Document:

Exhibit 10.3

November 9, 2006

Christopher D.
Genry

1449 Wynkoop, No. 402

Steelbridge Building

Denver, CO 80202

Re:        Separation
of Employment from United Dominion Realty Trust, Inc.

Dear Chris:

As we have
discussed, your employment with United Dominion Realty Trust, Inc. (the “Company”)
will end effective December 31, 2006 (the “Separation Date”). This letter
(this “Letter Agreement”) reflects our agreement with respect to the separation
of your employment with the Company.

1.                 Last Day of Employment. Your last day of employment with the
Company will be December 31, 2006.

2.                 Vacation Pay. You will be paid an amount equal to all
accrued but unused vacation up to December 31, 2006. You are entitled to
payment of all accrued but unused vacation whether or not you sign this Letter
Agreement. You will not be entitled to use sick leave, salary continuation or
disability benefits after the Separation Date.

3.                 Consideration. In consideration for signing this Letter
Agreement the Company agrees that:

(a)   You may
continue to participate in the Company’s group health insurance plans at the
same coverage levels as immediately prior to the Separation Date. Coverage will
continue through the Consolidated Omnibus Budget Reconciliation Act of 1985 until
the first to occur of (a) five (5) years from the Separation Date or (b) your
employment by a third party (a third party shall not be deemed to include an
entity of which all of the outstanding capital stock or ownership interests are
owned by you ) or (c) you default in the payment of or no longer continue
to pay your portion of the premiums (the “Severance Period”). During the
Severance Period, the Company shall continue to pay its portion of the premiums
and you will pay your portion of the premiums.

(b)   The Company
shall cause United Dominion Realty, L.P. and/or UDR Out-Performance III,
LLC to repurchase 22,500 Membership Units in UDR Out-Performance III, LLC,
which constitutes 50% of the Membership Units in UDR Out-Performance III,
LLC owned by you, for Twenty-Two Thousand Five Hundred Dollars and No Cents ($22,500.00),
such amount to be paid to you within thirty (30) days of the Separation Date.

(c)   The Company
shall cause United Dominion Realty, L.P. and/or UDR Out-Performance IV,
LLC to repurchase 55,333 Membership Units in UDR Out-Performance IV, LLC,
which constitutes 2/3 of the Membership Units in UDR Out-Performance IV,
LLC owned by you, for Fifty-Five Thousand Three Hundred Thirty-Three
Dollars and No Cents ($55,333.00), such amount to be paid to you within thirty
(30) days of the Separation Date.

(d)   On December 31,
2006, you shall receive 3,502 shares of Common Stock of the Company pursuant to
your 2005 Performance Contingent Restricted Stock Award. Further, upon
determination by the Compensation Committee of the Board (“Compensation
Committee”) as to the targeted award level for the 2006 PARS Program you will either
receive 2,472 shares of Common Stock of the Company or such other number
consistent with the Compensation Committee’s determination of the award level for
the 2006 PARS Program and pursuant to your 2006 Performance Contingent
Restricted Stock Award. You will forfeit any right to receive additional shares
of Common Stock under your 2005 and 2006 Performance Contingent Restricted
Stock Award grants.

(e)   All
restrictions on the following Restricted Stock Awards held by you that remain
subject to restrictions on December 31, 2006 shall lapse:

(i)    6,423
shares of restricted Common Stock granted to you on February 27, 2003;

(ii)   13,543
shares of restricted Common Stock granted to you on February 12, 2004;

(iii)  8,949
shares of restricted Common Stock granted to you on February 18, 2005; and

(iv)  1,986
shares of restricted Common Stock granted to you on February 15, 2006.

(f)    A bonus for fiscal year 2006 in the amount of $400,000 payable at
the same time the Company pays fiscal year 2006 bonuses to the Company’s other
senior executives.

(g)   You will be treated as an employee of the Company for purposes of eligibility
to participate in the “Board of Directors Guidelines Regarding Purchase of
Out-Performance Units (“Guidelines”) once and if such Guidelines are approved
by the Board of Directors of the Company.

4.                 Other Benefits. Except as provided explicitly in this Letter
Agreement, you shall not be entitled to any other or further benefits from
Company, including, without limitation, participation in health and dental
insurance plans, disability and life insurance plans, stock plans, 401(k) plans,
and profit sharing plans.

5.                 Expenses. Your expense report for expenses incurred through
the Separation Date must be received within three business days after the
Separation Date. You will be reimbursed for expenses incurred through the
Separation Date in accordance with ordinary Company reimbursement practices and
policies. If a final accounting of these new expenditures indicates that you
owe the Company any amount (e.g., for charges to Company accounts) after your
expense reports have been processed, you must pay such amount within three days
after the Separation Date.

6.                 Consulting. For a term commencing upon the Separation Date
and terminating upon the earlier of (a) twelve (12) months from the Separation
Date or (b) your employment by a company which owns, acquires, renovates,
operates, manages or develops apartment communities (the “Consulting Term”), you
shall provide consulting services to the Company. During the Consulting Term,
you will be reasonably available by telephone to consult with the Company. You
agree to apply your attention, knowledge and skills faithfully, diligently, to
the best of your ability as a consultant, in furtherance of the business and activities
of the Company.

As compensation for the performance of your consulting
services the Company will pay you the sum of Two Hundred Sixty Thousand Dollars
and No Cents ($260,000.00), to be paid in equal bimonthly installments in
arrears during the Consulting Term.

You hereby agree to
inform Thomas W. Toomey, Chief Executive Officer and President, United Dominion
Realty Trust, Inc. 1745 Shea Center Drive, Suite 200, Highlands
Ranch, CO 80129, immediately upon your acceptance of employment with a real
estate investment trust or a company which owns, acquires, renovates, operates,
manages or develops apartment communities, regardless of your anticipated start
date at the new position.

7.                 Company Property. You acknowledge that you have returned to
the Company all proprietary Company documents (including copies) and property
which you may possess, including, but not limited to, the following proprietary
information of the Company:  files,
memoranda, notes, computer-recorded information, personnel records (except
copies of any agreements you may have signed with the Company), equipment,
materials, keys, entry cards, identification, credit cards, and any other
materials of any kind that embodies any confidential or proprietary information
of the Company (and all reproductions thereof).

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8.                 Revocation. You understand that you have twenty-one (21)
days to consider the preclusive effect of this Letter Agreement prior to
executing this Letter Agreement. You further understand that you may revoke
this Letter Agreement for a period of seven (7) days following your
execution of this Letter Agreement. Any revocation within this period must be
submitted, in writing, to: the Company, c/o Sara Jo Light, Executive Vice
President - Director of Talent Management, and state, “I hereby revoke my
acceptance of the Letter Agreement.”  The
revocation must be mailed to the Company, c/o Sara Jo Light, Executive Vice President
- Director of Talent Management, or her designee, and postmarked within seven (7) days
of execution of this Letter Agreement. This Letter Agreement shall not become
effective or enforceable until the revocation period has expired. If the last
day of the revocation period is a Saturday, Sunday, or legal holiday in
Colorado, then the revocation period shall not expire until the next following
day which is not a Saturday, Sunday, or legal holiday in Colorado.

9.                 General Release
of Claim and Covenant Not to Sue.

(a)   In
consideration of the consulting agreement and the other benefits provided to
you under this Letter Agreement, and except for the obligations created by this
Letter Agreement, you knowingly and voluntarily release and forever discharge
the Company and its affiliates, as well as their respective officers,
directors, employees, stockholders, agents, attorneys, insurers,
representatives, assigns and successors, past and present, and each of them
(hereinafter together and collectively referred to as the “Released Parties”) of,
with respect to and from any and all actions, and claims of any kind, known and
unknown, suspected or unsuspected, against the Released Parties, which you,
your heirs, executors, administrators, successors, and assigns (together and collectively
“Executive”) have or may have as of the date of execution of this Letter
Agreement, including, but not limited to, any alleged violation of:

The National Labor Relations Act, as amended;

Title VII of the Civil Rights Act of 1964, as amended;

Sections 1981 through 1988 of Title 42 of the United
States Code, as amended;

The Employee Retirement Income Security Act of 1974,
as amended;

The Immigration Reform Control Act, as amended;

The Americans with Disability Act of 1990, as amended;

The Age Discrimination in Employment Act of 1967, as
amended;

The Fair Labor Standards Act, as amended;

The Occupational Safety and Health Act, as amended;

The Equal Pay Act;

The Family and Medical Leave Act of 1993;

all Colorado laws concerning the workplace;

any other federal,
state or local civil or human rights law or any other local, state or federal
law, regulation or ordinance; based upon any covenant of good faith and fair
dealing, implied or express contract, wrongful discharge, promissory estoppel,
equitable estoppel, employee benefit, violation of public policy, negligent or
intentional infliction of emotional distress, defamation, false light,
compelled self-publication, fraud, misrepresentation, invasion of privacy,
assault, battery, tortious interference with a contract, tortious interference
with a business relationship or economic interest, negligent retention,
negligent hiring, negligent supervision, negligence, negligent
misrepresentation, gross negligence, loss of consortium, equity or any
intentional or other tort; and/or

(i)    Arising
out of the Released Parties’ personnel practices, policies, or procedures; and

 3
 

(ii)   Arising
out of or relating to Executive’s employment or the initiation, existence or
cessation of Executive’s employment with the Released Parties, including any claims
for salary, wages, severance pay, vacation pay, sick pay, bonuses, and any
other compensation or benefit of any nature; and

(iii)  Arising
out of any statements or representations to or about Executive; and

(iv)  Arising out
of any other wrong, injury or loss allegedly suffered by Executive; and

any allegation for costs, fees, or other expenses
including attorneys’ fees incurred in these matters (collectively the “Released
Claims”).

You shall not sue
or initiate against the Released Parties any action or proceeding, or
participate in the same, individually or as a member of a class, under any
contract (express or implied), or any federal, state or local law, statute or
regulation pertaining in any manner to the Released Claims.

(b)   Except for the obligations created by this Letter Agreement, the Released
Parties hereby covenant not to sue and release and forever discharge you from any
and all claims, known and unknown, which the Release Parties have or may have against
you, including all claims arising from your positions as Executive Vice
President - Chief Financial Officer or Executive Vice President - Corporate Strategy
or as an employee of the Company or its subsidiaries or affiliates and the
termination of that relationship (and specifically including any and all claims
related to prior promises or contracts of employment), as of the date of this
Letter Agreement; provided, however, the Released Parties do not release you with
respect to claims arising out of or relating to fraud, gross negligence or
willful misconduct.

