Document:

exv10w12

 

Exhibit 10.12

EXECUTIVE EMPLOYMENT AGREEMENT

          I, Stephen F. Groth, agree to the terms and conditions of employment with Inner Mongolia
Production Company LLC (“Company”) set forth in this Employment Agreement (“Agreement”). This
Agreement supercedes all previous agreements, promises, representations, understandings and
negotiations between the parties, whether written or oral, with respect to the subject matter
hereof.

     1. Nature of Employment Relationship. My employment under this Agreement commenced on
September 29, 2006, and shall continue for an indefinite period until terminated by either the
Company or me as provided in Section 5 of this Agreement, in which case I will be entitled to the
compensation specified in that Section.

     2. Nature of Duties. I shall be the Company’s Vice President and Chief Financial Officer. As
such, I shall work exclusively for the Company and shall have all of the customary powers and
duties associated with this position, including day-to-day operational control of the Company. I
shall devote my full business time and effort to the performance of my duties for the Company,
which I shall perform faithfully and to the best of my ability. I shall be subject to the
Company’s policies, procedures and approval practices, as generally in effect from time-to-time.
Notwithstanding the foregoing, it shall not be a violation of this Agreement for me (A) at any time
to (i) serve on corporate, civic or charitable boards or committees, (ii) deliver lectures, fulfill
speaking engagements or teach at educational institutions and (iii) manage personal investments, so
long as such activities do not significantly interfere with the performance of my responsibilities
as an officer of the Company in accordance with this Agreement.

     3. Place of Performance. I shall be based in either California or New York, at my option,
except for required travel on the Company’s business.

     4. Compensation and Related Matters.

          (a) Base Salary. The Company shall pay me a base salary at an annual rate of one hundred
fifty thousand dollars ($150,000). My base salary shall be paid in conformity with the Company’s
salary payment practices generally applicable to Company executives. I will be eligible for pay
increases as determined by the Company’s Board of Managers (the “Board”). Any increase to the
abovementioned base salary will be considered the new base salary. The salary as specified above
shall commence on the first day of the month following the date the minimum subscription condition
as outlined and defined in the private placement memorandum being considered by the Company and
Advanced Drilling Services LLC is satisfied. Until the commencement of such new salary, my base
salary shall be as specified in the consulting Agreement dated November 8, 2005 (as amended) and
signed between myself and the Company.

          (b) Bonuses and Long Term Incentive Compensation. I will be eligible for bonus compensation
in an amount to be determined by the Board based on the Company’s achievement of financial
performance and other objectives established by the Board each year. In addition, I will be
eligible for long-term incentive compensation, such as additional options to purchase shares of the
Company’s membership Units (as

-1-

 

defined in the Company’s Operating Agreement), on such terms as established by the Board.
Notwithstanding the foregoing, the Company will pay me an annual bonus of between twenty percent
(20%) and thirty percent (30%) of my base salary (the “Annual Target Bonus”) based upon my
performance as determined by the Board, which bonus shall be payable within 30 days of the end of
each fiscal year, commencing for the 2007 fiscal year. Any bonus payable for 2006, shall be at the
discretion of the Board. Notwithstanding the foregoing, the Annual Target Bonus paid may be less,
as approved by the Board, based on my performance and the performance of the Company.

          (c) Equity Options. Upon the commencement of my employment under this Agreement, I will be
granted an option (“Option”) to purchase 9,200 Class A Units, as such term is defined in the
Company’s Operating Agreement, at $9.50 per Class A Unit; I shall become vested in the right to
exercise this Option with respect to 40% of the Class A Units on the first anniversary of the
Option grant and an additional 20% of the Class A Units on each subsequent anniversary of the
Option grant for the next three years of employment; provided, that additional vesting shall
terminate upon the date of any termination of my employment under this Agreement for Cause or with
Good Reason and all vesting shall be accelerated upon any termination of my employment under this
Agreement without Cause, without Good Reason or upon Death or Disability. The Option shall expire
on the tenth anniversary of the Option grant date. The Option shall be subject to all additional
terms of the option agreement between me and the Company evidencing the Option, if any. I shall
also be eligible to receive such additional option or Unit awards as may be approved by the Board
from time to time.

          (d) Standard Benefits. During my employment, I (and my family) shall be entitled to
participate in all employee benefit plans and programs, including, without limitation, savings and
retirement plans, medical, prescription, dental, disability, salary continuance, employee life
insurance, group life insurance, accidental death and travel accident insurance, to the same extent
generally available to Company executives and their families, in accordance with the terms of those
plans and programs. The Company shall have the right to terminate or change any such plan or
program at any time.

          (e) Vacation. I shall be entitled to paid vacation to the same extent generally available to
Company executives in accordance with Company policy, but not less than four weeks vacation per
annum.

          (f) Fringe Benefits. I shall be entitled to participate in all fringe benefits and
perquisites available to Company executives in accordance with Company policy.

          (g) Expense Reimbursement. I shall be entitled to receive prompt reimbursement for all
reasonable and customary travel and business expenses I incur in connection with my employment, but
I must incur and account for those expenses in accordance with the policies and procedures
established by the Company.

          (h) Sarbanes-Oxley Act Loan Prohibition. To the extent that any Company benefit, program,
practice, arrangement or this Agreement would or might otherwise result in my receipt of an illegal
loan (“Loan”), the Company shall use

-2-

 

reasonable efforts to provide me with a substitute for the Loan that is lawful and of at least
equal value to me. If this cannot be done, or if doing so would be significantly more expensive to
the Company than making the Loan, the Company need not make the Loan to me or provide me a
substitute for it.

     5. Termination.

          (a) Rights and Duties. If my employment is terminated, I shall be entitled to the amounts or
benefits shown in the applicable row in the following table, subject to the balance of this Section
5. The Company and I shall have no further obligations to each other, except the Company’s ongoing
indemnification obligation under Section 14, my confidentiality and other obligations to the
Company, and our mutual arbitration obligations under Section 8, or as set forth in any agreement I
subsequently enter into with the Company.

	 	 	 
	DISCHARGE FOR CAUSE

	 	Payment or provision when due of (1) any unpaid base
salary, expense reimbursements, and vacation days accrued
but not used prior to termination of employment, and (2)
other unpaid vested amounts or benefits under Company
compensation, incentive and benefit plans.
	 
	 	 
	DISABILITY

	 	Same as for “Discharge for Cause,” EXCEPT that I also
shall be potentially eligible for disability benefits
under any Company-provided disability plan in which I then
participate, and if no such plan is then provided, in
exchange for my execution of a general release document in
a form provided by and reasonably acceptable to the
Company, my base salary payments at my annual salary rate
at the time, but not my employment, shall continue for 12
months. In addition, I shall be entitled to accelerated
vesting of all equity options I have been granted that, as
of the date of such disability, remain unexercised and
unvested, to the extent permissible by law.

-3-

 

	 	 	 
	DISCHARGE OTHER 

THAN FOR CAUSE OR 

DISABILITY

	 	Same as for “Discharge for Cause,” EXCEPT that, in
exchange for my execution of a general release document in
a form provided by and reasonably acceptable to the
Company;
	 
	 	 
	 

	 	     (1) the Company shall pay me, within 30 days after the
date of discharge, an amount equal to the product of (A)
my Annual Target Bonus established by the Board for the
year of such discharge, or if no such target annual bonus
has been established, the Annual Target Bonus for the
preceding year or thirty percent (30%) of my base salary,
whichever is greater, and (B) a fraction, the numerator of
which is the number of days in the current calendar year
through the date of discharge and the denominator of which
is 365;
	 
	 	 
	 

	 	     (2) (A) my base salary payments at my annual salary rate
at the time, but not my employment, shall, where there has
been no Change In Control (as defined below), continue for
36 months, or (B) where there has been a Change in Control
in the preceding one (1) year, the Company shall pay me,
within 30 days after the date of discharge, an amount
equal to the sum of my base salary for 48 months;
	 
	 	 
	 

	 	     (3) I will be entitled to accelerated vesting of all
equity options I have been granted that, as of the date of
such discharge Other Than for Cause, remain unexercised
and unvested, to the extent permissible by law; and
	 
	 	 
	 
	 	     (4) for 24 months, or where there has been a Change in
Control in the preceding one (1) year, for 36 months,
following such discharge the Company shall continue to me
and/or my family all benefits described in Section 4(d)
above at least equal to those then provided to peer
executives or, if more favorable, as in effect at any time
thereafter with respect to peer executives; provided that
if I become reemployed with another employer and am
eligible for any of such benefits under such new
employer’s plan or plans, the benefits described herein
shall be secondary to those provided to my new employer.
	 
	 	 
	RESIGNATION WITHOUT 

GOOD REASON

	 	Same as for “Discharge for Cause.”
	 
	 	 
	RESIGNATION WITH 

GOOD REASON

	 	Same as for “Discharge Other Than for Cause or Disability.”

-4-

 

	 	 	 
	DEATH

	 	Same as for “Disability,” EXCEPT that payments shall be
made to the person or entity prescribed by me or Company
policies.

