Document:

Exhibit
10.16

 

QUOTA
SHARE REINSURANCE TREATY

 

(Hereinafter
referred to as “the Agreement”)

 

 

Between

 

Mont
Fort Re Limited in respect of if segregated account, designated as ILW Cell

 

(Hereinafter
referred to as “the Company”)

 

 

And

 

Flagstone
Reinsurance Limited

 

(Hereinafter
referred to as “the Reinsurer”)

 

DEFINITIONS

 

“Loss” shall mean actual payments on claims and all charges and loss reserves related to claims filed
as well as claims expected to be filed (IBNR), including any extra-contractual
or punitive damages.

 

“Loss Adjustment Expense” shall mean all expenses, excluding the
salaries and expenses of the company’s employees, incurred by the company
associated with handling of claims on company policies.

 

ARTICLE
I

 

BUSINESS REINSURED

 

The Company shall cede to the Reinsurer and the Reinsurer shall accept
from the Company an 8.33% quota share participation of the net retained
insurance liability of the Company
with respect to business designated as ILW Cell.

 

The Reinsurer’s limit of liability to the Company under this Agreement
for any and all losses and loss adjustment expenses incurred on all policies of
insurance and reinsurance is subject to a maximum total limit not to exceed (a)
$5 million, plus (b) the Reinsurer’s proportionate share of net retained
premium.

 

ARTICLE
II

 

ORIGINAL CONDITIONS

 

All reinsurances embraced by this Agreement shall be subject to the
same terms and conditions which govern the respective policies, endorsements,
binders and certificates of the Company, and the Reinsurer shall be entitled to
8.33% of the net retained premiums plus interest earned by the Company, such
premiums to be paid as received by the company.

 

 

ARTICLE
III

 

ATTACHMENT, COMMENCEMENT AND
TERMINATION

 

Liability hereunder shall be automatic and shall commence obligatorily
and simultaneously with that of the Company. The premium on account of such
liability shall be credited to the Reinsurer from the original date of the
Reinsurer’s liability.

 

This Agreement shall be effective as of 12:01 AM Eastern Standard time
June 5, 2006, and shall remain continuously in force unless terminated by
either party hereto giving the other at least 30 days’ prior written notice of
their intent to terminate.

 

In the event this Agreement is terminated, the liability of the Reinsurer
shall cease at the time and date of termination. The Reinsurer shall be liable
only for losses occurring during the period this Agreement is in force. The
date and time on which each loss of the Company occurs shall be the date and
time on which the liability of the Reinsurer attaches.

 

In the event this Agreement is terminated while an accident or
occurrence covered hereby is in progress, it is understood and agreed that
subject to the other conditions of this Agreement, the Reinsurer shall be liable
for its proportion of only such losses resulting from the accident or
occurrence arising before such termination.

 

In the event this Agreement is terminated, the Agreement shall be
commuted based on the net present value of the remaining estimated liabilities
of the Company as so determined by a qualified actuary and reported to the
Company and the Reinsurer (the “Actuary’s Valuation) as soon as practicable
after and no later than 60 days following such termination and notified to the
parties in writing.

 

In the event that either party shall disagree with the Actuary’s
Valuation, such party shall give written notice of all disagreements (a “Notice
of Disagreement”) to the other party within 30 days after having received such
Actuary’s Valuation and shall specify so far as reasonably practicable each
item of disagreement and the basis for such disagreement and shall specify the
total adjustment as proposed by the party in disagreement. If either party
delivers a Notice of Disagreement to the other party, the parties shall
negotiate in good faith to resolve all disagreements as promptly as
practicable. If the parties are unable to resolve all disagreements within 30
days following delivery of the Notice of Disagreement, then all unresolved
disagreements will be submitted within 30 days to an independent auditor
mutually acceptable to the parties (“Settlement Auditor”). The parties shall
fully co-operate with the Settlement Auditor and shall provide such Settlement
Auditor with access to all books, information and documents reasonably
requested by the Settlement Auditor to make such determination. The Settlement
Auditor shall, within 30 days after its engagement, deliver to the parties a
conclusive written resolution of the disagreements submitted to it and shall be
final and binding on the parties.

 

2

 

ARTICLE
IV

 

ACCOUNTS REPORTS

 

The Company shall furnish to the Reinsurer quarterly statement of
accounts of business ceded hereunder as soon as possible after the close of the
quarter, but in no event later than 30 days after the close of each quarter,
showing net written premiums, net earned premiums, commissions based on earned
premiums and paid losses and loss expenses.

 

The Company shall also furnish quarterly to the Reinsurer on an
accident year basis, a detailed statistical report that provides quarterly and
year-to-date information as follows:

 

1.                         Written
premiums, commissions, premiums in force and unearned premium reserve;

 

2.                         paid
losses and paid loss expenses less credit far salvages, subrogation recoveries
and loss adjustment expenses refunds; and

 

3.                         loss
reserve outstanding.

 

ARTICLE
V

 

LOSS AND LOSS ADJUSTMENT EXPENSES

 

This Agreement is subject to the same risks, conditions, privileges, valuations, assignments waivers and
modes of settlement as are or may hereafter assumed, granted or adopted by the
Company.

 

All loss settlement made or loss adjustment expense incurred by the
Company, provided they are within the terms of this Agreement shall be unconditionally
binding upon the Reinsurer and the amounts falling to the share of the
reinsurer shall payable within 60 days’ after the Company has furnished its
quarterly statement of account.

 

Reinsurer shall benefit proportionately in all salvage and recoveries.

 

ARTICLE
VI

 

INDEMNIFICATION AND ERRORS AND
OMISSIONS

 

The Company shall be the sole judge as to what constitutes a claim or
loss covered under the Company’s original policy or policies and as to the
Company’s liability thereunder, and the Reinsurer shall be bound by the
judgment of the Company as to the liability and obligation of the Company under
its policy or policies.

