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LEASE DATED JANUARY 1, 2005

Warehouse Lease Agreement

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Title: LEASE DATED JANUARY 1, 2005
Governing Law: New York     Date: 1/13/2005

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Exhibit 10.6

 

LEASE

 

LEASE dated January 1, 2005, between MSB Enterprises LLC, a New York limited liability company having an office at 1418 Avenue N, Brooklyn, New York 11230 (“Owner”), and IBUYDIGITAL, Inc., a Delaware corporation having an office at 244 Conover Street, Brooklyn, New York 11231 (“Tenant”).

 

1. Demise; Term . (a) Owner hereby leases to Tenant and Tenant hereby hires from Owner the land, together with all buildings and improvements now or hereafter located thereon, located at 244 Conover Street, Brooklyn, New York (collectively, the “Premises”), for a term of five (5) years commencing on January 1, 2005 (the “Commencement Date”), and ending on the last day of the month in which shall occur the fifth anniversary of the Commencement Date (the “Expiration Date”), unless the term is sooner cancelled, terminated or extended as provided in this lease, subject to all covenants, restrictions, easements, agreements and other matters now or hereafter affecting title to the Premises.

 

(b) Tenant shall have the right to extend the term of this lease for a period of five years, commencing on the day immediately following the Expiration Date and expiring on the fifth anniversary of the Expiration Date, on the same terms as are set forth in this lease (except that the fixed rent shall be as provided in this Section and Tenant shall have no further option or right to extend the term), provided (i) Tenant shall give notice to Owner of Tenant’s exercise of its right to extend the term of this lease on or before the date which is 180 days prior to the date initially set forth as the Expiration Date (time being of the essence) and (ii) Tenant is not in default under this lease on the date Tenant exercises its right. If Tenant duly exercises its right to extend the term, any reference in this lease to the term shall be deemed a reference to the term, as extended.

 

(c) The annual fixed rent during the extended term shall be the higher of: (i) the annual fixed rent payable in the last year of the initial term or (ii) the annual fair market fixed rent (“Market Rent”) for the Premises (on the terms set forth in this lease) as determined by Owner within 60 days after receipt of Tenant’s notice. Promptly after making the determination, Owner shall give notice to Tenant of Owner’s determination. If Tenant disputes Owner’s determination, Tenant shall give notice to Owner of the dispute within 15 days after receipt of Owner’s notice. Owner shall, within 15 days following Tenant’s notice, designate an independent appraiser reasonably acceptable to Tenant to determine the Market Rent. The appraiser must be a person having not less than 10 years’ experience as an appraiser or real estate broker of properties similar to the Premises in the City of New York, New York. Owner and Tenant shall each have the right to present to the appraiser such evidence as it may desire as to the Market Rent. The determination of the appraiser shall be binding and conclusive upon both Owner and Tenant; and the appraiser’s determination shall be requested within 30 days following his or her designation. Upon the determination of the Market Rent, Owner and Tenant shall enter into an agreement fixing the annual fixed rent for the extended term. The costs and expenses of the appraiser shall be paid 50 percent by Owner and 50 percent by Tenant. Each party, however, shall pay the costs and expense of its own attorneys and experts and of presenting its evidence. Pending the determination of the dispute, Tenant shall pay the higher of the annual fixed rent payable in the last year of the initial term or the Market Rent determined by Owner, and within 30 days

 

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following resolution of the dispute any adjustment shall be refunded by Owner to Tenant retroactive to the commencement of the renewal term. Except for the change, if any, of the annual fixed rent, no other term of this lease shall change.

 

2. Net Lease; No Services . Except as specifically set forth in this lease, this lease is intended to be, and shall be construed as, an absolutely net lease, whereby under all circumstances and conditions (whether now or hereafter existing or within the contemplation of the parties) the fixed rent payable to Owner shall be a completely net return to Owner throughout the term of this lease; and Tenant shall pay, and shall indemnify, defend and hold harmless Owner from and against any and all claims, losses, damages, expenses, costs, liabilities, obligations and charges whatsoever (including, without limitation, counsel fees) which shall arise or be incurred, or shall become due, during the term of this lease, with respect to or in connection with, the Premises, and the ownership, leasing, operation, management, maintenance, repair, rebuilding, use or occupation thereof, or any portion thereof. Owner shall not be required to provide any services or do any act in connection with the Premises, and the rent and additional rent under this lease shall be paid to Owner without any claim on the part of Tenant for diminution or abatement, and the fact that Tenant’s use and occupancy of the Premises, shall be disturbed or prevented by any cause whatsoever shall not in any way suspend, abate or reduce the rental to be paid under this lease except as otherwise specifically provided in this lease.