10.          No Claims
Exist. You confirm that no claim, charge, complaint, or action
exists pertaining in any manner to the Released Claims in any forum or form. In
the event that any such claim, charge, complaint or action is filed, you shall
not be entitled to recover any relief or recovery therefrom, including costs
and attorney’s fees.

11.          Non-Disparagement.
You agree not to make any negative, disparaging, disruptive or damaging
statements, comments or remarks to any third party concerning the Company and
its business. In response to inquiries about you from individuals outside of
Company, Company’s official response shall be to provide our standard reference
information of dates of employment and title.

12.          Assistance.
In partial consideration for your receipt of the consulting agreement and the
other benefits provided to you by the Company under this Letter Agreement, to
which you are not otherwise entitled, you agree to provide reasonable
assistance related to transition matters to the Company and/or its employees
through the end of the Consulting Term.

13.          Confidentiality.
You acknowledge that you have been exposed to and have learned a substantial
amount of information, which is proprietary and confidential to the Company,
whether or not you developed or created such information. You acknowledge that
such proprietary and confidential information may include, but is not limited
to, trade secrets; acquisition or merger information; advertising and promotional
programs; resource or developmental projects; plans or strategies for future
business development; financial or statistical data; customer information,
including, but not limited to, customer lists, sales records, account records,
sales and marketing programs, pricing matters, and strategies and reports; and
any Company manuals, forms, techniques, and other business procedures or
methods, devices, computer software or matters of any kind relating to or with
respect to any confidential program or projects of the Company, or any other
information of a similar nature made available to you and not known in the
trade in which the Company is engaged, which, if misused or disclosed, could
adversely affect the business or standing of the Company (collectively, the “Confidential
Information”). Confidential Information shall not include (a) information
that is generally known or generally available to the public through no fault
of your own; or (b) information 

 4
 

relating to a
strategy/business endeavor involving the ownership, operation and development
of real estate aimed at enhancing the level of product and service unique to
the Latino consumer. You agree that except as required by court order, you will
not at any time divulge to any person, agency, institution, the Company or
other entity any information which you know or has reason to believe is
proprietary or confidential to the Company, including but not limited to the
types of information described above, or use such information to the
competitive disadvantage of the Company. You agree that your duties and
obligations under this Section 13 will continue until the later of twelve
(12) months after the Separation Date, or as long as the Confidential
Information remains proprietary or confidential to the Company.

14.          Non-Solicitation.
As further consideration for the benefits provided in this Letter Agreement for
a period terminating on the earlier of one (1) year from the Separation
Date or the Consulting Term, you agree not to directly or indirectly solicit
for employment any person employed by the Company or its affiliates.

15.          Joint
Preparation of Agreement. This Letter Agreement is deemed to have
been drafted jointly by the parties. In any interpretation of this Letter Agreement,
the provisions of this Letter Agreement shall not be interpreted or construed
against any party on the basis that the party was the drafter.

16.          Severability.
If any provision of this Letter Agreement is determined to be invalid or
unenforceable, in whole or in part, such determination will not affect any
other provision of this Letter Agreement. For example, if the release of a
particular claim is held by a court to be invalid or unenforceable, such ruling
will not affect the releases of any other claims.

17.          Entire
Agreement. This Letter Agreement (including the exhibits hereto)
contains the entire agreement between you and the Company and is the complete,
final and exclusive embodiment of our agreement with regard to the subject
matter. It is entered into without reliance on any promise or representation
other than those expressly contained herein, and it may not be modified except
in writing signed by you and an officer of the Company.

18.          Governing
Law. This Letter Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of Colorado, as applied to
contracts made and performed entirely within the State of Colorado.

Please
sign and return this Letter Agreement to me, keeping a copy for yourself. Our
sincerest wishes in your future endeavors.

	
  Sincerely,

  	
   

  	
   

  	
   

  
	
  United
  Dominion Realty Trust, Inc.

  	
   

  	
   

  	
   

  
	
  /s/ Thomas W.
  Toomey

  	
   

  	
   

  	
   

  
	
  Thomas W. Toomey

  	
   

  	
   

  	
   

  
	
  Chief Executive
  Officer and President

  	
   

  	
   

  	
   

  
	
  Accepted and
  Agreed:

  	
   

  	
   

  	
   

  
	
  Date: November 9,
  2006

  	
   

  	
  By:

  	
  /s/ Christopher D. Genry

  
	
   

  	
   

  	
   

  	
  Christopher D. Genry

  

 

 5Exhibit 10.105

 

Dated   8th August   2006

 

 

 

 

ERACHANGE LIMITED  (1)

 

RUSS BERRIE (UK) LIMITED (2)

 

 

 

 

 

LEASE OF WHOLE

 

of

Stoke Park, Tower Lane

Eastleigh, Hampshire

 

 

	
  Term Commencement Date:

  	
   

  	
  8th August, 2006

  
	
  Term:  10 Years

  	
   

  	
   

  
	
  Term
  Expiry Date:

  	
   

  	
  7th August, 2016

  

 

 

 

 

 

 

 

 

 

 

 

Klimt & Co

49 Welbeck Street

London W1G 9XN

Tel:   0207 486 4432

Fax:  0207 486 2127

Ref:  TRM/TF.05.1123

 

 

TABLE OF CONTENTS

 

 

 

	
  PART ONE

  	
   

  	
  Definitions and Interpretation

  	
   

  	
  :

  	
   

  	
  Clauses 1-2

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  PART TWO

  	
   

  	
  Demise

  	
   

  	
  :

  	
   

  	
  Clause 3

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  PART THREE

  	
   

  	
  Tenants Covenants

  	
   

  	
  :

  	
   

  	
  Clauses 4-20

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  PART FOUR

  	
   

  	
  Insurance

  	
   

  	
  :

  	
   

  	
  Clauses 21-24

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  PART FIVE

  	
   

  	
  Landlord's Covenants

  	
   

  	
  :

  	
   

  	
  Clauses 25

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  PART SIX

  	
   

  	
  Rent Review

  	
   

  	
  :

  	
   

  	
  Clauses 26-32

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  PART SEVEN

  	
   

  	
  Miscellaneous Provisions

  	
   

  	
  :

  	
   

  	
  Clauses 33-39

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  PART EIGHT

  	
   

  	
  Forfeiture

  	
   

  	
  :

  	
   

  	
  Clauses 40-41

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  PART NINE

  	
   

  	
  Guarantee

  	
   

  	
  :

  	
   

  	
  Clauses 42-44

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  PART TEN

  	
   

  	
  Release of Landlord

  	
   

  	
  :

  	
   

  	
  Clause 45

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  PART ELEVEN

  	
   

  	
  Special Conditions

  	
   

  	
  :

  	
   

  	
  Clauses 46 - 48

  

 

 

SCHEDULES

 

 

1.                    RIGHTS GRANTED

 

2.                    EXCEPTIONS AND RESERVATIONS

 

3.                    DOCUMENTS

 

 

-               All
words in italicised text and inapplicable alternative wording in a clause may
be omitted or deleted

-               Clauses
LR13 may be omitted or deleted.

-               Clause LR14
may be omitted or deleted where the Tenant is one person.

-               Otherwise,
do not omit or delete any words in bold text unless italicised.

	
  LR1  Date of Lease

  	
   

  	
  8th August 2006

  
	
   

  	
   

  	
   

  
	
  LR2  Title Numbers

  	
   

  	
  LR2.1  Landlord’s title number(s)

  Title number(s) out of which this
  lease is granted.  Lease blank if not
  registered.

  HP256363

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  LR2.2  Other title numbers

  Existing title number(s) against
  which entries of matters referred to in LR9, LR10, LR11 and LR13 are to be
  made.

  
	
   

  	
   

  	
   

  
	
  LR3

  	
  Parties to this lease 

  	
   

  	
  Landlord

  Erachange Limited (Company
  Registration No. 3501740) of 15 Grosvenor Gardens, London, SW1W OBD

  Tenant

  Russ Berrie (UK) Limited (Company
  Registration No. 01459528) of Liberty House, Hounsdown Business Park, Bulls Copse
  Road, Totton, Southampton, Hampshire, SO40 9RB

  Other Parties

  Specify capacity of each party,
  for example “management company”, “Guarantor”, etc.

  
	
  Give full names, addresses and
  company’s registered number, if any, of each of the parties. For Scottish
  companies use a SC prefix and for limited liability partnerships use an OC
  prefix.  For foreign companies give
  territory in which incorporated 

  
	
   

  	
   

  	
   

  
	
  LR4  Property 

  Insert a full description of the
  land being leased

  or

  Refer to the clause, schedule or
  paragraph of a schedule in this lease in which the land being leased is more
  fully described.

   

  Where there is a letting of part
  of a registered title, a plan must be attached to this lease and any floor
  levels must be specified.

  	
   

  	
  In the case of a conflict between
  this clause and the remainder of this lease then, for the, purpose of
  registration, this clause shall prevail.

   

  As specified in clause 1.21

  
	
   

  	
   

  	
   

  
				

 

 1
 

 

 

	
  LR 5  Prescribed statements etc.

   

  If this lease includes a statement
  falling within LR5.1, insert under that sub-clause the relevant statement or
  refer to the clause, schedule or paragraph of a schedule in this lease which
  contains the statement.

   

  In LR5.2 omit or delete those Acts
  which do not apply to this lease.

  	
   

  	
  LR5.1  Statements prescribed under rules 179 (dispositions
  in favour of a charity), 180 (dispositions by a charity) or 196
  (leases under the Leasehold Reform, Housing and Urban Development Act 1993) of the Land
  Registration Rules
  2003

   

  LR 5.2 This lease
  is made under, or by reference to, provisions of:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  LR6.  Term for which the
  Property is lease

  	
   

  	
  From and including 

  	
  8th     August   2006

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  To and including

  	
  7th     August   2016

  
	
   

  	
   

  	
   

  
	
  Include only the appropriate
  statement (duly
  completed) from the three options

   

  NOTE: The information you provide,
  or refer to, here will
  be used as part of the particulars
  to identify the lease under Rule
  6 of the Land Registration Rules 2003.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  LR7.  Premium

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Specify the total premium,
  inclusive of any VAT where payable.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  LR8.  Prohibitions or
  restrictions on disposing of this lease

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Include whichever of the two
  statements is appropriate

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Do not set out here the wording of
  the provision 

  	
   

  	
  This lease contains a provision that prohibits or restricts
  dispositions.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  LR9.  Rights of
  acquisition etc.

