deposits

 

6

 

and interest applied in accordance with the Leases, shall be turned
over to Purchaser at the closing.  Seller
shall deliver at the closing a current schedule of rents and security
deposits.

 

(d)  An assignment of the Service Contracts and Agreements set
forth in Exhibit D, together with the originals thereof.

 

(e)  If Seller is a corporation, and if required by Section 909
of the Business Corporation Law, a resolution authorizing the sale of the
Premises and the execution and delivery of the closing documents hereunder and
a certificate of the secretary or assistant secretary of Seller certifying the
adoption and continued effectiveness of such resolution.

 

(f)  An certificate of Seller that Seller is not a “foreign person”
within the meaning of Section 1445 of the Internal Revenue Code of 1986,
as amended, and any other instruments required under said Code.

 

(g)  If the title examination discloses judgments, bankruptcies or
other returns against other persons having names the same as or similar to
Seller, Seller shall deliver an affidavit showing that such judgments,
bankruptcies and other returns are not against Seller.

 

(h)  A certificate reaffirm the representations and warranties of
Seller under this Agreement as of the Closing Date.

 

(i)  The certificate of occupancy for the Premises; all other
certificates, licenses, permits, authorizations and approvals issued for or
with respect to the Premises by governmental authorities, together with an
assignment of all of Seller’s rights hereunder or with respect thereto; all
records and files of Seller pertaining to the operation and maintenance of the
Premises as Purchaser reasonably may request; all keys to the Premises; an
assignment of all right, title and interest of Seller in and to the name “7
NORTH STREET, STATEN ISLAND, NEW YORK, 3 NORTH STREET, 2153 RICHMOND TERRACE,
STATEN ISLAND”; and such other documents as Purchaser reasonably may request to
consummate the transactions contemplated herein.

 

10. 
Adjustments and Costs

 

The following shall be apportioned as of midnight of the day preceding
the Closing Date:

 

(a)  All rent and other charges under the Leases.

 

If any of the Leases requires any tenant to pay additional rent or
charges (including without limitation percentage rent; escalations or other
charges for taxes, labor or

 

7

 

operating expenses; payments with respect to insurance; common area
charges; and electricity, HVAC or other utility charges), and Seller shall have
collected, or shall collect after the Closing Date, any portion of such
additional rent or charges for a period beyond the Closing Date; then there
shall be a pro rata adjustment and credit to Purchaser for such period.  If such additional rent or charges have not
been billed or collected as of the Closing Date; any such additional rent or
charges collected by Purchaser shall be held in trust for Seller, and Purchaser
promptly shall remit to Seller its pro-rata portion thereof.

 

(b)  Real estate taxes, vault charges, water charges and sewer
rents, if any, on the basis of the lien period for which assessed.  If on the Closing Date the tax rate shall not
have been fixed, the apportionment shall be based upon the tax rate for the
preceding year applied to the latest assessed valuation; however, adjustment
will be made when the actual tax amount is determined.  If there are water meters on the Premises,
Seller shall furnish readings thereof to a date not more than fifteen days
prior to the Closing Date.  Meter charges
shall be apportioned on the basis of the last reading.  Upon the taking of a subsequent actual
reading, such apportionment shall be readjusted.  The provisions of this clause (b) shall
survive the closing.

 

(c)  Amounts, if any, paid or payable in respect of the Service
Contracts and Agreements assigned to Purchaser at the closing.

 

Any errors in computing adjustments at the closing shall be corrected after
the closing.

 

If the adjustments result in a payment due Seller, such payment shall
be made at the closing by a cashier’s or certified check of Purchaser.  Purchaser, however, shall be entitled to pay
up to $5,000 by an uncertified check of Purchaser.  If the adjustments result in a payment due
Purchaser, such payment shall be credited against the cash portion of the
Purchase Price due at the closing.

 

The amount of any unpaid real estate taxes, assessments, water charges
and sewer rents which Seller is obligated hereunder to discharge or satisfy,
with any interest or penalties thereon, at the option of Seller may be allowed
as a credit to Purchaser at the closing, provided official bills therefor,
showing the amount due including any interest or penalties to a date not less
than two days after the Closing Date, are furnished at the closing.  If on the Closing Date there are any liens or
encumbrances which Seller is obligated hereunder to discharge or satisfy, Purchaser
agrees to provide at the closing, upon five days prior request, separate
certified checks to facilitate the discharge or satisfaction of items referred
to in this paragraph.