 

3. Fixed Rent .

 

(a) The fixed rent payable under this lease (the “Fixed Rent”) shall be as follows:

 

(i) $215,800 per annum from the Commencement Date, through and including the day immediately prior to the first anniversary of the Commencement Date.

 

(ii) $222,274 per annum from the first anniversary of the Commencement Date, through and including the day immediately prior to the second anniversary of the Commencement Date.

 

(iii) $228,942 per annum from the second anniversary of the Commencement Date, through and including the day immediately prior to the third anniversary of the Commencement Date.

 

(iv) $235,810 per annum from the third anniversary of the Commencement Date, through and including the day immediately prior to the fourth anniversary of the Commencement Date.

 

(v) $242,884 per annum from the fourth anniversary of the Commencement Date, through and including the Expiration Date.

 

(b) The Fixed Rent shall be payable (i) in lawful money of the United States which is legal tender for payment of all debts and dues, public and private, at the time of payment, or by check subject to collection, at the office of Owner or such other place as Owner may designate, without notice or demand, and without any setoff or deduction whatsoever, and (ii) in equal

 

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monthly installments in advance, on the first day of each month, except that the first full monthly installment of fixed rent shall be paid on the execution of this lease (and, if the Commencement Date is not the first day of a calendar month, the fixed rent for the first partial month shall also be paid on the execution of this lease). All other sums payable by Tenant under this lease shall be deemed additional rent and Owner shall have the same remedies in case of default in the payment thereof as Owner has in the case of default in the payment of fixed rent.

 

4. Real Estate Taxes and Other Expenses .

 

(a) Tenant shall, during the term of this lease, pay and discharge punctually, or cause to be paid and discharged punctually as and when the same shall become due and payable (or at Owner’s option, reimburse Owner therefor) (i) all taxes, special and general assessments, water rents, rates and charges, sewer rents and other governmental impositions and charges of every kind and nature whatsoever, extraordinary as well as ordinary (collectively, “Taxes”), and each and every installment thereof which shall or may during the term of this lease be charged, levied, laid, assessed, imposed, become due and payable, or liens upon or for or with respect to the Premises, or any part thereof, or any buildings, appurtenances or equipment owned by Tenant or Owner thereon or therein or any part thereof, together with all interest and penalties thereon under or by virtue of all present or future laws, ordinances, requirements, orders, directives, rules or regulations of the federal, state, county, town and city governments and of all other governmental authorities whatsoever (all of which shall also be included in the term “Taxes”) and (ii) all other charges levied, assessed, imposed or otherwise payable in respect of the Premises, or the ownership, leasing, operation, use, occupancy or possession thereof, including, without limitation, all charges for water, steam, heat, gas, hot water, electricity, light, power and any other service, facility or utility, furnished to the Premises, during the term of this lease (collectively, “Other Expenses”), but the term “Other Expenses” shall not include Owner’s franchise, inheritance, estate, succession, income, profits, revenues, gains, excise, corporate, gift, capital levy, rent, transfer or mortgage taxes. Owner shall deliver to Tenant, promptly upon receipt, all bills received by Owner for Taxes or Other Expenses. Any late charges, interest or penalties which accrue during any period in which Owner failed to promptly deliver a bill which was in Owner’s possession shall be paid by Owner. If there shall be any dispute between Owner and Tenant under the preceding sentence, Tenant shall pay all late charges, interest and penalties, and such dispute shall be settled by arbitration pursuant to Section 42.

 

(b) Tenant shall furnish to Owner official receipts or other satisfactory proof of payment of Taxes and Other Expenses within 15 days of the due date thereof. If any person to whom any payment is directly payable by Tenant under this lease shall refuse to accept payment from Tenant, Tenant shall give notice to Owner and shall pay the sum directly to Owner, who shall pay it to such person.