   

  Insert the relevant provisions in
  the sub-clauses or refer to the clause, schedule or paragraph of a schedule in
  this lease which contains the provisions

  	
   

  	
  LR9.1 Tenant’s contractual rights to renew this
  lease, to acquire the reversion or another lease of the Property, or to
  acquire an interest in other land.

   

   

  LR9.2 Tenant’s covenant to (or
  offer to) surrender this lease

  
	
   

  	
   

  

 

 2
 

 

 

	
  

  	
   

  	
  LR9.3 Landlord’s contractual rights
  to to this lease

  
	
  LR10. Restrictive covenants
  given in this lease by
  the Landlord in respect of land
  other than the Property

   

  Insert the relevant provisions or
  refer to the clause,
  schedule or paragraph of a
  schedule in this lease which contains the provisions

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  LR11. Easements

   

  Refer here only to the clause,
  schedule or paragraph of a schedule in this lease which sets out the
  easements.

  	
   

  	
  LR11.1 Easements granted by this
  lease for the benefit of the Property

   

  As specified in the First Schedule — None

   

  LR11.2 Easements granted or
  reserved by this lease over the Property for the benefit of other property

  
	
   

  	
   

  	
   

  
	
  LR12. Estate rentcharge
  burdening the Property

   

  Refer here only to the clause,
  schedule or paragraph of a schedule in this lease which sets out the
  rentcharge.

  	
   

  	
  As specified in the Second Schedule

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  LR13. Application for standard
  form of restriction.

   

  Set out the full text of the
  standard form restriction
  and the title against which it is
  to be entered.  If you wish to apply
  for more than one standard form
  of restriction use this clause
  to apply for each of them, tell us
  who is applying against which title and set out the full text of the restriction you are applying for.

   

  Standard forms of restriction are
  set out in Schedule 4 to the Land Registration Rules 2003.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  LR 14. Declaration of trust
  where there is more than one person comprising theTenant

   

  If the Tenant is one person, omit
  or delete all the
  alternative statements

  	
   

  	
   

  

 

 3
 

 

 

	
  If the Tenant is more than one person, complete this clause by omitting or deleting all inapplicable alterative statements.

  	
   

  	
   

  

 

 4
 

 

 

LEASE OF WHOLE

Date                        :               8th August 2006

PART
ONE  : 
DEFINITIONS AND INTERPRETATION

1.             DEFINITIONS

Where in this deed
the following underlined words commence with capital letters they have the
following meanings unless the context otherwise requires:

1.1                                 Landlord

ERACHANGE LIMITED (Company
Registration Number 3501740) of 15 Grosvenor Gardens London SW1W 0BD and any
person for the time being entitled to the reversion immediately expectant on
the Determination of the Term

1.2                                 Tenant

RUSS BERRIE (UK) LIMITED
(Company Registration Number 01459528) of Liberty House Hounsdown Business Park
Bulls Copse Road Totton, Southampton Hampshire SO40 9RB and any person in whom
the Term is from time to time vested

1.3           Agreed
Term

Commencing on  8th August 2006 and expiring on 7th August 2016

1.4           Authority

Any statutory, public, local or other competent
authority or a court of competent jurisdiction

1.5           Clause

A clause of this deed

1.6           Conduits

Any pipe, drain, culvert, sewer, flue, duct, gutter,
wire, cable, optic fibre, conduit, channel and other medium for the passage or
transmission of water, soil, gas, air, smoke, electricity, telecommunication,
light, information or other matter and all ancillary equipment or structures

1.7           Determination
of the Term

The proper and lawful determination of the Term by
re-entry notice surrender or otherwise

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1.8           Environmental

Includes the ambient air, land surface and sub strata,
any surface water or ground water, whether or not on, over, under or within the
Premises;

1.9           Environmental
Laws

Means any Enactments relating to the protection of the
Environment or the control of environmental hazards and pollution including
laws relating to the Release or threatened Release of Hazardous Material into
the Environment or otherwise relating to the presence, manufacture, processing,
distribution, use, treatment, storage, disposal, transportation or handling of
Hazardous Material

1.10         Environmental
Liabilities

Means any liabilities, responsibilities, claims,
losses, costs including remedial, removal, abatement, clean up, investigative
and all monitoring costs and other related costs and expenses, damages,
settlements, claims, expenses, penalties, fines, legal fees and costs which are
incurred, asserted or imposed as a result of or in connection with:-

(i)                                     any
violation of or non-compliance with Environmental Laws including the failure to
procure or violation of any permit or licence required by any Environmental
Laws;

(ii)           any Remedial Action.

1.11         First
Rent Payment

  8th February 2007

1.12                           Hazardous Material

Means any substance known or reasonably believed to be
harmful to human health or the Environment and for that reason subject to
Environmental Laws

1.13         Interest

Interest at the Interest Rate (both before and after
any judgment) calculated on a daily basis from the date on which interest
becomes chargeable on any payment pursuant to any provisions of the Lease to
the date upon which such payment is made such interest to be compounded with
rests at the usual quarter days

1.14         Interest
Rate

3% p.a. above the base lending rate from time to time
of The Royal Bank of Scotland plc (or of such other clearing bank in the United
Kingdom as the Landlord may give notice in writing from time to time)

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1.15         Lease

This lease as from time to time varied or supplemented
whether by deed, licence or otherwise

1.16         Party

The Landlord or the Tenant or the Guarantor (if any)
as the case may be

1.17         Permitted
User

Any use within class B1(c); B2 or B8 of the Schedule
to the Town & Country Planning (Use Classes) Order 1987 (to which Clause
2.6 shall not apply)

1.18         Plan

A plan annexed to the Lease

1.19         Planning
Acts

The Town and Country Planning Acts 1971 and 1990 and
all subsequent statutes containing provisions relating to town and country
planning when from time to time in force and all other statutes statutory
instruments regulations and orders included by virtue of Clause 2.6.

1.20         Possession
Date

Means
the date of the Lease

1.21         Premises

All those premises situate at Stoke Park Tower Lane
Eastleigh Hampshire as the same are registered under title number: HP256363
which said premises are shown edged red on  
the Plan No.1 and all and any part of such property and any additions
thereto including fixtures and fittings whenever fixed except those fixed by
the Tenant which are generally regarded as Tenant’s or trade fixtures but
excluding the ground, soil air and water within the ground beneath and
surrounding  the foundations  sub structure and hard standing of the
Premises

1.22         Release

Means any release, spillage, emission, leading,
pumping, injection, deposit, disposal, discharge, leeching or migration into
the Environment or into or out of any property including the movement of
Hazardous Material through the Environment

1.23         Remedial
Action

Means
all actions required to:-

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(i)                                     clean
up, remove, treat, or in any other way adjust or manage Hazardous Material in
the Environment

(ii)                                  prevent
the Release of Hazardous Material so that it does not migrate or endanger or
threaten to endanger public health or welfare or the Environment

(iii)                               perform
pre-remedial studies and investigations and post-remedial monitoring and care

1.24         Rent

A peppercorn on and from
the Possession Date to and including the 7th day of February 2007 (6 months)
and thereafter increasing to £547,046.50p a year or such other amount as is from
time to time agreed or determined pursuant to Part Six of the Lease or
otherwise and by way of further or additional rent all amounts payable by the
Tenant in respect of Value Added Tax calculated and payable in accordance with
the provisions of clause 6.2 hereof

1.25         Review
Date

 Means the   8th    
day of   August  2011

1.26         Schedule

A schedule to the Lease

1.27         Term

The Agreed Term and any continuation or extension of
it whether by agreement, operation of law or otherwise

1.28         VAT

Value Added Tax or other tax of a similar nature (and
unless otherwise expressly stated all references to Rent or other monies
payable by the Tenant are exclusive of any VAT charged or chargeable thereon)

2.             INTERPRETATION

The provisions of
the Lease shall unless the context otherwise requires be construed as follows:-

2.1           Obligations and liabilities of a
Party comprising more than one person are obligations and liabilities of such
persons jointly and severally

2.2           Words importing one gender include
all other genders

2.3           The singular includes the plural and
vice versa

2.4           A covenant by the Tenant not to do
something shall be construed as including a covenant not to permit or knowingly
to suffer it to be done by a third party

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2.5           A consent or approval to be given by
the Landlord is not effective for the purposes of the Lease unless it is in
writing and signed by or on behalf of the Landlord

2.6           Reference to a statute includes any
amendment modification extension consolidation or re-enactment of it and any
statutory instrument regulation or order made under it which is for the time
being in force

2.7           Headings to Clauses Schedules or
parts of the Lease do not affect the interpretation or construction of the
Lease

2.8           Unless the context otherwise requires
where in the Lease there is reference to the consequences of the Tenant’s acts
omissions and defaults all references to “the Tenant” include references to any
underlessee of the Tenant and to anyone at the Premises with the express or
implied authority of the Tenant or its underlessees

2.9           The Lease is to be construed and
interpreted as incorporating any variation addition or qualification which is
expressed to relate to it contained in any deed made between the Landlord and
the Tenant whether or not any person who is the Guarantor is a party and
including but not limited to all licences granted by the Landlord to the Tenant
but not so as to impose upon any personal liability under the Lease which would
be precluded by s.18 of the Landlord and Tenant (Covenants) Act 1995 (“the 1995
Act”)

2.10         Wherever and to the extent that any
provision of the Lease would or might contravene the provisions of s.25 of the
1995 Act then:-

2.10.1      such provision is to take effect only in
so far as it may do so without contravening s.25 of the 1995 Act and

2.10.2      where such provision is incapable of
having any effect without contravening s.25 of the 1995 Act the Lease is to be
construed and interpreted as if such provision were deleted and

2.10.3      the legality validity and enforceability
of any of the remaining provisions of the Lease is not in any way to be
affected or impaired as a result

PART
TWO : DEMISE

3.             DEMISE

The Landlord
demises the Premises to the Tenant subject to and with the benefit of Lease
dated 15 June 1978 and made between Rowntree Mackintosh Limited (1) and the
Southern Electricity Board (2) as varied by a Deed dated 12 March 1979 made
between the same parties relating to the electricity sub-station site forming
part of the Premises.