 

Any inadvertent delays, omissions or errors shall not be held to
relieve either party hereto from any liability which would attach it to
hereunder if such delays, omissions or errors had not been made, provided such
delays, omissions or errors are rectified immediately upon discovery.

 

3

 

ARTICLE
VII

 

ARBITRATION

 

As a condition precedent to any right of action hereunder, if any
dispute shall arise between the Company and the Reinsurer with reference to
this Agreement, whether such dispute arises before or after termination of this
Agreement, such dispute, upon the written request of either party, shall be
submitted to three arbitrators, one to be chosen by each party, and the third
by the two so chosen. If either party refuses or neglects to appoint an
arbitrator within thirty days after the receipt of written notice from the
other party requesting it to do so, the requesting party may appoint two
arbitrators. If the two arbitrators fail to agree in the selection of a third
arbitrator within thirty days minimum of their appointment, each of them shall
name two, of whom the other shall decline one and the decision shall be made by
drawing lots. All Arbitrators shall be executive officers of insurance or
reinsurance companies not affiliated in any capacity with either party to this
Agreement.

 

The arbitrators shall interpret this Agreement as an honorable
engagement and not as merely a legal obligation. They are relieved of all
judicial formalities and may abstain from following the strict rules of law and
they shall make their award with a view to effecting the general purpose of
this Agreement in a reasonable manner rather than in accordance with a literal
interpretation of the language. Each party shall submit its case to its
arbitrator within thirty days of the appointment of the third arbitrator.

 

The decision in writing of any two arbitrators when filed with the
parties hereto shall be final and binding on both parties. Judgment may be
entered upon the final decision of the arbitration in any court having
jurisdiction. Each party shall bear the expense of its own arbitrator and shall
jointly and equally bear with the other party the expense of third arbitrator
and of the arbitration.

 

Said arbitration shall take place in Bermuda, unless some other place
is mutually agreed upon by the Company and the Reinsurer.

 

ARTICLE
VIII

 

INSOLVENCY

 

In the event of the insolvency of the Company, this reinsurance shall
be payable directly to the Company, or to its liquidator, receiver, conservator
or statutory successor (except where this Agreement specifically provides
another payee of such reinsurance in the event of the insolvency of the Company
or where the Reinsurer with the consent of the direct insured or insureds has
assumed such policy obligations of the Company as direct obligations of the
Reinsurer to the payees under such policies and in substitution for the
obligations of the Company to such payees) on the basis of the claim or claims
allowed by such liquidator, receiver, conservator or statutory successor
without diminution because of the insolvency of the Company or because the
liquidator, receiver, conservator or statutory successor of the Company has
failed to pay all or a portion of any claim.

 

It is agreed, however, that the liquidator, receiver, conservator or
statutory successor of the Company shall give written notice to the Reinsurer of
the pendency of a claim against

 

4

 

the Company indicating the policy reinsured which claim would involve a
possible liability on the part of the Reinsurer within a reasonable time after
such claim is filed in the conservation or liquidation proceeding or in the
receivership, and that during the pendency of such claim, the Reinsurer may
investigate such claim and interpose, at their own expense, in the proceeding
where such claim is to be adjudicated any defense or defenses that they may
deem available to the Company or its liquidator, receiver, conservator or
statutory successor. The expense thus incurred by the Reinsurer shall be
chargeable subject to the approval of the court against the Company as part of
the expense of conservation or liquidation to the extent of a pro rata share of
the benefit which may accrue to the Company solely as a result of the defense
undertaken by the Reinsurer.

 

When two or more Reinsurers are involved in the same claim and a majority
in interest elects to interpose defense to such claim, the expenses shall be
apportioned in accordance with the terms of the reinsurance Agreement as though
such expense had been incurred by the Company.

 

ARTICLE
IX

 

ACCESS TO RECORDS

 

The Reinsurer or their representative shall have free access to the
books and records of the Company at all reasonable times for the purpose of
obtaining information concerning this Agreement or the subject matter thereof.

 

ARTICLE
X

 

GOVERNING LAW

 

This Agreement shall be governed by and construed in accordance with
Bermuda law.

 

ARTICLE
XI

 

CURRENCY

 

Premium and losses hereunder shall be payable in United States
currency.

 

5

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate on this 28 day of August 2006.

 

 

	
  MONT FORT RE LTD

  
	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Brent Slade

  	
   

  	
   

  	
   

  

 

 

and, on this 28 day of August 2006.

 

 

	
  FLAGSTONE REINSURANCE LIMITED

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ David Brown

  	
   

  	
   

  	
   

  

 

6

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate on this 28 day of August 2006.

 

 

	
  MONT FORT RE LTD

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Mark Bryne

  	
   

  	
   

  	
   

  

 

 

and, on this 28 day of August 2006.

 

 

	
  FLAGSTONE REINSURANCE LIMITED

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ David Brown

  	
   

  	
   

  	
   

  

 

 

ADDENDUM No: 1 

QUOTA SHARE REINSURANCE TREATY

(Hereinafter referred to as “the Agreement”)

 

 

Between

 

Mont
Fort Re Limited in respect of if segregated account, designated as ILW Cell

(Hereinafter referred to as “the Company”)

 

 

And

 

Flagstone
Reinsurance Limited

(Hereinafter referred to as “the Reinsurer”)

 

The intent of the Company and the Reinsurer in entering this Agreement
is to replicate, for all economic purposes, the Subscription Agreement between
Mont Fort Re Limited and Flagstone Reinsurance Limited. The Reinsurer’s rights
and liabilities to the Company under this Agreement, (including the right to
profit commission, settlement and any adjustment) under no circumstances, will
be diminished or increased vis-à-vis the Reinsurer’s rights and liabilities
under the Subscription Agreement.

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate on this 30 day of August 2006.

