Document:

Exhibit 10.5

PROMISSORY NOTE

August 1, 2006

FOR VALUE RECEIVED,
INTERNATIONAL FIGHT LEAGUE, INC., a Delaware corporation having its principal
executive offices at 1010 Sixth Avenue, 3rd Floor, New York, NY 10018 (“Borrower”),
promises to pay to the order of RICHARD J. KURTZ, an individual having an
address at 270 Sylvan Avenue, Englewood Cliffs, New Jersey 07632 (“Holder”),
or assigns, the principal sum of the aggregate unpaid principal amount of all
loans (each a “Loan” and collectively, the “Borrowings”) made by Holder to
Borrower, as set forth on Schedule A attached hereto, plus interest
thereon at the rate set forth below, at such time as specified below.  The amount of each Loan made by Holder to
Borrower hereunder and the date such Loan is made and the amount of each
payment or prepayment made on account of the principal and/or interest thereof
shall be recorded by Holder on his books and on Schedule A attached
hereto.  Such books and Schedule A
shall constitute presumptive evidence, absent manifest error, of the accuracy
of the information contained herein or therein. 
Upon repayment in full of all principal and interest due under this
Note, the Holder shall mark the original of this Note cancelled and return it to
the Borrower.

1.             Terms
of Payment.

1.1.          Interest.  The Borrowings shall accrue interest from the
respective date such loan is made as specified on Schedule A hereto at a
rate equal to eight percent (8%) per annum (based on a three hundred and sixty
five (365) day year).

1.2.          Principal
and Interest Repayment.  The
principal amount of this Note and accrued interest thereon shall be due and
payable upon the earlier of (i) the first anniversary of the making of the
first loan indicated on Schedule A hereto and (ii) the first funding of debt
and/or equity capital subsequent to the transaction contemplated by the Letter
Agreement between the Borrower, Holder and Paligent Inc., dated April 25, 2006,
that results in aggregate net cash proceeds to the Borrower of not less than
Five Million Dollars ($5,000,000).

1.3.          Form
of Payment.  Both the principal
amount of this Note, and all interest accrued thereon, shall be paid in such
currency of the United States of America as shall be legal tender at the time
of payment, and all payments or prepayments of principal and interest and other
sums due pursuant to this Note shall be made by certified check to Holder at
its address set forth above, or in immediately available funds by wire transfer
to Holder’s account at such bank as Holder shall have previously designated to
Borrower.  When any date on which
principal and interest are due and payable falls on a Saturday, Sunday or legal
holiday, then such payment shall be due and payable on the first business day
immediately following such date and interest shall be payable at the rate set
forth herein for the period of such extension.

1.4.          Optional
Prepayment.  This Note may be prepaid
by Borrower, in whole or in part, at any time or from time to time, without
premium or penalty.  All prepayments made

 

on this Note shall be applied first to the
payment of all unpaid interest accrued on this Note, and then to the
outstanding and unpaid principal amount of this Note as of the date of the
payment.

2.             Events
of Default.

2.1.          Definition
of Event of Default.  Any one or more
of the following events shall constitute an “Event of Default”:

2.1.1.       Borrower
fails to make any payment of principal or interest on this Note on or before
the date such payment is due and such failure continues for a period of ten
(10) business days after the payment due date;

2.1.2.       Borrower
makes an assignment for the benefit of creditors; files a petition in
bankruptcy; is adjudicated insolvent or bankrupt; petitions or applies to any
tribunal for the appointment of any receiver or trustee; or commences any
proceeding under law or statutes of any jurisdiction, whether now or hereafter
in effect, relating to reorganization, arrangement, readjustment of debt,
dissolution or liquidation, or there is commenced against Borrower any such
proceeding which shall not be dismissed within a period of sixty (60) days, or
Borrower indicates its written consent to, approval of, or acquiescence in any
such proceeding or the appointment of any receiver of or any trustee for it or
any substantial part of its property, or suffers any such receivership or
trusteeship to continue undischarged for a period of sixty (60) days; or

2.1.3.       Borrower
shall default in the performance of any of its covenants or agreements
contained in this Note, and, in the case of any such default which is capable
of being cured, continues uncured for ten (10) business days following the date
notice of such default is given to Borrower.

2.2.          Rights
upon Event of Default.  Upon the
occurrence of any Event of Default, Holder, at its option, may declare the
entire principal amount of this Note then outstanding, together with accrued
and unpaid interest thereon, immediately due and payable without presentment,
demand, protest or notice or other formality of any kind.  Holder also may exercise from time to time
any rights and remedies available to it by law and under any agreement or other
instrument relating to the amounts owed under this Note.

2.3.          Collection
Costs; Attorney’s Fees.  Borrower
shall promptly pay all of the reasonable costs and expenses of Holder incurred
in the collection of this Note, including reasonable attorney’s fees and
expenses, whether or not a suit to enforce such rights is actually
instituted.  All of such unpaid costs and
expenses shall be added to the principal amount of this Note.

3.             Miscellaneous.

3.1.          Unconditional
Obligation; Waivers.  The obligations
of Borrower to make the payments provided for in this Note are absolute and
unconditional and not subject to any defense, set-off, counterclaim,
rescission, recoupment or adjustment whatsoever.  Borrower hereby waives presentment and demand
for payment, notice of non-payment, notice of dishonor, protest, notice of
protest, bringing of suit and diligence in taking any action to collect any 

 2
 

 

amount called for under this Note, and shall
be directly and primarily liable for the payment of all amounts owing and to be
owing hereon, regardless of and without any notice, diligence, act or omission
with respect to the collection of any amount called for hereunder.  No waiver of any provision of this Note made
by agreement of Holder and any other person shall constitute a waiver of any
other terms hereof, or otherwise release or discharge the liability of Borrower
under this Note.  No failure to exercise
and no delay in exercising, on the part of Holder, any right, power or
privilege under this Note shall operate as a waiver thereof nor shall partial
exercise of any right, power or privilege. 
The rights and remedies herein provided are cumulative and are not
exclusive of any rights or remedies provided by law.

3.2.          Notices
and Addresses.  Any notice, demand,
request, waiver, or other communication under this Note shall be in writing and
shall be deemed to have been duly given on the date of service, if personally
served or sent by facsimile by 5 p.m., EST (if after such time it shall be
deemed given on the business day thereafter); on the business day after notice
is delivered to a courier or mailed by express mail, if sent by courier
delivery service or express mail for next day delivery; and on the third (3rd) day after mailing, if mailed
to the party to whom notice is to be given, by first class mail, registered,
return receipt requested, postage prepaid and addressed as follows:

To Holder:

RICHARD J. KURTZ

270 Sylvan Avenue

Englewood Cliffs, New Jersey 07632 

Fax:  (201) 503-2279

To Borrower:

INTERNATIONAL
FIGHT LEAGUE, INC.

1010 Sixth Avenue, 3rd Floor

New York, New York 10018

Attention: Gareb Shamus, President and Chief Executive Officer

with a copy to:

Lowenstein Sandler PC

1251 Avenue of the Americas

New York, New York 10020

Attention: Steven E. Siesser, Esq

Fax: 973-597-2400

3.3.          Lost,
Stolen or Mutilated Note.  Upon
receipt by Borrower of evidence satisfactory to it of the loss, theft,
destruction or mutilation of this Note or any Note exchanged for it, and (in
the case of loss, theft or destruction) of unsecured indemnity satisfactory to
it, and upon reimbursement to Borrower of all reasonable expenses incidental
thereto, and upon surrender and cancellation of such Note, if mutilated,
Borrower will make and deliver in lieu of 

 3
 

 

such Note a new Note of like tenor and unpaid
principal amount and dated as of the original date of the Note.

3.4.          Severability;
Binding Effect.  Any provision of
this Note which is invalid or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Note or affecting the validity or unenforceability of
any of the terms and provisions of this Note in any other jurisdiction.  This Note shall be binding upon and inure to
the benefit of the parties hereto and their successors and permitted assigns.  Neither this Note nor any rights or
obligations hereunder may be assigned by Borrower without Holder’s prior
written consent.

3.5.          Governing
Law; Forum.  This Note and any
dispute, disagreement, or issue of construction or interpretation arising
hereunder whether relating to its execution, its validity, the obligations
provided therein or performance shall be governed and interpreted according to
the internal laws of the State of New York, without giving effect to the
principles of conflicts of laws thereof. 
Each of the parties hereto hereby irrevocably and unconditionally
submits to the exclusive jurisdiction of any court of the State of New York or
any federal court sitting in the State of New York for purposes of any suit,
action or other proceeding arising out of this Note (and agrees not to commence
any action, suit or proceedings relating hereto except in such courts).  Each of the parties hereto agrees that
service of any process, summons, notice or document by U.S. registered mail at
its address set forth herein shall be effective service of process for any
action, suit or proceeding brought against it in any such court.  Each of the parties hereto hereby irrevocably
and unconditionally waives any objection to the laying of venue of any action,
suit or proceeding arising out of this Note, which is brought by or against it,
in the courts of the State of New York or any federal court sitting in the
State of New York and hereby further irrevocably and unconditionally waives and
agrees not to plead or claim in any such court that any such action, suit or
proceeding brought in any such court has been brought in an inconvenient forum.

3.6.          Amendments.  This Note cannot be changed orally or
terminated orally.  Any amendment of, or
supplement to or other modification of this Note must be in a written
instrument executed by both parties hereto.

3.7.          Section
Headings.  Section headings herein
have been inserted for reference only and shall not be deemed to limit or
otherwise affect, in any matter, or be deemed to interpret in whole or in part
any of the terms or provisions of this Note.

IN WITNESS WHEREOF, this
Note has been executed and delivered as of the date specified above.

	
   

  	
  INTERNATIONAL FIGHT LEAGUE,
  INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gareb Shamus

  	
   

  
	
   

  	
  Name: Gareb
  Shamus

  
	
   

  	
  Title: President
  and Chief Executive Officer

  

 

 4Exhibit 10.7

AGREEMENT OF LEASE

(Pre-Built Suite)

By and Between

424 WEST 33rd STREET
LLC, as Landlord

and

International Fight
League, Inc., as Tenant

covering a portion of the 6th floor

at premises 424 WEST 33rd STREET, NEW YORK, NEW YORK

 

TABLE OF
CONTENTS

 

	
  1.

  	
   

  	
  Definitions and Summary of
  Fundamental Lease Terms

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  Base Rent; Rent Commencement Date; Late Charges

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  Escalation For Real Estate Taxes

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  Security Deposit

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  Use and Occupancy 

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
   

  	
  Utilities and Services

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
   

  	
  Condition of Premises

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
   

  	
  Alterations during Term; Maintenance and Repairs to
  Premises

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
   

  	
  Insurance

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10 

  	
   

  	
  Indemnities

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1l.

  	
   

  	
  Damage or Destruction

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
   

  	
  Assignment and Subleasing

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13.

  	
   

  	
  Defaults and Remedies

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14.

  	
   

  	
  Provisions relating to Termination of Lease

  	
   

  	
  19

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  15.

  	
   

  	
  Eminent Domain

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  16.

  	
   

  	
  Subordination; Attornment; Rights of Mortgagee;
  Amendment

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  17.

  	
   

  	
  Estoppel Certificates

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  18.

  	
   

  	
  Rules and Regulations

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  19.

  	
   

  	
  Bankruptcy

  	
   

  	
  22

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  20.

  	
   

  	
  Notices

  	
   

  	
  22

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  21.

  	
   

  	
  Miscellaneous

  	
   

  	
  22

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Exhibit A

  	
  Floor Plan of Premises (§1.6)

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Exhibit B

  	
  Rules and Regulations (Article 18)

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Exhibit C

  	
  Guarantee

  	
   

  	
   

  

 

LEASE AGREEMENT (the “Lease”) made and entered into between 424
WEST 33rd STREET LLC, a New York
limited liability company, as landlord (“Landlord”), and the person or
entity described below as “Tenant.” In consideration of the rents and covenants
hereinafter set forth, Landlord hereby leases to Tenant, and Tenant hereby
leases from Landlord, the Premises described below upon the following terms and
conditions:

ARTICLE
1. DEFINITIONS AND SUMMARY OF FUNDAMENTAL LEASE TERMS

The following sets
forth certain fundamental facts and definitions relating to this Lease:

1.1. “Date of Lease”:
as of August       , 2006.

1.2. “Landlord”: 424
West 33rd Street LLC, a New
York limited liability company.

1.3. “Tenant”: International
Fight League, Inc., a Delaware corporation having an office at 1010 Sixth
Avenue, 3rd Floor, New York, New York 10018.

1.4. “Tenant’s Trade
Name”: None.

1.5. “Building”: 424 West 33rd Street, New York, New York.

1.6. “Premises”: Suite
650, on the sixth (6th) floor of the Building, as more particularly designated
on Exhibit “A” annexed.

1.7. “Permitted Use”:
Executive, administrative and general offices.

1.8. “Term”: approximately
four (4) years, beginning on the Commencement
Date and ending on the Expiration Date, unless sooner terminated in accordance
with this Lease.

1.9. “Commencement
Date”: September 1, 2006.

1.10. “Expiration Date”: August
31, 2010.

1.11.
“Rent Commencement Date”: November
1, 2006. If such date is not the first of a month, rent will be pro-rated for
the month in which it occurs.

1.42. “Guarantor”: Gareb
Shamus, an individual having a residential address at 24 North Brae Court,
Tenafly, New Jersey 07670.

1.13. “Security Deposit”: an amount equal to
eight (8) months’ Base Rent at the rate from time to time in effect, initially
$107,152.00; provided, however, that the amount of the Security Deposit shall
be an amount equal to six (6) months’ Base Rent at the rate from time to time
in effect from and after the date on which Landlord receives financial
information, reasonably satisfactory to Landlord and audited by a certified
public accountant, that Tenant’s regular business operations, reported on an
accrual basis and otherwise in accordance with generally accepted accounting
principles, are generating, for a period of not less than one
calendar quarter, revenue equal to or greater than expenses.