 

(c) Tenant may contest, by appropriate proceedings, the amount or validity, in whole or in part, of any Tax in any manner permitted by applicable law; provided, that (i) such contest is conducted by Tenant diligently and in good faith, (ii) Tenant may, subject to this subsection, proceed with such contest only after payment of such Tax, (iii) such contest shall not subject Owner to any liability (criminal, civil or otherwise), create any lien against the Premises or pose

 

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an imminent threat to the title of the Premises, (iv) Owner is provided notice of such contest prior to its commencement and (v) such contest is permitted by the holder of each Fee Mortgage (as hereinafter defined). Upon the termination of such contest, Tenant shall pay such Taxes or part thereof (to the extent then unpaid), as finally determined in such proceedings. Tenant shall promptly pay all interest, penalties and other costs and liabilities in connection with such contest. Any refunds or rebates on account of the Taxes paid by Tenant under the provisions of this Lease shall belong to Tenant. Any refunds or rebates received by Owner shall be deemed trust funds and as such shall be received by Owner in trust and paid to Tenant forthwith.

 

(d) Notwithstanding any provision of this section to the contrary, Tenant shall, at Owner’s option, deposit with Owner on the first day of each month an amount equal to one-twelfth (1/12th) of the aggregate annual payments for the Taxes. In addition, Tenant shall deposit with Owner such sum of money which, together with said monthly installments, shall be sufficient to pay all of the Taxes at least thirty (30) days prior to the due date thereof. If the amount of the Taxes is not ascertainable at the time any deposit is required to be made, the deposit shall be made on the basis of the amount of the Taxes for the prior tax year and, upon the amount of the Taxes being fixed for the then current year, Tenant shall, on not less than five days notice from Owner, deposit any deficiency with Owner. The funds so deposited with Owner shall be held by it without interest, and may be commingled with other funds of Owner, and provided that Tenant shall not be in default in the performance of any of its obligations under this lease, such funds shall be applied in payment of the Taxes when due to the extent that Tenant has deposited funds with Owner for such purpose. In the event of Owner’s sale of the Premises, Owner shall have the right to pay over the balance of such deposits in its possession to the vendee, and thereupon Owner shall be completely released from all liability with respect to such deposits and Tenant shall look solely to the vendee in reference thereto. The provisions of the preceding sentence shall apply to each and every sale of the Premises to a new vendee. Tenant shall, at its expense, at all times during the term of this lease, comply with the requirements of all insurance authorities, the provisions of all insurance policies applicable to the Premises (provided, with respect to Owner’s policies, that Owner or the insurance company has given Tenant notice of such requirements) and the requirements of all liens, encumbrances and other matters affecting title to the Premises.

 

5. Use . Tenant shall use and occupy the Premises for warehouse storage and packaging and ancillary executive and general offices in connection with Tenant’s business, and for no other purpose. Tenant shall not use or occupy, or permit or suffer the Premises or any part thereof to be used or occupied for any unlawful or illegal business, use or purpose, or in such a manner as to constitute a nuisance of any kind, or for any purpose or in any way in violation of the certificate of occupancy for the Premises or any present or future governmental laws, ordinances, requirements, orders, directions, rules or regulations.

 

6. Services and Utilities . Tenant shall arrange for, and promptly pay when due all amounts and charges for, all services and utilities to the Premises and Owner shall reasonably cooperate with Tenant in connection with obtaining any such services and utilities. Owner shall not be required to furnish or render any services or utilities to the Premises, Tenant or any occupant. The use of gas and electricity and any other utilities consumed in or on the

 

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Premises shall not exceed the capacity of the mains, feeders, ducts and conduits bringing the same to the Premises or of the outlets, risers, wiring, piping, duct work or other means of distribution of such utilities within the Premises. Owner reserves the right, without any liability whatsoever, or abatement of the Rent, to stop any heating, plumbing, electric and other systems in or serving the Premises (notwithstanding that such services are not furnished by Owner) when necessary by reason of accidents or emergencies or for repairs, alterations, replacements or improvements; provided, that Owner agrees (a) to use good faith reasonable efforts to minimize any interference (except minor or de minimis interference) with Tenant’s access to the Premises or Tenant’s use or occupancy of the Premises, or Tenant’s business therein, (b) to carry out such repairs, alterations, replacements and improvements promptly and diligently and in compliance with all applicable laws, ordinances and regulations of all governmental authorities, and all applicable insurance policies, and (c) (except in an emergency) to schedule such repairs, alterations, replacements, improvements, after consultation with Tenant, in such manner, at such times and in such locations as to create the least practicable interference with Tenant’s business.