3.1           Together with the rights set out in
the First Schedule

3.2           Except and reserving to the Landlord
as set out in the Second Schedule

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3.3           To hold the same to the Tenant for
the Term

3.4           Subject to all rights, easements,
restrictions, covenants and liabilities affecting the Premises

3.5           Yielding and paying to the Landlord
the Rent without any deduction (save as required by law) by equal quarterly
payments in advance on the usual quarter days in every year and proportionately
for any period of less than a year 

PART
THREE : TENANTS COVENANTS

4.             INTRODUCTION

With effect from
and including the Possession Date the Tenant covenants with the Landlord as set
out in this part of the Lease

5.             RENT

The Tenant shall
pay the Rent as provided in Clause 1.18 hereof without deduction or set off
(save as required by law) by way of bank standing order (unless otherwise
requested by the Landlord in writing)

6.             OUTGOINGS

6.1           The Tenant shall pay and indemnify
the Landlord against all rates, taxes, assessments, impositions, duties,
charges and outgoings of an annual or regularly recurring nature now or at any
time during the Term payable by the owner or occupier of or otherwise due in
respect of the Premises (except any tax assessed on the Landlord or any
Superior Landlord in respect of its ownership of rental income from or any dealing
with its reversionary interest)

6.2           Where this Lease requires the Tenant
to pay repay reimburse or provide any amount or other consideration in respect
of a Value Added Tax supply to the Tenant by the Landlord such amount or other
consideration will be deemed to be exclusive of any Value Added Tax chargeable
on that Value Added Tax supply (whether by virtue of a Value Added Tax Election
made or to be made otherwise) and the Tenant covenants to pay to the Landlord a
sum equivalent to that Value Added Tax and keep the Landlord indemnified
against all such Value Added Tax save in so far as the Landlord is unable to
recover the same as an input credit so long as the Landlord provides the Tenant
with a receipted VAT invoice addressed to the Tenant

6.3           If the Landlord has an option whether
or not to charge VAT the Tenant hereby irrevocably consents to the Landlord
freely exercising that option to the extent from time to time permitted by law

6.4           The Tenant shall pay and indemnify
the Landlord against all charges for electricity gas and other services
consumed at the Premises

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6.5           To pay a reasonable proportion (to be
settled in the event of dispute by the Landlord’s Surveyor acting fairly and
reasonably whose decision shall be binding) of the expense (including
compensation for damage and disturbance) 
of repairing maintaining cleansing and lighting (where necessary) all
roadways passageways paths and yards and all party walls or fences and all
gutters pipes sewers drains watercourses channels conduits ducts flues wires
cables or other easements or appurtenances used or enjoyed or to be used or
enjoyed or capable of being used or enjoyed in common by the occupier or owner
of the Premises and the occupier or owner of any adjoining or neighbouring
premises such proportion to be paid within 21 days of written demand and in
default to be recoverable by the Landlord as rent arrear

7.             REPAIR AND DECORATION

The Tenant shall
(subject to the provisions relating to insurance set out in part four of the
Lease);

7.1           keep the Premises at all times in
good and substantial repair and condition

7.2           clean the Premises regularly and
maintain them at all times in a clean and tidy condition

7.3           clean all windows regularly at least
once a month

7.4           decorate and keep the Premises decorated
to a good standard (in any event not less frequently than once in any period of
three years for the exterior and once in any period of five years for the
interior and also in the last year of the Term) PROVIDED in any event that the Tenant shall not be obliged to
so decorate the Premises either externally or internally more than once in any
consecutive period of twelve months

7.5           within three months (or sooner in
emergency) of receipt of notice from the Landlord of any breach of this Clause
carry out the repair cleaning or decoration required to remedy the breach and
if the Tenant fails diligently to commence and thereafter comply with such
notice and the Landlord enters the Premises to carry out such work the Tenant
shall within 21 days of written demand pay to the Landlord all reasonable and
proper costs which the Landlord so incurs in each case damage by any of the
Insured Risks (as defined in Clause 21.1 hereof) excepted save and to the
extent that the insurance monies are withheld by reason of any act or default
of the Tenant or any person under the Tenant’s control

8.             ALTERATIONS

8.1           The Tenant shall make no addition or
alteration to the Premises unless permitted by this Clause

8.2           The Tenant may with the previous
written consent of the Landlord (which consent shall not unreasonably withheld
or delayed) carry out any Tenant’s Alteration or addition in a manner
consistent with the provisions of the Lease

8.3           “Tenant’s Alteration” means:

8.3.1                        an internal non
structural alteration or addition which does not affect any load bearing part
of the Premises

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8.3.2                        the installation removal
or replacement of or an alteration to a Conduit

8.3.3                        to affix an aerial
and/or satellite dish and/or air conditioning condenser units on such part of
the roof of the Premises as the Tenant shall reasonable require

8.3.4                        any alterations
necessary to enable the Tenant to comply with any statutory requirement
relating to the Premises

8.3.5                        any electrical works to
the electrical system in the Premises (which shall include the installation of
video cameras and other CCTV equipment) subject to all such works being carried
out in accordance with the terms and conditions of the Institute of Electrical
Engineers relating to electrical works

8.3.6                        the creation of holes or
apertures in the cladding and external parts of the Premises (but excluding any
parts of the steel frame structure thereof) for the purposes of running any
cables or conduits appropriate to the equipment serving the Premises or forming
part of any of the alterations hereinbefore permitted

8.4           The Landlord may before giving
consent require:

8.4.1                        the submission to the
Landlord of drawings and specifications (in triplicate) showing the proposed
Tenant’s Alteration;

8.4.2                        the execution of such
licence to carry out the alteration containing an obligation to reinstate the
Premises at the Determination of the Term in such form as the Landlord may
reasonably require; and

8.5                           The Landlord’s
consent shall not be required in respect of:

8.5.1                        The erection or removal
of non-structural demountable partitions

8.5.2                        The installation removal
or alterations of counters shelving or other removable equipment (which for the
avoidance of doubt includes freestanding videos or television screens)

9.             SIGNS

The Tenant shall
not:

9.1           fix anything outside the Premises nor
to the exterior or interior of any doors or windows, unless permitted by this
Clause

9.2           display any flashing or moving sign
which is visible from outside the Premises

9.3           display any notice, sign, poster or
advertisement on the exterior of the Premises except to indicate the name and
business of the Tenant in a manner first approved by the Landlord (such
approval not to be unreasonably withheld or delayed) provided the no consent
shall be required to the Tenant affixing directional signage for deliveries and
parking, marking parking spaces including all necessary disabled markings as
well as any other signage which the Tenant may be required to affix to the
Premises (whether internally or 

 12
 

 

externally)
pursuant to any statutory enactment

10.          USER

10.1         The Tenant shall not use the Premises
otherwise than for the Permitted User

10.2         The Tenant shall not use the Premises
in a manner which may be or become or cause a nuisance, annoyance, disturbance,
inconvenience, injury or damage to the Landlord or any other person

10.3         The Tenant shall not reside or sleep on
the Premises nor use them for any sale by auction or for any dangerous, noisy
or offensive purpose or for any illegal or immoral activity

10.4         The Tenant shall not overload the structure
of the Premises

10.5         The Tenant shall not make use of
Conduits beyond their capacity nor in a manner which may block or damage them
and in particular will not stop up or obstruct or permit oil grease or other
deleterious matter or substance to enter any drain or sewer

11.          ALIENATION

11.1         Unless otherwise permitted under this
Clause the Tenant shall not:

11.1.1                      hold the Premises
expressly or impliedly on trust for another person

11.1.2                      part with possession or
occupation of the Premises

11.1.3                      share possession or
occupation of the Premises with another person

11.1.4                      allow anyone other than
the Tenant any lawful subtenant or their respective officers and employees to
occupy the Premises

Assignment:

11.2                           The
Tenant shall not assign a part (as distinct from the whole) of the Premises

11.3                           The
Tenant shall not assign the whole of the Premises without first:

11.3.1                      obtaining the prior
consent of the Landlord (which will not be unreasonably withheld or delayed).

11.3.2                      satisfying the
circumstances specified for the purposes of section 19(1A) of the Landlord and
Tenant Act 1927 and set out in clause 11.4.1 below; and

11.3.3                      complying with the
conditions specified for the purposes of section 19(1A) of the Landlord and
Tenant Act 1927 and set out in clause 11.4.2 below.

11.4.1                      The circumstances referred
to in clause 11.3.2 are that:-

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11.4.1.1                                   all sums due
from the Tenant under the Lease have been paid at the date of the grant of the
licence to assign;

11.4.1.2                                   in the
Landlord’s reasonable opinion there are at the date of the application for the
licence to assign no material outstanding breaches of any tenant covenant under
the Lease or any personal covenants undertaken by the Tenant;

11.4.1.3                                   the assignee
is a respectable and responsible person or persons who in the reasonable
opinion of the Landlord has the ability to meet the obligations of the Lease;
and

11.4.1.4                                   in the
reasonable opinion of the Landlord the proposed assignee would not reduce the
value (when valued the day after the assignment would have taken place) of the
interest of the Landlord in the Premises;

11.4.2      The conditions referred to in clause
11.3.3 are that:-

11.4.2.1                                   upon or
before any assignment and before giving occupation to the assignee the Tenant
shall covenant by way of indemnity and guarantee with the Landlord in the terms
set out in clause 44 of the Lease;

11.4.2.2                                   if so
reasonably required by the Landlord the assignee shall upon or before any
assignment and before taking occupation obtain guarantors reasonably acceptable
to the Landlord who shall covenant by way of indemnity and guarantee (if more
than one jointly and severally) with the Landlord Clause 42.2 in the terms set
out in Clause 43 of the Lease; and

11.4.2.3                                   the written
licence to assign contains a condition that if at any time prior to the
assignment the circumstances (or any of them) specified in clause 11.4.1.1 and
11.4.1.2 cease to exist the Landlord may revoke the licence by written notice
to the Tenant; and

11.4.2.4                                   if so
reasonably required by the Landlord the assignee shall procure a bank guarantee
or complete a Rent Deposit Deed in a form acceptable to the Landlord for such
reasonable sum in the circumstances as the Landlord may specify; and