1.14. “Base Rent” (includes
Electricity Inclusion Factor) shall mean the amount set forth in the table
below, subject to any escalation set forth in this Lease:

	
  Lease

  	
   

  	
  Lease Year

  	
   

  	
  Lease Year

  	
   

  	
  Base Annual

  	
   

  	
  Base Monthly

  	
   

  
	
  Year

  	
   

  	
  Beginning

  	
   

  	
  Ending

  	
   

  	
  Rent

  	
   

  	
  Rent

  	
   

  
	
  1

  	
   

  	
  September 1, 2006

  	
   

  	
  August 31, 2007

  	
   

  	
  $

  	
  160,728.00

  	
   

  	
  $

  	
  13,394.00

  	
   

  
	
  2

  	
   

  	
  September 1, 2007

  	
   

  	
  August 31, 2008

  	
   

  	
  $

  	
  160,728.00

  	
   

  	
  $

  	
  13,394.00

  	
   

  
	
  3

  	
   

  	
  September 1, 2008

  	
   

  	
  August 31, 2009

  	
   

  	
  $

  	
  169,416.00

  	
   

  	
  $

  	
  14,118.00

  	
   

  
	
  4

  	
   

  	
  September 1, 2009

  	
   

  	
  August 31, 2010

  	
   

  	
  $

  	
  169,416.00

  	
   

  	
  $

  	
  14,118.00

  	
   

  

 

 

Notwithstanding the
foregoing provisions of this §1.14, Tenant shall pay Base Rent at the reduced
rate of $1,086.00 per month, representing the Electricity Inclusion Factor,
from the Commencement
Date through and including the date immediately preceding the Rent Commencement
Date.

1.15. “Tenant’s Proportionate Share”: 3.10%, as
reasonably adjusted from time to time by Landlord to reflect any changes in the
size of the Premises or of the Building.

1.16. “Base Tax Year”: July 1, 2006 through June
30, 2007.

1.17. “Address for Notices”:

	
  Landlord:

  	
   

  	
  424 West 33rd Street LLC

  
	
   

  	
   

  	
  c/o
  Vectra Management Group

  
	
   

  	
   

  	
  424 West 33rd Street, Suite 540

  
	
   

  	
   

  	
  New York, NY 10001

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  with a mandatory copy to

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Smith, Buss & Jacobs, LLP

  
	
   

  	
   

  	
  500 Fifth Avenue, 15th
  Floor

  
	
   

  	
   

  	
  New York, NY 10036

  
	
   

  	
   

  	
  Attn.: Kenneth Jacobs, Esq.

  
	
   

  	
   

  	
   

  
	
  Tenant:

  	
   

  	
  International Fight League, Inc.

  
	
   

  	
   

  	
  424 West 33rd Street, Suite 650

  
	
   

  	
   

  	
  New York, NY 10001

  
	
   

  	
   

  	
  Attn.: Mr. Gareb Shamus

  

 

1.18. “Address for Payment of Rent”:

 

	
  Agent:

  	
   

  	
  424 West 33rd Street LLC

  
	
   

  	
   

  	
  c/o Newmark Knight Frank

  
	
   

  	
   

  	
  125 Park Avenue

  
	
   

  	
   

  	
  New York, NY 10017

  

 

1.19. “Electricity Inclusion Factor”: $13,032.00 per annum.

1.20. Exhibits.
The following Exhibits are attached to and made a part of this Lease:

	
  

  	
   

  	
  Exhibit “A” - Premises

  
	
   

  	
   

  	
  Exhibit “B” - Rules and Regulations

  
	
   

  	
   

  	
  Exhibit “C” - Guarantee

  

 

1.21. Summary for
Convenience Only. The foregoing provisions of this Article 1 summarize for
convenience only certain key terms of this Lease, which terms are sometimes
delineated more fully in the
Articles and Sections below. In the event of a conflict between the provisions
of this Article 1 and the balance of this Lease, the latter shall control.

Article
2. Base Rent; Rent Commencement Date; Late Charges.

2.1. Base
Rent During Term. Tenant shall pay to Landlord the Base Rent in equal
monthly installments on the 1st day of each and every month, other than the
first month’s rent, which shall be paid

 2
 

 

upon execution of this Lease. All rent shall be paid without counterclaim, setoff
or deduction. Landlord may change the Address for Payment of Rent by notice to
Tenant.

2.2. Late Charges. If Landlord
does not receive any part of the Base Rent or Additional Rent herein reserved,
or any other sum required to be paid by Tenant, within 5 days after the due
date thereof, Tenant shall pay Landlord, as Additional Rent, a late charge of 6% of the overdue amount on account of
Landlord’s increased costs of collection and administration.

2.3. Base Rent Escalation.

The term “Index” shall
mean the Consumer Price Index (New Series) (Base Period 1982-84=100)
all items for all urban consumers for New York-Northeastern New Jersey-Long
Island (CPI-U) published by the Bureau of Labor Statistics of the U. S.
Department of Labor or any successor to such Bureau. If the Index ceases to use
the 1982-84 average equaling 100
as the basis for calculation, or if a
change is made in the kind or
number of items contained in the Index, or if the Index is altered, converted
or revised in any other manner, then the Index shall be adjusted to the figure
which would have been arrived at had the change in the Index not occurred. If
the Index shall be discontinued, then any comparable Index issued by such
Bureau or similar agency shall be used for the purposes hereof, with such
adjustment as shall be appropriate to give effect to the intent of this
section.

The term “Rent Escalation
Percent” for each Lease Year shall mean the greater of (a) 3%, or
(b) the percentage increase (but not less than zero) by which the Index for the
second month before the first month of such Lease Year exceeds the Index for
the 14th month before the first month of such Lease Year.

The term “Base Rent Escalation” for each Lease Year
shall mean the product of (a) the Rent Escalation Percent for such Lease Year
and (b) the Base Rent
for the immediately preceding
Lease Year.

The term “Adjustment Date” shall mean the first day of
Lease Year 2 in §1.14
above and the first day of each Lease Year thereafter during the term of this
Lease.

On the first Adjustment
Date and on each Adjustment Date thereafter, the Base Rent for the Lease Year
beginning on such Adjustment Date shall be increased so that it is equal to the
sum of the Base Rent for the immediately preceding Lease Year plus the Base
Rent Escalation for the Lease Year beginning on such Adjustment Date plus any
increase in Base Rent for such Lease Year which may be set forth in Section 1.14.

Landlord shall notify
Tenant by a written statement of each change governed by this section. The
statement shall show (i) the new amount of the Base Rent Escalation, and (ii) the
manner, in reasonable detail, in
which the new annual Base Rent Escalation has been calculated. Landlord’s
failure to render a statement
with respect to any change permitted by this section shall not prejudice
Landlord’s right to render such
a statement retroactively or to render any subsequent statement pursuant to
this section. If any statement pursuant to this section shall be rendered after
the date on which the first monthly installment of any Base Rent Escalation
shall be due, then until such statement is rendered Tenant shall continue to
pay the Base Rent Escalation at the rate immediately theretofore in effect and
Tenant shall pay to Landlord, on the first day of the calendar month next
following the rendition of such statement, in addition to the then accruing monthly installment of annual
Base Rent, all unpaid Base Rent indicated by such statement.

Article 3. Escalation for Real Estate Taxes.

3.1. Definitions.

(a)           “Real Estate Taxes” shall mean all taxes and assessments,
and any bill for work done or services performed by a governmental agency which
may be levied, assessed or imposed at any time during the term of this Lease by
any governmental authority upon or against the land or the

 3
 

 

Building, or on personal property owned in conjunction
therewith for any reason, including Business Improvement District taxes and “MTA” surcharges. If in any Tax Year
(including the Base Tax Year) there is any abatement, exemption or discount of
Taxes (or any assessment or rate which comprises Real Estate Taxes), the
abatement, exemption or discount shall not be taken into account, and Real
Estate Taxes shall be determined as if there were no abatement, exemption or discount. In addition,
if due to a future change in the method of taxation, any tax or payment shall
be levied against the Landlord in substitution for any tax which would
otherwise constitute a Real Estate Tax, such tax or payment shall be deemed to
be a Real Estate Tax for the purposes hereof.

(b)           “Tax
Year” means the period July lst-June
30th, or any
other 12-month period selected by a governmental entity as the measuring date
for payment of Real Estate Taxes. Tenant agrees to pay as Additional Rent
(Tenant’s “Real Estate
Tax Contribution”) for each
Tax Year during the tern Tenant’s Proportionate Share of any increase in Real
Estate Taxes above the Real Estate Taxes paid or payable for the Base Tax Year, as defined in §1.16.

3.2. Monthly Installments.
Tenant shall pay monthly installments on account of its Real Estate Tax Contribution
in advance. During the first year of the Term, the installments shall be 105%
of the Real Estate Tax Contribution which Tenant would have paid if the Lease
had commenced one year earlier {with the Base Tax Year deemed modified
accordingly). Thereafter, Tenant’s installments shall be 105% of one-twelfth of
Tenant’s Real Estate Tax Contribution for the previous year. Within 60 days
after the close of each Tax
Year, Landlord shall send to Tenant a statement of Landlord’s Real Estate Taxes
during that Tax Year. Within 10 days thereafter, Tenant shall pay to Landlord, or Landlord
shall refund to Tenant or credit against Tenant’s subsequent Real Estate Tax
Contribution (as applicable), the difference between Tenant’s total
installments during that Tax Year and Tenant’s Real Estate Tax Contribution. Tenant’s Real Estate
Tax Contribution during the first and last year of the term shall be pro-rated
equitably. If the due date or frequency of Real Estate Tax payments to the
municipality is changed, the installments and reconciliation of Tenant’s
contributions will be adjusted accordingly.

3.3. Expense of Reductions. If
Landlord should reasonably incur any expenses in connection with Landlord’s
successful endeavor to reduce the assessed valuation or to reduce any bill for
work done or services rendered, assessment or levy, water or sewer charges,
thereby reducing Tenant’s share of increased Real Estate Taxes as set out
above, Tenant shall pay as Additional Rent Tenant’s Proportionate Share of such
expenses of Landlord, and
such amount shall be payable to Landlord as Additional Rent and collectible in
the same manner as annual Base Rent 10 days following Landlord’s demand.

3.4.
Evidence. A copy of a
Real Estate Tax bill, bill for assessment or levy, bill from Landlord
for expenses of any proceeding to obtain a
Real Estate Tax reduction, or a letter from Landlord’s mortgagee
attesting to any such amount shall be conclusive evidence of the amount of any
Real Estate Tax or expense of obtaining a reduction unless disputed by Tenant
within 30 days after receipt.

3.5. Nature of
Payments. All payments
to be made by Tenant under Article 3 are
Additional Rent.

Article 4. Security Deposit.

4.1. Deposit.
Tenant shall maintain a Security Deposit with Landlord in the amount as set
forth in Article 1
above as security for the faithful performance by Tenant of all of the terms,
covenants and conditions required to be performed by Tenant hereunder. If
Landlord shall deposit the Security Deposit in a banking organization in
an interest-bearing account, Landlord shall be entitled to receive, as
administration expenses, a sum equivalent to 1% per annum thereon in lieu of
all other administrative and custodial expenses. The Security Deposit shall be
returned to Tenant after the expiration of this Lease and delivery of
possession of the Premises to Landlord if, at such time, Tenant has performed
fully and faithfully all of the terms, covenants and conditions hereof. In the
event of termination of Landlord’s interest in this Lease, Landlord shall transfer or credit the Security
Deposit to Landlord’s
successor in interest, and Landlord shall thereupon be released from any
liability for the return of the Security Deposit or the accounting therefor.
The provisions hereof shall apply to every transfer or assignment made of the

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security to a new Landlord. Tenant shall not assign or
encumber or attempt to assign or encumber the monies deposited herein as
security, and neither Landlord nor its successors or assigns shall be bound by
any such assignment, encumbrance, attempted assignment or attempted
encumbrance.

4.2.
Default. If Tenant is in default under this Lease, Landlord may
use, apply or retain all or any part of the Security Deposit for the payment of
any monetary obligation due hereunder or to compensate Landlord for any other
expense or cost which Landlord may expend, or any loss or damage which Landlord
may suffer, by reason of Tenant’s default under the terms hereof, including any
damages or deficiency in the reletting of the Premises. If any portion of the
Security Deposit is so used or applied, regardless of whether such use or
application is before or after Tenant has ceased to occupy the Premises, Tenant
shall, within 5 days after written demand therefor, deposit with Landlord cash
in an amount sufficient to restore the Security Deposit to its original amount.

4.3.
Rights of Mortgagee. No holder of a mortgage or deed of trust or
a lessor under a ground lease to which this Lease is or may become subordinate
shall be responsible for the Security Deposit, unless such mortgagee or holder
of such deed of trust or lessor shall have actually received such Security
Deposit.

Article 5. Use and Occupancy.

5.1. Permitted Use.
Tenant shall use and occupy Premises for the “Permitted Use” described in §1.7 and for no other purpose. Tenant
shall at no time use or occupy the Premises in violation of the certificate of
occupancy for the Building.

5.2. Prohibition of Certain Activities or Uses.

(a)           Tenant shall not do or permit
anything to be done in the Building or on the Premises which may (i) increase
the existing rate or violate the provisions of any insurance carried with
respect to the Building or any of the contents thereof; or (ii) create
any public or private nuisance, commit waste or disturb the quiet enjoyment of
any other occupant of the Building; or (iii) violate any present or future law,
ordinance, regulation or requirement of any governmental authority or any
restriction or covenant existing with respect to the Premises. The judgment of
any court or the admission of Tenant in any action that Tenant has violated any
governmental law, ordinance, regulation or requirement shall be conclusive as
between Landlord and Tenant. The foregoing shall not be construed to create or
confer upon Tenant or any other person any rights with respect to Landlord; or
(iv) overload the floors or otherwise damage the structure of the Building; or
(v) constitute an improper, immoral or objectionable purpose; or (vi) increase
the cost of electricity, natural gas or other utility service beyond that level
permitted in this Lease; or (vii) subject Landlord or any other Tenant to any
liability to any third party.

(b)           Tenant shall not permit any machine,
personal property or fixture heavier than customarily used in connection with
general office purposes or Tenant’s permitted use to be placed in the Premises.

(c)           Tenant
shall not make any holes in any part of the Premises or place any exterior
signs or interior drapes, blinds or similar items visible from outside the
Premises without Landlord’s prior written consent.

(d)           (i) Tenant shall not use, generate,
manufacture, produce, store, treat, dispose or permit the escape on, under,
about or from the Premises, or any part thereof, of any asbestos,
polychlorinated biphenyls, petroleum products or any flammable, explosive,
radioactive, toxic, contaminating, polluting matter, waste, or substance or
related injurious materials, whether injurious by themselves or in combination
with other materials, or any other hazardous or toxic materials, wastes and
substances which are defined, determined or identified as such in any federal, state or local laws, rules or regulations, whether now existing or hereinafter enacted
or promulgated or any judicial or administrative interpretation of any thereof,
including any judicial or administrative orders or judgments (collectively “Hazardous Materials”). Tenant shall also not use, generate,
manufacture, produce, store, treat,

 5
 

 

dispose or permit the escape on, under, about or from
the Premises of any material, substance, or chemical regulated by any federal,
state or local law, rule, ordinance or regulation (collectively “Regulated Materials”).

