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RENTAL CONTRACT No. 11/V225162


May 18, 2000 St. Petersburg


The Committee for Managing City Property of St. Petersburg. acting in accordance with the regulation concerning the Committee and hereinafter referred to as "Landlord," in the person of the Director of the Admiralteyskoye District Agency of the Committee for Managing Urban Property. Natalya Gennalyevna, acting on the basis of a power of attorney from the Chairman of the KUCI [Committee for Managing City Property] No. 27-42 dated January 5, 2000 on the one hand and the limited liability company Artifishel Layf Rus [Artificial Life Rus], registered by Decision No, 123879 of the Registration Chamber of St. Petersburg, Certificate No. 77164, November 24, 1998 hereinafter referred to as "Tenant" in the person of Yevgeniy Anatolyevich Malakhovskiy, acting on the basis of power of attorney 78 AE 433317 dated May 9, 2000, have executed the following contract (hereinafter referred to as "the Contract") concerning the following.


1. GENERAL PROVISIONS


1.1. The Landlord undertakes to provide the tenant against payment the temporary possession and use of the nonresidential property -- nonresidential premises (building and equipment) hereinafter referred to as "The Property" located at the address pr. Rimskogo-Korsakova, 22, liter B, Room 25n, cadastral number 78:1244:0:8:1 on the second story on the basis of Order No. 878-r from the Chairman of the KUGI dated May 16, 2000 for nonresidential use (office).


The total area of the rented premises is 1996.6 (one thousand nine hundred ninety-six and six hundredths) square meters.


1.2. The information concerning the property contained in the Contract and its annexes is sufficient for the proper use of the Property in accordance with the purposes specified in Item 1.1. of the Contract. No documents aside from those specified in Section 8 of the Contract shall be handed over.


1.3. This contract shall be in effect for 5 years and shall enter into force at the time it is officially registered. The terms of this contract shall cover the relations between the parties from the date the Certificate of Acceptance of the property is signed in accordance with Item 1.1 of the Contract.


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2. RIGHTS AND OBLIGATIONS OF THE PARTIES


2.1. The Landlord undertakes;


2.1.1. To hand over the Property in accordance with the Certificate of Acceptance to the Tenant no later than 10 days after the Contract is signed. The Certificate of Acceptance for the Property shall be signed by the Landlord, the organization acting as Facility Administrator 2000 OMIS [Department of Maritime Engineering Service] (hereinafter referred to as the "Facility Administrator"], and the Tenant. The Certificate in question shall be attached to the Contract (Annex 1) and shall be an integral part of the latter.


2.1.2. To consider within a month the requests by the Tenant with regard to changing the use of the Property and also repairing and reequipping it.


2.1.3 To give written notice to the Tenant not less than two months in advance of the need to vacate the Property in connection with a decision made in the established manner concerning the performance of major repairs on the building in accordance with the approved plan for major repairs or concerning its razing (or reasons of urban renewal).


2.2. The Tenant undertakes:


2.2.1. To use the Property in accordance with Item 1.1 of the Contract and the standards and regulations for the use of buildings (premises) established by legislation, including sanitary standards and regulations, fire safety regulations, and statutory standards for the use of historical and cultural monuments (where necessary).


2.2.2. To pay promptly and completely to the Landlord the rent established by the Contract and subsequent amendments to it for the use of the Property and also the value added tax and other taxes.


2.2.3. To pay the insurance premiums for the Property promptly during the whole period that the Contract is in effect.


2.2.4. Current and major repairs shall be carried out be the Tenant at its cost within a reasonable period with prior written notification to the Landlord. A different procedure and conditions for carrying out major repairs may be established in a supplementary agreement to this Contract.


If the major repairs on the Property are carried out in connection with general major repairs on the building (equipment), financed in the established manner out of funds from the city budget, the relations between the Parties with regard to an allowance for the Tenant's expenditures, if the latter participates in carrying out the major repairs and other matters connected with carrying out the major repairs, shall be specified in a supplementary agreement to this Contract.


2.2.5. To ensure the preservation of the utility lines and equipment at the Property.


2.2.6 Not to lay covered or open electric or utility lines or to catty out redesigning or equipment changes without the written permission of the Landlord.


In the event that the Landlord discovers unsanctioned structural changes, violations of the integrity of the walls, partitions, or ceilings, remodeling. or laying networks that distort the original appearance of the Property, these must be eliminated by the Tenant and the premises returned to the original state at the Tenant's cost within a period set unilaterally by the Landlord.


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2.2.7. Within the rented premises to comply with the requirements of the State Public Health Inspectorate, the State Fire Inspectorate and also industrial relations and standards in effect with regard to the kinds of activity of the Tenant and the property it rents.


2.2.8. To vacate the premises in connection with a state of emergency in the building structure (or in part of it), performance of major repairs on the building, or its razing for reasons of urban renewal within the periods specified by the Landlord.


2.2.9. To maintain the Property and the territory appertaining to it in a proper state with regard to sanitation and fire protection.


2.2.10. To Inform the Facility Administrator and the Landlord immediately about any damage, accident, or other event causing (or threatening to cause) harm to the Property and promptly to take all possible measures to prevent threats of further destruction or damage to the Property.


2.2.11 Within twenty days from the date this Contract enters into force:


- to execute contracts for the supply of water, heat, electric power, and other resources to the rented premises directly with the organizations providing these services;


- to execute a contract for technical services for the rented premises with the Facility Administrator or, if it is actually possible, with other organizations.