 

7. Alterations; Signs .

 

(a) Except as set forth in this lease, Tenant shall make no changes, additions, improvements, or substitutions in or to the Premises (collectively, “Tenant’s Work”) of any nature without Owner’s prior consent which consent may be withheld in Owner’s sole and absolute discretion. For the purposes of this Lease, Tenant’s Work that affects the exterior of the Premises or the structure, systems or facilities of the Premises (including, without limitation, the mechanical, electrical, air conditioning, heating and plumbing systems and facilities) or Tenant’s Work which adversely affects the value of the Premises shall be deemed to be “Tenant’s Structural Work”. Notwithstanding anything in this lease to the contrary, Owner’s consent to Tenant’s Work other than Tenant’s Structural Work shall not be unreasonably withheld or delayed. For purposes of this lease, decorations in or to the Premises, restriping of the Premises, signage specified in Section 7(b), and routine maintenance and repairs shall not be deemed to be Tenant’s Work, and Tenant may make such decorations, restriping of the Premises, signage and routine maintenance and repairs without Owner’s consent; provided that Tenant gives Owner reasonable prior notice thereof. All fixtures and all panelings, partitions, railings and like installations (but not any of Tenant’s trade fixtures, inventory and movable personal property, which shall be and remain the property of Tenant, subject to this lease) installed in the Premises at any time by Tenant shall upon installation become the property of Owner and shall remain in the Premises upon the expiration or sooner termination of this lease. Any of Tenant’s property remaining in the Premises after the expiration or sooner termination of this lease shall be deemed abandoned by Tenant and Owner may dispose of the same at its discretion and at Tenant’s expense.

 

(b) Tenant shall erect or place on the Premises only such identification and directional signs as shall conform to and meet all requirements of the proper governmental authorities having jurisdiction and all permits and licenses for such signs shall be obtained and paid for by Tenant. Tenant shall give Owner notice of all identification signs so erected but shall not be required to give notice of any directional signs. Owner shall have the right to display a “For Sale” sign or any other sign indicating that the Premises are available for sale or development at

 

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any time, and a “For Rent” sign only during the final three months of the term of this lease. Tenant and Owner shall at all times maintain any of their respective signs or lettering, as may be approved and/or permitted hereunder, in good condition and shall hold each other harmless from injury to persons or property arising from the erection and maintenance of any such signs.

 

(c) Prior to the commencement of any Tenant’s Structural Work, Tenant shall submit to Owner for its approval two sets of complete plans, drawings and specifications (“Tenant’s Plans”), including, without limitation, all mechanical, electrical, air conditioning, heating, plumbing and other utility systems and facilities, for Tenant’s Structural Work, prepared by an architect and/or engineer duly licensed in the State of New York. Within 15 days following Owner’s receipt of Tenant’s Plans, Owner shall review or cause the same to be reviewed and shall thereupon return to Tenant one set of Tenant’s Plans with Owner’s approval or disapproval noted thereon, and if same shall be disapproved in any respect Owner shall state the reasons for such disapproval. Subject to the foregoing, if Owner shall not approve Tenant’s Plans, Tenant shall, if it desires to continue with the performance of such work, within 5 days of receipt thereof, cause its architect or engineer to make such changes to Tenant’s Plans as Owner shall require and shall thereupon resubmit the same to Owner for its approval. To the extent required pursuant to any mortgage affecting Owner’s interest in the Premises (as renewed, modified, consolidated, replaced and extended, a “Fee Mortgage”), or the landlord of Owner, if any, Tenant’s Plans shall also be subject to the prior approval of the holder of each Fee Mortgage and the landlord of Owner, if any. Following the approval of Tenant’s Plans, the same shall be final and shall not be changed by Tenant without the prior approval of Owner (and such holder and landlord, if required), except as may be required by law. Tenant shall give prior notice to Owner of any changes required by law and shall furnish Owner (and such holder and landlord, if required) with copies of all such required changes in Tenant’s Plans. Owner’s approval of Tenant’s Plans or of any revisions shall not constitute an opinion or agreement by Owner that the same are structurally sufficient or that Tenant’s Plans are in compliance with law, nor shall such approval impose any present or future liability on Owner or waive any of Owner’s rights under this lease. Tenant shall only employ licensed persons and firms (where required by law) and labor to perform Tenant’s Work and any routine maintenance and repairs and restriping. In any event, all contractors Tenant proposes to employ shall be bondable and, with respect to Tenant’s Structural Work, shall be subject to Owner’s prior approval, which will not be unreasonably withheld or delayed, provided that such contractors agree to enter into construction contracts containing insurance, bonding and release of lien provisions reasonably satisfactory to Owner. Such approval shall be requested by Tenant prior to the commencement of any Tenant’s Structural Work.