 

If on the Closing Date the Premises shall be affected by an assessment
which is or may become payable in annual installments, and the first
installment is then a lien, then all unpaid installments of such assessment
shall be paid by Seller at the closing.

 

Seller shall pay or shall credit Purchaser at the closing with an
amount equal to any applicable transfer tax or stamp tax payable by reason of
the delivery of the deed.  Seller and

 

8

 

Purchaser
agree to execute, swear to, and cause to be filed any applicable transfer tax
return or other return required in connection with the closing.

 

11. 
Escrow Conditions

 

Concurrently with the execution of this Agreement, Purchaser has
delivered to Silverman Sclar Shin & Byrne PLLC, attorney for the
Seller, , having an address at 381 Park Avenue South, Suite 1601, New
York, New York,  (“Escrow Agent”)
Purchaser’s check in the amount of $100,000.00, being the amount to be paid by
Purchaser upon the execution of this Agreement pursuant to clause (a) of Article 1
above (the “Down Payment”).

 

Escrow Agent, subject to collection of said check, shall hold the Down
Payment in accordance with this Agreement, or a joint instruction signed by
Seller and Purchaser, or separate instructions of like tenor signed by Seller
and Purchaser, or a final judgment of a court of competent jurisdiction.  Escrow Agent at any time may deposit the Down
Payment with a court of competent jurisdiction, and upon notice to Seller and
Purchaser of such deposit Escrow Agent shall have no further responsibility or
liability hereunder.

 

Escrow Agent shall deposit the Down Payment in an interest bearing
account, or invest the Down Payment in treasury bills, certificates of deposit
or other income producing investments. 
Any interest or income thereon shall be for the account of, and be paid
at the closing to, the party entitled to the Down Payment under the terms of
this Agreement.

 

12.  Brokerage

 

Seller and Purchaser each represent and warrant to the other that they
have not d ealt with any broker in connection with this sale, other than
CONTINENTAL REALTY, LLC, a NEW YORK limited liability company, having an
address at 1007 BRIGHTON BEACH AVENUE, BROOKLYN, NEW YORK 11235 (the “Broker”),
whose commission Seller agrees to pay pursuant to a separate agreement.  The parties hereto expressly agree that
Continental Realty, LLC is the exclusive real estate broker involved in this
transaction, and that Continental Realty, LLC shall receive an exclusive right
to relocate the Seller within six months from the date of the closing.

 

13.  Notices

 

All notices, demands and other communications required or permitted to
be given hereunder shall be in writing and shall be deemed to have been
properly given if delivered by hand or sent by United States registered or
certified mail, return receipt requested, to Seller or Purchaser, as the case
may be, at their addresses first above written, or at such other addresses as
they may designate by notice given hereunder. 
Copies of any such communication to the Purchaser or the Escrow Agent
shall be delivered to JANOFF & GUREVICH, LLP, attention ALEXANDER
GUREVICH, 216 EAST 49TH STREET, NEW YORK, NY 10017, and to CONTINENTAL FINANCE
CORPORATION, 715 Park Avenue, New York, New York 10021, in the aforesaid
manner.  Copies of such communication to
the Purchaser or the Escrow Agent shall be delivered to

 

9

 

Silverman
Sclar Shin & Byrne PLLC, Att: Peter R. Silverman at 381 Park Avenue
South, Suite 1601, New York, New York 10016, in the aforesaid manner.

 

14. 
Miscellaneous

 

All payments of Purchaser on account of the Purchase Price, and
Purchaser’s expenses for examination of title, are hereby made a lien against
the Premises.

 

If Purchaser defaults under this Agreement, Seller as its sole remedy
shall be entitled to receive and retain all sums paid by Purchaser hereunder as
liquidated damages.

 

The representations and warranties of Seller hereunder shall survive
the closing for two years from the date of closing.

 

This Agreement may not be altered, amended, changed, waived, or
modified in any respect or particular unless the same shall be in writing
signed by Seller and Purchaser.

 

This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, executors, administrators,
successors and permitted assigns.

 

The Tax Identification Numbers of Seller and Purchaser are as follows:

 

IN WITNESS WHEREOF
Seller and Purchaser have duly executed this Agreement on the date first above
written.

 

 

	
   

  	
  MIDWAY
  LEASING INC.