(ii)         Tenant shall indemnify, defend and hold
harmless Landlord and Landlord’s employees, partners, agents or successors from
any and all claims, sums paid in settlement of claims, judgments, damages, cleanup costs,
penalties, fines, costs, liabilities, losses or expenses which arise during or
after the Term as a result of Tenant’s breach of the obligations set forth
herein and from the release in the Premises of, or contamination of the
Premises by, Hazardous Materials or Regulated Materials which are introduced or
permitted to be introduced by Tenant at any time during the Term. This
indemnity includes (A) costs incurred in connection with any investigation of
site conditions or any cleanup, remedial, removal or restoration work required
by any federal, state or local governmental
agency or political subdivision and attorneys, consultants and experts fees; (B) additional costs required to take
necessary precautions to protect against the release of Hazardous or Regulated
Materials on, in, under or affecting the Building or the Premises, into the
air, any body of water, any other public domain or any other surrounding areas
and (C) any costs incurred to comply, in connection with all or any portion of
the Building or the Premises, with all applicable laws, orders, judgments and
regulations with respect to Hazardous or Regulated Materials. Tenant shall
promptly take all actions at its sole cost and expense which are necessary to
remediate the presence of a Hazardous Material or Regulated Material. This
indemnity shall survive expiration or earlier termination of this tease.

(iii)         From time to
time, Landlord shall have the right, upon 24 hours’ prior notice, to cause the Premises to be inspected and
tested for the presence of Hazardous or Regulated Materials or the correction
of any condition existing at the Premises as a result of any such Hazardous or
Regulated Materials. Tenant shall cooperate with Landlord’s representatives and
agents in the making of such
inspections and tests by furnishing such information and access as may be
necessary or required to carry out the same. If any such tests or inspections
shall reveal any Hazardous Materials or Regulated Materials or other condition
in the Premises as a result of actions of Tenant, Tenant’s employees, officers,
contractors, guests or invitees which requires corrective action or other
remediation, Tenant shall pay to Landlord, as Additional Rent, within 10 days after demand, the cost of such action or remediation,
including the cost of an independent, licensed environmental consultant to
monitor such work and to certify its full completion, and the cost of any
filing fees and permit fees in connection therewith. Landlord shall not be
liable to Tenant or any party claiming through or under Tenant for loss of
business or other consequential damages arising out of such inspections, testing and work, nor shall Tenant or any
other such party be entitled to any abatement of Base Rent or Additional Rent
while such inspections, testing and work are carried out.

5.3. Affirmative Obligations With Respect to Use.
Tenant, at its sole cost and expense, shall:

(a)           Keep the Premises in a clean and
orderly condition, free of objectionable noises, odors or nuisances.

(b)           Comply with all laws, rules,
regulations, statutes and ordinances with respect to the use and storage of Hazardous
Materials and Regulated Materials, including their removal and disposal at the
expiration or earlier termination of the Term. If any equipment installed by Tenant to serve the Premises
utilizes refrigerants containing chlorofluorocarbons (“CFCs”), Landlord, in its sole
discretion, may require Tenant to remove such equipment at the expiration or
earlier termination of the Term. Tenant shall also comply with all laws, rules,
regulations, statutes and ordinances with respect to such equipment and its use
or disposal and/or the use of CFCs.

(c)            Pay when and as due all license
fees, permit fees, equipment use permits, refrigerator machine permits, and
charges of a similar nature for the conduct by Tenant or any subtenant of any
business or undertaking authorized
under this Lease
to be conducted in the Premises.

(d)            Use commercially reasonable methods
to prevent vermin, rats and mice in the Premises and, if Landlord shall notify
Tenant in writing that there is a problem with vermin, rats or mice in

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or about or emanating from the Premises and tenant
shall fail to cure such problem within 10 days
after such notice, maintain a service contract for the extermination of vermin,
rats and mice in the Premises in compliance with Landlord’s requirements using a vendor designated by Landlord.

(e)         Conduct its business in and from the
Premises in a reputable manner in every respect. If at any time Landlord
notifies Tenant that Landlord reasonably objects to Tenant’s manner of
operating the Premises, Tenant shall remove the basis for such objection in
such manner and within such reasonable time as Landlord may specify in such
notice.

(f)          Not place a
load upon any floor of the Premises exceeding the floor load which it was designed to carry and which is
allowed by law. Landlord may prescribe the weight and position of all safes,
business machines and mechanical equipment. Tenant shall place and maintain
installations, at Tenant’s
expense, in settings sufficient (in Landlord’s judgment) to absorb and prevent
vibration, noise and annoyance.

(g)         Keep
the Premises in good order and repair in accordance with §8.3.

5.4.
Suitability. Tenant acknowledges that except as expressly set
forth in this Lease, neither Landlord nor any other person has made any
representation or warranty with respect to the Premises or any other portion of
the Building or improvements, nor has Landlord agreed to undertake any
modification, alteration or improvement thereof, and that no representation has
been made or relied upon concerning the suitability of the Premises or any
other portion of the Building or improvements for the conduct of Tenant’s business.

5.5. License to Use Public
Portions of Building. The public portions of the Building shall be
available for the common use of all Building occupants and their invitees and
shall be used and occupied under a revocable license. If the amount of such
areas shall be changed
or diminished, Landlord shall not be subject to any liability, Tenant shall not
be entitled to any compensation or diminution or abatement of rent, and
revocation or diminution of such areas shall not be deemed constructive or
actual eviction. The public portions of the Building shall be subject to the
exclusive control and management of Landlord. Landlord may close all or any
portion of the public portions of the Building (including sidewalks) as necessary
to prevent a dedication thereof or the accrual of any right to any person or
the public therein.

5.6. Compliance with Law.

(a)           “Legal Requirements” shall mean laws, statutes and ordinances and the orders, rules,
regulations, directives and requirements of all federal, state, county, city and borough departments, bureaus,
boards, agencies, offices, commissions and other subdivisions thereof, or of
any official thereof, or any other governmental public or quasi-public
authority, whether now or hereafter in force, including building codes and
zoning regulations and ordinances and The Americans with Disabilities Act of 1990, as amended, which may be
applicable to the land or Building or the Premises or the sidewalks, curbs or
areas adjacent thereto and all requirements, obligations and conditions of all instruments
of record on the date of this Lease.

(b)           Tenant
shall promptly comply with all Legal Requirements (i) if with respect to the
Premises, whether or not arising out of Tenant’s use or manner of use thereof
(including Tenant’s permitted use) and (ii) if with respect to the Building, if
arising out of Tenant’s use or manner of use of the Premises or the Building
(including Tenant’s permitted use). Tenant shall not do anything in the
Premises which is contrary to Legal Requirements, or which will invalidate or
be in conflict with public liability, fire or other policies of insurance at
any time carried by or for the benefit of Landlord, or which may subject
Landlord to any liability or responsibility.

5.7. Signs;
Directory Listing.

(a)           Any sign, curtain, blind, window
treatment, window film, decoration, or other installation visible from outside
the Premises and suffered or installed by Tenant must be approved in

 7
 

 

advance and in writing by Landlord, in Landlord’s sole
discretion. Landlord shall not unreasonably withhold consent to an
identification sign on Tenant’s door at the entrance to its space.

(b)         Tenant shall be entitled to one
listing, identifying Tenant, on the directory in the lobby and one listing on the
directory on the landing outside the elevator on the floor on which the
Premises are located.

5.8. Collection of Refuse.

(a)          Tenant shall arrange for collection of
refuse at Tenant’s sole cost and expense, using a contractor designated by
Landlord.

(b)         Tenant shall comply with all Legal
Requirements regarding the collection, sorting, separation and recycling of
waste products, garbage, refuse and trash. Landlord may refuse to permit
collection from Tenant of waste products, garbage, refuse or trash that is not
separated and sorted as required by law, or require Tenant to arrange for
collection of specific non-routine trash in a specific manner, at Tenant’s sole
cost and expense. Tenant, utilizing counsel reasonably satisfactory to
Landlord, shall indemnify, defend and hold Landlord harmless (including
reasonable legal fees and expenses) from and against all fines, penalties, or
damages imposed on Landlord or Tenant by reason of Tenant’s failure to comply
with this Section, and all actions, claims and suits arising from such
noncompliance.

5.9. Access to
Premises; Security. Tenant shall have the right of access to the Premises
24 hours a day, 7 days a week. Landlord initially shall maintain a 24-hour
attended lobby to screen visitors to the Building and shall provide and monitor cameras to record
the exterior entrance to the main lobby and the freight lobby. Landlord may
thereafter from time to time make reasonable changes to its methods of making the Building secure.

Article
6. Utilities and Services.

6.1. Generally.
Except as expressly provided in this Lease, Tenant shall pay for all water,
gas, electricity, telephone, and all other utilities used or consumed in the
Premises, and shall pay all water, sewage and trash removal charges imposed by
government authority or otherwise. Upon request, Tenant shall install any meter
necessary for Tenant to make any such payments directly to the utility
provider. Except as expressly provided in this Lease, Tenant shall arrange and
pay for the entire cost and expense of all (a) wiring from the core of the
floor on which the Premises are located, (b) telephone stations, (c) equipment
and use charges, and (d) other materials and services for any utilities or
telecommunications facilities utilized by Tenant.

6.2.
Utilities and Services to be Provided by Landlord. As long as
Tenant is not in default under this Lease, Landlord shall provide (i) passenger
elevator facilities on business days from 8 a.m. to 6 p.m., with one passenger elevator subject to call at
all other times; (ii) steam heat to the
Premises on business days from 8 a.m. to 6
p.m., and on Saturdays from 9:00 a.m. to 12:00 p.m.; (iii) water for ordinary lavatory purposes, but if
Tenant uses water for any other purposes or in unusual quantities, Landlord, at
Tenant’s expense, may install a water meter, which Tenant shall keep in good
working order and repair, and Tenant shall pay for water consumed per the meter
as Additional Rent upon rendition of bills; (iv) air-conditioning/cooling to
the Premises from May 15th through September
30th on business days (Monday through Friday,
holidays excepted) from 8:00 a.m. to 6:00 p.m.; (v) ventilation to the Premises
during the same hours except when air-conditioning/cooling is being furnished
as stated above; (vi) freight elevator service on business days between 8:00
a.m. and 12:00 p.m. and between 1:00 p.m.
and 4:00 p.m.; and (vii) 6 watts
of electricity capacity per usable square foot of space in the Premises.

6.3. After-Hours and
Additional Services. The Base Rent does not include the cost of furnishing
heat, air-conditioning, elevator or mechanical ventilation to the Premises
during periods other than the hours and days set forth in §6.2. (Periods other
than those set forth in §6.2 shall be referred to as “Overtime Periods”). Accordingly, if Landlord shall furnish any heat,
air-conditioning, mechanical ventilation or elevator services to the Premises
during Overtime Periods, Tenant shall pay Landlord

 8
 

 

additional rent for such services at the standard
rates fixed from time to time by Landlord. Tenant shall provide reasonable
advance notice of its need for such services. If Landlord is unable or
unwilling to supply those services, then Landlord, at Tenant’s expense, may
install controls which permit Tenant to regulate when such overtime services
are furnished.

6.4. Limitation on
Landlord’s Liability. In no event shall Landlord be liable for any
interruption or failure in the supply of any utility or service to the Premises
unless such failure is caused by Landlord’s gross negligence or willful
misconduct. Utilities and services furnished to the Premises are subject to and
limited by all laws, rules, and regulations of any governmental authority
affecting the supply, distribution, availability of or consumption of energy,
including, but not limited to, heat, electricity, gas, oil and/or water.
Landlord may also suspend operation of the heating system, the air conditioning
system, the ventilation system, elevator service, the plumbing system, electric
power systems, cleaning or other services when Landlord deems it necessary by reason of accident or
emergency, or the making the necessary repairs, and such suspension may
continue until such repairs have been completed. Landlord’s failure to furnish
any of such services shall not constitute or give rise to any claim of an actual or constructive eviction;
or entitle Tenant to any compensation or abatement or diminution of Rent; or
relieve Tenant from any of its obligations under this Lease; or impose any
liability upon Landlord or its agents by reason of inconvenience or annoyance
to Tenant or injury to or interruption of Tenant’s business or otherwise.

6.5. Electrical Current.

(a)           Landlord shall furnish electricity to
Tenant on a “rent
inclusion” basis in accordance with this section. Landlord shall have the right
at any time and from time to time
to measure Tenant’s consumption of electricity, including Tenant’s reasonable
share of the electricity used by the HVAC system on the floor on which the
Premises are located as measured by a survey performed by a qualified person. If Landlord on the basis of such measurement
and survey reasonably determines that Tenant’s consumption of electricity
exceeds the Electricity Inclusion Factor, then Landlord may charge Tenant, in
addition to the Electricity Inclusion Factor, an amount equal to the cost of
such additional consumption of electricity. If at any time the electric rates
on the schedule pursuant to which Landlord purchases electricity for the
Building shall exceed such rates in effect on the date of this Lease, including
by reason of Landlord’s changing the electricity supplier for the Building,
then, effective on and after the date of the change in the electric rates,
Tenant shall pay as additional annual Base Rent and Electricity Inclusion
Factor, an amount equal to the product of the Electricity Inclusion Factor set
forth in §1.19 above multiplied
by the ratio of the new such electric rates to such electric rates in effect on
the date of this Lease. Landlord
shall give Tenant prompt written notice of any such change and the amount
thereof. The amount due for the period from the effective date of the change to
the last day of the month in which Tenant receives notice of the change shall
be paid within 10 days following the date of Landlord’s
notice. Landlord shall furnish electric current to the Premises for the use of
Tenant for the operation of the lighting fixtures and the electrical
receptacles for ordinary office equipment in the Premises and there shall be no
separate charge to Tenant for such electric current by way of measuring such
electricity service on any meter. The annual Base Rent shall include the
Electricity Inclusion Factor, which shall be collectible by Landlord in the same
manner as annual Base Rent.

(b)            Tenant shall at all times comply
with the rules, regulations, terms and conditions applicable to service,
equipment, wiring and requirements of the public utility supplying electricity
to the Building. Tenant shall not use any electrical equipment which, in
Landlord’s reasonable judgment, would exceed the capacity of any of the
electrical conductors or equipment in or otherwise servicing the Premises, or
interfere with the electrical service to other tenants of the Building, or
exceed 6 watts
per square foot of usable space within the Premises. If, in Landlord’s sole
judgment, Tenant’s electrical requirements necessitate installation of an
additional riser, risers or other proper and necessary conductors or equipment,
including, without limitation, any switchgear, Landlord shall so notify Tenant
of whether same can be provided in a commercially reasonable manner and, if so,
the cost of providing it. Within 5 business days after receipt of such notice,
Tenant shall either cease use of such electrical equipment or agree to pay 50%
of such cost immediately and the balance upon completion of the work and
rendition of a bill, in each case as Additional Rent.