 

 

	
  MONT FORT RE LTD

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ 

  	
   

  	
   

  	
   

  

 

 

and, on this 30 day of August 2006.

 

 

	
  FLAGSTONE REINSURANCE LIMITED

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ David BrownExhibit
10.17

 

EYE
PATCH HOLDINGS LIMITED

(“The Lessor”)

 

GIBBONS
MANAGEMENT SERVICES LIMITED

(“The Agent”)

 

 

-and-

 

 

WEST END
CAPITAL MANAGEMENT (BERMUDA) LIMITED

(“The Lessee”)

 

 

 

LEASE

 

Relating
to Second/Third Floor, Crawford House

Church Street, Hamilton, Bermuda

 

 

THIS LEASE is dated the 1st day of October 2005 and is made in
duplicate

 

BETWEEN:

 

1.                                       EYE PATCH HOLDINGS LIMITED a company
incorporated in and under the laws of the Islands of Bermuda (the “Lessor”)

 

GIBBONS
MANAGEMENT SERVICES LIMITED a company incorporated in and
under the laws of the Islands of Bermuda (the “Agent”)

 

AND

 

2.                                       WEST END CAPITAL MANAGEMENT (BERMUDA) LIMITED,
a company incorporated in Bermuda and having its registered offices at 41 Cedar
Avenue, Hamilton HM 12, Bermuda (the “Lessee”)

 

1.                                      DEFINITIONS

 

(1)                                  “the
Building” shall mean that office building of which the Demised Premises forms
part and which has been erected by the Lessor on land situate at Church Street,
in the City of Hamilton in the Islands of Bermuda and known as “Crawford
House”.

 

(2)                                  “Decorate”
means to paint or otherwise treat as the case may be all surfaces usually or
requiring to be so treated having first prepared such surfaces as may be
necessary and to wash down all washable surfaces and to resort paint and make
good the brickwork and stonework where necessary. ALL decoration shall be
carried out with good quality materials and where painting is involved, two
coats shall be applied.

 

(3)                                  “the
Demised Premises” shall mean all those office premises situated on the second
floor of the Building comprising an area of 3517 square feet and on the third
floor of the Building comprising 3917 TOGETHER
WITH the Lessors fixtures and fittings therein contained.

 

(4)                                  “the
Lessor” and the “Lessee” shall include the successors and assigns and person or
persons for the time being deriving title from or under the Lessor and the
Lessee respectively.

 

(5)                                  “the
Agent” shall mean all of the powers rights and remedies of the the Lessor in
this Agreement may be exercised by the Agent and any act or thing done by the
Agent in pursuance of this Licence Agreement shall deemed to be the act of the
Lessor and shall be Binding upon the Lessor.

 

(6)                                  “Maintenance
Expenses” shall mean the amount expended by the Lessor during each Maintenance Period
in respect of the costs expenses and outgoings incurred in respect of the
matters mentioned in the Third Schedule hereto.

 

(7)                                  “Maintenance
Period” shall mean the financial year of the Lessor which is the period of 12
calendar months commencing on the 1st day of January and ending 31st
December of each year during the Term.

 

(8)                                  “Rent”
shall mean the rent and service charge provided for in clause 3 and any
increase thereof. (Rent review every THREE years)

 

(9)                                  “Term”
shall mean the period of TEN years commencing on the 1st day of
October 2005 and ending on the 30th September 2015.

 

 

2.                                      DEMISE

 

In consideration of the Rent hereinafter reserved and
the covenants and conditions on the part of the Lessee hereinafter contained
the Lessor hereby demises to the Lessee ALL
THAT the Demised Premises TOGETHER
WITH the easements rights and privileges mentioned in the First
Schedule hereto but subject to the exceptions and reservations mentioned in the
Second Schedule hereto TO HOLD the
Demised Premises unto the Lessee for the Term YIELDING
AND PAYING to the Lessor the Rent.

 

3.                                      RENT AND SERVICE CHARGE

 

(i)                                     The
Lessee shall pay to the Lessor a yearly rent for the Demised Premises of
BD$297,359:88 (being equivalent to $40:00 per square foot for the Demised
Premises) until the 30th day of September 2008 and such rent shall be payable
by equal monthly installments in advance on the first day of each calendar
month. The Lessee shall be entitled to commence possession of the Demised
Premises from the date of execution of this Lease the first monthly payment
being in respect of the period from the 1st day of October 2005 to
the 31st day of October 2005 to be paid on the execution hereof.

 

(ii)                                  The
Lessee shall pay to the Lessor by way of additional rent Maintenance Expenses
for each Maintenance Period and so in proportion for any part thereof at the
times and in the manner hereinafter provided.

 

(iii)                               The
Lessee’s proportion of the Maintenance Expenses shall be calculated as the
percentage of the square footage the Demised Premises bears towards the total
square footage of the other parts of the Building which are determined by the
Lessor exclusively.

 

(iv)                              (a)                                  The
Lessee shall pay for the first year of the Term the sum of $5,868:58 per
calendar month on account of the Maintenance Expenses. ($2,930:83 for the
second floor and $2,937:75 for the third floor) The sum payable by the Lessee
on account of the Maintenance Expenses shall be reviewed by the Lessor and the
Lessee on an annual basis and within one month from the commencement of each
Maintenance Period.

 

(b)                                 Within
three months of the end of each Maintenance Period the Lessor shall cause
proper accounts to be prepared showing the actual Maintenance Expenses for the
period and shall provide the Lessee with a copy thereof. If the sums paid by
the Lessee to the Lessor in accordance with paragraph 3(iv)(a) hereof exceed
the Lessee’s proportion of the Maintenance Expenses shown in the accounts then
such excess shall be forthwith repaid to the Lessee. If the sums paid by the Lessee
to the Lessor in accordance with paragraph 3(iv)(a) are less than the Lessee’s
proportion of the Maintenance Expenses shown in the accounts then such
differences shall forthwith be paid by the Lessee to the Lessor.