11.4.2.5                                   the written
consent of any mortgagee or chargee of the Landlord or any superior Landlord
(if applicable) is obtained; and

11.5                           In this
Clause 11 and in Part Ten of the Lease the expression “tenant covenants” has
the meaning ascribed to it by section 28 of the Act 1995

Underlettings:

11.6                           The
Tenant shall not underlet a part (as distinct from the whole) of the Premises
other than by way of a “permitted part” a permitted part for the purposes of
this clause being either an underletting of the whole the area coloured in
green or the whole of this area coloured in blue on Plan No. 2 but not both
areas

 14
 

 

 

11.7         The Tenant shall not underlet the whole
or a permitted part of the Premises

11.7.1                      unless the proposed
undertenant has first covenanted by deed with the Landlord in such form as the
Landlord may reasonably require that with effect from the date of the
underlease and during the period whilst the undertenant remains bound by the
tenant covenants of the underlease the undertenant will observe and perform all
the provisions of the underlease to be observed and performed by the undertenant;
nor

11.7.2                      (where the proposed
undertenant is a corporate body and the Landlord reasonably so requires)
without first procuring a covenant by deed with the Landlord from two
individuals who are or a company which is acceptable to the Landlord as surety
for the undertenant; nor

11.7.3                      except by way of a “permitted
underlease”; nor

11.7.4                      without the prior written
consent of the Landlord or of any mortgagee or chargee of the Landlord
(which  consent in each case shall not be
unreasonably withheld) or of any mortgagee or chargee of the Landlord

11.8         A “permitted underlease” is an
underlease which:

11.8.1                      is granted without any
fine or premium;

11.8.2                      reserves a rent not less
than the rent which the Tenant ought reasonably to obtain in the open market at
the relevant time upon the grant of such underlease;

11.8.3                      incorporates provisions
for the review of rent at the same times and on the same basis as in the Lease;

11.8.4                      is (so far as is
consistent with an underlease) in a form substantially the same as the Lease
except that further subletting shall be prohibited and

11.8.5                      is excluded from the
operation of sections 24 to 28 (inclusive) of the Landlord and Tenant Act 1954

11.9         The Tenant shall enforce and shall not
waive or vary the provisions of an underlease and (if appropriate) shall
operate at the Review Date the rent review provisions contained in such
underlease but shall not agree the rent upon such a review without the prior
approval of the Landlord which approval shall not be unreasonably withheld or
delayed

Associated Companies:

11.10       The Tenant may share occupation of the
Premises in a manner which does not transfer or create a legal estate with a
Company that is a member of the same group (as defined by Section 42 of the
Landlord and Tenant Act 1954):

11.10.1                    for so long as both the
Tenant and that Company remain members of the same group; and

 15
 

 

 

11.10.2                    provided that within 21 days
of such sharing the Landlord receives notice of the company sharing occupation
and the address of its registered office 

Notification:

11.11       The Tenant shall upon request from time
to time provide within one month  all
information which the Landlord may reasonably request  under Section 40 (1)(a) and (b) of the Landlord
and Tenant Act 1954

11.12       The Tenant shall within 28 days of the
assignment, charge or underlease of or of any other devolution of the Lease or
of any interest deriving from the Lease give notice thereof to the Landlord’s
solicitor, produce for registration a certified copy of the document effecting
or evidencing such devolution and pay a registration fee of £55.00 (plus VAT)

12.          LEGAL
OBLIGATIONS

12.1         In this clause “Legal Obligation” means
any present or future statute, statutory instrument or byelaw, or any present
or future regulation, order, notice, direction, code of practice or requirement
of any Authority insofar as it relates to the Premises or to their occupation
or use but irrespective of the person on whom such obligation is imposed

12.2         If the Tenant receives from an
Authority formal notice of a Legal Obligation it shall within 14 days produce a
copy to the Landlord and if such notice is in the Landlord’s reasonable opinion
contrary to the interests of the Landlord the Tenant shall make (at the cost of
the Landlord) such objection or representation against such Legal Obligation as
the Landlord may reasonably require but otherwise shall at its own expense
observe and comply with all Legal Obligations to the extent that they solely
relate to the Tenant’s occupation or use of the Premises

12.3         Where a Legal Obligation requires the
carrying out of works the Tenant shall so far as such Legal Obligation permits
also comply with the provisions of the Lease in relation to such works

12.4         The Tenant shall not do or omit to do
in relation to the Premises or their use or occupation anything by reason of
which the Landlord may incur any liability whether for costs, a penalty,
damages, compensation or otherwise

12.5         The Tenant shall not cause or knowingly
or where the Tenant ought reasonably to know permit a nuisance on or in
relation to the Premises and if a nuisance occurs shall forthwith take all
necessary action to abate it

12.6         Without prejudice to the generality of
this Clause the Tenant shall in particular observe and comply with all Legal
Obligations of any appropriate Authority relating to health and safety, means
of escape in case of fire, and the protection and preservation of life and
property carrying out such works of modification and improvement to the
Premises as may from time to time be required by such Legal Obligations

12.7         The Tenant shall carry out any works to
the Premises not only in accordance with all Legal Obligations but also with
good quality materials and in a good and workmanlike

 16
 

 

manner to the
reasonable satisfaction of the Landlord

12.8         The Tenant shall perform and observe
all covenants and other provisions contained or referred to in any documents
listed in the Third Schedule insofar as they relate to or affect the Premises
or their use or occupation

13.          PLANNING

13.1.        The provisions of this Clause supplement
the general obligations imposed by Clause 12

13.2         The Tenant shall not commit a breach of
planning control (as defined in section 172(3) of the Town and Country Planning
Act 1990) in relation to the Premises

13.3         The Tenant shall observe and comply
with the Planning Acts in relation to the Premises

13.4         The Tenant shall make no application
under the Planning Acts (whether for planning permission or otherwise) in
relation to the Premises without the Landlord’s prior consent (which consent
may be granted subject to such conditions as having regard to all the
circumstances are reasonable but which consent shall not be unreasonably
withheld or delayed) and then only in a form previously approved by the
Landlord (which approval shall not be unreasonably withheld or delayed)

13.5         The Tenant shall supply to the Landlord
promptly and without further request copies of all applications, notices,
decisions and other formal communications under the Planning Acts which relate
in any way to the Premises and where such communications relate only to the
Premises or to an application made by the Tenant then the Tenant shall at its
own expense take such action to protect the Landlord’s interests as the
Landlord may reasonably require

13.6         The Tenant shall not implement a
planning permission until the Landlord has given its consent (such consent not
to be unreasonably withheld or delayed where planning permission is granted
pursuant to an application approved by the Landlord or where the Landlord’s interests
are not likely to be prejudiced)

13.7         Where a planning permission issued to
the Tenant imposes conditions the Tenant shall unless the Landlord shall
otherwise direct carry out prior to the Determination of the Term all works
which the planning conditions may require and the Landlord may before giving
consent to its implementation reasonably require the Tenant to undertake that
if it implements the planning permission it will carry out prior to the
Determination of the Term all works which the planning conditions may at any
time require

13.8         Where on the Tenant’s application a
planning permission is refused or granted subject to conditions and the
Landlord produces Counsel’s opinion that the Landlord’s interests are thereby
materially prejudiced and that a planning appeal is justified the Tenant shall
prosecute such an appeal at the joint expense of the Landlord and the Tenant

14.          DEFECTIVE
PREMISES

The
Tenant shall promptly give notice to the Landlord of any defect in the Premises
of which it is or should be aware in respect of which the Landlord may have a
liability or duty of care under the 

 17
 

 

Lease, the Defective
Premises Act 1972 or otherwise

15.          ENCROACHMENTS

15.1         The Tenant shall not stop up, darken or
obstruct any window or light at the Premises without the consent of the
Landlord such consent not to be unreasonably withheld or delayed

15.2         The Tenant shall not knowingly permit
and shall take all reasonable measures to prevent any new window, light,
opening, doorway, pathway, Conduit or other encroachment or easement being made
or acquired in, against, out of, or upon the Premises

16.          LANDLORD’S
RIGHTS

16.1         The Tenant shall permit the Landlord,
any superior landlord, and persons authorised by any of them to exercise any
right excepted and reserved by the Second Schedule and in addition to the right
to enter the Premises at all reasonable times after not less than four days’
prior notice in writing (except in emergency when as much notice as is
reasonably practicable shall be given) with tools and equipment (if
appropriate):

16.1.1                      to inspect the Premises
view their state and condition or to make surveys or to show the Premises to
prospective tenants or purchasers (wherever reasonably possible not during peak
business hours) of for any other reasonable and proper purpose under the Lease

16.1.2                      to execute works following
the Tenant’s failure to comply with a notice served under Clause 7.5. (without
prejudice to any other remedy available to the Landlord) and also pursuant to
Clause 12.6.

16.1.3                      to take schedules or
inventories

16.1.4                      to inspect or execute
works or repair, maintenance, decoration, construction, alteration, improvement
or otherwise to other property the person entering causing as little damage and
disturbance as is reasonably practicable and making good as soon as practicable
any physical damage to the Premises and the Tenant’s fixtures and fittings
therein so caused to the Tenant’s reasonable satisfaction and provided only
that such works cannot otherwise be economically carried out

16.2         The Tenant will permit the affixation
to suitable parts of the Premises of reletting notices during the six months
preceding the Determination of the Term and of notices relating to the disposal
or acquisition of any reversionary interest at any time PROVIDED ALWAYS  that such notice shall not obstruct or
interfere with the access of light to the windows of or obstruct or interfere
with signs on the Premises and that no such re-letting notices shall be so
affixed to the Premises in the event that the Tenant has given valid notice to
the Landlord that it does intend to renew the Lease in accordance with the
procedures required under the Landlord and Tenant Act 1954 Part II

17.          COSTS

The
Tenant shall pay and indemnify the Landlord against all reasonable and proper
liability, all

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reasonable
and proper costs, fees, charges, disbursements and expenses connected with,
incidental to, consequent upon and (where appropriate) in contemplation of:

17.1         an application for the Landlord’s
consent (whether or not the consent is given or the application is withdrawn);

17.2         a schedule of dilapidations during or
within five months after the Determination of the Term;

17.3         notice pursuant to a provision of the
Lease or under Sections 146 or 147 of the Law of Property Act 1925 and
proceedings under those sections even if forfeiture is avoided otherwise than
by relief granted by the court;