          (b) Change in Control. “Change in Control” means (i) the acquisition of more than 50% of the
outstanding voting securities of the Company by an individual person or an entity or a group of
individuals or entities acting in concert, directly or indirectly, through one transaction or a
series of related transactions; (ii) a merger or consolidation of the Company with or into another
entity after which the Members of the Company immediately prior to such transaction hold less than
50% of the voting securities of the surviving entities; or (iii) a sale of all or substantially all
of the assets of the Company.

          (c) Discharge for Cause. The Company may terminate my employment at any time if it believes
in good faith that it has Cause to terminate me. “Cause” shall include, but not be limited to:

               (i) my refusal to follow lawful directions or my material failure to perform my duties (other
than by reason of physical or mental illness, injury, or condition), in either case, after I have
been given notice of my default and a reasonable opportunity to cure it;

               (ii) my willful and continued failure to substantially comply with any material Company
policy;

               (iii) conviction of a felony or the entering of a plea of nolo contender to a felony, in
either case having significant adverse effect on the business and affairs of the Company; or

               (iv) my accepting a position with another business enterprise or venture without the Company’s
written consent at any time before I have resigned from the Company or been discharged.

No act or failure to act on my part will be considered “willful” unless it is done, or omitted to
be done, by me in bad faith or without reasonable belief that such action or omission was in the
best interests of the Company. Any act or failure to act that is based on authority given pursuant
to a resolution duly passed by the Board, or the advice of counsel to the Company, shall be
conclusively presumed to be done, or omitted to be done, in good faith and in the best interests of
the Company. If I am discharged for Cause, I will only receive the benefits to which I am entitled
under Section 5(a).

          (d) Termination for Disability. The Company may terminate my employment on account of
Disability, or may transfer me to inactive employment status, which shall have the same effect
under this Agreement as a termination for Disability. “Disability” means a physical or mental
illness, injury, or condition that prevents me from performing substantially all of my duties under
this Agreement for at least 90 consecutive calendar days or for at least 120 calendar days, whether
or not consecutive,

-5-

 

in any 365 calendar day period, or is likely to do so, as certified by a physician selected by
the Company or the Board.

          (e) Discharge Other Than for Cause or Disability. The Company may terminate my employment at
any time for any reason, and without advance written notice, and I will receive the same benefits
as specified for “Discharge for Cause” in Section 5(a), above. If I am terminated by the Company
other than for Cause or for Disability, I will receive the payments described for a no Cause
discharge in the chart in Section 5(a) only if I sign a general release form furnished to me by the
Company within 60 days after my employment ends, and I do not thereafter properly revoke the
release, if it provides for revocation.

          (f) Resignation. I may resign my employment with or without “Good Reason” at any time. If I
provide notice, the Company may advance the effective date of my resignation if it does not need
the amount of notice I provide. If I resign without Good Reason, I will receive the same payments
as a “Discharge for Cause,” as described in the chart in Section 5(a). If I resign with Good
Reason, I will receive the same payments as a “Discharge Other Than for Cause or Disability,”
described in the chart in Section 5(a), if I sign a general release form furnished to me by the
Company and I do not thereafter properly revoke the release, if it provides for revocation.
Following a Change of Control, my determination that an act or failure to act constitutes Good
Reason shall be conclusively presumed to be valid unless such determination is decided to be
unreasonable by an arbitrator pursuant to Section 5 hereof. “Good Reason” means that, without my
express written consent, one or more of the following events occurred after I sign this Agreement:

               (i) Demotion. My duties or responsibilities are substantially and adversely diminished from
those in effect immediately before the change in my position, other than merely as a result of the
Company ceasing to be a public company, a change in my title, or my transfer to an affiliated
company that assumes this Agreement.

               (ii) Salary Reduction. My annual base salary is reduced, other than as part of
across-the-board salary reductions affecting all executives of similar status employed by the
Company or any entity in control of the Company.

               (iii) Discontinuance of Compensation Plan Participation. The Company fails to continue, or
continue my participation in, any compensation plan in which I participated immediately before the
event causing my resignation, which discontinuance is material to my total compensation, unless an
equitable substitute arrangement has been adopted or made available on a basis not materially less
favorable to me than the plan in effect immediately before the event causing my resignation, both
as to the benefits I receive and my level of participation relative to other participants.

               (iv) Successors to the Company. Any failure of the Company to comply with Section 12 of this
Agreement.

               (v) Breach of this Agreement. Any other material breach of this Agreement by the Company that
is either not taken in good faith or, even if taken in

-6-

 

good faith, is not remedied by the Company promptly after receipt of notice thereof from me.

However, an event that is or would constitute Good Reason shall cease to be Good Reason if: (i) I
do not terminate employment within 45 days after the event occurs; (ii) before I terminate
employment, the Company reverses the action or cures the default that constitutes Good Reason
within 10 days after I notify it in writing that Good Reason exists; or (iii) I was a primary
instigator of the Good Reason event and the circumstances make it inappropriate for me to receive
Good Reason resignation benefits under this Agreement (e.g., I agree temporarily to relinquish my
position on the occurrence of a merger transaction I negotiate).

          (g) Death. If I die while employed under this Agreement, the payments required by Section
5(a) in the event of my death shall be made.

          (h) Transfers to Affiliates or Successors. My transfer to an affiliate or successor of the
Company shall not be deemed a termination of my employment under this Agreement, unless the
affiliate or successor refuses to assume this Agreement, in which case I will receive the continued
salary payments described in Section 5(a) for “Discharge Other Than for Cause or Disability,” if I
sign a general release form provided to me by the Company and I do not thereafter properly revoke
the release, if it provides for revocation.

          (i) Offset. Any amounts payable to me under this Section 5 shall first be offset against any
amounts I owe the Company at the time of termination.

     6. Confidentiality. I acknowledge that I currently possess or will acquire secret,
confidential, or proprietary information or trade secrets concerning the operations, future plans
and business methods of the Company (“Confidential Information”).

          (a) Promise Not to Disclose. I promise never to use or disclose any Confidential Information
before it has become generally known within the industry through no fault of my own. I agree that
this promise shall never expire.

          (b) Promise Not to Solicit. To prevent me from inevitably breaking this promise, I further
agree that, while this Agreement is in effect and for 24 months after its termination: (i) as to
any customer or supplier of the Company with whom I had dealings or about whom I acquired
Confidential Information during my employment, I will not solicit or attempt to solicit (or assist
others to solicit) the customer or supplier to do business with any person or entity other than the
Company; and (ii) I will not solicit or attempt to solicit (or assist others to solicit) for
employment any person who is, or within the preceding 6 months was, an officer, manager, employee
or consultant of the Company.

          (c) Promise Not to Engage in Certain Employment. I agree that, while this Agreement is in
effect and for 24 months after its termination, I will not accept any employment or engage in any
activity, without the written consent of the Board, if the loyal and complete fulfillment of my
duties in such employment would inevitably

-7-

 

require me to reveal or utilize Confidential Information, as reasonably determined by the
Board.

          (d) Return of Information. When my employment with the Company ends, I will promptly deliver
to the Company, or, at its written instruction, will destroy, all documents, data, drawings,
manuals, letters, notes, reports, electronic mail, recordings, and copies of such materials, of or
pertaining to the Company or any of its affiliated entities which are in my possession or control.
In addition, during my employment with the Company, and thereafter, I agree to meet with Company
personnel as reasonably requested by the Board, and, based on knowledge or insights I gained during
my employment with the Company, answer any question they may have related to the Company’s business
and operations.

          (e) Intellectual Property. Intellectual property (including such things as all ideas,
concepts, inventions, plans, developments, software, data, configurations, materials (whether
written or machine-readable), designs, drawings, illustrations and photographs that may be
protectable, in whole or in part, under any patent, copyright, trademark, trade secret, or other
intellectual property law), developed, created, conceived, made or reduced to writing or practice
during my employment with the Company, except intellectual property that has no relation to the
Company or any of its customers that I developed purely on my own time and at my own expense, shall
be the sole and exclusive property of the Company, and I hereby assign all my rights, title and
interest in any such intellectual property to the Company.

          (f) Enforcement of this Section. This Section shall survive the termination of this Agreement
for any reason. I acknowledge that (i) my services are of a special, unique and extraordinary
character and it would be very difficult and impossible to replace them, (ii) this Section’s terms
are reasonable and necessary to protect the Company’s legitimate interest, (iii) this Section’s
restrictions will not prevent me from earning or seeking a livelihood, (iv) this Section’s
restrictions shall apply wherever permitted by law, and (v) my violation of any of this Section’s
terms would irreparably harm the Company. Accordingly, I agree that, if I violate any of the
provisions of this Section the Company or any of its affiliated entities shall be entitled to, in
addition to other remedies available to it, an injunction to be issued by any court of competent
jurisdiction restraining me from committing or continuing any such violation, without the need to
prove the inadequacy of money damages or post any bond or for any other undertaking.

     7. Notice.

          (a) To the Company. I will send all communications to the Company in writing, addressed as
follows (or in any other manner the Company notifies me to use):

			
	          If Mailed:	 	Inner Mongolia Production Company LLC

Attn: President

75 South Broadway

White Plains, New York 10601

-8-

 

			
	          If Faxed:	 	Inner Mongolia Production Company LLC

Attn: President

Fax: 914-304-4077

Tel.: 914-304-4076

          (b) To Me. All communications from the Company to me relating to this Agreement must be sent
to me in writing at my Company office or in any other manner I notify the Company to use.