 

(v)                                 IT IS HEREBY AGREED AND DECLARED

 

(a)                                  The
Maintenance Expenses may in the discretion of the Lessor be increased to take
into account any Interim Increase in the Maintenance Expenses payable by the
Lessor during any Maintenance Period.

 

(b)                                 The
Lessor shall if required by the Lessee cause the accounts to be audited and the
costs of such audit shall be included and be a part of the Maintenance
Expenses.

 

 

4.                                      RESTRICTIONS
ON LESSEE

 

The Lessee so that this covenant shall be for the
benefit and protection of the Building and the other tenants thereof and every
part thereof hereby covenants with the Lessor and also as a separate covenant
with every other Lessee for the time being of every other part of the Building
that the Lessee and all persons deriving title through or under the Lessee will
at all times hereafter observe the restrictions set forth in the Fourth
Schedule thereof.

 

5.                                      LESSEES COVENANTS

 

The Lessee hereby covenants with the Lessor as
follows:

 

(i)                                     RENT

 

To pay the Rent and the Maintenance Expenses and any
other charges hereby reserved and agreed throughout the Term and in the manner
hereinbefore appointed for payment thereof without any deduction whatsoever.

 

(ii)                                  FIT OUT

 

On vacating the Demised Premises the Lessee shall
remove such of its fittings as the Landlord may reasonably require.

 

(iii)                               OUTGOINGS

 

To pay for and indemnify the Lessor against all
telecommunication charges and electricity consumed and any other outgoings
whatsoever payable in respect of the Demised Premises.

 

(iv)                              TAXES

 

To pay for and indemnify the Lessor against all taxes
and charges which are now or during the Term charged or imposed in respect of
the Demised Premises including the Corporation of Hamilton Tax and taxed
payable under the Land Valuation and Tax Act 1967 or any Act for the time being
amending or replacing the same.

 

(v)                                 MAINTAIN

 

To keep the Demised Premises and the Landlord’s
fixtures and fittings therein in first class repair and condition making good
any damage caused to the Demised Premises by any act or omission of the Lessee,
its servants, agents and invitees and during the Term to replace from time to
time any of the Lessor’s fixtures and fittings which may be or become beyond
repair.

 

(vi)                              NOT TO ALTER

 

Not to cut, maim, alter or injure or permit to be cut,
maimed, altered or injured any of the walls, timbers, floors or any other part
of the Demised Premises nor without the previous consent in writing of the
Lessor to make any alterations, additions, or improvements of any kind in or to
the Demised Premises or any part thereof provided that if the Lessor does
consent in writing to any alterations, additions or improvements, the Lessee
will make good to the satisfaction of the Lessor any damage occasioned thereby
and will remove and make good at its own expense any alterations, additions or
improvements not so authorised by the Lessor.

 

 

(vii)                           DECORATE

 

To Decorate those parts of the Demised Premises as are
painted at the commencement of the Term once in every three years and in the
last year of the Term whenever and howsoever determined and to maintain all
wall-coverings and other fabrics installed by the Lessee in first class repair
and condition.

 

(viii)                        INSPECTION

 

To permit the Lessor with or without workmen or others
at all reasonable times of the day (or at any time in an emergency) upon giving
previous notice in writing to enter upon and provide access to the Demised
Premises to view the state of repair and condition thereof and upon the Lessor
serving upon the Lessee a notice specifying any defects or wants of reparation
then and there found and requiring the Lessee forthwith to execute the same to
the reasonable satisfaction of the Lessor. If the Lessee shall not within the
period of one month after such notice or sooner if required in case of
emergency proceed to repair and make good the same according to such notice and
the covenants in that behalf hereinbefore contained then to permit the Lessor
to enter upon the Demised Premises and execute such repairs the costs thereof
to be a debit due from the Lessee to the Lessor and forthwith to be recoverable
by action.

 

(ix)                                (a)                                  Not
to do or permit or suffer to be done or omitted anything on any part of the
Demised Premises which may render void or voidable any insurance policy
maintained by the Lessor under clause 6(ii) hereof or which may increase the
rate of premium payable in respect thereof and in any event to indemnify all
other Lessees for loss suffered as a result of the Lessees own negligence the
Lessees use of the Demised Premises.

 

(b)                                 Not
at any time during the Term to use or occupy or permit to be used or occupied
the Demised Premises otherwise than as offices and in particular not to use or
permit the user of the Demised Premises or any part thereof for residential
purposes and not to do or permit or suffer to be done on the Demised Premises
any act or thing which may be or become a nuisance, disturbance, annoyance or
inconvenience to the Lessor or the owners Lessees or occupiers of any adjoining
or neighbouring premises or which may deteriorate or tend to deteriorate the value
of any adjoining or neighbouring premises.

 

(c)                                  Not
to use or permit to be sued the Demised Premises or any part thereof for any
noxious, offensive, noisy or dangerous trade or business or use or permit to be
used the same for any vexatious, illegal or immoral purpose or permit any drug
or drugs to be taken into the Demised Premises or any part thereof nor use or
permit to be used the Demised Premises as a betting shop, club, place of public
entertainment or amusement arcade nor for any purpose at any time prohibited by
any Government Municipal or other competent authority nor permit or suffer to
be held upon the Demised Premises or any part thereof any sale by auction.

 

(d)                                 Not
to exhibit or permit to be exhibited goods or chattels for sale or display or
any other purpose on the corridors, staircases and landings of the Building not
to place goods, packages or rubbish on the corridors, staircases and landings
of the Building or on any of the pavements adjoining or adjacent to the
Building nor allow the same to be obstructed in any way whatsoever or used for
packing or unpacking goods and not to write or permit writing thereon,

 

 

save only that rubbish for collection may be placed on
a portion of the pavement adjoining the Building as agreed by the Lessor.