 9
 

 

(c)           Landlord
shall not be liable in any way to Tenant for any failure or defect in the
supply or character of electric service furnished to the Premises by reason of
any requirement, act or omission of the utility company serving the Building or
for any other reason not attributable to the gross negligence of Landlord.

6.6. Cleaning Services.
Tenant shall arrange for cleaning services for the interior of the Premises,
for the interior of the exterior windows, and, if they tilt inward, for the
exterior of the exterior windows, in each case at Tenant’s sole cost and
expense, using a contractor from a list provided by Landlord. All cleaning shall be performed at
such times and in such a manner as Landlord may reasonably determine pursuant
to Rules and Regulations for the Building.

Article 7. Condition of Premises.

7.1.
Condition of Premises and Building. Tenant represents that it has
inspected the Premises, and agrees that Landlord shall not be required to
perform any work, supply any materials or incur any expense to prepare the
Premises for Tenant’s occupancy, except as otherwise specifically provided for
herein. Tenant hereby accepts the Premises in its condition on the date of this
Lease, “as is” and subject to violations, whether or not of record. Neither
Landlord nor Landlord’s agents have made any representations or promises with
respect to the physical condition of the Building, the land upon which it is
erected or the Premises, the rents, leases, expenses of operation or any other
matter or thing affecting or related to the Premises except as expressly set
forth in this Lease, and no rights, easements or licenses are acquired by
Tenant by implication or otherwise except as expressly set forth in this Lease.
Tenant acknowledges that Tenant’s taking possession of the Premises shall be
conclusive evidence that the Premises and the Building were in good and
satisfactory condition at the time possession was taken, except as expressly
set forth herein. Notwithstanding the foregoing provisions of this §7.1, on or
before the Commencement Date Landlord shall (a) leave for Tenant all unclaimed
furniture located in the Premises on the date of this Lease, (b) at
Landlord’s option, either professionally clean the existing carpet in the Premises to
a “class A” condition or remove such existing carpet and install in its place
new Building-standard carpet, (c) repaint the Premises (not including the
ceiling) in a Building-standard color chosen by Tenant, and (d) install, at
Tenant’s expense, a new coordinating “glass” office wall along the southeastern
open area of the Premises. Landlord shall provide Tenant with an estimate of
the cost of installing such wall prior to commencing work on it.

7.2. Quiet Enjoyment.
Landlord covenants and agrees with Tenant that upon Tenant paying the Base Rent
and Additional Rent and observing and performing all the terms, covenants and
conditions on Tenant’s part to be observed and performed, Tenant may peaceably
and quietly enjoy the Premises, subject, nevertheless, to the terms and
conditions of this Lease and to the ground leases, underlying leases and
mortgages mentioned herein.

7.3. Failure to Give
Possession. If Landlord is unable to give possession of the Premises on the
Commencement Date because of the holding-over or retention of possession of any
tenant, subtenant or occupant or because a certificate of occupancy has not
been procured for the Premises or the Building, or for any other reason,
Landlord shall not be subject to any liability for failure to give possession
on such date, the validity of the Lease shall not be impaired, and the
Expiration Date shall not be extended, but the rent payable hereunder shall be
abated (unless Tenant is responsible for Landlord’s inability to obtain
possession) until Landlord has given Tenant written notice that Landlord is
able to deliver possession in the condition required by this Lease. If permission is given to Tenant to
enter into the possession of the Premises or to occupy premises
other than the Premises before the Commencement Date, then such possession or
occupancy shall be deemed to be under all the terms, covenants, conditions and
provisions of this Lease except the obligations to pay the fixed annual Base
Rent set forth in this Lease and to pay utilities.

 10
 

 

Article 8. Alterations during Term; Maintenance of
and Repairs to
Premises.

8.1.
Alterations During Term.

(a)         As used in this Lease, the term “Alterations” shall mean any changes, alterations,
installations, additions, or improvements, of any nature, in or to the
Premises. Tenant shall make no Alterations without Landlord’s prior written
consent, provided, however, that, subject to Landlord’s prior written consent,
which shall not be unreasonably withheld or delayed, and subject to compliance
at all times with all applicable laws and governmental rules and regulations
and Landlord’s reasonable requirements relating to construction and
alterations, Tenant may make nonstructural decorative interior Alterations
costing less than $1,000 in the aggregate. Tenant shall give to Landlord at
least 10 business days’ prior written notice of the expected date of
commencement of any work relating to Alterations. Tenant shall discharge any
mechanic’s or materialman’s liens imposed in connection with the Alterations
pursuant to §8.6.

(b)         Tenant may not make any changes or
installations to the exterior of the Premises or which will be visible from the
exterior of the Premises. No window-type air conditioner may be installed in
the Building or through any of its exterior walls and no equipment may be
installed on the roof of the Building. No openings may be cut in the roof,
floors, or exterior walls of the Building.

(c)          If Landlord approves an Alteration,
then in order to compensate Landlord for the cost of reviewing and inspecting
the Alteration during the Term and of coordinating entry by Tenant’s workers
and the performance of the Alteration so as not to disrupt other tenants within
the Building, Tenant shall pay to Landlord an administrative fee equal to 8% of the cost of the Alteration. Such
fee shall be payable as Additional Rent upon demand by Landlord. Landlord may
base its calculation of the amount of such fee upon an invoice from the
contractor performing the work, and shall be provided with same upon demand.

8.2. Maintenance, Repairs and Alterations to
Building by Landlord.

(a)          Subject to the other provisions of
this Lease, Landlord shall maintain in good order, condition and repair the
public portions and structural elements of the Building, including the foundation,
bearing walls, columns, and roof.

(b)           Landlord
shall have the right to change the arrangement or location of public entrances,
passageways, doors, doorways, corridors, elevators, stairs, toilets or other
public parts of the Building, or the name, number or designation by which the
Building may be known, or the manner in which the Building is heated, at any
time without such changes constituting an eviction and without incurring
liability to Tenant therefor. There shall be no allowance to Tenant for
diminution of rental value and no liability on the part of Landlord by reason
of inconvenience, annoyance or injury to business arising from Landlord or
others making repairs, alterations, additions or improvements in or to any
portion of the Building or the Premises or in or to the fixtures,
appurtenances, or equipment thereof. Furthermore, Tenant shall not have any
claim against Landlord by reason of Landlord’s imposition of controls on the
manner of access to the Building by Tenant’s invitees as the Landlord may deem
necessary for the security of the Building and its occupants.

8.3. Maintenance
and Repairs by Tenant.

(a)           Tenant, at its sole cost and expense,
shall maintain the Premises in good order, condition and repair, reasonable
wear and tear excepted, including electric light bulbs; interior surfaces of
the ceilings, walls and floors; doors; window panes and frames; electrical
wiring, switches and fixtures; and all equipment and fixtures installed by or
at the expense of Tenant. Tenant shall use contractors approved by Landlord.
Tenant shall not make any repair affecting the windows, doors, structure or utility
systems of the Building without first notifying Landlord in writing. After
notice from Tenant, Landlord shall have the right. (but not the obligation) to
make such repair on Tenant’s behalf, at the expense of and for the account of
Tenant. If Tenant fails to maintain the Premises in good order, condition and
repair, Landlord may give Tenant notice to do such acts as are reasonably required so to maintain the Premises. If Tenant
fails to promptly commence such work and diligently prosecute it to completion,
Landlord shall have the right to do such acts and expend such funds at the
expense of Tenant as are reasonably required to perform such work. Any amount
so expended by Landlord shall be paid by Tenant promptly

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upon demand therefor with interest at 18% per annum.
Landlord shall have no liability to Tenant for any damage, inconvenience or
interference with the use of the Premises by Tenant as a result of performing
any such work. Tenant expressly and irrevocably waives the benefit or
applicability of any statute which would otherwise afford Tenant the right to
make repairs at Landlord’s expense or to terminate this Lease because of
Landlord’s failure to keep the Premises in good order, condition and repair.

(b)         Tenant
shall give prompt notice of any defective condition in the Premises for which
Landlord may be responsible hereunder. Tenant shall not be entitled to any
setoff or reduction of rent by reason of any failure of Landlord to comply with
the covenants of this or any other article of this Lease. Tenant’s sole remedy
at law in such instance will be by way of an action for damages for breach of contract. The provisions of
this Article shall not apply in the case of fire or other casualty which are
dealt with elsewhere in this Lease.

(c)          Tenant
shall be responsible for the cost of repairing all damage or injury to the
Premises or to any other part of the Building, and the systems and equipment
thereof, whether requiring structural or nonstructural repairs, which is caused
by or results from carelessness, omission, neglect or improper conduct of
Tenant, its agents, employees, invitees or licensees, or which arises out of
any work, labor, service or equipment done for or supplied to Tenant or arising
out of the installation, use or operation of the Tenant’s property or
equipment.

8.4. Cleaning of
Windows. Tenant will not clean nor permit to be cleaned any window in the
Premises from the outside in violation of any applicable law, and without prior
notice to Landlord. Tenant shall clean the windows as provided in §6.6 above. Landlord shall have no
obligation to clean windows.

8.5. Landlord’s Rights
as to Installations in and Access to Premises. Landlord may place, maintain
and repair installations and equipment of any kind in, upon and under the
Premises as necessary or desirable
for the servicing of the Premises and any other portion of the Building. Landlord may also enter
the Premises at all times in order to inspect them, to exhibit them to
prospective purchasers, mortgagees, tenants and lessees, and to make such
repairs, additions, alterations or improvements as Landlord may deem desirable.
Tenant hereby expressly waives any claim for damages for any injury or
inconvenience to, or interference with, Tenant’s business, any loss of
occupancy or quiet enjoyment of the Premises, and any other loss occasioned
thereby. Landlord shall at all times have and retain a key with which to unlock
all the doors in, upon and about the Premises, excluding Tenants vaults and
safes. Landlord may use any and all means which Landlord may deem proper to
open such doors in an emergency in order
to obtain entry to the Premises. No entry by Landlord upon the Premises shall
under any circumstances be construed or deemed to be a forcible or unlawful
entry into or detainer of the Premises or an eviction of Tenant from the
Premises or any portion thereof.

8.6. Mechanic’s Liens.
Tenant shall keep the Building and the Premises free from any liens arising out
of work performed on or materials furnished to the Premises or obligations
incurred by Tenant and shall indemnify, hold harmless and defend Landlord from
any liens and encumbrances arising out of any work performed or materials
furnished by or at the direction of Tenant. If within 15 days following the imposition of any
such lien or encumbrance Tenant shall not cause such lien or encumbrance to be
released of record by payment or posting of a proper bond, Landlord shall have,
in addition to all other remedies provided herein and by law, the right, but
not the obligation, to cause the same to be released by such means as it shall
deem proper, including payment of the attorneys’ fees and costs, and the same
shall be payable to Landlord by
Tenant upon demand as Additional Rent with interest thereon at 14% per annum. Landlord shall have the
right at all times to post and keep posted on the Premises any notices
permitted or required by law, or which Landlord shall deem proper, for the
protection of Landlord and the Premises and any other party having an interest
therein from mechanics’ and materialmen’s liens.

8.7. Adjacent
Excavation-Shoring. If an excavation is made upon land adjacent to the
Premises, Tenant shall afford to the person causing such excavation a license to enter the Premises for the
purpose of doing such work as such person shall deem necessary to preserve the
wall or the Building from injury or damage and to support the wall or Building
by proper foundations and shall make no claim against Landlord for damages or
indemnity, or for diminution or abatement of rent.

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Article 9.
Insurance.

9.1. Tenant’s Insurance. At all times during
the term of this Lease, Tenant shall procure and continue in force the
following insurance coverage:

(a)          Broad form comprehensive general
liability insurance covering bodily injury and property damage of not less than
$2,000,000 for any
single injury and $2,000,000 for any single occurrence;

(b)          Fire and extended coverage insurance,
including vandalism and malicious mischief coverage, in an amount equal to the
full replacement value of all fixtures, furniture and improvements installed by
or at the expense of Tenant, and naming Landlord as loss payee;

(c)          Contractual liability insurance
endorsements with respect to Tenant’s liability under this Lease;

(d)          Workers’ compensation insurance policy
providing statutory benefits for Tenant’s employer’s liability;

(e)          Intentionally omitted; and

(f)           Such other or additional insurance in
such types and amounts as Landlord may reasonably require.

9.2. Contents of insurance
Policies. All insurance shall name Landlord, its managing agent, the
present and any future mortgagee of the Building, and any other persons specified by Landlord from time to time
as additional insureds. Such insurance shall be maintained with companies
licensed to do business in New York State and having a rating of not less than
A- in “Best’s Insurance Guide.” Tenant shall furnish to Landlord certificates
of coverage on the Commencement Date and thereafter not less than 30 days prior to the expiration of each
policy. All policies shall contain a provision that no act or omission of Tenant shall affect
or limit the obligation of the insurance company to pay the amount of any loss
sustained. No such policy shall be cancelable or subject to reduction of
coverage or other modification or cancellation except after 30 days’ prior written notice to
Landlord by the insurer. All such policies shall be written as primary
policies, not contributing with and not in excess of the coverage which
Landlord may carry. At least 30 days prior to the expiration of such policies.
Tenant shall furnish Landlord with renewals or binders. If Tenant does not
maintain any required insurance, Landlord may (but shall not be required to)
procure said insurance on Tenant’s behalf and
charge Tenant the premiums together with a 25% handling charge, payable
upon demand. Tenant may provide such insurance coverage pursuant to blanket
policies if they expressly afford coverage to the Premises and to Tenant as
required by this Lease. The foregoing minimum limits of policies shall in no
event limit the liability of Tenant under this Lease.

9.3.
Subrogation. Landlord and Tenant shall each procure an
appropriate waiver of subrogation clause or consent to waiver of right to
recovery clause in (or endorsement on) any “all-risk” property insurance
covering the Premises and the Building and their respective alterations,
construction and other improvements, personal property, fixtures, furniture,
inventory and equipment located thereon or therein. Such clause or endorsement
shall state that their respective insurers waive subrogation or consent to a
waiver of right of recovery against the other party, to the extent permitted by
law. Neither Landlord nor Tenant will make any claim against or seek to recover
from the other or its partners, directors, officers, shareholders or employees
for any loss or damage to their property or the property of others resulting from fire or other hazards
covered by such “all-risk” property insurance policies to the extent that such
loss or damage is actually
recoverable under such policies (exclusive
of any deductibles). Such waiver will not apply in the event of loss or damage
resulting from the other party’s gross negligence or willful misconduct. Any
insurance policies herein required to be procured by Tenant shall contain an
express waiver of any right of subrogation by the insurer against Landlord.

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9.4. Lender as insured.
At Landlord’s option, any mortgage lender interested in any part of the
Building or the Premises may be afforded coverage under any policy required to
be secured by Tenant hereunder, by use of a mortgagee’s endorsement to the
policy concerned.