          (c) Time Notice Deemed Given. Notice shall be deemed to have been given when delivered or, if
earlier (1) when mailed by United States certified or registered mail, return receipt requested,
postage prepaid, or (2) faxed with confirmation of delivery, in either case, addressed as required
in this Section.

     8. Arbitration of Disputes. If any legally actionable dispute arises which cannot be resolved
by mutual discussion between the Company and me, we each agree to resolve that dispute by binding
arbitration before an arbitrator experienced in employment law. Said arbitration will be conducted
in accordance with the rules applicable to employment disputes of Judicial Arbitration and
Mediation Services or such other arbitration service as we agree upon, and the law of the State of
California. The Company will be responsible for paying any filing fee and the fees and costs of
the arbitrator, unless I initiate the claim, in which case I will contribute an amount equal to the
filing fee for a claim initiated in a court of general jurisdiction in the State of California.
The Company and I agree that this promise to arbitrate covers any disputes that the Company may
have against me, or that I may have against the Company and/or its related entities and/or their
owners, directors, officers and employees, arising out of or relating to this Agreement, the
employment relationship or termination of employment, including any claims concerning the validity,
interpretation, effect or violation of this Agreement; discrimination, harassment or retaliation in
violation of any federal, state or local law; and any other aspect of my compensation, training, or
employment. The Company and I further agree that arbitration as provided in this Section shall be
the exclusive and binding remedy for any such dispute and will be used instead of any court action,
which is hereby expressly waived, except for any request by either of us for temporary or
preliminary injunctive relief pending arbitration in accordance with applicable law, or an
administrative claim with an administrative agency. The Company and I also agree that any such
arbitration shall be conducted in San Francisco, California, unless otherwise mutually agreed.

     9. Amendment. No provisions of this Agreement may be modified, waived, or discharged except
by a written document signed by me and a duly authorized Company officer. Thus, for example,
promotions, commendations, and/or bonuses shall not, by themselves, modify, amend, or extend this
Agreement. A waiver of any conditions or provisions of this Agreement in a given instance shall
not be deemed a waiver of such conditions or provisions at any other time.

     10. Interpretation and Exclusive Forum. The validity, interpretation, construction, and
performance of this Agreement shall be governed by the laws of the State of California (excluding
any that mandate the use of another jurisdiction’s laws). Any arbitration (unless otherwise
mutually agreed), litigation or similar proceeding with

-9-

 

respect to such matters only may be brought within California, and all parties to this
Agreement consent to California’s jurisdiction.

     11. Department of Homeland Security Verification Requirement. I agree to timely file all
documents required by the Department of Homeland Security to verify my identity and lawful
employment in the United States. Notwithstanding any other provision of this Agreement, if I fail
to meet any such requirements promptly after receiving a written request from the Company to do so,
I agree that my employment shall terminate immediately and that I shall not be entitled to any
compensation from the Company of any type.

     12. Successors. This Agreement shall be binding upon, and shall inure to the benefit of, me
and my estate, but I may not assign or pledge this Agreement or any rights arising under it, except
to the extent permitted under the terms of the benefit plans in which I participate. This
Agreement shall be binding upon, and shall inure to the benefit of, the Company and its successors
and assigns. The Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business and/or assets of
the Company (a “Successor”) to assume expressly and agree to perform this Agreement and the
Indemnification Agreement (defined below) in the same manner and to the same extent that the
Company would be required to perform if no such succession had taken place, after which any
reference to the “Company” in this Agreement shall be deemed to be a reference to the successor and
any reference to the “Board” in this Agreement shall be deemed to be a reference to the board of
directors or managers of the successor. The Company will also require any Successor to either (i)
assume each outstanding equity option granted to me pursuant to Section 4(c) or the Company’s
equity incentive plan, with appropriate adjustment of (a) the amount of equity securities of the
Successor available for purchase under the Option as assumed and (b) the exercise price thereof, in
each case to reflect the price per Class A Unit or rate of conversion of the Successor’s equity for
Class A Units in any such succession, as the case may be, or (ii) grant to me substantially similar
awards/options to purchase equity securities of the Successor.

     13. Validity. The invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement, which shall remain
in full force and effect.

     14. Indemnification/Insurance. The Company shall obtain and maintain Directors and Officers
Insurance in order to hold me harmless from any criminal or civil litigation arising from the
performance of my duties and responsibilities on behalf of the Company; provided, that if I am
terminated for Cause, such insurance coverage shall not apply to the action or actions that
materially supported the termination for Cause. The duration of such insurance shall include my
term of employment and a period consistent with standard industry practice for similarly-situated
development stage companies following the termination of my employment pursuant to Section 5 above.
In addition, the Company shall provide corporate indemnification to me pursuant to the terms of
the Indemnification Agreement by and between me and the Company, dated September 29, 2006, as
amended (the “Indemnification Agreement”).

-10-

 

     15. Counterparts. This Agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original but all of which together shall constitute the same instrument.

     16. Entire Agreement. All oral or written agreements or representations, express or implied,
with respect to the subject matter of this Agreement are set forth in this Agreement.

I ACKNOWLEDGE THAT ALL UNDERSTANDINGS AND AGREEMENTS BETWEEN THE COMPANY AND ME
RELATING TO THE SUBJECTS COVERED IN THIS AGREEMENT ARE CONTAINED IN IT AND THAT
I HAVE ENTERED INTO THIS AGREEMENT VOLUNTARILY AND NOT IN RELIANCE ON ANY
PROMISES OR REPRESENTATIONS BY THE COMPANY OTHER THAN THOSE CONTAINED IN THIS
AGREEMENT ITSELF.

I FURTHER ACKNOWLEDGE THAT I HAVE CAREFULLY READ THIS AGREEMENT, THAT I
UNDERSTAND ALL OF IT, AND THAT I HAVE BEEN GIVEN THE OPPORTUNITY TO DISCUSS
THIS AGREEMENT WITH MY PRIVATE LEGAL COUNSEL AND HAVE AVAILED MYSELF OF THAT
OPPORTUNITY TO THE EXTENT I WISHED TO DO SO. I UNDERSTAND THAT BY SIGNING THIS
AGREEMENT I AM GIVING UP MY RIGHT TO A JURY TRIAL.

	 	 	 	 	 
	 	 	 
	Date:  September 29, 2006 	/s/ Stephen F. Groth
 	 
	 	Stephen F. Groth 	 
	 	 	 
	 
	 	INNER MONGOLIA PRODUCTION COMPANY LLC

 	 
	Date:  September 29, 2006 	By:  	/s/ Frank C. Ingriselli
 	 
	 	 	Its:  President and CEO 	 
	 	 	 	 
	 

-11-exv10w13

 

Exhibit 10.13

LEASE

STATION PLAZA ASSOCIATES

Landlord

and

INNER MONGOLIA PRODUCTION COMPANY

Dated: December 1st, 2006

Suite # 47/48/49

Building:

Station Plaza

250 East Hartsdale Avenue

Hartsdale, New York

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 
	SECTION	 	PAGE	 
	 
	1.	 	PREMISES	 	 	1	 
	2.	 	DEFINITIONS	 	 	1	 
	3.	 	TERM	 	 	1	 
	4.	 	USE OF PREMISES	 	 	2	 
	5.	 	RENT	 	 	3	 
	6.	 	INCREASES IN OPERATING EXPENSES	 	 	3	 
	7.	 	INCREASE IN REAL ESTATE TAXES	 	 	4	 
	8.	 	REPAIRS	 	 	5	 
	9.	 	PARKING	 	 	5	 
	10.	 	UTILITIES AND SERVICES	 	 	5	 
	 
	 	(a)	 	HVAC	 	 	5	 
	 
	 	(b)	 	Water	 	 	6	 
	 
	 	(c)	 	Electricity	 	 	6	 
	 
	 	(d)	 	Cleaning	 	 	6	 
	 
	 	(e)	 	Security	 	 	6	 
	 
	 	(f)	 	Interruption of Services	 	 	6	 
	11.	 	INSURANCE	 	 	6	 
	12.	 	SUBORDINATION	 	 	7	 
	13.	 	DESTRUCTION, FIRE OR OTHER CAUSES	 	 	8	 
	14.	 	EMINENT DOMAIN	 	 	8	 
	15.	 	ASSIGNMENT AND
SUBLEASING, MORTGAGE, ETC.	 	 	9	 
	16.	 	FEES AND EXPENSES	 	 	10	 
	17.	 	NO REPRESENTATIONS BY LANDLORD; INDEMNITY	 	 	10	 
	18.	 	QUIET ENJOYMENT; HOLDING OVER	 	 	11	 
	19.	 	DEFAULT	 	 	11	 
	20.	 	REMEDIES OF LANDLORD	 	 	12	 
	21.	 	RIGHT TO EXHIBIT PREMISES AND ACCESS TO PREMISES	 	 	13	 
	22.	 	BROKERAGE	 	 	13	 

 

 

	 	 	 	 	 	 	 	 	 
	SECTION	 	PAGE	 
	 
	23.	 	SECURITY DEPOSIT	 	 	13	 
	24.	 	LEASE STATUS AND NOTICE	 	 	14	 
	25.	 	ASSIGNS	 	 	15	 
	26.	 	SURRENDER OF REMISES	 	 	15	 
	27.	 	MISCELLANEOUS	 	 	15	 
	28.	 	ENTIRE AREEMENT	 	 	16	 
	EXHIBIT A — OPERATING EXPENSES	 	 	18	 
	EXHIBIT B — CLEANING SPECIFICATIONS	 	 	20	 
	EXHIBIT C — SUITE RENOVATIONS	 	 	22	 

 

 

     LEASE dated the 1st day of December, 2006, between STATION PLAZA ASSOCIATES, a partnership
organized and existing under the laws of the State of New York with an office at 595 Summer Street,
Stamford, CT acting herein by Leslie M. Klein, partner duly authorized (“Landlord”); and,
Inner Mongolia Production Company, with offices located at 250 East Hartsdale Avenue, Hartsdale,
New York 10530 (“Tenant”).