  
	
   

  	
   

  
	
   

  	
  By 

  	
  /s/ Domenic Gatto

  	
   

  
	
   

  	
   

  	
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CONTINENTAL FINANCE
  CORPORATION

  
	
   

  	
   

  
	
   

  	
  By 

  	
  /s/ Alexander Gurevich

  	
   

  
	
   

  	
   

  	
  President

  

 

10

 

Silverman Sclar Shin & Byrne PLLC hereby executes this
Agreement for the sole purpose of agreeing to serve as Escrow Agent in
accordance with the provisions of Article 11 of this Agreement.

 

 

	
   

  	
  By 

  	
  /s/ Peter Silverman

  	
   

  
	
   

  	
   

  	
   General
  Partner

  

 

11Exhibit 10.2

 

 

 

LEASE

 

dated October   , 2005

 

between

 

CONTINENTAL FINANCE CORPORATION

 

                    as Lessor

 

and

 

ATLANTIC EXPRESS TRANSPORTATION CORP

 

                    as Lessee

 

 

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

 

 

 

	
   

  	
    1 — Demised Premises and Lease Term

  	
   

  
	
   

  	
    2 —
  Rent

  	
   

  
	
   

  	
    3 — No Counterclaim or Abatement

  	
   

  
	
   

  	
    4 — Use of Demised Premises

  	
   

  
	
   

  	
    5 — Condition of Demised Premises

  	
   

  
	
   

  	
    6 — Maintenance and Repair

  	
   

  
	
   

  	
    7 — Alterations and Additions

  	
   

  
	
   

  	
    8 — Impositions

  	
   

  
	
   

  	
    9 — Compliance With Requirements

  	
   

  
	
   

  	
  10 — Liens

  	
   

  
	
   

  	
  11 — Permitted
  Contests

  	
   

  
	
   

  	
  12 — Utility
  Services

  	
   

  
	
   

  	
  13 — Insurance

  	
   

  
	
   

  	
  14 —
  Indemnification By Lessee

  	
   

  
	
   

  	
  15 — Damage or
  Destruction

  	
   

  
	
   

  	
  16 — Taking of
  the Demised Premises

  	
   

  
	
   

  	
  17 — Quiet
  Enjoyment

  	
   

  
	
   

  	
  18 — Right to
  Cure Lessee’s Default

  	
   

  
	
   

  	
  19 — Events of
  Default and Termination

  	
   

  
	
   

  	
  20 —
  Repossession

  	
   

  
	
   

  	
  21 — Reletting

  	
   

  
	
   

  	
  22 —
  Assignment of Subrents

  	
   

  
	
   

  	
  23 — Lessee’s
  Equipment

  	
   

  
	
   

  	
  24 — Security
  Deposit

  	
   

  
	
   

  	
  25 — Survival
  of Obligations; Damages

  	
   

  
	
   

  	
  26 —
  Injunction

  	
   

  
	
   

  	
  27 — Waivers

  	
   

  
	
   

  	
  28 — Lessor’s
  Remedies Cumulative

  	
   

  
	
   

  	
  29 —
  Assignment and Subletting

  	
   

  
	
   

  	
  30 —
  Subordination and Attornment

  	
   

  
	
   

  	
  31 — Entry by
  Lessor

  	
   

  
	
   

  	
  32 —
  Conveyance by Lessor

  	
   

  
	
   

  	
  33 — No Merger
  of Title

  	
   

  
	
   

  	
  34 —
  Acceptance of Surrender

  	
   

  
	
   

  	
  35 — Holdover
  Tenancy

  	
   

  
	
   

  	
  36 — End of
  Lease Term

  	
   

  
	
   

  	
  37 — Option to
  Extend Lease Term

  	
   

  
	
   

  	
  38 — Brokerage

  	
   

  
	
   

  	
  39 —
  Definitions

  	
   

  
	
   

  	
  40 — Notices

  	
   

  
	
   

  	
  41 —
  Communications Tower

  	
   

  
	
   

  	
  42 —
  Miscellaneous

  	
   

  
	
   

  	
  Exhibit A — Description of Land

  	
   

  

 

 

LEASE

 

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

 

1.  The
Demised Premises and Lease Term

 

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

 

2.  Rent

 

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

 

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

 

1

 

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

 

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

 

3.  No
Counterclaim or Abatement

 

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

 

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

 

2

 