9.5. No Coverage for Tenant’s Personal
Property. Landlord shall not be obligated to repair any damage to or to
carry insurance on the alterations, construction and other improvements
installed by Tenant within the Premises or on Tenant’s fixtures, furnishings,
equipment, personal property or inventory located in the Premises, or to carry
insurance against interruption of Tenant’s business.

9.6. Compliance with
Insurance Requirements. Tenant shall not keep anything in the Premises or
use the Premises in a manner which will increase the insurance rate for the
Building over that in effect prior to the commencement of Tenant’s occupancy.
Tenant shall pay all costs, expenses, fines, penalties, or damages imposed upon
Landlord by Tenant’s failure to comply with this section. If Landlord’s fire insurance rate shall increase
during the Term as a result of Tenant’s use or manner of use, then Tenant shall
reimburse Landlord, as Additional Rent hereunder, for the increase. In any
action or proceeding wherein Landlord and Tenant are parties, a schedule or “make
up” of rates for the Building or Premises issued by a body making fire
insurance rates applicable to the Premises shall be conclusive evidence of the
facts therein stated and of the items and charges in the fire insurance rates
then applicable to the Premises.

Article 10. Indemnities.

10.1.
Indemnification by Tenant. Tenant shall defend, indemnify and
save harmless Landlord and any managing agent, mortgagee or lessor under any
ground or underlying lease, and their respective agents, officers and
employees, contractors, licensees and invitees (collectively, “Indemnitees”), from and against all loss or liability, claims, suits, demands,
damages, judgments, costs, interest
and expenses (including reasonable counsel fees, witness fees and disbursements
incurred in the defense of any action or proceeding), to which they may be
subject or which they may suffer, by reason of any claim for any injury to, or
death of, any person or persons (including Landlord, its agents, contractors,
employees, licensees and invitees) or damage to property (including any loss of
use thereof) or otherwise arising from or in connection with the occupancy or
use of the Premises, or from any work, installation or thing whatsoever done at the Premises or performed by Tenant
within the Building (whether or not with Landlord’s consent), from and after
the execution of this Lease; resulting from any breach of Tenant’s obligations
under this Lease; or from any act, omission or negligence of Tenant or any of
Tenant’s officers, directors, agents, contractors, employees, subtenants,
licensees or invitees (individually and collectively, “Claims”). Tenant shall pay, satisfy and discharge any judgments, orders
and decrees which may be recovered against any indemnitee in connection with a
Claim within thirty days after the rendering thereof if any action or
proceeding is brought against any indemnitee by reason of any such claim,
Tenant, upon written notice from Landlord, shall resist or defend such action
or proceeding by counsel approved by Landlord in writing, such approval not to
be unreasonably withheld.

10.2. Limits on
Landlord’s Liability for Loss or Damage.

(a)           Landlord shall not be responsible or
liable to Tenant for any loss or damage to Tenant or its property, or property
under Tenant’s care and custody, for any reason, including (but not limited to)
damage caused by water, steam, leakage, fire, theft, or vandalism, or by the
bursting, stoppage or overflow of any drain, or any water or sewer or sprinkler
pipe, unless resulting from Landlord’s gross negligence.

(b)           Landlord
and its agents will not be liable for any loss or damage caused by other
tenants or persons in, upon
or about the Building or caused by operations in construction of any private,
public or quasi-public work.

(c)           Landlord shall not be liable for any
damage Tenant may sustain if at any time any windows of the Premises are
closed, darkened or bricked up (whether temporarily or permanently) for any

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reason, and Tenant shall not be entitled to any
compensation therefor nor abatement or diminution of rent nor shall the same
release Tenant from its obligations hereunder or constitute an eviction.

10.3. Recourse by
Tenant. Tenant shall look only to Landlord’s current rents, issues, profits
and other income Landlord receives from the Building, net of current operating
expenses, liabilities, reserves and debt service, for the satisfaction of
Tenant’s remedies for the collection of a judgment (or other judicial process)
requiring the payment of money by Landlord in the event of any default or
liability by Landlord hereunder. No other property or assets of Landlord and no
property of any officer, employee, director, shareholder, partner or principal
of Landlord shall be subject to levy, execution or other enforcement procedure
for the satisfaction of Tenant’s remedies under or with respect, to this Lease,
the relationship of Landlord and Tenant hereunder or Tenant’s use or occupancy
of the Premises.

Article 11.
Damage or Destruction.

11.1. Landlord’s Obligations.
Tenant shall give immediate notice to Landlord if the Premises are damaged by fire or
other casualty, and this Lease shall continue in full force and effect except
as set forth below. If the Premises shall be partially damaged by any casualty
insured against in any insurance policy maintained by Landlord, Landlord shall
repair the Premises upon receipt of insurance proceeds. Until such repair is
complete, the Basic Rent and Additional Rent shall be abated proportionately as
to any portion of the Premises rendered untenantable. If, however, by reason of
such occurrence (a) the Premises are rendered wholly untenantable; or (b) the
Premises are damaged as a result of a risk which is not covered by insurance; or
(c) the Premises are damaged during the last 24 months of the Term or of any renewal; or (d) insurance proceeds
or a portion thereof are applied
by the lender to the satisfaction of Landlord’s mortgage on the Building; or
(e) the Premises or the Building is damaged to the extent of 50% or more of the
then-monetary value thereof, Landlord may either elect to repair the damage or may cancel this Lease by notice of
cancellation within 60 days
after such event and thereupon this Lease shall expire upon the date specified
in such notice as fully and completely as if such date were the date set forth
above for the termination of this Lease and Tenant shall forthwith quit,
surrender and vacate the Premises without prejudice to Landlord’s rights and
remedies against Tenant under the Lease as in effect prior to such termination. In that case Tenant’s
liability for rent upon the termination of this Lease shall cease as of the
date of the occurrence of such casualty. If Landlord elects to repair any such
damage, Tenant shall cooperate with Landlord’s restoration by promptly removing
from the Premises all of tenant’s salvageable inventory and moveable equipment,
furniture and other property. Tenant’s liability for rent shall
resume 5 days after notice the Premises have been repaired. If the damage is
caused by the negligence of Tenant or its employees, agents, invitees or
concessionaires, there shall be no abatement of rent. Except for abatement of
rent (if any), Tenant shall have no claim against Landlord for any damage
suffered by reason of any such damage, destruction, repair or restoration, nor shall
Tenant have the right to terminate this Lease as the result of any statutory
provision now or hereafter in effect pertaining to the damage and destruction
of the Premises or the Building,
except as expressly provided herein.

11.2. Restoration of
Tenant’s Fixtures and Equipment. Landlord shall not be required to repair any injury or damage caused by fire or any other cause,
or to make any restoration or replacement of any paneling, decoration,
partition, railing, floor covering, office fixture or any other improvement or
property installed in the Premises by Tenant or at the direct or indirect
expense of Tenant. Unless this Lease is terminated by Landlord pursuant to §11.1,
Tenant shall restore or replace such improvements and property in the event of injury or damage to a
condition at least equal to that existing prior to the destruction or casualty.

Article
l2. Assignment and
Subleasing.

12.1.
No Sublease or Assignment. Tenant shall not transfer, assign,
mortgage or hypothecate this Lease, in whole or in part, permit the use of the
Premises by any person or persons other than Tenant, its employees, customers
and others having lawful business
with Tenant, or sublet the Premises
or any part thereof, without the prior written consent of Landlord in each and
every instance, at Landlord’s sole discretion. Such prohibition against
assigning or subletting shall include any assignment or subletting by operation
of law. Any transfer of this Lease from Tenant by merger, consolidation,
transfer of assets or

 15
 

 

liquidation shall constitute an assignment for
purposes of this Lease. If Tenant is not a natural person, the transfer, assignment, reallocation or
hypothecation of any stock or interest in such entity so as to
transfer a record or beneficial interest in the aggregate in excess of 49% of such interest pursuant to a common plan, whether in a single
transaction or a series of transactions, shall be deemed an assignment within
the meaning of this §12.1.

12.2. Effect of
Unauthorized Transfer. Any assignment or subletting without Landlord’s
consent shall be void ab  initio and shall constitute a default
hereunder which, at the option of Landlord, shall result in the termination of this Lease or the exercise of Landlord’s
other remedies hereunder (except that until the default is cured, the proposed
assignee or subtenant will be deemed to be guaranteeing Tenant’s obligations
hereunder). Consent to any assignment or subletting shall not operate as a
waiver of the necessity for consent to any subsequent assignment or subletting
and the terms of such consent shall be binding upon any person holding by,
under or through Tenant.

12.3. Landlord’s Right
to Terminate Lease or Take Sublease Upon Proposed Sublease or Assignment.
Tenant shall not offer to sublease any of the Premises or to assign this Lease
before delivering to Landlord a written notice that Tenant intends to seek a subtenant or
assignee. Tenant shall not offer to sublease or assign at a base rent lower
than the rent offered by Landlord for comparable vacant space in the Building.
All documents circulated by Tenant in connection with any solicitation shall be
subject to the prior approval of Landlord.

12.4. Collection not
Waiver or Consent. If this Lease is assigned or if the Premises or any
portion thereof are sublet or occupied by any person other than Tenant,
Landlord may collect rent and other charges from such assignee or other party,
and apply the amount collected to the rent and other charges reserved
hereunder, but such collection shall not constitute consent or waiver of the
necessity of consent to such
assignment, subletting or other transfer, nor shall such collection constitute
the recognition of such assignee, subtenant or other party as Tenant hereunder
or a release of Tenant from further performance of any covenant or obligation
herein. No consent by Landlord to any assignment, subletting or other transfer
by Tenant shall relieve Tenant of any obligation to be performed by Tenant
hereunder, whether occurring before or after such consent, assignment,
subletting or other transfer. If Landlord shall consent to any assignment,
subletting or other transfer hereunder, Tenant shall pay or reimburse Landlord’s
reasonable fees and costs, including attorneys’ fees, incurred in connection
with the processing of documents necessary to the giving of such consent.

Article 13. Defaults and Remedies.

13.1. Default by
Tenant. Upon the occurrence of any of the following events, Tenant shall be
deemed in default under this Lease:

(a)          Tenant’s failure to pay any
installment of Base Rent or Additional Rent or any other sum due hereunder
within five days after written notice of nonpayment; provided, however, that if
in any Lease Year (as such term is defined in §1.14) Tenant shall pay any
installment of Base Rent or Additional Rent or any other sum due hereunder more
than five days after it shall be due, then Tenant shall be deemed in default
under this Lease upon Tenant’s failure to pay within five days after it shall
be due any installment of Base Rent or Additional Rent or any other sum
becoming due on or after the sixth day after the due date of the aforementioned
sum paid late by Tenant through and including the last day of the same Lease
Year;

(b)           Assignment of this Lease or
subleasing of any portion of the Premises in violation of Article 12;

(c)           Failure to keep the insurance
policies for the Premises in full force and effect, or to deliver the policies
to Landlord upon request;

(d)           Default by Tenant under any other
agreement between Tenant and Landlord;

 16
 

 

(e)         The Building’s or the Premises’
becoming subject to any mechanic’s, materialman’s or other lien which arises
out of work performed or materials furnished to the Premises or obligations
incurred by Tenant and which remains undischarged of record (by payment,
bonding or otherwise) for 30 days;

(f)          Tenants failure to deliver to
Landlord, within 10 days after request by Landlord, any
estoppel certificate required under this Lease;

(g)          Default
under any guaranty or indemnity executed in connection herewith which continues
after the expiration of any applicable grace periods;

(h)          Tenant’s or any guarantor’s becoming
bankrupt or insolvent or filing any debtor proceedings or having taken against
it, in any court, pursuant to state or federal statute, a petition in
bankruptcy or insolvency, or reorganization, or the appointment of a receiver
or trustee; or Tenant’s petitioning for or entering into an arrangement or
suffering this Lease to be taken under a writ of execution;

(i)           Tenants not taking possession
of the Premises within 30 days after the Date of this Lease, or Tenant’s
vacating or abandoning the premises; or

(j)           Tenant’s failure to perform any other
term, condition, or covenant to be performed by it pursuant to this Lease
within 15 days after written notice; or if such default or omission complained
of shall be of a nature that the same cannot be completely cured or remedied
within said 15-day period, Tenant’s failure to diligently commence curing such
default within such 15-day period or Tenant’s failure thereafter with
reasonable diligence and in good faith to proceed to remedy or cure such
default.

13.2. Conditional
Limitation. If Landlord has given the notice provided for in §13.1 and
Tenant has not cured the breach, or if Tenant shall default in the payment of
any basic rent or Additional Rent, Landlord may serve a written 5 days’ notice
of cancellation of this Lease upon Tenant. Upon the expiration of such 5-day
period, this Lease and the Term shall end and expire as fully and completely as if the expiration of such 5-day
period were the day originally fixed for the end of this Lease, and Tenant
shall then quit and surrender the Premises to Landlord, but Tenant shall remain
liable as hereinafter provided and Landlord shall have the other remedies set
forth in this Lease.

13.3. Landlord’s Remedies. If Tenant defaults,
Landlord shall have the following remedies:

(a)           Landlord, without notice, may
re-enter the Premises (either by force or otherwise) and dispossess Tenant (by
summary proceedings or otherwise) and the legal representative of Tenant or
other occupants of the Premises and remove their effects and hold the Premises
as if this Lease had not been made. Tenant hereby waives the service of notice
of intention to re-enter or to institute legal proceedings to that end. If
Tenant shall default hereunder before the date fixed as the commencement of any
renewal or extension of this Lease, Landlord may cancel and terminate such
renewal or extension agreement by written notice.

(b)             All installments of Base Rent (and
Additional Rent at the level at the time of default) through and including the
original Expiration Date shall immediately become due and payable. Landlord may
re-let the Premises or any parts thereof, either in the name of Landlord or
otherwise, for any term, whether more or less than the term of this Lease, and
may grant concessions or free rent or charge a higher rental than that in this
Lease. Tenant or its legal representatives shall also pay Landlord as
liquidated damages for the failure of Tenant to observe and perform Tenant’s
covenants in this Lease any deficiency between the rent reserved in this Lease
and the net amount, if any, of the rents collected on account of the re-let
lease or leases of the Premises for each month of the period which would
otherwise have constituted the balance of the Term. The failure of Landlord to
re-let any part of the Premises shall not release or affect Tenant’s liability
for damages. In computing such liquidated damages there shall be added to the
deficiency all expenses which Landlord may incur in connection with re-letting,

 17

 

such as legal expenses, reasonable attorneys’ fees,
brokerage, advertising and the costs of keeping the Premises in good order or
for preparing the Premises for re-letting. Any such liquidated damages shall be
paid in monthly installments by Tenant on the rent day specified in this Lease,
and any suit brought to collect the amount of the deficiency for any month
shall not prejudice in any way the rights of Landlord to collect the deficiency
for any subsequent month by a similar proceeding. Landlord, in putting the
Premises in good order or preparing it for re-rental, may make such alterations, repairs,
replacements, and
decorations in the Premises as Landlord, in Landlord’s sole judgment, considers
advisable and necessary for the purpose of re-letting the Premises, and the
making of such alterations, repairs, replacements, and decorations shall not
operate or be construed to release Tenant from liability under this Article.
Landlord shall not be liable in any way whatsoever for failure to re-let the
Premises, or, if the Premises are re-let, for failure to collect the rent due
under such re-letting, and in no event shall Tenant be entitled to receive any
excess of such net rents collected over the sums payable to Tenant to Landlord
hereunder.