 

(d) Promptly following Owner’s approval of Tenant’s Plans, Tenant shall secure or cause to be secured all necessary approvals of Tenant’s Plans from all governmental authorities having jurisdiction and all permits and licenses necessary to perform Tenant’s Work. Tenant shall obtain all necessary approvals from all governmental authorities for any Tenant’s Work and any decoration, restriping or routine maintenance and repairs to be made in or to the Premises. Prior to the commencement of any Tenant’s Work, Tenant shall furnish Owner with copies of Tenant’s Plans (if applicable) as approved by such governmental authorities and, promptly upon Owner’s request, copies of the foregoing permits and licenses; provided, that with respect to Tenant’s

 

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Structural Work, the filing of any applications with any governmental authorities for such approval or for any permits or licenses required to perform such Tenant’s Structural Work shall be done by a person or entity approved by Owner (which approval shall not be unreasonably withheld or delayed). Prior to such filing for Tenant’s Structural Work, Tenant shall submit copies of such applications to Owner for its approval, which shall not be unreasonably withheld or delayed.

 

(e) Upon Tenant having secured the approvals from Owner and from governmental authorities, all as required under this Section, Tenant shall promptly (i) with respect to Tenant’s Structural Work, enter into contracts in form and substance approved by Owner, which approval shall not be unreasonably withheld or delayed, provided that such contracts shall provide for indemnification, insurance, bonding and release of lien provisions reasonably satisfactory to Owner and (ii) upon Owner’s request, furnish Owner with a copy of each executed contract.

 

(f) Following compliance by Tenant with its obligations under the foregoing provisions of this Section, Tenant shall promptly commence or cause to be commenced Tenant’s Work, decorating, restriping, signage or routine maintenance and repairs and shall complete or cause the same to be completed with reasonable diligence, in a first-class, workmanlike manner in accordance with the approved Tenant’s Plans (if applicable), all licenses and permits, all liens, encumbrances and other matters affecting title to the Premises, this lease, all applicable laws, ordinances and regulations of all governmental and insurance authorities and all applicable requirements of the Board of Fire Underwriters.

 

(g) Promptly following the completion of Tenant’s Work, decorating, restriping or signage or routine maintenance and repairs, Tenant shall obtain and, promptly upon Owner’s request, submit to Owner copies of all final necessary governmental and fire underwriters’ approvals or certificates evidencing the completion thereof in compliance with all governmental and fire underwriters’ requirements. Effective on the expiration or sooner termination of this lease, all warranties and guaranties, if any, in connection with Tenant’s Work shall be assigned to Owner.

 

(h) Upon reasonable prior notice and at reasonable times (except in an emergency where only such verbal notice as shall be practicable under the circumstances shall be required), Owner reserves the right, at any time and without liability (except as specifically set forth in this lease and except for the negligence or wilful misconduct of Owner, its employees, contractors, representatives and agents) to Tenant, to make changes in or to the Premises as it may deem reasonably necessary or desirable; provided that same shall not interfere with Tenant’s use and occupancy thereof, or Tenant’s business therein or interfere with Tenant’s access to the Premises (except for minor or de minimis interference).