WITNESSETH:

	1.	 	PREMISES.

     Landlord hereby leases to Tenant, for the term and upon the conditions hereinafter specified,
the following premises: approximately 1378 rentable square feet of (the “Premises”) on the
fourth (4th) floor in the building (the “Building”) known as Station Plaza, 250 East
Hartsdale Avenue, located in Hartsdale (the “City”).

	2.	 	DEFINITIONS.

     Terms used in this Lease shall have the following meanings:

	 	(a)	 	Base Rent:

	 	(i)	 	Lease Year 1 — $38,584.00.00 per annum payable at the monthly rate of
$3,215.33;
	 
	 	(ii)	 	Lease Year 2 — $40,127,00.00 per annum payable at the monthly rate of
3,343.92;
	 
	 	(iii)	 	Electric included

	 	(b)	 	Tax Base Year: Calendar Year 2007

Base Operating Expense Year: Calendar Year 2007
	 
	 	(c)	 	Tenant’s Proportionate Share: 5.5%
	 
	 	(d)	 	Parking: Four (4) spaces reserved
	 
	 	(e)	 	Lease Year: Consecutive 12-month periods during the Term, with the first Lease Year
commencing on the 1st day of December, 2006.

	3.	 	TERM.

     To have and to hold the premises for a term of two (2) years (the “term”), commencing on
December 1, 2006 (the “Commencement Date”), and ending on November 30, 2008 (the
“Expiration Date”).

Page -1-

 

	4.	 	USE OF PREMISES.

     (a) Tenant shall use the Premises only for general office use, and for no other purpose.
Tenant will not interfere with the conduct of business by other tenants or occupants of the
Building or create any private nuisance, including, without limitation, the occupation by Tenant or
its employees, agents, contractors, subtenants or invitees (collectively, “Tenant’s
representatives”) of more than the number of parking places allocated to Tenant.

     (b) Tenant, at its expense, shall comply with all laws, orders and regulations of Federal,
State and municipal authorities and with any direction of any public officer or officers, pursuant
to law, which shall impose any violation, order or duty upon Landlord or Tenant with respect to the
Premises or the use or occupancy thereof, including without limitation the Americans With
Disabilities Act (as amended from time to time and as may be superceded from time to time, the
“Act”) and any Environmental Laws (collectively, the “Legal Requirements”).
Anything in the preceding sentence to the contrary notwithstanding, if alterations to the Premises
are required under the Act because of alterations to the common areas of the Building (the
“Common Areas”) made by Landlord, then Landlord shall, at its expense, make the alterations
to the Premises required under the Act. If alterations to the Common Areas are required under the
Act because of the nature of Tenant’s business or alterations made by or on behalf of Tenant within
the Premises, then Landlord may make same and Tenant shall, within 20 days after receipt of a bill
from time to time, reimburse Landlord for the reasonable cost of such alterations.

     (c) Tenant, at its expense, shall comply with all rules, orders, regulations and requirements
of the Board of Fire Underwriters or other similar body or authority having jurisdiction and all
insurance policies affecting the Premises (collectively, the “Insurance Requirements”) and
shall not do or permit anything to be done, in or upon the Premises, or bring or keep anything
therein, which is prohibited by any Insurance Requirements, or which would increase the rate of
fire insurance applicable to the Building over that in effect on the date hereof. Tenant shall
comply with the Legal Requirements and the Insurance Requirements, whether or not such compliance
shall require extraordinary or unforeseen repairs, replacements or additions, and whether or not
the Premises currently comply with same.

     (d) Tenant shall, at Tenant’s expense, keep and maintain the Premises in compliance with all
local, state and Federal environmental laws, ordinances and regulations, including without
limitation, 42 U.S.C. §9601 et seq., 42 U.S.C. §6901 et seq., 49 U.S.C. §1801 et seq., 15 U.S.C.
§2601 et seq., and the regulations promulgated thereunder, (all of the foregoing being referred to
collectively as the “Environmental Laws”). During the Lease term, Tenant shall permit no
spills, discharges, or releases of any hazardous, radioactive or polluting substances, including
without limitation any oil or petroleum products or any chemical liquids or solids (all of the
foregoing being referred to collectively as “Hazardous Materials”). Tenant shall indemnify,
defend and hold harmless Landlord, its successors and assigns from and against any claim,
liability, cost, damage, expense, response or remedial action costs (including without limitation
attorneys’ fees, and costs of

Page -2-

 

investigation or audit) relating to: (i) the presence, use, or storage on or under the Premises, or
any spill, discharge or release from the Premises, of any Hazardous Material during the Lease term;
(ii) any failure of the Premises to comply with any applicable Environmental Law, unless such
non-compliance results from the conduct of Landlord and/or a prior occupant of the Premises; or
(iii) any loss of value of the Premises, including without limitation any loss of value arising
from the imposition of any lien against the Premises, unless such loss of value results from the
conduct of Landlord and/or a prior occupant. In addition, Tenant, at its sole cost and expense,
shall be responsible to contain and remove any and all medical waste, and shall indemnify and hold
Landlord harmless with regard to said medical waste and disposal thereof. These foregoing
indemnities shall survive the expiration or termination of this Lease.

	5.	 	RENT.

     Commencing on the Commencement Date, Tenant shall pay to Landlord the Base Rent specified
below, without demand and without setoff or deductions of any kind, in equal monthly installments,
in advance, on the first day of each calendar month of the Term at the address of Landlord stated
above or such other place as Landlord may designate in writing from time to time, with payment in
advance of appropriate fractions of a monthly payment for any portion of a month at the expiration
or prior termination of the Term. Every amount payable by Tenant hereunder in addition to Base Rent
shall be deemed “Additional Rent.” Base Rent and Additional Rent are herein collectively
referred to as the “Rent.” Any Rent not paid by Tenant on or before the due date thereof
shall be payable on or before the first day of the succeeding month with a late charge equal to 5%
of the unpaid installment, payable as Additional Rent. Anything herein to the contrary
notwithstanding, the first monthly installment of Base Rent, which shall be payable on the
execution hereof.

	6.	 	INCREASES IN OPERATING EXPENSES.

     (a) After the expiration of the Base Operating Expense Year and of each succeeding calendar
year (“Operating Year”), Landlord shall furnish Tenant a written statement prepared by
Landlord of the Operating Expenses of the Property, as defined in Exhibit A attached
hereto, incurred for such year. During the period of 60 days after receipt of Landlord’s statement,
Tenant’s independent certified public accountant may inspect the records of the material reflected
in said Landlord’s statement at a reasonable time mutually agreeable to Landlord and Tenant.
Failure of Tenant to challenge any item in such statement within 60 days after receipt shall be a
waiver of Tenant’s right to challenge such item for such year. Within 30 days after receipt of such
statement for any Operating Year setting forth any increase of Operating Expenses during such
Operating Year over the Operating Expenses in the Base Operating Expense Year (said increase being
referred to herein as the “Cost Increase”), Tenant shall pay Tenant’s Proportionate Share
of the Cost Increase (less the amount of Tenant’s projected share paid by Tenant on account
thereof) to Landlord as Additional Rent. Operating Expenses shall be determined as if the Building
were 95% occupied during the Base Operating Expense Year and each Operating Year in which actual
occupancy shall be less than 95%.

Page -3-

 

     (b) Commencing
with the first Month After the Base Operating Expense Year, Tenant shall
pay to Landlord, as Additional Rent, Tenant’s projected share. Such projected share shall be equal
to Landlord’s written estimate of Tenant’s Proportionate Share of the Cost Increase for the
Operating Year. On the first day of each month of each Operating Year during the Term, and within
30 days after Tenant’s receipt of Landlord’s written estimate, Tenant shall pay to Landlord
one-twelfth of its projected share of the estimated Cost Increase for such Operating Year. If
Landlord’s statement after the end of an Operating Year shall indicate that Tenant’s projected
share exceeded Tenant’s Proportionate Share of Cost Increase, Landlord shall forthwith, at
Landlord’s option, either (i) pay the amount of excess directly to Tenant concurrently with the
notice or (ii) permit Tenant to credit the amount of such excess against the subsequent payments of
Additional Rent due hereunder. If Landlord’s statement shall indicate that Tenant’s Proportionate
Share of Cost Increase exceeded Tenant’s projected share for the completed Operating Year, Tenant
shall, subject to the provisions of subsection 6(a) herein, forthwith pay the amount of
such excess to Landlord. If said Landlord’s statement is furnished to Tenant after the commencement
of a subsequent Operating Year, there shall be promptly paid by Tenant to Landlord or vice versa,
as the case may be, an amount equal to the portion of such payment or credit allocable to the part
of such Operating Year which shall have elapsed prior to the first day of the calendar month next
succeeding the calendar month in which said Landlord’s statement is furnished to Tenant.