 

(e)                                  Not
to keep or permit to be kept on the Demised Premises any petroleum products or
material of a dangerous or explosive nature or the keeping of which may
contravene any Statute or Local Regulation or Bye-Law or constitute a nuisance
to the occupiers of neighbouring premises and not without the authority of the
Lessor to use or permit to be used on the Demised Premises any machines (other
than normal office machines).

 

(f)                                    Not
to place any excessive weight or strain on the floors of the Demised Premises
and to repair or pay the cost of repairing any damage which may be caused by a
breach of this covenant or any other damage cause by the Lessee or the servants
or agents of the Lessee to any adjoining or neighbouring premises (including
the remainder of the Building).

 

(x)                                   ADVERTISEMENTS

 

Not to affix or set upon the Demised Premises or any
part thereof, any placards, announcements, advertisements, signs, signboards,
fascia advertisements or sky signs of any description PROVIDED ALWAYS that the Lessee shall have
the right to exhibit the trading name and the type of business of the Lessee in
a form approved by the Lessor on or at the entrance to the Demised Premises and
on the notice boards in the Building to be arranged by the Lessor.

 

(xi)                                ASSIGNMENT

 

(a)                                  In
the event of the Lessee wishing to assign or underlet or part with possession
of the Demised Premises then the Lessee shall first offer in writing to the
Lessor to make an absolute surrender of the unexpired balance of the Term PROVIDED THAT if the Lessor does not within
14 days accept in writing the surrender then the following shall apply.

 

(b)                                 Not
to assign, mortgage, charge or underlet or part with the possession of the
Demised Premises or any part thereof without the consent in writing of the Lessor
which consent shall not be unreasonably withheld in the case of a responsible
assignee but as a condition of such consent the Lessor will require to be made
a party to such assignment to signify its consent and such assignment shall
contain a covenant by the intended assignee to perform the covenants on the
part of the Lessee contained in this Lease as if these covenants were therein
repeated with the substitution of the name of then intended assignee for the
name of Lessee and containing also a provision that the proviso for re-entry
contained in this Lease shall take effect as if the covenant contained in such
assignment were covenant on the part of the Lessee contained in this Lease and
thereupon in respect of an assignment only the obligations of the Lessee or
other assigning party under this Lease or any such assignment as aforesaid
shall cease but without prejudice to any right of action against the Lessee or
other assigning party for any antecedent thereof.

 

(c)                                  Within
one calendar month after the execution of any assignment, mortgage, charge or
devolution of the Demised Premises to deliver to the Lessor a duplicate copy of
such assignment or other document under which such devolution arises for the
Lessor’s retention.

 

 

(xii)                             ENTRY FOR DEVELOPMENT

 

To permit the Lessor after reasonable prior written
notice to enter the Demised Premises in connection with the development of any
adjoining or neighbouring premises subject to the Lessor exercising such right
in a reasonable manner and taking all reasonable steps to minimise disruption
of the Lessee’s business and making good any damaged caused to the Demised
Premises thereby and in particular the Lessee shall not object (whether on
Planning or other grounds) to the Lessor carrying out any development or other
works on neighbouring or adjoining premises.

 

(xiii)                          ENTRY FOR REPAIR

 

To permit the Lessor after reasonable prior written
notice at reasonable times (or at any time in an emergency) to enter upon the
Demised Premises in connection with the maintenance repair examination or
alteration of any neighbouring premises or anything serving the same and
running through the Demised Promises or to com ply with any requirements of any
competent authority the Lessor acting in a reasonable manner and making good
any damage cause to the Demised Premises.

 

(xiv)                         RE-LETTING ON EXPIRY

 

The Lessee will permit the Lessor or its agents during
the period of calendar months immediately preceding the expiration or sooner
determination of the Term to affix notice boards of reasonable dimensions to
conspicuous parts of the Demised Premises announcing that the Demised Premises
are to be let or sold and at all reasonable times by appointment to show all
intending Lessees or purchasers over the Demised Premises.

 

(xv)                            COMPLIANCE WITH STATUTES

 

(a)                                  To
comply at all times and in all respects during the Term with all Act,
Regulations, Bye-Laws and Orders whether made by Government, Municipal or other
competent body or authority and comply with the conditions imposed thereby
insofar as the same relate to or affect the Demised Premises and to do all such
works as may be directed to be done in respect of the Demised Premises whether
by the owner or the occupier thereof and at all times to indemnify and keep
indemnified the Lessor against any breach non-performance or non-observance of
any Act, Regulation, Bye-Law or Order and repay to the Lessor any costs, charge
or expenses incurred by the Lessor in respect of such Acts, Regulations,
Bye-Laws or Orders.

 

(b)                                 As
often as is necessary to obtain at the Lessee’s expense (subject to the Lessors
written consent first being obtained) all licenses, permissions and consents in
respect of the use of the Demised Premises and to notify the Lessor of any
refusals in respect thereof and pay, satisfy and keep the Lessor fully
indemnified against all actions proceedings, damages, penalties, costs,
charges, claims and demands whatsoever which may become payable in respect of
the carrying out or maintenance by the Lessee of any operation on or use of the
Demised Premises.

 

 

(xvi)                         EASEMENT AND ENCROACHMENTS

 

Not to obstruct any window or light belonging to the
Demised Premises and to give immediate notice to the Lessor if the Lessee
becomes aware of any easement affecting the Demised Premises which shall be
made or a attempted and at the Lessors request and cost to adopt such means as
may be reasonably required to prevent the same.

 

(xvii)                      INDEMNIFICATION

 

To be responsible for and to indemnify the Lessor
against the cost of all damage occasioned to the Demised Premises or any other
part of the Building or any adjacent or neighbouring premises and against all
actions, costs, claims, demands and liability whatsoever in respect of injury
or damage to personal property due to or arising from the act, neglect or
default of the Lessee or any servants, agents, licensees or invitees of the
Lessee.