 

(i) Upon reasonable prior notice and at reasonable times (except in an emergency where only such verbal notice as shall be practicable under the circumstances shall be required), Owner may install and maintain pipes, fans, ducts, wires and conduits within or through the walls, floors or ceilings of the Premises so long as such installation and maintenance (i) shall not materially interfere with Tenant’s use and occupancy thereof, or Tenant’s business therein or (ii) materially interfere with Tenant’s access to the Premises or materially or permanently reduce the number of parking spaces available to Tenant.

 

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8. Maintenance and Repairs; Covenant Against Waste; and Right of Inspection .

 

(a) Tenant shall, throughout the term of this lease, at Tenant’s expense, maintain the Premises, and all equipment and other personal property used in connection with the maintenance or operation thereof, in good order, condition and repair, and Tenant shall not commit or suffer any waste with respect thereto. Except as set forth herein, Tenant shall promptly make all repairs, interior and exterior, structural and nonstructural, ordinary as well as extraordinary, foreseen as well as unforeseen, necessary to keep the Premises in good and lawful order and condition, and said repairs shall be at least equal in quality and class to the original work and performed by reputable, independent contractors in a good and workmanlike manner. Tenant shall maintain all portions of the Premises, and the curbs and sidewalks adjoining the Premises, in a clean and orderly condition, free of accumulation of dirt, rubbish, snow and ice, and Tenant shall not permit or suffer the overloading of any of the floors of the Premises. In no event shall Owner be liable to Tenant for any damage to the Premises or to any property of Tenant resulting from any cause, including, without limitation, roof leaks. Tenant shall not place safes, units, filing systems, libraries or other heavy equipment or furniture within the Premises without first obtaining Owner’s consent.

 

(b) Notwithstanding any provision of this lease to the contrary, Owner shall perform any structural repairs or replacements of the structural portions of the roof, load bearing walls and floors, load bearing columns, load bearing beams, load bearing foundation and all other load bearing components of the Premises, and shall perform any replacements of major building systems, unless (i) the need for any structural repair or replacement is caused by Tenant or Tenant’s failure to comply with the provisions of this lease or (ii) the unexpired term of this lease shall be one year or less.

 

(c) Tenant shall permit Owner, the authorized representative of Owner, the holder of any mortgage on the Premises and any prospective purchaser, mortgagee or tenant of the Premises to enter the Premises at all reasonable times for the purpose of inspecting all or any part thereof. Further, if Tenant shall fail to perform any repairs, restoration or other work which Tenant is obligated to perform under this lease and such default is not remedied within the applicable grace period provided for in this lease, or at any other time in the case of an emergency, Owner and its authorized representatives shall have the right to enter the Premises and to perform such work. If Tenant is not present to permit entry into the Premises, Owner or its agents may enter the same by master key or forcibly, provided reasonable care is exercised to safeguard Tenant’s property, and such entry shall not render Owner or its agents liable therefor, nor shall the obligations of Tenant under this lease be affected. Any amount paid by Owner for any of said purposes, and all necessary and incidental costs and expenses (including, without limitation, counsel fees) of Owner in connection therewith, together with interest thereon at the rate of 12 percent per annum, or the then maximum lawful interest rate, whichever shall be less, from the date of the making of such expenditure by Owner, shall be due and payable by Tenant to Owner on demand

 

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as additional rent. Nothing in this section shall imply any duty on Owner to do any such work or to make any alterations, repairs (including, without limitation, repairs and other restoration work made necessary due to any fire or other casualty), additions or improvements to the Premises, of any kind whatsoever. The performance thereof by Owner shall not constitute a waiver of Tenant’s default in failing to perform the same.

 

(d) Without limiting the generality of the foregoing, Tenant shall comply with the requirements and recommendations contained in any operations and maintenance program prepared by an independent and reputable engineering or construction firm or company (as the same may be amended from time to time upon reasonable prior notice to Tenant) forwarded to Tenant by Owner with respect to the maintenance and repair of the Premises; provided that such requirements and recommendations are substantially typical of those which such firm or company would provide to comparable or similarly situated Premises located in New York, New York.