     (c) Landlord’s failure to render Landlord’s statement with respect to any Operating Year or
Tax Year, or Landlord’s delay in rendering said statement beyond a date specified herein, shall not
prejudice Landlord’s right to render a Landlord’s statement with respect to that or any subsequent
Operating Year or Tax Year. The obligations of Landlord and Tenant under the provisions of this
Section with respect to any Additional Rent, which obligations have accrued prior to the expiration
or sooner termination of the Term, shall survive the expiration or any sooner termination of the
Term.

7. INCREASE IN REAL ESTATE TAXES.

     If Real Estate Taxes with respect to the Property are increased, during any year subsequent to
the Tax Base Year, over Real Estate Taxes paid by Landlord during the Tax Base Year, then Tenant
shall pay to Landlord, without setoff or deductions of any kind, as
Additional Rent After the Tax
Base Year an amount equal to Tenant’s Proportionate Share of such increase. Payment of such
increase shall be made in the installments provided by the taxing authority within 30 days after
Tenant receives from Landlord notice of such tax increase and a bill for Tenant’s Proportionate
Share thereof, together with a copy of the applicable bill received by Landlord from the taxing
authority. “Real Estate Taxes” shall mean all taxes, assessments and governmental charges,
whether Federal, State or municipal, which are levied or charged against real estate, personal
property or rents, or on the right or privilege of leasing real estate or collecting rents thereon
and any other taxes and assessments attributable to the Property or its operation, excluding,
however, Federal, State or other general income taxes not limited to real property. If Landlord
shall be required under a mortgage or other creditor arrangement to make real estate tax deposits
monthly or otherwise, Tenant shall make the same

Page -4-

 

installment payments to Landlord of its share of same. If Landlord receives a refund of any portion
of Real Estate Taxes that were included in the Real Estate Taxes paid by Tenant, then Landlord
shall reimburse Tenant its pro rata share of the net refunded taxes, less any expenses that
Landlord reasonably incurred to obtain the refund. If, as a result of any application or proceeding
brought by or on behalf of Landlord for review of the assessed valuation of the Property for the
Tax Base Year, there shall be a decrease in the Real Estate Taxes payable by Landlord for such
year, the reduced amount shall be used for future calculations under this Section.

8. REPAIRS.

     (a) Except as provided in (b) below, the roof, exterior walls (excluding windows) and
foundation of the Building and all parts of the heating, plumbing, electrical and air conditioning
systems in the Building shall be maintained and repaired by Landlord at its expense, except if
necessitated by the excess use (i.e., greater than normal office use) by, or the negligence or
willful act of Tenant or any of Tenant’s Representative, in which event Tenant shall promptly
reimburse Landlord for the costs incurred in effecting such repair or replacement as necessary. The
fact that any such repairs are Landlord’s responsibility does not preclude the cost of same being
included as Operating Expenses.

     (b) Tenant, at its expense, shall repair, maintain in good order and condition and replace, if
necessary, the interior of the Premises and shall keep the Premises clean and orderly in accordance
with Landlord’s standards for the Building.

9. PARKING.

     Tenant shall have the right to use the number of parking spaces specified in Section 2 hereof.
Landlord shall have the right, at any time and from time to time during the Term, to designate or
re-designate the parking spaces to be used by Tenant, in which event Tenant shall limit its
employee and invitee parking to its assigned spaces and will post markings designating its spaces.
Landlord shall have no liability to Tenant if others park in Tenant’s assigned spaces.

10. UTILITIES AND SERVICES.

     (a) HVAC. Mondays through Fridays (except the days observed by the Federal or the New York
state governments as legal holidays) from 8:00 a.m. to 6:00 p.m., and Saturdays (except the days
observed by the Federal or the New York state governments as legal holidays) from 8:00 a.m. to 1:00
p.m., Landlord shall furnish and distribute heat to the Premises reasonable air conditioning on
business days from May 15th to September 30th. If Tenant shall require air
conditioning or heat at any other time, Landlord shall furnish after-hours air conditioning and
heat upon reasonable advance notice from Tenant, and Tenant shall pay Landlord’s then-established
charges therefor on Landlord’s demand. Landlord’s current charge to Tenant for such after-hours
service is $75.00 per hour.

Page -5-

 

     (b) WATER. Landlord shall supply reasonably adequate quantities of hot and cold water to the
Premises for ordinary lavatory and drinking purposes.

     (c) ELECTRICITY. Tenant shall pay to Landlord, for all electricity consumed in the Premises,
utilizing the Electrical Factor set forth in Section 2 (if so specified), payable in installments
on the first day of each month during the Term.

     (d) CLEANING. Landlord, at its expense, shall cause the Premises to be cleaned Mondays through
Fridays (except the days observed by the Federal or the New York state governments as legal
holidays), including annually the exterior and the interior of the windows thereof (subject to
Tenant maintaining unrestricted access to such windows), but excluding any portions of the Premises
used for the storage, preparation, service or consumption of food or beverages. Tenant shall pay to
Landlord on demand Landlord’s reasonable charges for any special or unusual cleaning work in the
Premises, including without limitation, the cleaning of private baths, interior glass, pantries,
kitchens, lounge areas, paneled and fabric walls, and wood floors. Exhibit B describes the
cleaning services to be provided by Landlord under this Section.

     (e) SECURITY. In no event shall Landlord be required to provide any security services to the
Building. Tenant shall supply such security services to the Premises as Tenant requires, subject to
Landlord’s prior approval of plans. If Landlord shall, at its discretion, supply any security
services to the Building, same shall not guarantee the safety of Tenant’s employees, invitees or
property.

     (f) INTERRUPTION OF SERVICES. Landlord does not warrant that any of the services referred to
above, or any other services which Landlord may supply, will be free from interruption, and Tenant
acknowledges that any one (1) or more such services may be suspended by reason of accident,
repairs, inspections, alterations or improvements necessary to be made, or by Unavoidable Delay (as
hereinafter defined). Any such interruption or discontinuance of service shall not be deemed an
eviction or disturbance of Tenant’s use and possession of the Premises, or any part thereof, nor
render Landlord liable to Tenant for damages by abatement of the Rent or otherwise, nor relieve
Tenant from performance of Tenant’s obligations under this Lease. Landlord shall, however, exercise
reasonable diligence to restore any service so interrupted.

11. INSURANCE.

     (a) Tenant shall, at its expense, secure and maintain general liability insurance written on a
so-called “comprehensive” general liability form with combined single limit coverage (for personal
injury, property damage or death arising out of any one (1) occurrence) of at least $1,000,000,
with no deductible, naming Landlord and Landlord’s designees as additional insureds under the
policy. Tenant shall, at its expense, secure and maintain excess liability insurance written on a
umbrella form with combined and single limit coverage (for personal injury, property damage or
death arising out of any one (1) occurrence) of at least $1,000,000, with no deductible, naming
Landlord and Landlord’s designees as additional insureds under the policy. Tenant shall deliver to
Landlord

Page -6-

 

duplicate certificates of such insurance prior to taking occupancy of the Premises and shall
deliver new certificates at least 30 days prior to the expiration of the existing coverage. Such
certificates shall provide that in the event of termination or material change in coverage,
Landlord shall be given 30 days’ advance notice in writing sent by certified mail to the address of
Landlord. Such insurance shall insure Tenant’s contractual liability hereunder and shall contain a
waiver of the insurer’s right of subrogation against Landlord. Said coverage limit shall be
increased if, in Landlord’s reasonable judgment, increased limits are required to protect Landlord
and Tenant against claims covered thereby. If Tenant shall voluntarily carry any liability
insurance in an amount greater than required hereunder, such insurance shall comply with the
requirements of this Section.

     (b) Tenant shall maintain all-risk casualty insurance covering Tenant’s furniture, fixtures,
equipment and other personality within the Premises, with replacement value coverage.

     (c) Landlord and Tenant hereby waive all rights to recover against each other for any loss or
damage covered by any casualty insurance required under this Lease, or otherwise actually carried
by each of them. Landlord and Tenant will diligently attempt to cause their respective insurers to
issue appropriate waiver of subrogation endorsements to all policies and insurance carried in
connection with the Premises or the contents of either of them. Anything in this Lease to the
contrary notwithstanding, Landlord and Tenant shall look first to the proceeds of their respective
insurance policies before proceeding against each other in connection with any claim relating to
any matter covered by this Lease.

12. SUBORDINATION.

     (a) This Lease is and shall be subject and subordinate to (i) any and all mortgages now or
hereafter affecting the fee title of the Building, and to any and all present and future
extensions, modifications, renewals, replacements and amendments thereof; and (ii) any and all
ground leases now or hereafter affecting the Building or any part thereof and to any and all
extensions, modifications, renewals, replacements and amendments thereof. Tenant will execute and
deliver promptly to Landlord any reasonable certificate or instrument which Landlord, from time to
time, may request for confirmation of the provisions of this Section.