 

(xviii)                   DISPOSAL OF REFUSE

 

To deposit all refuse from the Demised Premises in the
refuse area as directed by the Lessor and not to deposit or dispose of such
refuse in any other manner.

 

(xix)                           FALSE ALARM

 

To pay for or if necessary, reimburse the Lessor for
all costs and charges incurred as a result of any false alarm occurring in the
security of the Building caused by the Lessee or any servant or agent of the
Lessee.

 

(xx)                              CONFORM TO MANAGEMENT REGULATIONS

 

To conform to the reasonable regulations from time to
time laid down by the Lessor for the management of the Building for the comfort
of the occupiers generally and also to conform to the regulations from time to
time laid down by the Lessor as the method of bringing of fixing telephone or
electric light or power or otherwise and other pipes, wires or conduits into
the Demised Premises and to carry out the work in connection therewith to the
satisfaction of the Lessor and to make good to the reasonable satisfaction of
the Lessor any damage which may be caused by such work to the fabric of the
Building.

 

(xxi)                           KEY HOLDERS

 

To provide to the Landlord the names, addresses and
telephone numbers of all persons holding keys to the Demised Premises.

 

(xxii)                        YIELD UP TO LESSOR

 

(i)                                     At
the expiration or sooner, determination of the Term quietly to yield up to the
Lessor the Demised Premises with all fixtures and fittings which now or any
time during the Term shall be thereon added in good and substantial repair and
condition and decorated as aforesaid,

 

(ii)                                  If
the Demised Premises are not delivered up at the determination of the Lease
properly cleaned, decorated and repaired and available for immediate
re-letting, then the Lessee will pay to the Lessor a sum equal to 1/365th
of the annual rent payable at the determination of the Lease on a per diem
basis until such time as the Lessors Surveyor certifies that the Lessee’s
covenants hereunder have been complied with.

 

 

6.                                      LESSORS COVENANTS

 

The Lessor hereby covenants with the Lessee as
follows:

 

(i)                                     QUIET ENJOYMENT

 

That the Lessee paying the Rent and other payments
reserved hereunder and performing and observing the covenants and conditions on
its part hereinbefore contained shall peaceably and quietly hold and enjoy the
Demised Premises during the Term without any lawful interruption by the Lessor
or any person rightfully claiming under or in trust for it.

 

(ii)                                  INSURANCE

 

To keep the Building insured under fully comprehensive
cover to the full reinstatement value thereof and including public liability
and such other risks as the Lessor may deem necessary in some insurance office
of good repute and to make all payments necessary for that purpose when the
same shall become due and payable.

 

(iii)                               REINSTATEMENT

 

In the event that the Building shall be damaged or
destroyed by an insured risk the Lessor shall use all insurance monies received
under any insurance policy to reinstate and make good the Building and the
Demised Premises as soon as is practicable after such damage or destruction.

 

(iv)                              SUSPENSION OF RENT

 

In the event of the Demised Premises or any part
thereof at any time during the Term being damaged or destroyed by an insured
risk or any of them so as to be unfit for occupation and use and if the Lessors
policy or policies of insurance shall not have been rendered void or voidable
or payment of the policy monies refused in whole or in part by reason of any
act or default of the Lessee then the Rent hereby reserved of a fair proportion
thereof according to the nature and extent of the damage sustained shall be
suspended until the Demised Premises shall again be rendered fit for occupation
and use and any dispute concerning this clause shall be determined by
arbitration in accordance with the provisions of clause 9 hereof

 

(v)                                 MUTUAL COVENANTS

 

To require every person to whom it shall hereafter
grant a Lease of any part of the Building to covenant to observe the
restrictions set forth in the Fourth Schedule hereto.

 

(vi)                              MAINTENANCE OBLIGATIONS

 

That subject to the payment of the Rent and other
payments hereinbefore reserved at the dates and in manner hereinbefore provided
and to the observance and performance of the covenants and stipulations herein
contained and on the part of the Lessee to be observed and performed the Lessor
will carry on, perform or arrange for the carry out and performance of the
several matters and things set forth in the Third Schedule hereto and will
defray the costs and expenses thereof PROVIDED
ALWAYS and without prejudice to the generality of the foregoing it
is hereby expressly agreed that the Lessor may appoint at its own expense and
remunerate a Managing Agent who by the terms of his contract shall be
responsible to the Lessor for carrying out and performing the several matters
and things

 

 

set forth in the Third Schedule hereto and for
arranging for the defraying of the costs and expenses thereof.

 

(vii)                           SIMILAR
LEASES 

 

That all or any part of the Building leased or to be
leased by the Lessor shall contain substantially the same covenants and
stipulations and conditions as are herein set forth except as to the dates of
such Leases and the commencement date thereof.

 

7.                                      MUTUAL
AGREEMENTS

 

It is hereby mutually agreed and declared as follows:

 

(i)                                     If
and whenever the Rents or any other payments herein before reserved or any part
thereof shall be in arrears and unpaid for 14 days next after the same shall
have become due whether any formal or legal demand therefore shall have been
made or not or if and whenever there shall be any breach non-observance or
non-performance by the Lessee of any of the covenants on its part herein
contained or if the Lessee or any assignee of the Lessee being an incorporated
company shall enter into a liquidation whether voluntary or compulsory (except
by way of reconstruction or amalgamation) then and in any such case it shall be
lawful for the Lessor to enter into and upon all or any part of the Demised
Premises in the name of the whole and thereupon this present demise shall
absolutely determine and become void but without prejudice nevertheless to any
right of action or remedy of the Lessor in respect of any antecedent breach by
the Lessee of any of the covenants on its part herein contained.