 

(e) With respect to repairs and replacements described in Section 9(b) which are Owner’s responsibility, Owner shall comply with the requirements and recommendations prepared by an independent, reputable and experienced engineering or construction firm or company reasonably selected by Owner, provided that such requirements and recommendations are substantially typical of those which such firm or company would provide to comparable or similarly situated Premises located in the New York, New York. If Owner shall fail to perform any repair or replacement which Owner is obligated to perform under this lease and such default is not remedied within any applicable grace period provided for in this lease, or at any other time in the case of an emergency (in which event Tenant shall promptly notify Owner of the same), Tenant shall have the right to perform such work and the obligations of Owner under this lease shall not be affected. Any reasonable amount paid by Tenant for any of said purposes, and all reasonably necessary and incidental costs and expenses (including, without limitation, reasonable attorneys’ fees) of Tenant in connection therewith, together with interest thereon at the rate of 12 percent per annum, or the then maximum lawful interest rate, whichever shall be less, from the date of the making of such expenditure by Tenant, shall be due and payable by Owner to Tenant on demand. The performance thereof by Tenant shall not constitute a waiver of Owner’s default in failing to perform the same.

 

9. Mechanics’ Liens .

 

(a) Tenant shall not suffer or permit any mechanic’s or other liens to be filed against the Premises, or any part thereof, or against Tenant’s leasehold estate in the Premises, by reason of any work, labor, services or materials done for, or supplied, or claimed to have been done for, or supplied to, Tenant or anyone holding the Premises or any part thereof through or under Tenant. If any such lien shall at any time be filed against the Premises, Tenant shall promptly notify Owner and shall take such action as bonding, deposit, payment or otherwise as will cause the same to be discharged of record within 20 days after the filing thereof. If Tenant shall fail to discharge any such lien within such period, then, in addition to any other right or remedy of Owner, Owner may, but shall not be obligated to, procure the discharge of record of the same either by paying the amount claimed to be due or by deposit in court or by bond, and Owner shall

 

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be entitled, if Owner so elects, to compel the prosecution of an action for the foreclosure of any such lien by the lienor (which Owner may, at its option, elect not to defend or to defend in such manner as Owner shall determine in its sole discretion) and to pay the amount of the judgment, if any, in favor of the lienor with interest, costs and allowances. Any amount paid or deposited by Owner for any of the aforesaid purposes, and all legal and other expenses of Owner, including, without limitation, counsel fees, in defending any such action or in obtaining the discharge of any such lien, together with interest thereon at the rate of 12 percent per annum, or the then maximum lawful interest rate, whichever shall be less, from the date of payment or deposit, shall be due and payable by Tenant to Owner on demand as additional rent.

 

(b) Nothing contained in this lease shall be deemed to be, or construed in any way as constituting, the consent or request of Owner, express or implied, by inference or otherwise, to any person, for the performance of any labor or the furnishing of any materials for any construction, rebuilding, alteration, improvement, or repair of or to the Premises or any part thereof, nor as giving Tenant any right, power or authority to contract for or permit the rendering of any services or any material which might in any way give rise to the right to file any lien against Owner’s or Tenant’s interest in the Premises. Further, Owner hereby gives notice to all persons who may furnish labor or materials to Tenant at the Premises that Owner does not consent to the filing of any mechanic’s or other lien against Owner’s or Tenant’s interest or estate in the Premises, and that all persons furnishing labor and materials to Tenant shall look only to Tenant’s credit and such security as Tenant may furnish for the payment of all such labor and materials.

 

10. Requirements of Law . Tenant shall, at its expense, at all times during the term of this lease, comply with all present and future laws, orders and regulations of all state, federal, municipal and local governments, departments, commissions and boards and any direction of any public officer pursuant to law affecting the Premises, and/or Tenant’s use, occupancy, repair and/or maintenance thereof, and shall keep in full force and effect all licenses and permits which are required or necessary to carry on the operation of Tenant’s business at the Premises; except that Tenant shall not be required to make or pay for any structural alterations in order to so comply unless such alterations shall be necessitated by the acts, omissions or negligence of Tenant or its employees, contractors, agents, visitors or licensees. Tenant shall, at its expense, at all times during the term of this leases comply with the requirements of insurance authorities, the provision of all insurance policies applicable to the Premises and the requirements of all liens, encumbrances and other matters affecting title to the Premises. Tenant shall pay all costs, expenses, liabilities, losses, damages, fines, penalties, claims and demands, including, without limitation, counsel fees, that may in any manner arise out of or be imposed because of the failure of Tenant to comply with this section.