     (b) Neither the foreclosure of a superior mortgage nor the termination of a superior ground
lease, nor the institution of any suit, action, summary or other proceedings by Landlord or any
successor landlord under such ground lease or by the holder of any such mortgage, shall, by
operation of law, result in the cancellation or termination of the obligations of Tenant hereunder,
and Tenant agrees to attorn to and recognize Landlord and any successor landlord under such ground
lease or the holder of any such mortgage, or the purchaser of the Building in foreclosure or any
subsequent owner of the fee, as the case may be, as Tenant’s landlord hereunder in the event that
any of them shall succeed to Landlord’s interest in the Premises.

Page -7-

 

13. DESTRUCTION, FIRE OR OTHER CAUSES.

     (a) If the Building shall be partially damaged by fire or other casualty so that the damage
can reasonably be repaired by Landlord within 180 days from the date of the damage (90 days in the
case of damage within the last year of the Term), then the damage shall be diligently repaired by
and at the expense of Landlord (to the extent of net insurance proceeds received by Landlord for
restoration), subject to applicable Legal Requirements and Insurance Requirements, and the Rent
until such repairs shall be made shall be apportioned according to the part of the Premises which
is tenantable.

     (b) If the Building is destroyed or rendered wholly untenantable by fire or other cause, or if
the Building shall be so damaged that it cannot reasonably be repaired by Landlord within 180 days
(90 days in the case of damage within the last year of the Term) from the date of the damage, or if
Landlord shall elect not to restore the same but to demolish it or rebuild it, then in any of such
events Landlord may, within 60 days after such casualty, give Tenant a notice in writing of
intention to terminate this Lease, and thereupon the Term shall expire, effective the date of the
casualty, and Tenant shall vacate the Premises and surrender the same to Landlord within ten (10)
days after receipt of Landlord’s notice. If Landlord does not elect to terminate this Lease, the
provisions of subsection (a) shall govern.

     (c) Landlord shall not be liable for any damage to, or be required (under any provision of
this Lease or otherwise) to repair, restore or replace, any property in the Premises or be liable
to Tenant for damage arising from rain or snow or from the bursting, overflowing or leakage of
water, steam or gas pipes or defect in the plumbing, HVAC, mechanical or electrical systems of the
Building or from any act or neglect of any other tenant or occupant in the Building.

14. EMINENT DOMAIN.

     (a) If the whole or any substantial part of the Land and/or the Building shall be acquired or
condemned by eminent domain for any public or quasi-public use or purpose, or if Landlord elects
not to restore the Building but to demolish or rebuild it, then and in that event, the Term shall
cease and terminate from the date of taking, and Rent shall be adjusted and paid to the date of
such termination.

     (b) In the event of any other condemnation of a part of the Building, this Lease shall remain
in effect, but the Rent shall be prorated based on that portion of the Premises which remains
tenantable, and Landlord shall diligently repair the damage to the Building (to the extent of net
condemnation proceeds received by Landlord for restoration), subject to applicable Legal
Requirements and Insurance Requirements.

     (c) In any event Tenant shall have no claim against Landlord or the condemning authority for
the value of the unexpired Term or to any part of the award in such proceeding; provided

Page -8-

 

however that Tenant may assert a claim against the condemning authority for any of its personal
property so taken and for its moving expenses.

15. ASSIGNMENT AND SUBLEASING, MORTGAGE, ETC.

     (a) Neither Tenant nor any party claiming under or through Tenant shall assign, mortgage or
encumber this Lease, or sublease all or any part of the Premises, or suffer or permit the Premises
or any part thereof to be subleased to or used by others, without the prior written consent of
Landlord in each instance. As provided in subsection (c) below, Landlord shall not
unreasonably withhold its consent to a proposed subletting or assignment. The transfer (or
transfers in the aggregate) of more than a 50% interest in Tenant, shall be deemed an assignment of
this Lease for the purposes of this Section. If this Lease be assigned, or if the Premises or any
part thereof be sublet to or occupied by anybody other than Tenant, Landlord may, at Landlord’s
option, collect rent from the assignee, subtenant or occupant, and apply the net amount collected
to the Rent herein reserved (and any sublease shall confirm such option by Landlord), but no such
assignment, subletting, occupancy or collection shall be deemed a waiver of this covenant, or the
acceptance of the assignee, subtenant or occupants, or a release of Tenant from the further
performance by Tenant of covenants on the part of Tenant herein contained. The consent by Landlord
to an assignment or subletting shall not be construed to relieve Tenant from obtaining the express
consent in writing of Landlord to any further assignment or subletting.

     (b) If Tenant desires to assign this Lease or to sublease all or substantially all of the
Premises in the aggregate, Tenant shall first give notice to Landlord of the proposed transaction
and the term thereof, and Landlord shall have the right, by notice to Tenant within 30 days after
receipt of Tenant’s notice, to terminate this Lease. If Tenant desires to sublease less than
substantially all of the Premises in the aggregate, Tenant shall first give notice to Landlord as
aforesaid, and Landlord shall have the right to terminate this Lease with respect to the portion of
the Premises proposed to be subleased, as of the intended effective date of the proposed sublease.
If Landlord exercises its right to terminate this Lease with respect to such portion of the
Premises, then (i) the Base Rent and Tenant’s Proportionate Share shall be proportionally reduced,
and an adjustment shall be made for amounts, if any, paid in advance and applicable to the portion
of the Premises no longer leased by Tenant; and (ii) the number of parking spaces available for
Tenant’s use pursuant to Section 9 hereof shall be proportionally reduced, as reasonably
designated by Landlord.

     (c) If Landlord elects not to so terminate this Lease, then Landlord shall not unreasonably
withhold its consent to the proposed subletting or assignment. Tenant shall pay to Landlord as
Additional Rent, within ten (10) days after receipt of payments from a subtenant or assignee, 75%
of any “profit” on a subletting or assignment, i.e., the excess of consideration of any type
received by Tenant from the subtenant or assignee, over (in the case of a sublease only) a pro rata
portion of the Rent payable by Tenant hereunder, reduced by Tenant’s reasonable third-party
brokerage fees and attorneys’ fees for the transaction.

Page -9-

 

     (d) Notwithstanding the foregoing, without Landlord’s consent and without being subject
to Landlord’s rights under subsections 15(b) and (c) above but upon 60 days’ prior notice
to Landlord, this Lease may be assigned, or the Premises may be sublet, to any entity which is an
Affiliate of Tenant. Within ten (10) days after the execution of any such assignment or sublease,
Tenant shall deliver a complete copy of the documentation to Landlord. For the purposes of this
Section, an “Affiliate” means any entity controlling, controlled by or under common control
with Tenant. If thereafter the transferee shall no longer be an Affiliate of Tenant, that shall be
deemed a new assignment or sublease, as the case may be, subject to this Section.

     (e) Landlord shall not be required to consider, act upon or accept any request to assign or
sublet the Premises, unless Tenant accompanies such request with payment of the sum of $1,500.00
for anticipated administrative costs in reviewing and evaluating such request.

16. FEES AND EXPENSES.

     If Tenant shall default in the observance or performance of any term or covenant of this
Lease, Landlord may, after ten (10) days’ notice to Tenant to cure the default and failure of
Tenant to cure the same within such period, or at any time thereafter without notice in event of
emergency, perform the same for the account of Tenant. If Landlord makes any expenditures or incurs
any obligations in connection with a default by Tenant, including, but not limited to, reasonable
attorneys’ fees in instituting, prosecuting or defending any action or proceeding against Tenant,
such sums paid or obligations incurred, with interest (as provided below) and costs, shall be
deemed to be Additional Rent hereunder and shall be paid by Tenant to Landlord within ten (10) days
of rendition of any bill or statement to Tenant hereunder.

17. NO REPRESENTATIONS BY LANDLORD; INDEMNITY.

     (a) Landlord and Landlord’s agents have made no representations or promises with respect to
the Building or the Premises, including the uses permitted under applicable law, except for
representations herein expressly set forth.

     (b) Except as otherwise herein specified, neither Landlord, nor any employee, agent or
contractor of Landlord, shall be liable to Tenant or any of Tenant’s Representatives (i) for any
damage to or loss of any property of Tenant or such other person, irrespective of the cause of such
damage or loss; or (ii) for any personal injury to Tenant or such other person from any cause.

     (c) Subject to subsection 11(c) herein, Tenant shall defend, indemnify and hold
harmless Landlord, its employees, agents and contractors against and from all liabilities,
including reasonable attorneys’ fees, which may be imposed upon or incurred by or asserted against
Landlord or such other persons by reason of any of the following occurring during the Term or prior
thereto when Tenant has been given access to the Premises: (i) any work or thing done in the
Premises by or at the request of Tenant or any of Tenant’s Representatives; (ii) any negligence or
wrongful act or omission of Tenant or any of Tenant’s Representatives; (iii) any accident, injury,
loss or damage to

Page -10-

 

any person or property occurring in the Premises; and (iv) any failure on the part of Tenant or any
of Tenant’s Representatives to comply with any of the terms of this Lease.

18. QUIET ENJOYMENT; HOLDING OVER.

     (a) Upon Tenant paying the 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 hereby demised, free from any interference, molestation or acts of Landlord or of
anyone claiming by, through or under Landlord, subject, nevertheless, to the terms and conditions
of this Lease and to any ground lease and mortgages as hereinbefore provided.