(c)             Landlord
may recover from Tenant, and Tenant shall pay Landlord, on request, in lieu of
any further deficiency pursuant to paragraph (b) of this section (as liquidated
damages) the amount by which the unpaid rent for the period which otherwise
would have constituted the unexpired portion of the Term (conclusively
presuming the additional rent for each year thereof to be the same as was
payable for the year immediately preceding the termination, re-entry or
obtaining of possession) exceeds (ii) the then fair and reasonable rental value
of the Premises, including the additional rent for the same period, both
discounted to present value at the rate of 4% per annum. If, before presentation
of proof of liquidated damages, Landlord relets the Premises or any portion of
the Premises for any period pursuant to a bona fide lease with an unrelated
third party, then the net rents payable in connection with the reletting shall
be considered to be the fair and reasonable rental value for the Premises or
the portion of the Premises relet during the term of the reletting. If Landlord
relets the Premises, or any portion of the Premises, together
with other space in the Building, the rents collected under the reletting and
the expenses of the reletting shall be equitably apportioned for the purposes
of this Article.

(d)           Nothing
contained in this Lease shall be considered to limit or preclude the recovery
by Landlord from Tenant of the maximum amount allowed to be obtained as damages
or otherwise by any law, rule, or regulation.

13.4. Equitable
Rights. In the event of a breach or threatened breach by Tenant of any of the covenants or provisions hereof,
Landlord shall have the right of injunction and the right to invoke any remedy
allowed at law or in equity as if re-entry, summary proceedings and other
remedies were not provided for elsewhere in this Lease.

13.5. Landlord’s
Right to Cure Tenant’s Breaches. If Tenant shall fail to perform any
obligation hereunder, Landlord, after notice to Tenant, may perform the
obligation on behalf of and for the account of Tenant, and the cost of
performing such obligation, together with a 10% administrative fee and interest at the maximum legal rate,
shall be Additional Rent payable to Landlord upon demand.

13.6. Waiver of
Right of Redemption. Tenant expressly waives any and all rights of
redemption granted by or under any present or future laws in the event of
Tenant’s being evicted or dispossessed for any cause, or in the event of
Landlord’s obtaining possession of Premises for any reason, whether by reason of
the violation by Tenant of any of the covenants and conditions of this Lease or
otherwise.

13.7. Remedies Cumulative. Each remedy of Landlord
provided for in this Lease shall be in addition to, and not in exclusion of, each other remedy
available to Landlord.

13.8. Consents.
If in this Lease it is provided that Landlord’s
consent or approval as to any matter will not be unreasonably withheld or
delayed, Tenant’s sole remedy for any claimed breach shall be an action for
specific performance. If it is established by a court or body having final
jurisdiction thereover that Landlord has been unreasonable, the only effect of
such finding shall be that Landlord shall be deemed to
have given its consent or approval. Landlord shall not be liable to Tenant in
any respect for money damages under any circumstances by reason of withholding
its consent.

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13.9. Fees and
Expenses. If Landlord is required to send any notice of default, demand, or
engage in any action or other proceeding for which Landlord deems it advisable
to retain an attorney, then Tenant shall pay Landlord for reasonable attorney’s
fees incurred in connection with such notice, demand, action or proceeding,
together with Landlord’s costs of enforcing this Lease, including attorney’s fees, witness fees
and disbursements. Tenant shall be responsible for all of Landlord’s costs and
expenses of enforcing this Lease or defending any claim or action brought by
Tenant in connection with this Lease. The expenses incurred by reason of Tenant’s
default shall be deemed to be Additional Rent hereunder and shall be paid by
Tenant to Landlord within 10 days of rendition of any bill or statement to
Tenant therefor. If the Term shall have expired at the time such expenditures
are incurred, such sums shall be recoverable by Landlord as damages.

Article 14. Provisions relating to Termination of Lease.

14.1. Surrender
of Premises. Upon the expiration of this Lease, Tenant shall peaceably
surrender the Premises to Landlord broom clean, in good order and condition,
ordinary wear and tear and loss by fire (unless caused by Tenant, its agents,
servants, employees or invitees) excepted, and shall deliver all keys to
Landlord. Before surrendering the Premises, Tenant shall remove from the
Premises and the Building all Alterations, all of its personal property and
trade fixtures and such other property as Landlord shall have the right to
require the removal of, in such a way as not to damage the Premises or the
Building, unless such damage shall be unavoidable, in which event Tenant shall
advise Landlord in advance and in writing and in reasonable detail of what
Tenant proposes to do that will cause such damage, and shall perform such
removal so as to minimize any damage to the Premises and the Building. Without
limiting the generality of the foregoing, if during the Term any portion of the
Premises has been painted in a color different from its color on the date of
this Lease, then Tenant shall repaint such portion in such initial color or
shall pay Landlord’s reasonable cost of doing so. Tenant shall be responsible
for all costs, expenses
and damages incurred in such removal. All
of the foregoing property not removed from the Premises upon the
abandonment thereof or upon the termination of this Lease for any cause whatsoever shall conclusively be deemed
to have been abandoned and may be appropriated, sold, stored, destroyed or
otherwise disposed of by Landlord without notice to Tenant or any other person and
without any obligation to account therefor. Tenant shall pay Landlord upon demand
all expenses incurred in connection with the disposition of such property. Upon
termination of the Term, Tenant shall deliver to Landlord all keys to the
Premises. However, no surrender of the Premises shall be effected by Landlord’s
acceptance of the keys or of the rent or by any other means whatsoever without
Landlord’s written acknowledgment of such acceptance as surrender. Tenant shall
not be released from obligation in connection with surrender of the Premises
until Landlord has inspected the Premises and delivered to Tenant a written
release. Tenant shall indemnify Landlord against any loss or liability
resulting from delay by Tenant in so surrendering the Premises, including
without limitation thereto, any claims made by any succeeding tenant founded on
such delay.

14.2. Repair of
Damage. Tenant, at its
sole cost and expense, shall repair to Landlord’s reasonable
satisfaction any damage to the Building or the Premises caused by or in
connection with the removal of any articles of personal property, business or
trade fixtures, machinery, equipment, cabinetwork, furniture, movable
partitions, or temporary or permanent Alterations.

14.3. Holding
Over.

(a)           If
Tenant holds over in possession after the expiration or an earlier termination
of the Term, such holding over
shall not extend the Term or renew the Lease, nor establish a month-to-month
tenancy (but such holding over shall be subject to all of covenants and
conditions of this Lease), except that the charge for use and occupancy of such
holding over (“Use Fee”) for each calendar month or part thereof shall be two times the
sum of

(i)           1/12th of the highest annual Base Rent set
forth in this Lease; plus

(ii)          1/12th of all other items of annual Additional Rent
which would have been payable had this Lease not expired; plus

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(iii)        all other items of Additional Rent (not
annual Additional Rent) which would have been payable had this Lease not
expired.

(b)         Tenant shall pay to Landlord the Use Fee, in full and
without setoff, on the first day of each month for which the Use Fee is due.
Tenant agrees that said Use Fee is commercially reasonable.

14.4. Landlord’s Right
to Require Relocation and Substitution of Premises. Landlord may relocate
Tenant to other space within the Building, if in Landlord’s reasonable judgment
such space is comparable in size
and sufficient for Tenant’s intended use. If Landlord shall elect to relocate
Tenant pursuant to the provisions of this Section, Landlord shall give Tenant
not less than 60 days’ written notice, indicating the location of Tenant’s new
space and the date on which Tenant shall move to Tenant’s new space in the
Building. Upon receipt of notice from Landlord that Landlord elects to relocate
Tenant pursuant to the provisions hereof, Tenant shall notify Landlord, not
later than 20 days after receipt of such notice, either that Tenant will move
to the space designated by Landlord in the Building or that Tenant will not
accept such move and elects to terminate this Lease, such termination to be
effective 30 days
after Tenant so notifies Landlord. If Tenant does not give either such notice
to Landlord within such 20-day period, then this Lease shall terminate 30 days after the date of Landlord’s
notice to relocate as if the date specified were the originally scheduled
Expiration Date. If Tenant elects to be relocated, Landlord shall pay Tenant’s
reasonable out-of-pocket cost of moving to
the new space. When tenant has moved, the new space shall become the “Premises”
which is the subject of this Lease. Otherwise, neither the terms of this Lease
nor Tenant’s duties and obligations hereunder shall be affected by relocation
of Tenant to other space in the Building. If
Tenant elects not to relocate and to terminate this Lease, Landlord
shall have no liability to Tenant for earlier termination of this Lease or for
any cost or expense of moving from the Premises.

Article 15. Eminent Domain.

If the whole or
any part of the Premises shall be acquired or condemned by Eminent Domain for
any public or quasi-public use or purpose, then and in that event, the Term
shall cease and terminate from the date of title vesting in such proceeding and Tenant shall have no
claim for the value of any unexpired portion of the Term, and Tenant hereby
assigns to Landlord its entire interest in any such award. Tenant shall have
the right to make an independent claim to the condemning authority for the
value of Tenant’s moving expenses and personal property, trade fixtures and
equipment, if Tenant is entitled under the terms of this Lease to remove such
property, trade fixture and equipment at the end of the Term and if such claim
does not reduce Landlord’s award.

Article 16. Subordination;
Attornment; Rights of Mortgagee; Amendment.

16.1. Subordination. This Lease
shall automatically be subject and subordinate to any existing or future
mortgage, any and all advances made under any mortgage, any ground or
underlying lease, and all renewals, modifications, amendments, consolidations,
replacements and extensions of either. No documentation, other than this Lease, shall be required to
evidence such subordination, If any holder of a mortgage or deed of trust shall
elect to have this Lease superior to the lien of its mortgage or deed of trust
and shall give written notice thereof to Tenant, then this Lease shall be deemed
prior to such mortgage or deed of trust or to the date of recording thereof.
Tenant shall execute all documents required by Landlord to confirm such
subordination or priority within 10 days
of request therefor from Landlord. Tenant does hereby make, constitute and
irrevocably appoint Landlord as Tenant’s attorney-in-fact and in Tenant’s name,
place and stead to do so if Tenant
fails to do so within such time period, and such power of attorney shall be
deemed to be coupled with an interest. Without the prior written consent of
Landlord, Tenant shall not subordinate its interests hereunder or in the
Premises to any lien or encumbrance other than those encumbrances described in
this §16.1. Any such unauthorized subordination by Tenant
shall be void and of no force or effect whatsoever.

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16.2. Attornment. If at any time (a) Landlord shall be the holder
of a leasehold estate covering premises of which the Premises form a part, and
if such leasehold estate shall expire or terminate for any reason, or (b) the
Building, the Land or Landlord’s leasehold estate shall be affected by a
mortgage, then at the election and upon the demand of any landlord of the
premises of which the Premises are a part, or of any mortgagee in possession
thereof, Tenant shall attorn to any such landlord or mortgagee upon the terms
and conditions set forth in this Lease for the remainder of the Term,
regardless of any rule of law to the contrary or absence of privity of
contract. The foregoing provisions shall inure to the benefit of any such
landlord or mortgagee and shall be self-operative without the necessity of the
execution of any further instruments; but Tenant shall upon demand execute,
acknowledge and deliver any instrument or instruments confirming such
attornment. The foregoing shall not limit any other rights which such Landlord
or mortgagee may then have under the law.

16.3. Rights of Mortagee.
In the event of an act or omission or alleged act or omission by Landlord which
would give Tenant the right to terminate this Lease or to abate the payment of
rent or to claim a partial or total eviction, Tenant shall not exercise any
such right unless (a) Tenant shall first have given written notice of such act
or omission to Landlord and to the holder of any mortgage on the Building (whose
name and address shall previously have been furnished to Tenant) and (b)
neither Landlord nor any mortgagee shall have commenced to cure such act or
omission within a reasonable period of time following the giving of such notice
(which reasonable period shall in no event be less than the period to which
Landlord would be entitled under this Lease or otherwise, after similar notice,
to effect such remedy).

16.4. Amendments in Connection with Financing. In
connection with the procurement, continuation or renewal of any financing for
which the Land or the Building represents collateral in whole or in part, if a
lender shall request reasonable modifications of the Lease as a condition of
such financing, Tenant will join
with Landlord in amending this Lease, if such amendment does not materially and
adversely affect Tenant’s economic interests under this Lease.

Article 17. Estoppel Certificates.

Within 10 days after Landlord’s request
therefor on a form
provided by Landlord, Tenant shall execute and deliver to Landlord an
Estoppel Certificate in recordable form setting forth the following: (a) a ratification of this Lease; (b) the Commencement Date and
Expiration Date hereof, (c) a certification
that this Lease is in full force
and effect and has not been assigned, modified, supplemented or amended (except
by such writing as shall be stated) and that this Lease represents the entire
agreement between Landlord and Tenant; (d) that all conditions under this Lease
to be performed by Landlord have been satisfied; (e) that there are no defenses
or offsets against the enforcement of this Lease by Landlord, or, in the
alternative, those claimed by Tenant; (f) the amount of advance rent, if any
(or none if such is the case)
paid by Tenant; (g) the date to which rent has been paid; (h) the amount of Base
Monthly Rent, if any, that has
been paid in advance and the amount of security deposited with Landlord; (i)
whether or not Landlord is in default under this Lease (and if so, specifying
the nature of the default); and (j) such other information as Landlord (or
its mortgagees or potential purchasers of the Premises) may reasonably request.
If Tenant fails to properly execute and deliver the Estoppel Certificate to
Landlord within 10 days after Landlord has delivered to Tenant an Estoppel
Certificate under this Article 17, Tenant shall be deemed to have authorized
Landlord to respond to Landlord’s request as Tenant’s attorney-in-fact on
Tenant’s behalf and Landlord is hereby authorized to so certify and deliver
such certificate. Landlord’s mortgage lenders, assignees and purchasers shall
be entitled to rely upon such Estoppel Certificate. Tenant’s failure to furnish
any Estoppel Certificate within 10 days after request shall be a default under
this Lease and it shall be conclusively presumed that (x) this Lease is in full force and effect without modification in
accordance with the terms set forth in the request; (y) there are no breaches
or defaults on the part of Landlord; and (z) no more than one month’s rent has
been paid in advance.