- to execute a contract for the collection and the disposal of trash with the district housing agency or with an organization performing such services. To make payments promptly for services under the contracts in question.


2.2.12. When subletting the Property in the established manner:


- to ensure the compliance of the sublessee with the standards and regulations for the use of a nonresidential property, including sanitary standards and regulations, fire safety regulations, statutory standards for the use of monuments of history and culture (where necessary), and also other statutory standards and regulations.


- to Inform the Landlord about the execution of a subletting contract within fifteen days from the date of official registration of the subletting contract and also to inform the Landlord about all amendments to the subletting contract.


2.2.13. To ensure that the Landlord and Facility Administrator have unhindered access to the Property for inspecting it and verifying compliance with the terms of the Contract.


2.2.14. If an insured event covered in the insurance policy occurs, to notify the Landlord, Facility Administrators and also the appropriate responsible officials (police, State Fire Inspectorate, the organization operating the utilities, etc.), and ASO RUS about the event without delay and also afford representatives of the insurance organization the opportunity to inspect the premises.


2.2.15. To give written notice to the insurance organization mentioned above about all changes in the degree of risk within no more than three days from the onset of these changes.


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2.2.16. To carry out within the specified period the orders of the Landlord, Facility Administrator, the State Fire Inspectorate, and other supervisory bodies concerning measures to be taken to remedy situations arising as a result of the activity of the Tenant that threaten the safety of the Property and the ecological and sanitary situation outside the rented premises, and also with regard to compliance with the Tenant's obligations specified in Items 2.2.6 and 2.2.9 of the Contract.


2.2.17. To maintain the facade of the Property in a proper state. If part of the building is rented, the Tenant shall accept a fractional participation in the repair of the building facade. The share of the Tenant in expenditures for repair shall be determined based on the ratio between the area rented and the total area of the building.


2.2.18. In the event that the Property is a building or structure and at the time it is rented there are not confirmed boundaries for the plot of land attached to the Property before ____________________, 19__, to arrange at its own cost for the development of a plan of the boundaries of the plot of land attached to the Property and execute a rental contract for the plot of land in question (excluding the area on which the Property is built) within a period of 15 days from the time the boundaries are confirmed in the established manner.


2.2.19. To return to the Landlord the Property in accordance with the Certificate of Acceptance signed by the persons indicated in Item 2.1.1 no later than ten days after the expiration of the period of validity of this Contract or the date established for its cancellation in the condition in which the Tenant received it, taking into account normal wear with all nonremovable improvements.


2.4. The Landlord shall have the right to place advertising on the outside of the building or structure, part of which is the Property.


2.5. The Tenant shall have a preferential right over other persons to execute a rental contract for a new period in the event that it has committed no violations of the Contract during the period that it has been in effect on the condition that the tenant inform the Landlord in writing of its desire to execute a Contract for a new period no later than 2 months before the expiration of the period that the Contract is in force.


3. PAYMENTS AND ACCOUNTS REGARDING THE CONTRACT


3.1. The rent paid for using the Property shall be set in conventional units ((UYe) and at the time the Contract is executed it shall amount to 47.405 (forty-seven and four hundred and five thousandths) UYe per square meter per year without taking into account the value-added tax: the rental payment for the Property amounts to 23662.174 UYe per quarter.


3.2. The conventional unit is equal to the value in rubles of one US dollar at the exchange rate of the Central Rank of the Russian Federation on the first working day of the quarter for which the payment is made. The Tenant shall be required to calculate the amount of the rental payment to be remitted to the Landlord In accordance with Item 3.1.


3.3 In the event of a change in the regulations of the Russian Federation and/or St. Petersburg governing the calculation of the amount of rent and also [in the event of a change] in the kind of activity of the Tenant (in the framework


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of the purposes for using the Property in accordance with Item 1.1. of the Contract) the Landlord shall have the right to change the amount of the rental payment in a noncontestable unilateral manner. The new amount of the rental payment shall be set from the time the Tenant receives notification of the corresponding


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amendment of the Contract. The time of receipt by the Tenant of notification is specified in any event as no later than three days from the date a registered letter is sent to the address indicated in the contract.


3.4. The Tenant shall remit the rental payment and also the value-added tax and other taxes indicated by a separate line in the payment order for each quarter in advance, no later than the tenth day of the first month in the current quarter.


3.5. If the Tenant does not make the rental payment within twenty days from the due date for payment, the Landlord shall have the right to collect the indebtedness from the Tenant in the established manner.


3.6. Each quarter the Tenant shall pay the insurance premium that is specified in insurance contract No. 545422 dated May 18, 2000 between the Tenant and the insurance organization designated in Item 2.2.14 in accordance with the method in effect for assessing the value of real property for calculating the amount of insurance and the insurance premium. Payment of the first insurance premium with subsequent submission to the Landlord of a copy of the payment order shall be accomplished within ten days from the day the Property is transferred to the Tenant under the Certificate of Acceptance or the Contract is signed, if the Property is already in the possession of the Tenant. Subsequently the insurance premium for each quarter shall be paid no later than the twenty-fifth day of the last month of the preceding quarter and a copy of the payment order shall be provided to the Landlord within ten days.


3.7. The amount of the insurance premium may be recalculated in accordance with the method in effect for assessing the value of real estate for calculating the amount of insurance and the Insurance premium. The recalculation of the amount of the insurance premium shall be carried out by the insurance organization designated in Item 2.2.14. and the Landlord and Tenant must be informed about the recalculation performed. The notification in question must be carried out in such a way that the Contracting Parties acquaint the
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