     (b) If Tenant retains possession of the Premises or any part thereof after the Expiration Date
or earlier termination date without the written consent of Landlord, Tenant’s occupancy shall be
under all of the terms and conditions of this Lease, except that (i) the tenancy shall be at will,
terminable by either party on ten (10) days’ written notice; (ii) the Base Rent per month shall be
the greater of (x) 150% of the then monthly fair market fixed rent for the Premises, and (y) 150%
of the Base Rent specified herein for the month preceding the termination; and (iii) Tenant shall
indemnify and hold Landlord harmless for all damages sustained and liabilities incurred by Landlord
as a result of Tenant’s continued occupancy beyond ten (10) days after Landlord’s notice to Tenant
under this subsection. Anything in this Lease to the contrary notwithstanding, if Tenant shall
retain possession of part or all of the Premises after the Expiration Date or earlier termination
date hereof, extension or renewal rights, first offer and first refusal rights, and expansion
rights, if any, herein shall terminate.

19. DEFAULT.

     (a) If (i) Tenant defaults in the payment, when due, of any installment of Rent and Tenant
fails to remedy such default within five (5) business days after notice from Landlord; or (ii)
Tenant defaults in fulfilling any other covenant of this Lease and Tenant fails to remedy such
default within 20 days after notice by Landlord to Tenant specifying the nature of such default (or
if the said default cannot be completely cured or remedied within said 20-day period and Tenant
shall not have diligently commenced curing such default within such 20-day period and shall not
thereafter diligently remedy or cure such default within 60 days after notice from Landlord), then
Landlord may, by notice to Tenant, cancel this Lease, and this Lease and the Term hereunder shall
end and expire as fully and completely as if the date of cancellation were the day herein
definitely fixed for the end and expiration of this Lease and the Term hereof. Tenant shall then
quit and surrender the Premises to Landlord, but Tenant shall remain liable as hereinafter
provided.

     (b) If (i) a notice provided for in subsection (a) above shall have been given and the
Term shall expire as aforesaid, or (ii) any execution shall be issued against Tenant or any of
Tenant’s property, whereupon the Premises shall be taken or occupied or attempted to be taken or
occupied by someone other than Tenant, then and in any of such events, Landlord may, without
notice, re-enter

Page -11-

 

the Premises, and dispossess Tenant, and the legal representative of Tenant or other occupant of
the Premises, by summary proceedings or otherwise, 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, but Tenant shall remain liable for damages
as hereinafter provided.

20. REMEDIES OF LANDLORD.

     In case of any such default, re-entry, expiration and/or dispossess by summary proceedings or
otherwise: (a) the Rent shall become due thereupon and be paid up to the time of such re-entry,
dispossess and/or expiration, together with such expenses as Landlord may incur for counsel fees,
brokerage and/or putting the Premises in good order, or for preparing the same for re-rental; (b)
Landlord may re-let the Premises or any part or parts thereof, either in the name of Landlord or
otherwise, for a term or terms, which may at Landlord’s option be less than or exceed the period
which would otherwise have constituted the balance of the Term, and may grant concessions of free
rent; and/or (c) Tenant or the legal representatives of Tenant shall also pay Landlord any
deficiency between (i) the Rent hereby reserved and/or covenanted to be paid, and (ii) the net
amount, if any, of the rents collected on account of the lease or leases of the Premises for each
month of the period which would otherwise have constituted the balance of the Term. There shall be
added to such deficiency such expenses as Landlord may incur in connection with re-letting the
Premises, including without limitation, counsel fees, brokerage commissions and expenses incurred
in maintaining the Premises in good order and in connection with renovating and preparing the same
for re- letting. Any such rent deficiency 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 or months by a similar proceeding. In addition, Landlord shall have the
alternative of commencing suit against Tenant at any time for an amount equal to the Rent reserved
for the balance of the Term less the fair market rent of the Premises for the same period. Any Rent
not paid by Tenant within 20 days after the due date thereof, shall thereafter be payable with
interest at the rate of 3% per annum in excess of the prime or base rate of Citibank (or its
successor) in effect from time to time, from the due date to the date of payment. Landlord, at its
option, may make such alterations, repairs, replacements and/or decorations in the Premises as
Landlord considers advisable for the purpose of re-letting the Premises; and the making of such
alterations and/or decorations shall not operate or be construed to release Tenant from liability
hereunder as aforesaid. The failure of Landlord to re-let the Premises or any part thereof shall
not release or affect Tenant’s liability for continued rent or damages hereunder nor shall Landlord
in any event be liable in any way whatsoever for failure to re-let the Premises. In the event of a
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 herein provided for. Mention in this Lease of any
particular remedy shall not preclude Landlord from any other remedy, in law or in equity.

Page -12-

 

21. RIGHT TO EXHIBIT PREMISES AND ACCESS TO PREMISES.

     (a) Landlord reserves the right to enter the Premises and exhibit same at any reasonable time
(i) to prospective mortgagees, purchasers and ground lessees and (ii) to prospective tenants at any
time within 180 days prior to the expiration of the Term.

     (b) Subject to reasonable security requirements, Tenant shall have access to the Building 24
hours per day, seven (7) days per week. A keypad or similar security access system will be
provided.

     (c) Landlord reserves the right to have its employees and agents enter the Premises at any
reasonable time (and at any time in case of emergency) in order to gain access to any utility area,
which utility area contains equipment and systems for the Building, and in order to effect
necessary repairs and replacements. Such agents may bring necessary tools and equipment with them
and may store same within the Premises.

     (d) Landlord shall exercise all access rights to the Premises available under this Lease, in
each instance, upon reasonable advance notice to Tenant, in a manner consistent with Tenant’s
reasonable security requirements and in a manner which does not unreasonably interfere with
Tenant’s business operations, except in any event in cases of emergency.

22. BROKERAGE.

     Tenant represents that it has not had or dealt with any realtor, broker or agent in connection
with the negotiation of this Lease and Tenant shall pay and hold Landlord harmless from any cost,
expense or liability (including costs of suit and attorneys’ fees) for any compensation, commission
or charges claimed by any realtor, broker or agent with respect to this Lease and the negotiation
thereof.

23. SECURITY DEPOSIT.

     Tenant
has deposited with Landlord the sum of $6,430.66 (the
“Security Deposit”) as
security for the performance by Tenant of the provisions of this Lease. If Tenant defaults with
respect to any provision of this Lease, including payment of the Rent, Landlord may use, apply,
draw upon or retain all or any part of the Security Deposit to the extent necessary for the payment
of any Rent, or to compensate Landlord for any other loss, cost or damage which Landlord may suffer
by reason of Tenant’s default. If any portion of the Security Deposit is so used, applied, or drawn
upon, Tenant shall, within ten (10) days after notice thereof, deposit cash with Landlord in an

Page -13-

 

amount sufficient to restore the Security Deposit to its original amount. Tenant’s failure to do so
shall be a breach of this Lease. Landlord shall not, unless otherwise required by law, be required
to keep the Security Deposit separate from its general funds, nor pay interest to Tenant. If Tenant
shall fully and faithfully perform every provision of this Lease to be performed by it, the
Security Deposit or any balance thereof shall be returned to Tenant (or to the last transferee of
Tenant’s interest hereunder) within 30 days after the expiration of the Term (or sooner termination
of this Lease) and upon Tenant’s vacation of the Premises in accordance with this Lease. If the
Building is sold, the Security Deposit shall be transferred to the new owner, and thereupon
Landlord shall be discharged from further liability with respect thereto.

24. LEASE STATUS AND NOTICE.

     (a) From time to time, within ten (10) days after notice from Landlord, Tenant shall execute,
acknowledge and deliver to Landlord and/or to any other entity specified by Landlord, a
certification concerning the status of this Lease and Tenant’s occupancy of the Premises, including
without limitation that this Lease is unmodified in full force and effect (or, if there have been
modifications, that the same is in full force and effect as modified and stating the
modifications), stating the dates to which the Rent has been paid, and stating whether or not there
exists any default by Landlord under this Lease, and, if so, specifying each such default. Any
notice, demand, consent, approval, direction, agreement or other communication required or
permitted hereunder or under any other documents in connection herewith shall be in writing and
shall be directed as follows:

			
	If to Landlord:	 	

Station Plaza Associates

Attn: Mr. Leslie M. Klein

595 Summer Street

Stamford, CT 06901

			
	If to Tenant:   	 	

Inner Mongolia Production Company

Attn.: Mr. Frank Ingriselli

75 South Broadway — suite 400

White Plains, NY 10601

or to such changed address as a party hereto shall designate to the other parties hereto from time
to time in writing. Notices shall be (i) personally delivered (including delivery by Federal
Express, United Parcel Service or other comparable nation-wide overnight courier service) to the
offices set forth above, in which case they shall be deemed delivered on the date of delivery (or
first business day thereafter if delivered other than on a business day or after 5:00 p.m. New York
City time to said offices); or (ii) sent by certified mail, return receipt requested, in which case
they shall be deemed

Page -14-

 

delivered on the date shown on the receipt unless delivery is refused or delayed by the addressee
in which event they shall be deemed delivered on the third day after the date of deposit in the
U.S. Mail.

25 ASSIGNS.

     (a) The covenants, conditions and agreements contained in this Lease shall bind and inure to
the benefit of Landlord and Tenant and their respective heirs, distributees, executors,
administrators, successors and, except as otherwise provided in this Lease, their assigns.