17.4         the recovery of arrears of Rent or
other sums payable under the Lease;

17.5         the enforcement of any covenant or
obligations of the Tenant under the Lease;

17.6         abating a nuisance which the Tenant
fails to abate

18.          INTEREST

Without
prejudice to any other right or remedy of the Landlord the Tenant shall pay to
the Landlord Interest on any Rent and VAT (if applicable) which is not paid to
the Landlord  within 7 days of the date
it is due (whether payment is formally demanded or not) and Interest on any
other sum which is not paid to the Landlord by the later of fourteen days from
the date it is due and the date fourteen days after a written demand for
payment is made in each case for the avoidance of doubt such interest to be
calculated from the date upon which the payment fell due

19.          INDEMNITY

The
Tenant is responsible for and shall indemnify and keep the Landlord indemnified
against all claims, demands, actions, or proceedings made or brought and all
losses, damages, costs, expenses and liabilities incurred, suffered or arising
directly or indirectly in respect of or otherwise connected with:

19.1         the use and occupation of the Premises;

19.2         the state of repair and condition of
the Premises (except to the extent (if any) caused by any act omission or
default of the Landlord);

19.3         any act default omission or negligence
of the Tenant or of any other person at the Premises with the express or implied
authority of the Tenant or of anyone deriving title through the Tenant; and

19.4         any breach of any covenant or other
provision of the Lease to be observed and performed by the Tenant save in so
far as the same are covered by the Insured Risks unless the Tenant shall be
liable under the provisions of clause 24.5 hereof

20.          YIELDING
UP

Upon the Determination of the Term the Tenant shall:

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20.1                         remove all signs and
tenant’s fixtures and fittings and furniture and effects making good any damage
to the Premises so caused; and

20.2                         yield up the Premises
in a state and condition consistent with due compliance by the Tenant with its
covenants and obligations under the Lease

PART FOUR : INSURANCE

21.          DEFINITIONS

In
this part of the Lease:

21.1         “Insured Risks” means risk of loss or
damage by fire, storm, tempest, flood, lightning, explosion, aircraft, articles
dropped from aircraft, riot, civil commotion, malicious damage (including acts
of terrorism, impact, bursting and overflowing of pipes, of tanks or of other apparatus
landslip subsidence or heave, and by such other normal perils against which the
Landlord may reasonably insure and notify to the Tenant in writing

21.2         “the Insurance Policies” means the
following insurance policies effected in such insurance office of repute or
with such underwriters and through such agency as the Landlord may reasonably
decide and subject to such reasonable excesses, exclusions, limitations and
conditions as may be usual in the United Kingdom Insurance market and the
insurer may require or the Landlord may properly negotiate

21.2.1                      insurance of the Premises
(but specifically excluding tenant’s and trade fixtures and fittings) against
the Insured Risks for a sum sufficient to cover the cost of reinstatement
assuming total loss including all applicable VAT and ancillary costs (such as
site clearance and professional fees) and appropriate allowance for inflation

21.2.2                      a “Loss of Rent Policy”
being insurance against the loss of all Rent and applicable VAT for a period of
three years and for such sum as takes into account any likely rent review
during that period having regard to all proper and reasonable relevant
circumstances

21.2.3                      third party and public
liability at the Premises for such sum as the Landlord may from time to time consider
prudent

21.2.4                      such matters in relation
to the Premises not otherwise specifically mentioned in this part of the Lease
as the Landlord (acting reasonably) may from time to time consider prudent

22.          LANDLORD’S COVENANTS

The
Landlord covenants with the Tenant that from and including the Possession Date
until the Determination of the Term:

22.1         the Landlord will effect and maintain
the Insurance Policies and will ensure a note of the Tenant’s interest is
endorsed on them (but only so far as they are not vitiated by any act, neglect
or default of the Tenant, anyone deriving Title through the Tenant or anyone at

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the Premises with
express or implied authority of either of them)

22.2         the Landlord will upon request from
time to time produce to the Tenant a copy or full details of the Insurance
Policies and evidence that they are in force

22.3         the Landlord will notify the Tenant of
any change either in the insurance office or in the provisions of the Insurance
Policies from time to time which is material to the Tenant

22.4         in the event of any loss or damage
against which the Landlord has covenanted to effect an insurance policy the
Landlord will apply all monies received from the insurer in relation to
insurance of the Premises pursuant to Clause 21.2.1 above and from the Tenant
pursuant to Clause 24 in carrying out works of reinstatement or otherwise
making good such loss or damage as soon as practicable and the Landlord shall
make good any deficiency in the insurance monies received out of its own monies
save to the extent that such deficiency occurs due to the payment of the policy
monies being refused by reason or as a result of some act or default on the
part of or suffered by the Tenant or anyone in the Tenant’s control

22.5         (unless and save to the extent that the
policy of insurance has been invalidated and the policy monies have been
properly withheld by reason of any act or default of the Tenant and Tenant has
not paid to the Landlord the policy monies lost hereby) forthwith to use its
reasonable endeavours to obtain any labour permits planning permissions by-law
and other approvals which are necessary to enable the Premises to be rebuilt or
reinstated

22.6         the Landlord shall carry out all works
of reinstatement or replacement in a good and workmanlike manner in accordance
with good building practice and using good sound and suitable materials and in
accordance with all necessary consents and the requirements of statute bye-law
any local act or the fire officer

22.7         if the Premises are wholly or
substantially damaged or destroyed by any of the Insured Risks the Landlord
shall use all reasonable endeavours to obtain deeds of collateral warranty from
the contractor any nominated sub-contractor or sub-contractor having a design
function the architect the structural engineer and the mechanical and
electrical services engineer engaged to carry out the works of reinstatement or
replacement or their design or supervision such collateral warranty deeds to be
in a form approved by the Tenant (such approval not to be unreasonably withheld
or delayed)

22.8         if it shall not be possible to rebuild
or reinstate the Premises in accordance with clauses 22.4 and 22.5 exactly as
they were prior to the date of damage or destruction the Landlord shall rebuild
or reinstate the same making any necessary changes provided that the use and
enjoyment of the Premises and the ability of the Tenant and any lawful occupier
to use the Premises beneficially for the use permitted by the Lease shall not
thereby be materially and adversely affected and the prior written consent of
the Tenant (such consent not to be unreasonably withheld or delayed) shall be
obtained by the Landlord prior to any such changes being made

22.9         if any of the said necessary consents
contain a condition which was not in force immediately prior to the date of
damage or destruction by any of the Insured Risks and which materially and
adversely affects the ability of the Tenant or any lawful occupier to use the
Premises beneficially for the use permitted by the Lease or which makes any

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consent personal to the
Tenant or any other named occupier or class of persons or which makes the
consent temporary after implementation the Tenant shall be entitled by giving
written notice to the Landlord not later than 21 days after receiving a copy of
the relevant consent to determine the Lease whereupon the Lease shall cease and
be at an end but without prejudice to any claim in respect of any antecedent
breach of the terms of the Lease by either Party

22.10       if the insurer has under the terms of the
Insurance Policies the option to effect reinstatement rather than to pay the
insurance monies to the Landlord and exercises such option the Landlord shall
use all reasonable endeavours (which expression shall connote (inter alias) the
taking of any requisite proceedings where counsel of not less than ten years’
call at the English bar specialising in insurance matters shall have advised
that on the balance of probabilities such proceedings would succeed) to procure
that the insurer carries out such reinstatement without avoidable delay and
shall not agree to accept anything less than full repair or restoration without
the prior written consent of the Tenant (such consent not to be unreasonably
withheld or delayed)

22.11       ensure that nothing is done or omitted by
itself or its servants or agents which causes the Insurance Policies to be
rendered void or voidable

22.12       notify the Tenant in writing of any
proposed substantive change in the ambit quantum or terms of cover from time to
time and shall supply (without the need of any request from the Tenant) a copy
of the new form of policy which becomes applicable; and

22.13       ensure that the Insurance Policies
effected by the Landlord hereunder contain a non-invalidation clause to the
effect that they shall not be avoided by any act or omission or by any
alteration whereby the risk of damage or destruction is increased unknown to or
beyond the control of the Landlord and a provision whereby the insurers agree
to waive all rights of subrogation to which the insurers might become
subrogated against the Tenant (unless the loss has been occasioned by or
contributed to by the fraudulent or criminal or malicious act of the Tenant);
and

22.14       procure that the interest of the Tenant
or any undertenant is noted on the policy of insurance either specifically or
generically

23.          ABATEMENT
OF RENT

23.1         If by reason of destruction or damage
by an Insured Risk the Premises are wholly or partially unfit for occupation
and use or inaccessible and the Insurance Policies have not been vitiated or
any payment thereunder refused by reason of some act, neglect or default of the
Tenant, someone deriving title through the Tenant, or some person with the
express or implied authority of either of them then the Rent or a fair
proportion of the Rent according to the nature and extent of the damage
sustained shall cease to be payable until the Premises are again fit for
occupation and use provided that for the avoidance of doubt if the Tenant shall
have paid any sum in advance in respect of a period following the date of
damage or destruction the Landlord shall on whichever shall be the earlier of
the end of the period in respect of which the sum was paid and the date which
the Premises are rendered fit for beneficial occupation or use and accessible
as aforesaid refund the same or a due proportion thereof according to the
length of time that the Premises are unfit for beneficial occupation and uses
or inaccessible as aforesaid

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23.2         A dispute as to the amount or duration
of such cesser of Rent shall be referred to arbitration under the Arbitration
Act 1996 the arbitrator to be appointed (failing agreement between the parties)
by the President of the Royal Institution of Chartered Surveyors upon the
application of either Landlord or the Tenant

23.3         In the event of destruction or damage
to the Premises or any part of them resulting from any Insured Risk and the
Premises not having been rebuilt or reinstated and made fit for occupation and
use by a date which is 2 years and 9 months after the date of such destruction
or damage then unless the Insurance Policies shall be void by reason of any act
or default of the Tenant or its agents or visitors then either party may
determine the Lease by giving to the other party not less than three months written
notice of its wish to determine (such notice to be given not to expire earlier
than the third anniversary of such destruction or damage) and on the expiration
of such notice the Lease and the Term shall immediately cease and determine but
without prejudice to any antecedent right of action or remedy in respect of any
breach of covenant or claim by either party against the other arising under the
Lease