 

(ii)                                  Without
prejudice to any other right, remedy or power herein contained, if any Rents or
other sums payable by the Lessee to the Lessor hereunder shall be due but
unpaid for 14 days the Lessee shall pay to the Lessor interest on such
outstanding amounts at the maximum rate of interest (which may vary from time
to time) permitted by the Interest and Credit Charges (Regulations) Act 1975 or
any Act for the time being amending, repealing or replacing the same calculated
from the due date to the actual date of payment such interest to be paid by the
Lessee to the Lessor by way of additional Rent.

 

(iii)                               The
Lessor shall not be liable to the Lessee or any person claiming through the
Lessee for any damage which may be caused by any defect of any plant or
machinery or services in the Demised Premises or any neighbouring premises and
the Lessor will not be liable for any injury caused on the Demised Premises to
the Lessee, its servants, customers or visitors including tradesmen and the
Lessee shall indemnify the Lessor against all claims, actions and proceedings
in respect of such injury or claim.

 

(iv)                              The
Lessor shall have the right to sell and transfer the Building and transfer and
assign in whole or in part, by operation of law or otherwise, its rights and
obligations hereunder whenever the Lessor in its sole judgement deems it
appropriate without any liability to the Lessee and the Lessee shall attorn to
any party to which the Lessor transfer the Building.

 

(v)                                 If
the Lessee is desirous of taking a new Lease of the Demised Premises and gives
written notice to the Lessor not less than four months and not more than six
months before the expiration of the Term and if there is not at the time of
service of such notice any existing breach or non-observance of any of the
Lessee’s covenants the Lessor shall at the expense of the Lessee grant to it a
new Lease for a further Term of TEN years at an increased rental commensurate
with the Bermuda Government’s declared Cost of Living Index but not less than
the rent being paid during the last

 

 

12 months of the previous Term and in default of
agreement to be determined by arbitration as hereinafter provided and subject
in all other respects to the same terms and conditions as are contained in the
Lease.

 

8.                                      NOTICES

 

Any notice under the Lease shall be in writing. Any
notice to the Lessee shall be sufficiently served if sent to the Lessee at the
Demised Premises by registered post and any notice to the Lessor shall be
sufficiently served if delivered at or sent by registered post to P.O. Box HM
1194. Hamilton, HM EX, Bermuda. Any notice sent by post shall be deemed to be
given three days after the date on which it was posted to the address to which
it is sent.

 

9.                                      ARBITRATION

 

If any dispute or question whatsoever touching or
concerning this Lease shall arise between the parties hereto the matter in
difference shall be submitted to one arbitrator to be appointed by agreement
between the parties or in the absence of such agreement by three arbitrators
one to be appointed by each of the parties hereto and the third to be appointed
by the other two arbitrators such appointment to be made within thirty days of
notification of the decision being taken to refer to arbitration and such
submission shall be considered a reference to arbitration within the meaning
the Arbitration Act 1986 or any Act for the time being in force amending or
replacing the said Act.

 

10.                               PARAGRAPH HEADINGS

 

Paragraph headings do not form part of this Lease and
shall not be taken into account in the construction of interpretation thereof.

 

 

IN WITNESS WHEREOF the
parties to these presents hereunto caused their Common Seals to be affixed the
day and year first before written.

 

 

THE
FIRST SCHEDULE

(Lessee’s Easements Rights and Privileges)

 

(i)                                     The
full and free right of passage and running water and soil in and through the
sewers, drains and channels upon through or under any adjoining premises and
the free and uninterrupted use of all electric telephone, cables and wires and
other rights necessary for the enjoyment of the Demised Premises.

 

(ii)                                  The
use in common with the Lessor and all others so authorised by the Lessor to the
entrance, lobbies, hallways, stairways, passenger elevators, vehicular ramps,
loading and unloading areas for the purposes only of ingress and egress to and
from the Demised Premises.

 

(iii)                               The
right to erect and thereafter maintain and repair throughout the Term no more
than two communication satellite dishes upon the roof of the Building to be
constructed in a workmanlike manner and to have access to the roof for the
purposes of such erection maintenance and repair together with the right to run
cables and wires connecting the Demised Premises with the satellite dishes in
and through, over and under other parts of the Building. In exercising such
right, the Lessee shall not cause any unnecessary disturbance or inconvenience
to the Lessor or any other tenants of the Building and will at its own expense
make good any damage that may be cause.

 

(iv)                              The
benefit of the restrictions contained in the Leases of other parts of the
Building granted or to be granted.

 

(v)                                 The
right to sub-jacent and lateral support and to shelter and protection from the
other parts of the Building.

 

SECOND
SCHEDULE

(Exceptions and Reservations)

 

There is excepted and reserved out of this Lease unto the Lessor and
the other Lessees of the Building:

 

(i)                                     All
air conditioning units and duct and pipe-work connected therewith and the full
and free passage and right of running water and soil, electric, telephone and
other pipes, conduits, wire and cables through, upon or under the Demised
Premises and the right to enter upon the same in order to make connections
with, inspect, maintain, remove or replace such air conditioning units and
other services.

 

(ii)                                  The
right to alter any adjacent land or premises in any manner whatsoever and to
let the same for any purpose or otherwise deal therewith notwithstanding the
light or air to the Demised Premises is in any such case thereby diminished or
prejudicially affected.

 

(iii)                               The
right for the Lessor and its surveyor or agents with or without workmen and
others at all reasonable times on notice (except in case of emergency) to enter
the Demised Permises for the purpose of carrying out the obligations of the
Lessor hereunder which said rights of entry will conform to the requirements
set out in’ clause 5(viii) of the Lease.

 

(iv)                              The
easements, rights and privileges equivalent to those set forth in the First
Schedule hereof.

 

 

THIRD
SCHEDULE

(Lessors Maintenance Obligations)

 

The management maintenance and repair of the Building and all the
facilities thereof and the provision of all services in connection therewith
including (but without prejudice to the generality of the foregoing):

 

(i)                                     Maintaining
in good and substantial repair and condition the main structure and roof of the
Building.