 

11. Subordination . (a) This lease is subject and subordinate to all ground or underlying leases and to all mortgages which may now or hereafter affect such leases or the Premises and to all renewals, modifications, consolidations, replacements and extensions of any such leases and mortgages. This clause shall be self-operative and no further instrument of subordination shall be required. In confirmation of such subordination, Tenant shall execute promptly any certificate Owner may request. To the extent not provided by applicable law, in the

 

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event of the enforcement by any holder of a mortgage on the Premises of the remedies provided for by law or by such mortgage, Tenant will, upon request of any person succeeding to the interest of Owner as the result of said enforcement, automatically become the lessee of such successor in interest, without any change in the terms or other provisions of this lease; provided , however , that said successor in interest shall not be bound by any payment of fixed rent or additional rent for more than one month in advance, except prepayments in the nature of security for the performance of its obligations under this lease. Upon request by said successor in interest, Tenant shall execute and deliver an instrument or instruments confirming its attornment.

 

(b) If any act or omission of Owner would give Tenant the right, immediately or after lapse of a period of time, to cancel or terminate this lease, or to abate the payment of Rent or to claim a partial or total eviction, Tenant shall not exercise such right (i) until it has given written notice of such act or omission to Owner and each holder of a Fee Mortgage whose name and address shall previously have been furnished to Tenant and (ii) until 30 days shall have elapsed following the giving of such notice if the same can be remedied within a 30-day period or if the same cannot be remedied within 30 days until a reasonable period of time has elapsed to cure provided such cure has commenced within the 30-day period, and, further, provided the holder of the Fee Mortgage or the Owner shall with due diligence continue to remedy such act or omission.

 

(c) Owner shall use reasonably commercial efforts to obtain a nondisturbance agreement from each holder of a Fee Mortgage encumbering the Premises on the Commencement Date or future holder of a Fee Mortgage, in recordable form and in the standard form customarily employed by such holder, pursuant to which such holder shall agree that if and so long as no default hereunder shall have occurred and be continuing, the leasehold estate granted to Tenant and the rights of Tenant pursuant to this Lease to quiet and peaceful possession of the Premises shall not be terminated, modified, affected or disturbed by any action which such holder of the Fee Mortgage may take to foreclose any such Fee Mortgage, as applicable, and that any successor landlord shall recognize this lease as being in full force and effect as if it were a direct lease between such successor landlord and Tenant upon all of the terms, covenants, conditions and options granted to Tenant under this lease, except as otherwise provided herein.

 

12. Default .

 

(a) If Tenant defaults in fulfilling any of its obligations under this lease, other than the obligations for the payment of Rent; or if the Premises become abandoned; or if the Premises are damaged by reason of negligence or carelessness of Tenant, its agents, employees or invitees; or if any execution or attachment shall be issued against Tenant or any of Tenant’s property whereupon the Premises shall be taken or occupied by someone other than Tenant; then in any one or more of such events, upon Owner serving a 30 days’ notice upon Tenant specifying the nature of said default and upon the expiration of said 30 days, if Tenant shall have failed to comply with or remedy such default, or if the said default or omission complained of shall be of a nature that the same cannot be completely cured or remedied within said 30-day period and cannot be cured with the payment of money, and if Tenant shall not have diligently commenced curing such default within said 30-day period and thereafter continuously prosecuted the curing with due diligence until completion, then Owner may serve a 3 days’ notice of cancellation of

 

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this lease upon Tenant, and upon the expiration of said 3 days, this lease and the term under this lease shall end and expire as fully and completely as if the expiration of such 3-day period was the day definitely fixed for the expiration of the term of this lease and Tenant shall then quit and surrender the Premises to Owner but shall remain liable as hereinafter provided.

 

(b) If the notice provided for in subsection (a) of this Section shall have been given, and the term shall expire as aforesaid; or if Tenant shall default in the payment of Rent and the same i


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