4.  Use
of Demised Premises

 

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

 

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

 

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

 

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

 

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

 

5. 
Condition of Demised Premises

 

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

 

3

 

6. 
Maintenance and Repair

 

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

 

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

 

7. 
Alterations and Additions

 

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

 

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

 

8. 
Impositions

 

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

 

4

 

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

 

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

 

9. 
Compliance With Requirements

 

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

 

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

 

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

 

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

 

5

 

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

 

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

 

10.  Liens

 

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

 

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

 

6

 

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

 

11. 
Permitted Contests

 

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

 

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

 

7

 

12. 
Utility Services

 

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

 

13. 
Insurance

 

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

 

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

 

8

 

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

 

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

 

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

 

14. 
Indemnification By Lessee

 

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

 

9

 

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

 

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

 

15. 
Damage to or Destruction of the Demised Premises

 

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

 

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

 

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

 

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

 

10

 

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

 

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

 

16. 
Taking of the Demised Premises

 

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

 

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

 

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

 

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

 

11

 

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

 

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

 

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

 

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

 

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

 

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

 

12

 

17. 
Quiet Enjoyment

 

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

 

18. 
Right to Cure Lessee’s Default

 

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

 

19. 
Events of Default and Termination

 

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

 

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

 

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

 

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

 

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

 

13

 

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

 

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

 

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

 

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

 

20. 
Repossession

 

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

 

14

 

21. 
Reletting

 

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

 

22. 
Assignment of Subrents

 

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

 

23. 
Lessee’s Equipment

 

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

 

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

 

15

 

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

 

24. 
Security Deposit

 

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

 

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

 

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

 

25. 
Survival of Lessee’s Obligations and Damages

 

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

 

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

 

16

 

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

 

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

 

26. 
Injunction

 

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

 

17

 

27.  Waivers

 

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

 

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

 

28. 
Lessor’s Remedies Cumulative

 

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

 

29. 
Assignment, Subletting and Mortgages

 

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

 

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

 

18

 

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

 

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

 

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

 

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

 

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

 

19

 

30. 
Subordination and Attornment

 

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

 

31.  Entry
by Lessor

 

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

 

32. 
Conveyance by Lessor

 

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

 

20

 

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

 

33.  No
Merger of Title

 

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

 

34. 
Acceptance of Surrender

 

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

 

35. 
Holdover Tenancy

 

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

 

36. 
End of Lease Term

 

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

 

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

 

21

 

37. 
Options to Extend Lease Term

 

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

 

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

 

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

 

38. 
Brokerage

 

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

 

39. 
Definitions

 

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

 

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

 

“Demised Premises” — as defined in Article 1.

 

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

 

22

 

“Fixed Rent” — as defined in Article 2.

 

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

 

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

 

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

 

“Land” — as defined in Article 1.

 

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

 

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

 

23

 

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

 

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

 

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

 

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

 

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

 

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

 

“Total Taking” — as defined in Article 16.

 

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

 

24

 

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

 

40.  Notices

 

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

 

41. 
Communications Tower

 

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

 

41. 
Miscellaneous

 

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

 

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

 

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

 

25

 

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

 

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

 

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

 

 

	
   

  	
   

  	
   CONTINENTAL FINANCE CORPORATION

  
	
   ATTEST:

  	
   

  	
   

  
	
   

  	
   

  	
   By 

  	
   

  	
   

  
	
   

  	
   

  	
   President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   By 

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   Secretary

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  ATLANTIC
  EXPRESS TRANSPORTATION CORP.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   By 

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   By 

  	
   

  	
   

  	
   

  	
   

  
	
   Secretary

  	
   

  	
   

  
								

 

26

 

EXHIBIT A

 

The Demised Premises

 

 

Acknowledgment
for CONTINENTAL FINANCE CORPORATION :

 

STATE OF NEW
YORK, COUNTY OF                     , ss.

 

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

 

 

	
   

  	
   

  	
   

  
	
   

  	
  Notary Public

  	
   

  
	
   

  	
   My
  commission expires on

  

 

 

Acknowledgment
for ATLANTIC EXPRESS TRANSPORTATIONCORP:

 

STATE OF NEW
YORK, COUNTY OF                     , ss.

 

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

 

 

	
   

  	
   

  	
   

  
	
   

  	
  Notary Public

  	
   

  
	
   

  	
   My
  commission expires on

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