     (b) The word Landlord as used in this Lease means only the owner for the time being of
Landlord’s interest in this Lease. In the event of any assignment of Landlord’s interest in this
Lease, the assignor in each case shall no longer be liable for the performance or observance of any
agreements or conditions on the part of the Landlord to be performed or observed.

26 SURRENDER OF PREMISES.

     At the expiration of the Term, Tenant will peacefully yield up to Landlord the Premises, broom
clean, in as good order and repair as when delivered to Tenant, damage by fire, casualty and
ordinary wear and tear excepted. Any property left by Tenant in the Premises shall be deemed
abandoned by Tenant.

27 MISCELLANEOUS.

     (a) Each covenant and agreement in this Lease shall be construed to be a separate and
independent covenant and agreement, and the breach of any such covenant or agreement by Landlord
shall not discharge or relieve Tenant from Tenant’s obligations to perform every covenant and
agreement of this Lease to be performed by Tenant. If any term or provision of this Lease or any
application thereof shall be invalid or unenforceable, the remainder of this Lease and any other
application of such term shall not be affected thereby. The use of the term “herein” shall mean “in
this Lease” unless the context clearly indicates otherwise.

     (b) This Lease shall be governed in all respects by the laws of the State of New York.

     (c) Any provision of this Lease which requires Landlord not to unreasonably withhold its
consent shall never be the basis for an award of damages or give rise to a right of setoff or
termination to Tenant, but may be the basis for a declaratory judgment or specific injunction with
respect to the matter in question.

     (d) Tenant shall look solely to the estate and interest of Landlord, its successors and
assigns, in the Property for the collection of a judgment in the event of a default by Landlord
hereunder, and no other property or assets of Landlord or any officer, director or partner of
Landlord

Page -15-

 

shall be subject to levy, execution or other enforcement procedure for the satisfaction of
Tenant’s remedies.

     (e) The failure of Landlord to insist in any one (1) or more instances upon the strict
performance of any one (1) or more of the agreements, terms, covenants, conditions or obligations
of this Lease, or to exercise any right, remedy or election herein contained, shall not be
construed as a waiver or relinquishment for the future of the performance of such one (1) or more
obligations of this Lease or of the right to exercise such election, but the same shall continue
and remain in full force and effect with respect to any subsequent breach, act or omission, whether
of a similar nature or otherwise.

     (f) Obligations under this Lease which accrue during the Term shall survive the Expiration
Date or sooner termination of the Term, as same may be extended hereunder.

     (g) The Building may be designated and known by any name Landlord may choose, and such name or
designation may be changed from time to time in Landlord’s sole discretion.

	28	 	ENTIRE AGREEMENT.

     This is the entire agreement between the parties on the subject matter hereof. No prior oral
or written agreements are a part hereof.

Page -16-

 

     IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and seals the year and
day first above written.

	 	 	 	 	 
	 	LANDLORD: STATION PLAZA ASSOCIATES

 	 
	 	By:  	/s/ Leslie M. Klein
 	 
	 	 	Leslie M. Klein 	 
	 	 	Its Partner, duly authorized 	 
	 
	 	TENANT:

 	 
	 	By:  	/s/ Frank Ingriselli
 	 
	 	 	Frank Ingriselli 	 
	 	 	 	 

Page -17-

 

	 	 	 	 	 

EXHIBIT A

Operating Expenses

A. The term “Operating Expenses” shall mean actual expenses paid or incurred by Landlord
for the operation, repair (as used herein, including replacement of equipment and materials when
necessary) and maintenance of the Property, including the parking areas, which include without
limitation the following:

          1. Reasonable wages, salaries and benefits of all necessary building employees engaged in the
physical operation, cleaning, security, repair and maintenance of the Property, including
Employer’s Social Security Taxes and any other taxes which may be levied on such wages and
salaries, and including a managing agent’s fee in an amount reasonable in the City.

          2. All supplies and materials used in the operation, cleaning, security, repair and
maintenance of the Property, and the fees paid to independent contractors for such services.

          3. The cost of supplying water, power, heating, lighting, ventilating, air-conditioning and
other utilities to the Property.

          4. The current year’s amortized amount of any capital expenses incurred with respect to the
Property, amortized over the minimum period allowed for federal income tax purposes, together with
interest at the rate of 10% per annum.

          5. The cost of all maintenance and service agreements, including common area maintenance and
upkeep.

          6. Insurance premiums.

          7. The cost of general operation, repair, cleaning and maintenance of the Property (including
garbage and refuse removal), exclusive of expenses for alterations of premises for the
accommodation of a specific tenant or tenants.

     B. The foregoing costs and expenses shall exclude or have deducted from them, any and all of
the following items:

          1. leasing, financing and/or sales commissions;

          2. executives’ salaries above the grade of building manager;

          3. advertising and promotional expenditures;

Page -18-

 

          4. legal and accounting fees, other than legal and accounting fees reasonably incurred in
connection with the maintenance and operation of the Property or in connection with the preparation
of statements required pursuant to additional rent or lease escalation provisions;

          5. costs incurred in performing work or furnishing services for individual tenants (including
this Tenant) to the extent that such work or service is in excess of any work or service Landlord
at its expense is generally furnishing to tenants;

          6. debt service and financing costs on any mortgage affecting the Property;

          7. the cost of leasehold improvements made to spaces leased to other tenants in the Building;

          8. the cost of repairs and/or restoration necessitated by condemnation or casualty;

          9. any cost for which Landlord is reimbursed in full by insurance, other tenants of the
Building, or otherwise fully compensated; and

          10. rent under any ground lease.

Page -19-

 

EXHIBIT B

Cleaning

     The Landlord agrees to provide cleaning of the Tenant’s offices and building premises as
follows:

          1. DAILY: All public areas, public hallways, public lobbies, public vestibules and Tenant’s
office spaces shall be swept; waste baskets will be emptied, cleaned and contents removed to
designated areas for removal from building; all tables, file cabinets, window sills, and ledges
will be hand dusted daily; lavatories throughout the building will be cleaned; and the elevator cab
will be swept; carpeting shall be carpet swept.

          2. WEEKLY: Clean tile walls and metal partitions in lavatories; stairways swept; sanitary
napkin disposal cans sanitized; carpeting vacuumed.

          3. MONTHLY: Doors cleaned; lighting fixtures in public areas will be dusted.

          4. ANNUALLY: Windows will be cleaned inside and out; Tenant shall, on one week’s notice clear
all sill in the premises.

          5. EXTERIOR PREMISES: Lawn areas shall be mowed and landscaped areas shall be kept in a neat
and orderly appearance as the season of the year dictates and as required by Landlord; all paved
areas, walkways, steps, etc., shall be maintained and be kept free of snow and ice, in a reasonable
way, as the season of the year dictates and as required by the Landlord; the Landlord shall spread
sand, as it deems necessary, on all paved surfaces, and remove same when necessary.

          6. GENERALLY: Cleaning services shall be provided only on business days; any and all trash,
debris, crates, boxes, cartons, etc., which do no fit easily into waste paper baskets will be
removed for Tenant upon receipt of Tenant’s timely request, at Tenant’s cost and expense, which
shall be treated as additional rent; the Tenant shall commit no violations of building’s Rules
and/or Regulations, or of the codes, rules or regulations of fire departments or local authorities.
Violations of any and all laws governing the operation or occupancy of this building by Tenant
placing any one or more items of trash, debris, crates, boxes, cartons, etc., in halls, stairwells
or in any location except where specifically designed by the Landlord and the cost of removing any
such items, or of removing the violations, including any damages the Landlord may suffer as a
result of the Tenant’s acts, shall be borne solely by the Tenant, and such costs, expenses, losses,
and damages which the Landlord incurs or will incur, will be billed to Tenant as additional rent in
accordance with the terms and conditions of this Lease. The Tenant’s use and/or occupancy, whether
for emergency purposes or not, of the demised premises, after normal business hours (from 9:00 a.m.
to 5:00 p.m. on business days only) shall cause no interference, delay, conflict, etc., with the
normal routines of the building such as, maintenance, cleaning, and other services scheduled to be
performed.

Page -20-

 

     Except as otherwise provided herein scheduling, method, code of operation and general
performance of cleaning services shall be at the sole option and discretion of the Landlord. The
Tenant shall cooperate in maintaining the neat and orderly appearance of the premises. If requested
in writing by Landlord, Tenant will separate its garbage and trash according to recycling
guidelines or requirements. All food and wet garbage shall be put in plastic bags by Tenant and
such bags will be closed and tied or sealed.

Page -21-

 

EXHIBIT C

Suite Renovations- Tenant Fitup:

     The Landlord agrees to provide the following improvements to the Tenant’s office as follows:

	 	1.	 	Suite modifications according to the attached floor layout;
	 
	 	2.	 	Repainting of all wall surfaces in tenant selected color;
	 
	 	3.	 	Installation of new carpeting in tenant selected color, not to exceed $22.00 per
sq/yd. Any additional cost will be the responsibility of tenant. Movement of any and all
furniture is the responsibility of tenant;
	 
	 	4.	 	Replacement of all current ceiling tiles with new ceiling.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00128-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00128-of-00352.parquet"}]]