Article 18. Rules and Regulations.

The rules and regulations
in Exhibit “B” are hereby made a part of this
Lease. Landlord may from time to time amend, modify, delete or add rules and
regulations for the use and care of the Building and

 21
 

 

the Premises. Each such
amendment, modification, deletion or addition shall be effective upon notice to
Tenant. Tenant will cause its employees, visitors, agents, or any other persons
permitted by Tenant to occupy or enter the Building to abide by all of such
rules and regulations at all times. Upon any breach of such rules or
regulations, Landlord may exercise any or all of its remedies in the event of
default by Tenant and may, in addition, exercise any remedies available at law
or in equity, including the right to enjoin any breach of such rules and
regulations. No act performed by Landlord or its agents during the Term to
enforce such rules and regulations shall constitute an eviction of Tenant by
Landlord or an acceptance or surrender of the Premises. Landlord shall not be
responsible to Tenant for the failure by any other tenant or person to observe
any such rules and regulations.

Article 19. Bankruptcy.

19.1. Landlord’s Right to Cancel.
Landlord may cancel this Lease by written notice to Tenant within a reasonable
time after (a) the commencement of a
case in bankruptcy, or under the laws of any state, naming Tenant as the
debtor or (b) Tenant’s making an assignment or any other arrangement for the
benefit of creditors under any state statute. Neither Tenant nor any person
claiming through or under Tenant, or by reason of any statute or order of
court, shall thereafter be entitled to possession of the Premises but shall
forthwith quit and surrender the Premises. If this Lease shall be assigned in
accordance with its terms, the provisions of this Article shall be applicable
only to the party then owning Tenant’s interest in this Lease.

19.2. Landlord’s
Damages. Upon the termination of this Lease under §19.1, Landlord may
recover from Tenant as and for liquidated damages all amounts of damages
provided for in Article 13 above or elsewhere in this Lease or by law.

Article 20.
Notices.

Any notice
required or permitted under this Lease shall be in writing and shall be deemed
sufficiently given or served if addressed as indicated in Article 1 and
delivered by hand or sent for delivery on the next business day by overnight
mail by recognized overnight courier (with receipt), or by United States
certified mail, return receipt requested. The time of the giving of such notice
shall be the time when the same is delivered by hand or sent for delivery by
overnight mail or mailed as aforesaid. Each party may from time to time change
the place to which notice is to be given under this Article by giving written
notice thereof to the other party.

Article 21. Miscellaneous.

21.1. No Waiver.
Landlord’s failure to seek redress for violation, or to insist upon the strict
performance, of any covenant or condition of this Lease or of any Rule or
Regulation shall not prevent a subsequent act from having all the force and
effect of an original violation. Landlord’s receipt of Base Rent or Additional
Rent with knowledge of the breach of any covenant of this Lease shall not be
deemed a waiver of such breach and no provision of this Lease shall be deemed
to have been waived by Landlord unless such waiver be in writing and signed by
Landlord. No payment by Tenant or receipt by Landlord of a lesser amount than
the monthly rent herein stipulated shall be deemed to be other than on account
of the earliest stipulated rent nor shall any endorsement or statement of or on
any check or any letter accompanying any check or payment as rent be deemed an
accord and satisfaction, and Landlord may accept such check or payment without
prejudice to Landlord’s right to recover the balance of such rent or to pursue
any other remedy in this Lease. No act or thing done by Landlord or Landlord’s
agents during the Term shall be deemed an acceptance of a surrender of the
Premises, and no agreement to accept
such surrender shall be valid unless in writing and signed by Landlord. No
employee or agent of Landlord shall have any power to accept the keys of the
Premises on Landlord’s behalf prior to the termination of the Lease, and the
delivery of keys to any such agent or employee shall not operate as a
termination of the Lease or a surrender of the Premises.

21.2. Waiver of Trial
by Jury; No Counterclaims. Landlord and Tenant each waive trial by jury in
any action, proceeding or counterclaim brought by either of the parties against
the other on any matters

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whatsoever arising out of or in any way connected with
this Lease, the relationship of Landlord and Tenant, Tenant’s use or occupancy
of the Premises, or any emergency statutory or any other statutory remedy. If
Landlord commences any proceeding or action for possession, including a summary
proceeding for possession of the Premises, Tenant shall not interpose any
counterclaim, except for statutory mandatory counterclaims.

21.3. Force Majeure.
This Lease and the obligations of Tenant hereunder shall not be affected,
impaired or excused because Landlord is unable to fulfill any of its
obligations under this Lease, or is unable to make, or is delayed in making any
repair, additions, alterations or decorations, or is unable to supply or is
delaying in supplying any equipment, fixtures, or other materials, if the
reason for such inability or delay is strike or labor troubles or any cause
beyond Landlord’s reasonable control, including government preemption or
restrictions; or any rule, order or regulation of any governmental agency; or
conditions resulting from war or other emergency.

21.4. Captions.
The captions are inserted only as a matter of convenience and for reference and
in no way define, limit or describe the scope of this Lease or the intent of
any provisions thereof.

21.5. Binding
Effect. The covenants, conditions and agreements contained in this Lease
shall bind and insure to the benefit of Landlord and Tenant and their
respective heirs, distributees, executors, administrators, successors, and
(except as may be otherwise provided in this Lease) assigns. Each provision to
be performed by Tenant shall be construed to be both a covenant and a condition, and if there shall be
more than one Tenant, they shall all be bound, jointly and severally, by such
provisions.

21.6. Execution
and Delivery. Landlord’s submission of this Lease to Tenant for execution
shall confer no rights and impose no obligations on either party unless and
until both Landlord and Tenant shall have executed this Lease and duplicate
originals thereof shall have been delivered to the respective parties. At Landlord’s option, this Lease shall
be void and of no force and effect if the
check given hereunder for the Security Deposit and first month’s rent is not
honored on first deposit, and Tenant shall be liable for any costs of Landlord
(including attorney’s fees) incurred in connection with the execution of this Lease and enforcement of
Landlord’s rights hereunder.

21.7. Attachments.
Exhibits referred to in this Lease and any addendums, riders and schedules
attached to this Lease shall be deemed to be incorporated in this Lease as
though a part hereof.

21.8. Recording.
Tenant shall not record this Lease or a memorandum hereof without Landlord’s
prior written consent. Landlord, at its option and at any time, may file this Lease
or a memorandum hereof for record with the City Register.

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

21.10. Broker’s Commissions. Each
of Landlord and Tenant covenants, warrants and represents to the other that it has not dealt
with any broker except Newmark & Company Real Estate, Inc. who brought
about this Lease. Landlord shall pay such broker’s commission pursuant to a separate agreement. Each of Tenant
and Landlord shall indemnify and hold the other harmless from and against any
claims for any brokerage commissions, including without limitation attorneys’
fees and expenses, arising out of any conversation or negotiation had by the
indemnifying party with any other broker or finder.

21.11. Entire Agreement,
etc. This Lease and the Exhibits, Riders and or Addenda, if any, attached
hereto constitute the entire agreement between the parties with respect to the
subject matter hereof. Any guaranty attached hereto is an integral part of this
Lease and constitutes consideration given to Landlord to enter into this Lease.
Any prior conversations or writings are merged herein and

 23
 

 

extinguished. No subsequent amendment to this Lease
shall be binding upon Landlord or Tenant unless reduced to writing and signed.

21.12. Time of
Essence. Time is of the essence as to all time periods contained in this Lease.

21.13. No Joint Venture, etc.
Nothing contained in this Lease shall be deemed to constitute or be construed
or implied to create the relationship of principal and agent, partnership,
joint venture or any other relationship between the parties hereto, other than
the relationship of landlord and tenant.

21.14. Authorization.
If Tenant is not a natural person, (a) Tenant represents and warrants (i) that
Tenant is duly constituted and is qualified to do business in New York; (ii)
that all of Tenant’s franchise, corporate or other applicable taxes have been
paid to date; and (iii) that all future forms, reports, fees and other
documents necessary for Tenant to comply with applicable laws shall be filed
and paid by Tenant when due; (b)
each person executing this Lease on behalf of Tenant represents and warrants
that he or she, and Tenant, are duly authorized to execute and deliver this
Lease; and (c) Tenant shall deliver to Landlord within ten (10) days after
written notice (i) a good standing certificate issued by the state under the
laws of which Tenant is organized, (ii) a copy of the certificate of
incorporation and bylaws, or articles of organization and limited liability
company agreement, or limited partnership certificate and limited partnership
agreement, or other organizational documents of Tenant, including all
amendments thereto, certified by the secretary or manager or member or general
partner or other appropriate representative of Tenant to be true, correct, and
complete and in full force and effect, (iii) if applicable, Tenant’s authorization
to do business in the State of New York, (iv) if applicable, resolutions of the
board of directors, or shareholders, of Tenant authorizing Tenant to execute
and deliver this Lease and authorizing one or more officers of Tenant to do so
on behalf of Tenant, and (v) if applicable,
an incumbency certificate, executed by Tenant’s secretary, naming the officers
of Tenant, containing their signatures, and stating that they have been duly elected and are
presently serving in such offices and that the signature opposite each such
name is the true and correct signature of such person.

21.15. No Third
Party Beneficiary.
Nothing contained in this Lease shall be construed so as to confer upon any
other party the rights of a third party beneficiary except rights contained
herein for the benefit of a mortgagee.

22.16.
Choice of Law, Venue. This lease shall be governed by New
York law. Tenant consents to personal jurisdiction and venue in the City,
County, and State of New York.

21.17. No Oral
Changes. This Lease may not be modified orally.

21.18. Survival.
Tenant’s obligations under this Lease shall survive the expiration or earlier
termination of the Lease. In addition, notwithstanding any termination of this
Lease or the Term, Tenant shall be and remain liable to fully perform and
fulfill all of its obligations under this Lease relating to events occurring,
circumstances existing, or obligations or claims arising or attributable to,
the period prior to the date of termination.

21.19. Successors.
Landlord shall not be liable to Tenant for any default or breach under this
Lease which occurs after the sale of the Building or Premises by Landlord.

21.20. Construction
and Definitions.

(a)            Additional Definitions. As used in this Lease, the following
terms shall be construed as follows. The term “including” means “including but
not limited to”. The term “may” means “may but is not obligated to”. The term “or”
means “and/or”. The term “at any time” shall be construed as “at any time or
from time to time”. The term “any” shall be construed as “any and all”. The
term “Tenant” includes Tenant and its agents, employees, contractors,
concessionaires, and licensees. The term “repair” means “repair, maintain or
replace”. The term “office” shall exclude premises used as a store, for the
sale or display, at any time, of any goods, wares or merchandise, or as a
restaurant, shop, booth, bootblack or other stand, barber shop, or for other
similar purposes or for manufacturing. The term

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“Landlord” means a
landlord or lessor, and means only the Landlord, or the mortgagee in
possession, for  the time being of the Land and Building
(or the Landlord of a lease of the Building or of the Land and Building, as
applicable), so that upon any sale or assignment (except for purposes of
security or collateral) by Landlord of the Building, the Premises or this
Lease, Landlord shall be entirely relieved of its obligations hereunder from
and after the Commencement Date of the Term (irrespective of when such, sale or assignment occurs), and it
shall be deemed ipso facto that the purchaser or lessee has assumed and agreed
to carry out all obligations of Landlord hereunder. The words “re-enter” and “re-entry”
as used in this lease are not restricted to their technical legal meaning. The
term “business days” shall exclude Saturdays, Sundays, and all days observed by
the New York State or federal government as legal holidays and those designated
as holidays by the applicable building service union employees service contract
or by the applicable Operating Engineers contract with respect to HVAC service.

(b)            Restrictions on Tenant’s acts also
restrict Tenant from permitting such act to be performed.

(c)            Wherever a requirement is imposed on
any party, it shall be deemed that the party shall be required to perform the
requirement at its own expense unless it is specifically otherwise provided.

29.21. Checks.
Tenant shall pay Owner the sum of $50.00 for each unpaid check tendered to
Owner and returned by the bank to defray Owner’s expenses in connection
therewith. If Tenant shall tender to Owner during the term of this Lease three
or more checks which are returned by the bank, Owner may, at its option, by written notice to
Tenant, require that all further checks tendered to Owner pursuant to this
Lease be certified or bank checks.

21.22.
Counterparts. This Lease
may be executed in counterparts, each of which shall be deemed an original, but
all counterparts shall constitute one instrument after execution of one
original by each party hereto.

21.23. Guarantee. As a further
inducement to Landlord to enter into this Lease, Gareb Shamus is executing and
delivering to Landlord a guarantee, in the form of the document annexed as Exhibit
“C”, simultaneously with Tenant’s execution and delivery of this Lease.

21.24. Right of First Offer on Other Space.

(a)          The
term “Option Space” shall mean the space, on the 6th floor of the Building,
which is currently known and designated as Suite 630. The term “Existing Lease”
shall mean the lease pursuant to which Landlord, on the date of this Lease, is
leasing the Option Space to the tenant thereof.

(b)          On
or before October 1, 2007,
if Tenant is not then in default under this Lease, Tenant may give written
notice to Landlord of Tenant’s desire to lease the Option Space from Landlord for a term commencing
on May 1, 2008 and ending on the Expiration Date.
If, however, the Existing Lease shall terminate prior to April 30, 2008, then
Landlord shall give written notice to Tenant of such termination and of the
date thereof (the “Early Termination Date”) promptly after learning of it and
Tenant, if not then in default
under this Lease, may give written notice to Landlord, on or before the date
which is 7 months prior to the Early Termination Date (or, if later, on or
before the 15th day after the date of Landlord’s notice to Tenant), of Tenant’s
desire to lease the Option Space from Landlord for a term commencing on the day
immediately following the Early Termination Date (or, if later, on the 60th day
after the date of Landlord’s notice to Tenant) and ending on the Expiration
Date.

(c)           Landlord
and Tenant shall negotiate in good faith, for a period of 30 days commencing on
the date of Tenant’s notice to Landlord under paragraph (b) of this section, as
to Tenant’s leasing of the Option Space from Landlord for the period of time
set forth above in this section. If the tenant of the Option Space does not
renew its lease of the Option Space, and if Landlord and Tenant have agreed, by
the last day of such 30-day period, on the terms on which Tenant shall lease
the Option

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Space from Landlord, then Landlord and Tenant shall
enter into a written lease of the Option Space on such agreed terms.

IN WITNESS WHEREOF, Landlord and Tenant have respectively
signed and sealed this lease as of the day and year first above written.