23.4         In the event of either party exercising
its right to determine the Lease under clause 23.3 above the whole or any
unexpended part of the Insurance Policies monies shall belong to the Landlord
absolutely

24.          TENANT’S
COVENANTS

The
Tenant covenants with the Landlord that from and including the Possession Date:

24.1         the Tenant will pay to the Landlord within
14 days of written demand all premiums valuations or assessments incurred by
the Landlord in effecting and maintaining the Insurance Policies

24.2         the Tenant will comply with the
insurers requirements in relation to the Premises and will not do or omit to do
anything which may make any Insurance policy void or voidable in whole or in
part or without first notifying the Landlord in writing at least 28 days prior
thereto increase the premium for such policy within 14 days of written demand
paying to the Landlord the whole of such increase

24.3         the Tenant will maintain such fire
fighting equipment on the Premises as the insurer or an Authority may
reasonably require

24.4         the Tenant will forthwith notify the
Landlord of any loss, damage or destruction of or relating to the Premises and
of any other event which comes to the attention of the Tenant and which may
affect or give rise to a claim under the Insurance Policies

24.5         the Tenant will within 14 days of
written demand pay to the Landlord an amount equal to all monies which the
Landlord is unable to recover under an Insurance Policies by reason of:

24.5.1                      an act, default or
omission of the Tenant

24.5.2                      the Tenant’s failure to
comply with a condition of the Insurance Policies of which the Tenant has been
made aware in writing or by receiving a copy of the condition

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24.6         the Tenant shall not effect any
insurance policy equivalent to any of the Insurance Policies but if in breach
of this covenant it does so it shall pay to the Landlord all monies received under
such policy

PART FIVE : LANDLORD’S COVENANTS

25.          COVENANTS

Subject
to the Tenant paying the rent and other sums due under the Lease and complying
with its covenants the Landlord covenants with the Tenant from and including
the Possession Date until the Determination of the Term to permit the
Tenant  to peaceably and quietly to hold
and enjoy the Premises without any interruption or disturbance from or by the
Landlord or any person claiming under or in trust for the Landlord or by title
paramount

PART SIX : RENT REVIEW 

26.          DEFINITIONS AND INTERPRETATION

In
this part of the Lease

26.1       “Review
Period” means the period commencing on the 
Review Date and expiring on the Determination of the Term

26.2         “Restrictions” means restrictions
imposed by an Authority which operate to impose any limitation in relation to
the review of rent or the collection of any increase in rent

26.3         “Open Market Rent” is as defined in
Clause 28

26.4         Time is not of the essence except where
specified

27.          REVIEW
OF RENT

With
effect from the Review Date the Rent shall be the amount payable (but for any
abatement of Rent) immediately prior to the Review Date or (if greater than)
the Open Market Rent as agreed or determined under this part of the Lease

28.          OPEN
MARKET RENT

“Open
Market Rent” means the best yearly rent at which the Premises might reasonably
be expected to be let as a whole at the Review Date by a willing landlord to a
willing tenant

28.1         assuming that:

28.1.1                      the Premises are available
to let as a whole or let in parts as permitted by  the Lease with vacant possession on the open
market without a fine or premium under a lease for a term equal to the residue
of the Agreed Term and otherwise on the same terms as the Lease (except as to
the amount of the Rent)

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28.1.2                      the covenants and
provisions of the Lease on the part of the Landlord and the Tenant have been
fully performed and observed and the Landlord has not knowingly breached its
covenants hereunder

28.1.3                      the Premises (or the
relevant parts thereof) may only be used as permitted by this Lease

28.1.4                      if the Premises (or the
relevant parts thereof) have been destroyed or damaged they have been fully
restored

28.1.5                      the Premises are ready to
be fitted out and equipped to the requirements of a willing tenant and are
otherwise available for immediate occupation and use in accordance with the
Permitted User

28.1.6                      no works have been carried
out to the Premises (or the relevant parts thereof) (unless by the Landlord)
which has diminished their rental value

28.1.7                      if VAT is charged on Rent
under the Lease every prospective willing tenant would be able to recover such
VAT in full

28.2         but disregarding:

28.2.1                      any effect on rent of the
fact that the Tenant, any undertenant or any of their respective predecessors
in title have been in occupation of the Premises (or the relevant parts
thereof)

28.2.2                      any goodwill attached to
the Premises (or the relevant parts thereof) by reason of the carrying on of
the business of the Tenant, any undertenant or any of their predecessors in
title

28.2.3                      the taxable status of any
Party for the purpose of VAT or any other tax

28.2.4                      any effect on rent of the
Restrictions

28.2.5                      any effect on rent
attributable to any improvement to the Premises carried out during the Term
with the Landlord’s prior written consent before the Review Date and otherwise
than in pursuance of an obligation to the Landlord or its predecessors in title
the extent only that such improvement has been carried out without cost to the
Landlord or its predecessors in title and that such improvement was completed
either during the Term or during any period of occupation prior to the
commencement of the Term arising out of an agreement to grant the Lease

28.2.6                      any rental concession
which might on a new letting with vacant possession be granted to a tenant

29.          PROCEDURE

29.1         The rent shall be reviewed upon the
Review Date

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29.2         The Landlord and Tenant shall endeavour
to agree the Open Market Rent as at the Review Date

29.3         If by the date three months prior to
the Review Date the Landlord and the Tenant shall not have agreed the Open
Market Rent either may by notice to the other require the Open Market Rent as
at the Review Date to be determined by a Chartered Surveyor having at least ten
years’ experience in assessing the rental value of premises similar to the
Premises and acting as a single arbitrator

29.4         If the Landlord and the Tenant do not
agree on the joint appointment of an arbitrator the arbitrator shall be
nominated on the joint application of the Landlord and the Tenant (or if either
of them neglects to concur in such application within 14 days of being
requested so to do then on the sole application of the other) by the President
or other chief officer or acting chief officer for the time being of the Royal
Institution of Chartered Surveyors and the arbitrator so appointed shall
proceed in accordance with the Arbitration Act 1996

29.5         The arbitrator shall within three
months of his appointment or within such extended period as the parties  may agree give to the Landlord and the Tenant
written notice of the amount of the Open Market Rent as determined by him but
if he does not or if for any reason it becomes apparent that he will not be
able to complete his duties in accordance with his  appointment the Landlord and the Tenant may
agree upon or either of them may apply for the appointment of another
arbitrator (which procedure may be repeated as often as necessary) pursuant to
the provisions of this Clause

29.6         The costs of the arbitrator including
those incidental to his appointment shall be borne by the Landlord and the
Tenant in such manner as the arbitrator determines

30.          DELAYED
REVIEW

Where
the Rent payable with effect from the Review Date is not ascertained prior to
the Review Date the Tenant shall:

30.1         with effect from the Review Date pay an
“Interim Rent” at the rate at which Rent was payable (ignoring any abatement)
immediately prior to the Review Date; and

30.2         if the Rent when ascertained exceeds
the Interim Rent then within twenty-one days of the Rent being ascertained pay
to the Landlord an amount equal to the aggregate of the sums by which each
quarterly instalment of Rent would have exceeded each instalment of Interim
Rent had the Rent been ascertained by the Relevant Review Date together with
Interest on each of those sums from the date it would have been due to the date
of payment at a rate 2% below the Interest Rate

31.          RESTRICTIONS

Where
Restrictions are in force at the Review Date the Landlord may (whether or not
Rent has been agreed or determined with effect from that Review Date) give
notice to the Tenant at any time but not later than 28 days (in respect of
which time is of the essence) after such Review Date postponing such Review
Date until such later date (being not later than the Determination of The Term)
as the Landlord may subsequently by not less than three month’s prior notice
specify and

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in
that event the Rent payable immediately prior to the Review Date that is
postponed shall (notwithstanding any review that may have taken place as at
that Review Date) continue to be the Rent payable until increased upon review
at the postponed Review Date

32.          MEMORANDA

Where
Rent is increased with effect from the Review Date the Landlord and Tenant
shall (at their own cost) sign memoranda thereof in such form as the Landlord
may reasonably require for annexation to both the original and counterpart of
the Lease

PART SEVEN : MISCELLANEOUS PROVISIONS

33.          RECOVERY
OF MONEY

In
addition to any other remedy available to the Landlord all moneys due from the
Tenant to the Landlord under the Lease may be recovered as if such moneys were
reserved as Rent

34.          USER

The
Landlord does not warrant that the Premises may lawfully be used for any
purpose authorised under the Lease

35.          EASEMENTS

35.1         The Tenant is not entitled to and the
Premises do not enjoy any right of light or air which might restrict or
interfere with the free use of any other property for building or any other
purpose

35.2         The operation of Section 62 of the Law
of Property Act 1925 is excluded from the Lease and the only rights granted
with the Premises are those expressly granted in the Lease

36.          COVENANTS

36.1         Nothing contained or implied in the
Lease gives the Tenant the benefit of or the right to enforce or to prevent the
release or modification of any covenant agreement or condition relating to
other property

36.2         Each covenant in the Lease by the
Tenant remains in full force at law and in equity notwithstanding any waiver or
release temporarily or permanently revocably or irrevocably of any other
covenant in the Lease or of any covenant affecting other property so far as the
law allows

37.          LIABILITY

37.           The Landlord is not responsible to
the Tenant or to anyone at the Premises with the Tenant’s express or implied
authority for any accident, injury, damage or loss save for acts of negligence
on the part of the Landlord its servants agents and employees acting within the
direct scope of their authority

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38.          COMPENSATION

Any
statutory right of the Tenant to claim compensation from the Landlord whether
on vacating the Premises or otherwise is excluded to the extent that the law
allows

39.          NOTICES

39.1         A notice by one party (“the sender”) to
another (“the recipient”) is duly served if in writing and either delivered to
the recipient or sent by registered or recorded delivery post addressed to the
recipient at his registered office

39.2         In this Clause ‘writing’ includes
facsimile or other electronic means of communication by such means in which
event service is deemed to be effected when the sender has finished
transmitting the notice unless either the sender knows or  ought reasonably to know that the
transmission has failed or is incomplete (in which case service is not effected
until the notice has been duly transmitted) or transmission takes place outside
normal business hours (in which case notice is deemed to be served when normal
business hours next commence)

39.3         In this Clause “working day” means any
day except Saturday, Sunday or a bank or public holiday and “normal business
hours” are 9.30 a.m. to 5.30 p.m. on a working day