 

(ii)                                  The
repairing, renewing, painting, glazing, maintaining, repainting and when
necessary the rebuilding of the following parts of the Building namely the main
structure (including foundations and footings) the external walls and external wood and ironwork, the joists,
the roofs, canopies, the interior parts of the Building (excluding the interior
of all premises demised) the air conditioning plant and equipment, the communal
toilets used in common by the Lessee and others, the drains, the hot and cold
water cisterns and pipes, the waste pipes, the main electricity cables, the
heating apparatus, the ventilating apparatus and shafts and the fire prevention
apparatus and security systems serving the Demised Premises in common with
other parts of the Building.

 

(iii)                               The
cleansing and lighting of the forecourts, staircases, passages, landings,
communal toilets and other parts of the Building used in common by the Lessee
with the Lessor and all other Lessees.

 

(iv)                              The
insuring of the Building against the risks set out in clause 6(ii) hereof
(including loss of rent and architects and surveyors fees).

 

(v)                                 The
cost of supplying water in respect of the Building.

 

(vi)                              The
provision of water heaters.

 

(vii)                           Any
expenses deemed necessary or incurred in connection with the removal of refuse.

 

(viii)                        The cost
of supplying electricity for all the machinery, equipment and apparatus
employed in servicing the Building.

 

(ix)                                Paying
all existing and future rates, taxes and assessments payable by Law in respect
of the Building (other than any tax or other charge payable on the Demised
Premises by the Lessee under the provisions of clause 5(iv) hereof).

 

(x)                                   The
cost of employing staff for the performance of the duties and services before
mentioned and for the security of the Building and all other incidental
expenditures in relation to such employment including (but not by way of
limitation) the payment of the statutory and such other insurance, health,
welfare, pension and other payments, contributions, and premiums that the
Lessor may in his discretion deem desirable or necessary the provision of
uniforms, working clothes, tools, appliances, cleaning and other material,
bins, receptacles and other equipment for proper performance of their duties
and all costs and expenses incurred in providing suitable accommodation within
the Building.

 

(xi)                                The
cost of any audit fees incurred pursuant to clause 3(v)(c).

 

 

FOURTH
SCHEDULE

(Restrictions on Lessee)

 

(i)                                     Not
to throw or permit to be thrown anything whether of a liquid or solid nature
from any part of the Demised Premises.

 

(ii)                                  Not
to keep any animals on the Demised Premises.

 

(iii)                               Not
to hang articles of any description from the exterior of any part of the
Demised Premises or any other part of the Building except within the Demised
Premises.

 

(iv)                              Not
to keep any plants on the exterior windowsills or place thereon any ornaments
or other things which might impair, alter or mar the uniformity or appearance
of the Building.

 

(v)                                 Not
to encumber or interfere with the access to or egress from or place or leave
rubbish upon any parts of the Building used in common with other tenants
thereof (other than such part thereof as is specifically reserved for such
purpose).

 

(vi)                              Not
to affix a radio, television, aerial t.v. or satellite dish to the exterior of
the Demised Premises or to any other part of the Building without the written
permission of the Lessor.

 

(vii)                           Not to
make or allow any person to make any undue noise in or about the Demised
Premises or any part of the Building.

 

(viii)                        Not to use
water closets and other water apparatus for any purposes other than those for
which they were constructed.

 

(ix)                                Not
to permit any water or liquid to soak through the floors of the Demised
Premises and in the even of such happening, to immediately rectify and make
good all damage and injury to the premises so affected unless water from a
defective main structure or roof of the Building.

 

(x)                                   To
use all water on the Demised Premises sparingly and not have water running
unnecessarily for any length of time.

 

(xi)                                To
observe all such other rules and regulations from time to time (either in
addition to or by way of substitution for these rules and regulations or any of
them) as the Lessor may deem needful for the safety, care and cleanliness of
the Building or for securing the comfort or convenience of the tenants of the
Building generally.

 

FIFTH
SCHEDULE

(Lessors Fixtures and Fittings)

 

(i)                                     All
carpet and underlay installed in the Demised Premises.

 

(ii)                                  All
partitions, doors, coverings, supports, bulkheads, uprights and supports
fastenings and all other fitting integral to the partitioning works.

 

(iii)                               All
kitchen cabinets and bathroom tiles, cabinets, vanity units, work surfaces,
stall sets and plumbing fixtures.

 

(iv)                              All
ceiling tile grid, air conditioning ducts, cupboard and defuser lighting
throughout, light defusers and all wiring switches and electrical outlets.

 

 

	
  The Common Seal of

  EYE PATCH HOLDINGS LIMITED

  was hereunto affixed

  	
  )

  )

  )

  	
   

  	
  [SEAL]

  
	
  in the presence of

  	
  )

  	
   

  	
   

  
	
   

   

  	
   

  	
   

  	
   

  
	
  /s/ 

  	
   

  	
   

  	
   

  	
   

  
					

 

	
  The Common Seal of

  GIBBONS MANAGEMENT SERVICES

  LIMITED

  	
  )

  )

  )

  	
   

  	
  [SEAL]

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ 

  	
   

  	
   

  	
   

  	
   

  
					

 

	
  The Common Seal of

  	
  )

  	
   

  	
   

  
	
  WEST END CAPITAL MANAGEMENT

  (BERMUDA) LIMITED

  	
  )

  )

  	
   

  	
  /s/ David Brown

  	
   

  
	
  was hereunto affixed

  	
  )

  	
   

  	
   

  
	
  in the presence of

  	
  )

  	
   

  	
   

  

 

 

	
   

  	
   

  	
  THIS IS TO CERTIFY THAT, In accordance with section
  14 of the Stamp Duties Act 1976, full and proper duty has been paid on the
  original instrument.

  	
  [SEAL]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ 

  	
   

  
	
  ACTING

  	
   

  	
  Tax Commissioner

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