	
  

  	
  LANDLORD:
  424
  WEST 33rd STREET LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Raju L. Shah

  	
   

  
	
   

  	
   

  	
   

  	
  Raju L. Shah, Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  TENANT:
  INTERNATIONAL FIGHT LEAGUE, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Gareb Shamus

  	
   

  
	
   

  	
   

  	
   

  	
  Gareb Shamus,
  President

  
								

 

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EXHIBIT
B

RULES AND REGULATIONS

1.
           The sidewalks,
entrances, driveways, passages, courts, elevators, vestibules, stairways,
corridors or halls shall not be obstructed or encumbered by any Tenant or used
for any purpose other for ingress or egress from the Premises and for delivery
of merchandise and equipment in a prompt and efficient manner using elevators
and passageways designated for such delivery by Landlord. There shall not be
used in any space, or in the public hall of the Building, either by any Tenant
or by jobbers or others in the delivery or receipt of merchandise, any hand
trucks, except those equipped with rubber tires and side guards approved by
Landlord. If the Premises are situated on the ground floor of the Building,
Tenant shall keep the sidewalk and curb in front of the Premises clean and free
from ice, snow, dirt and rubbish.

2.            The
water and wash closets and plumbing fixtures shall not be used for any purposes
other than those for which they were designated or constructed and no
sweepings, rubbish, rags, acids or other substances shall be deposited therein,
and the expense of any breakage, stoppage, or damage resulting from the
violation of this rule shall be borne by the Tenant who, or whose clerks,
agents, employees or visitors, shall have caused it.

3.             No carpet, rug or other article shall be hung or
shaken out of any window of the Building and no Tenant shall sweep or throw or
permit to be swept or thrown from the Premises any dirt or
other substances into any of the corridors or halls, elevators, or out of the
doors or windows or stairways of the Building and Tenant shall not use, keep or permit to be used or kept any foul
or noxious gas or substance in the Premises, or permit or suffer the Premises
to be occupied or used in a manner
offensive or objectionable to Landlord or other occupants of the Building by
reason of noise, odors and/or vibrations, or interfere in any way with other
Tenants or those having business therein, nor shall any bicycles, vehicles,
animals, fish, or birds be kept in or about the Building. Smoking or carrying
lighted cigars or cigarettes in the elevators of the Building is prohibited.

4.             No awnings or other
projections shall be attached to the outside walls of the Building without
Landlord’s prior written consent.

5.
            No sign, advertisement,
notice or other lettering shall be exhibited, inscribed, painted or affixed by
any Tenant on any part of the outside of the Premises or the Building or on the
inside of the Premises if the same is visible from the outside of the Premises
without the prior written consent of Landlord, except that the name of Tenant
may appear on the entrance door of the Premises. In the event of the violation
of the foregoing by any Tenant, Landlord may remove same without any liability,
and may charge the expense incurred by such removal to Tenant or Tenants
violating this rule. Interior signs on doors and directory tablet shall be
inscribed, painted or affixed for each Tenant by Landlord at the expense of
such Tenant, and shall be of a size,
color and style acceptable to Landlord.

6.
            No Tenant shall mark,
paint, drill into, or in any way deface any part of the Premises or the
building of which they form a part. No boring, cutting or stringing of wires
shall be permitted, except with the prior written consent of Landlord, and as
Landlord may direct. No Tenant shall lay linoleum, or other similar floor
covering, so that the same shall come in direct contact with the floor of the
Premises, and, if linoleum or other similar floor covering is desired to be
used then an interlining of Building’s deadening felt shall be first affixed to
the floor, by a paste or other material, soluble in water, the use of cement or
other similar adhesive material being expressly prohibited.

7.             Tenant
shall not place any additional locks or bolts of any kind upon any of the doors or windows, nor shall any changes
be made in existing locks or mechanism thereof. Upon termination of its
tenancy, each Tenant must restore to Landlord each key or access control card
to stores, offices and lavatories that was furnished to, or otherwise procured
by, such Tenant, and Tenant shall pay to Landlord

 27
 

 

the cost of each lost key
or card. All keys and access control cards shall be keyed in accordance with
the Building’s master control system. Landlord shall provide all duplicate keys
and access control cards to Tenant at Tenant’s expense. Purchase of keys and
access cards from unauthorized vendors is prohibited.

8.            Freight,
furniture, business equipment, merchandise and bulky matter of any description
shall be delivered to and removed from the Premises only on the freight
elevators and through the service entrances and corridors, and only during
hours and in a
manner approved by Landlord. Landlord reserves the right to inspect all freight
to be brought into the Building and to exclude from the Building all freight
which violates any of these Rules and Regulations of the lease of which these
Rules and Regulations are a part.

9.
           Canvassing, soliciting
and peddling in the Building is prohibited and each Tenant shall cooperate to
prevent the same.

10.           Landlord
may exclude from the Building all persons who do not present a pass or access
card issued by Landlord. Landlord, at Tenant’s expense, will furnish passes or
access cards to persons for whom Tenant makes a written request. Each Tenant
shall be responsible for all persons for whom he requests such pass and shall
be liable to Landlord for all acts of such persons. Tenant shall not have a claim
against Landlord by reason of Landlord’s excluding from the Building any person
who does not present such pass. Tenant shall immediately notify Landlord of
lost passes and termination of employees.

11.           Landlord may prohibit any advertising
by any Tenant which in Landlord’s opinion tends to impair the reputation of the Building or its desirability as a
building for offices, and upon written notice from Landlord, Tenant shall refrain
from or discontinue such advertising.

12.
          Tenant shall not bring or
permit to be brought or kept in or on the premises, any inflammable,
combustible, explosive, or hazardous fluid, material, chemical or substance, or cause or
permit any odors of cooking or other processes, or any unusual or other
objectionable odors to permeate in or emanate from the Premises. .

13.           If the Building contains central air-conditioning
and ventilation, Tenant agrees to keep all windows closed at all times and to
abide by all rules and regulations issued by Landlord with respect to such
services. If Tenant requires HVAC service after the usual hours, Tenant shall
give notice in writing to the Building superintendent prior to 3:00 p.m. in the
case of services required on weekdays, and prior to 3:00 p.m. on the day prior
in case of after hours service required on weekends or holidays. Tenant shall
cooperate with Landlord
in obtaining maximum effectiveness of the cooling system by lowering and
closing Venetian blinds and/or drapes and curtains when the sun’s rays fail
directly on the windows of the Premises.

14.           Tenant shall not move any safe, heavy machinery,
heavy equipment, bulky matter, or fixtures into or out of the Building without
Landlord’s prior written consent. If such safe, machinery, equipment, bulky
matter or fixtures requires special handling, all work in connection therewith
shall comply with all laws and regulations applicable thereto and shall be done
during such hours as Landlord may designate.

15.           Tenant shall sort and separate such
waste products, garbage, refuse and trash into such categories as required by law.
Each separately sorted category of waste products, garbage, refuse and trash
shall be placed in separate receptacles reasonably approved by Landlord. Such
separate receptacles may be removed from the Premises in accordance with a
collection schedule prescribed by law or as Landlord may designate. Landlord
may require Tenant to remove certain items which do not fall into the foregoing
categories, as determined by Landlord in its sole discretion. Tenant shall
cause its refuse and trash to be carted away only between the hours of 8:00
p.m. and 7:00 a.m.

 28
 

 

EXHIBIT
C

GUARANTY

In consideration
for, and as an inducement to, 424 west 33rd Street LLC (“Landlord”), a
New York limited liability company having an address c/o Newmark Knight Frank,
125 Park Avenue, NY, NY 10017, to enter into a lease (“Lease”)
with International  Fight Club, Inc. (“Tenant”),
of space (“Premises”) in 424 West 33rd St., NY, NY, and described more particularly
in the Lease, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Gareb Shamus  (“Guarantor”), having an address at 24 North Brae Court, Tenafly, New Jersey 07670, hereby agrees as
follows:

1.            A.             Guarantor unconditionally and
irrevocably guarantees to Landlord the full, prompt payment by Tenant of the
following amounts (the “Guaranteed Amounts”):

(i) Any Rent which
accrues while Tenant has legal or actual possession of the Premises and until
the date on which Landlord regains legal and actual possession of the leased
Premises, vacant and broom clean;

(ii) Any use or
occupancy fee which accrues if Tenant holds over after the expiration of the
lease term, until the date on which Landlord regains legal and actual
possession of the Premises, vacant and broom clean;

(iii) Any costs
(including attorney’s and witness’s fees) which Landlord may incur in any
action instituted, prosecuted or defended due to Tenant’s default in the
observance of any term, article, or provision of the Lease or this Guaranty.

(iv) Any amounts
charged to Landlord and due from Tenant to pay for the costs of performance of
Tenant’s Work, including any costs of discharging a mechanic’s or materialman’s
lien placed against the building as a result of Tenant’s Work (as defined in
the Lease);

(v) Any expenses
which Landlord may incur in restoring or correcting any breach by Tenant of any
of its non-monetary obligations under the Lease, whether or not Tenant has
vacated the demised premises;

(vi) Any loss or
liability which Landlord may incur in connection with any action brought
against Tenant by any third party for any reason.

B.             The foregoing Guaranty shall apply
until the conditions precedent for its release have been met, whether or not
Tenant is in default, and whether or not Tenant has filed a petition in bankruptcy or a
comparable proceeding.

2.             If Tenant
shall default in the payment of any of the Guaranteed Amounts, or if for any
reason the Lease is invalid or cannot be enforced against Tenant with respect to any of the Guaranteed Amounts,
Guarantor shall promptly make the payment and shall pay to Landlord all damages
that may arise in consequence of Tenant’s failure to pay such Guaranteed
Amounts and disbursements incurred by Landlord (including, but not limited to,
reasonable attorneys’ and witness fees and disbursements) arising out of Tenant’s
failure to pay such Guaranteed Amounts or by the enforcement of this Guaranty.

3.             This
Guaranty is an absolute and unconditional Guaranty of payment and of
performance with respect to the Guaranteed Amounts. The liability of Guarantor
on this Guaranty shall be direct and immediate and not conditional upon the
pursuit of any remedies against any person, firm or corporation

 29
 

 

obligated under the
Lease. Guarantor hereby waives any presentment, demand for payment, protest,
notice of non-payment, non-performance, or non-observance, or any other proof,
notice or demand in order to charge Guarantor therefor. Guarantor hereby
expressly agrees that the validity of this Guaranty and the obligations of the
Guarantor hereunder shall in no way be terminated, affected, diminished or
impaired by reason of the assertion or non-assertion by Landlord against
Tenant, its successors or assigns, of any of the rights or remedies reserved to
Landlord pursuant to the provisions of the Lease.

4.             No delay on the part of the
Landlord in exercising any rights hereunder or failure to exercise them shall operate
as a waiver of those rights; no notice to or demand on the Guarantor shall be deemed to be a waiver of the
obligations of the Guarantor or of the right of Landlord to take further action without notice
or demand as provided herein; and no modification or waiver of the provisions
of this Guaranty shall be effective
unless in writing, nor shall any such waiver be applicable except in the
specific instance for which given. All of the Landlord’s rights and remedies
under the Lease or under this Guaranty are intended to be distinct, separate
and cumulative. No such right or remedy under the Lease or this Guaranty is
intended to be an exclusion of or a waiver of any other right or remedy
available to Landlord.

5.             This
Guaranty shall be a continuous Guaranty. The liability of Guarantor hereunder
shall in no way be affected, modified or diminished by reason of any
assignment, renewal, replacement, modification, consolidation or extension of
the Lease, by reason of any modification or waiver of or change in any of the terms,
covenants, conditions or provisions of the Lease by Landlord and Tenant, by
reason of any extension of time that may be granted, by reason of any dealings
or transactions or matter or thing occurring between Landlord and Tenant, its
permitted successors or assigns, or by reason of any bankruptcy, insolvency,
reorganization, arrangement, assignment for the benefit of creditors,
receivership or trusteeship affecting Tenant, whether or not notice of any of
the events referred to in this paragraph is given to Guarantor. Guarantor
hereby authorizes Landlord to run a credit check on Guarantor from time to time.

6.             If
this Guaranty shall be held ineffective or unenforceable by any court of
competent jurisdiction, Guarantor shall be deemed to be a co-tenant under the
Lease with the same force and effect as if Guarantor were expressly named as a
co-tenant therein.

7.             This Guaranty is, and shall be
deemed to be, a contract entered into under and pursuant to the laws of the State of New York and shall be in all
respects governed, construed, applied and enforced in accordance with the laws of the State of New York. No defense
given or allowed by laws of any other State or country shall be interposed in
any action hereon unless such defense is also given or allowed by the laws of
the State of New York. The address set forth on Page 1 of this Guaranty shall
be Guarantor’s address for notices. Guarantor consents to substituted service
of process at its address on Page 1 and to personal jurisdiction and venue in
New York State, New York County.

8.             If Guarantor is
not a natural person, Guarantor represents and warrants that this Guaranty has
been duly authorized by all necessary action on Guarantor’s part, has been duly
executed and delivered by a duly authorized officer, or member or partner of
Guarantor, and constitutes Guarantor’s valid and binding agreement in
accordance with its terms.

9.             As a further
inducement to Landlord to execute the Lease, and in consideration thereof,
Landlord and the Guarantor agree to waive trial by jury in any action or
proceeding brought on, under or by virtue of this Guaranty.

10.           Guarantor
consents that it may be served in any legal manner of personal or substituted
service at its address on page 1 of this Guaranty. Guarantor consents to
personal jurisdiction in New York
State and venue in New York County.

 30
 

 

11.           This Guaranty shall be binding upon
Guarantor, its heirs, executives, successors and assigns, and shall inure to
the benefit of, and be enforceable by, Landlord, its successors and
assigns.

IN WITNESS WHEREOF, Guarantor has executed this
Guaranty as of the 6th day of September, 2006.

	
  

  	
  GUARANTOR

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Gareb Shamus

  	
   

  
	
   

  	
   

  	
  Gareb Shamus

  
				

 

 

	
  STATE OF

  	
  N.Y

  	
  )

  
	
   

  	
   

  	
  ) ss.:

  
	
  COUNTY OF

  	
   

  	
  )

  

 

On the 6th day of September in the 2006 before me, the undersigned, a Notary Public in and for said State,
personally appeared GAREB SHAMUS, 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(ies),
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.

	
  

  	
   

  	
   

  
	
   

  	
  /s/ Mary Theresa
  Grogan

  	
   

  
	
   

  	
   

  	
  Notary Public

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Mary Theresa Grogan

  
	
   

  	
   

  	
  Notary Public State of NY

  
	
   

  	
   

  	
  Queens County, 01GR498052

  
	
   

  	
   

  	
  Commission Expires, 4/18/10

  
				

 

 31

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