PART EIGHT : FORFEITURE

40.          RIGHT OF
ENTRY

The
Landlord may at any time after the occurrence of any of the following events
re-enter the Premises whereupon this demise shall absolutely determine (but
without prejudice to any right of action of the Landlord in respect of any
arrears of Rent or any antecedent claim or breach of covenant):

40.1         if any Rent remains unpaid 21 days
after it is due (in the case of Rent whether formally demanded or not); or

40.2         if any material covenant or stipulation
in the Lease which is to be performed or observed by the Tenant is not
performed or observed and is not remedied in accordance with the terms of the
Lease; or

40.3         if the Tenant permits any execution or
distress to be levied on any goods in the Premises; or

40.4         if the Tenant (or any one party
included within the definition of the Tenant) becomes Insolvent (as defined in
the next Clause)

41.          INSOLVENCY

“Insolvent”
means for the purposes of this part of the Lease:

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41.1         in relation to a company that:

41.1.1                      it is deemed unable to pay
its debts as defined in Section 123 of the Insolvency Act 1986 (referred to as “the
Act” in the remainder of this Clause); or

41.1.2                      a bonafide proposal for a
voluntary arrangement under Part I of the Act is made; or

41.1.3                      a petition is presented
for an administration order under Part II of the Act; or

41.1.4                      a receiver or manager is
appointed whether under Part III of the Act (including an administrative
receiver) or otherwise; or

41.1.5                      it goes into liquidation
as defined in Section 247 (2) of the Act (other than a voluntary winding up
solely for the purpose of amalgamation or reconstruction while solvent); or

41.1.6                      a provisional liquidator
is appointed under Section 135 of the Act; or

41.1.7                      a proposal is made for a
scheme of arrangement under Section 425 of the Companies Act 1985 other than
for the purposes of amalgamation or reconstruction; and

41.2         in relation to an individual that:

41.2.1                      an application is made for
an interim order or a proposal is made for a voluntary arrangement under Part
VIII of the Act; or

41.2.2                      a bankruptcy petition is
presented to the Court or his circumstances are such that a bankruptcy petition
could be presented under Part IX of the Act; or

41.2.3                      he enters into a deed of
agreement

PART NINE :  GUARANTEE

42.          INTRODUCTION

The
parties agree and declare as follows:-

42.1         where a Guarantor is a party to the
Lease the Guarantor covenants with the Landlord as set out in Clause 43

42.2         where a surety for an assignee is
required pursuant to Clause 11.4.2.2 such surety shall covenant with the
Landlord in the terms of Clause 43 as if it were the Guarantor under the Lease
except that such guarantee will take effect only from the date of the relevant
assignment and extend only to the obligations of the assignee

42.3         where a surety for an undertenant is
required pursuant to Clause 11.7.2 such surety shall covenant with the Landlord
in the terms of Clause 43 as if it were the Guarantor under the Lease except
that the guarantee will extend only to the obligations of the undertenant and
its successors in title under the underlease and the provisions relating to
disclaimer of the

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Lease will not
apply

43.          GUARANTOR’S
COVENANT

The
Guarantor covenants with the Landlord (for the benefit of the Landlord and of
the person in whom from time to time the reversion immediately expectant upon
the Determination of the Term is vested without the need for any express
assignment) that

43.1         during the period while the Tenant
remains bound by the tenant covenants of the Lease and/or by any obligations of
the Tenant undertaken pursuant to the covenant contained in Clause 11.4.2.1 of
the Lease (such period in this Clause 43 being referred to as “the Tenant’s
Liability Period”) the Tenant shall punctually pay the Rent and observe and
perform the covenants and other provisions of the Lease and in case of default
the Guarantor will pay the Rent and observe and perform the covenants and
provisions in respect of which the Tenant is in default and make good to the
Landlord within 21 days of written demand and indemnify the Landlord against
all losses damages costs and expenses thereby arising or incurred by the
Landlord

43.2         the liability of the Guarantor under
Clause 43.1 shall not be affected in any way by;

43.2.1                      any neglect or forbearance
of the Landlord in enforcing payment of Rent or observance or performance of
the covenants and provisions of the Lease

43.2.2                      any time or indulgence
given to the Tenant by the Landlord

43.2.3                      any refusal by the
Landlord to accept Rent from the Tenant following a breach of covenant by the
Tenant

43.2.4                      any agreement with the
Tenant, any licence or consent granted to the Tenant or any variation in the
terms of the Lease so long as such variation does not increase the Guarantor’s
financial liability under the Lease unless the Guarantor was a party to such
variation or such variation was envisaged by the terms of the Lease Provided
That if a variation occurs which increases the Guarantor’s financial liability
and Guarantor was not a party to such variation then (save in the case of
reviewed rent) the Guarantor shall not be released but the Guarantor’s
financial liability to the Landlord pursuant to this Clause 43 shall be limited
to that which it would have been prior to such variation

43.2.5                      the death of the Tenant (if
an individual) or the dissolution of the Tenant (if a company)

43.2.6                      a surrender of part of the
Premises except that the Guarantor will have no liability in relation to the
surrendered part in respect of any period following the date of surrender

43.2.7                      any other act matter or
thing apart from the express release in writing of the Guarantor

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43.3         if during the Tenant ‘s Liability
Period the Tenant (being a company) enters into liquidation or (being an
individual) becomes bankrupt and the liquidator or the trustee in bankruptcy
disclaims the Lease the Guarantor shall upon written notice from the Landlord
given within six months after the date of disclaimer accept a new lease of the
Premises for a term equal to the residue then remaining unexpired of the Agreed
Term at the Rent then payable under the Lease and otherwise subject to the same
covenants and provisions as in the Lease (without however requiring any other
person to act as guarantor) such new lease to take effect from the date of
disclaimer and to be granted at the cost of the Guarantor who shall execute and
deliver to the Landlord a counterpart of it

43.4         if the Lease is disclaimed and for any
reason the Landlord does not require the Guarantor to accept a new lease
pursuant to Clause 43.3 the Guarantor shall pay to the Landlord within 21 days
of written demand an amount equal to the difference between any money received
by the Landlord for the use or occupation of the Premises and the Rent (if
higher) which would have been payable had the Lease not been disclaimed for the
period commencing with the date of disclaimer and ending upon the date twelve
months after the date of disclaimer or (if earlier) the date upon which the
Premises are relet

44.          TENANT’S
GUARANTEE COVENANT

The
Tenant covenants with the Landlord (for the benefit of the Landlord and of the
person in whom from time to time the reversion immediately expectant upon the
Determination Of The Term is vested without the need for any express
assignment) that

44.1         during the period while the assignee of
the Tenant (“the Assignee”) remains bound by the tenant covenants of the Lease
(such period in this Clause 44 being referred to as “the Assignee’s Liability
Period”) the Assignee shall punctually pay the Rent and observe and perform the
covenants and other provisions of the Lease and in case of default the Tenant
will pay the Rent and observe and perform the covenants and provisions in
respect of which the Assignee is in default and make good to the Landlord
within 21 days of written demand and indemnify the Landlord against all losses
damages costs and expenses thereby arising or incurred by the Landlord

44.2         the liability of the Tenant under
Clause 44.1 shall not be affected in any way by:

44.2.1                      any neglect or forbearance
of the Landlord in enforcing payment of Rent or observance or performance of
the covenants and provisions of the Lease

44.2.2                      any time or indulgence
given to the Assignee by the Landlord

44.2.3                      any refusal by the
Landlord to accept Rent from the Assignee following a beach of covenant by the
Assignee

44.2.4                      any agreement with the
Assignee any licence or consent granted to the Assignee or any variation in the
terms of the Lease so long as such variation does not increase the Tenant’s
financial liability under the Lease unless the Tenant was a party to such
variation or such variation was envisaged by the terms of the Lease Provided
That if a variation occurs which increases the Tenant’s financial liability and
Tenant was not a party to such variation then (save in the case of reviewed
rent) the Tenant shall not be released but the Tenant’s financial liability to
the

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Landlord pursuant
to this Clause 44 shall be limited to that which it would have been prior to
such variation

44.2.5                      the death of the Assignee
(if an individual) or the dissolution of the Assignee (if a company)

44.2.6                      any other act matter or
thing apart from the express release in writing of the Tenant

44.3         If during the Assignee’s Liability
Period the Assignee (being a company) enters into liquidation or (being an individual)
becomes bankrupt and the liquidator or the trustee in bankruptcy disclaims the
Lease the Tenant shall upon written notice from the Landlord given with six
months after the date of disclaimer accept a new lease of the Premises for a
term equal to the residue then remaining unexpired of the Agreed Term at the
Rent then payable under the Lease and otherwise subject to the same covenants
and provisions as in the Lease (without however requiring any other person to
act as guarantor) such new lease to take effect from the date of disclaimer and
to be granted at the cost of the Tenant who shall execute and deliver to the
Landlord a counterpart of it

45.          RELEASE
OF LANDLORD

45.1.        For the purposes of clause 45.2:-

45.1.1                      “the Landlord” means the
person named in clause 1.1 as the Landlord

45.1.2                      “Landlord’s Obligations”
means all obligations of the Landlord under any any covenant or other term of
the Lease or any document expressed to be supplemental to the Lease and all
implied obligations of the Landlord under the Lease or any such document

45.1.3                      “Breach” means any breach
by the Landlord of the Landlord’s Obligations or any of them

45.1.4                      “Reversion” means the
reversion immediately expectant on the Determination of the Term

45.2         No liability shall attach to the
Landlord in respect of any Breach which occurs at any time after the Reversion
has ceased to be vested in the Landlord

PART TEN  :  SPECIAL CONDITIONS

46.                               CONTRACTS
(RIGHTS OF THIRD PARTIES) ACT 1999

The
provisions of the Contract (Rights of Third Parties) Act 1999 shall not apply
to this Lease unless otherwise stated in this Lease

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47.          TENANT’S
BREAK OPTION

47.1         If the Tenant wishes to determine the
Lease at the expiry of the fifth year of the Agreed Term and gives to the
Landlord not less than six months prior written notice (as to which period time
shall be of the essence) and shall have paid the Rent upto the Determination of
the Term then  upon the expiry of the
above mentioned notice period the Lease shall cease and determine without
prejudice to any antecedent claim or breach of covenant by either party against
the other arising under the Lease

47.2         In the event that the Tenant exercises
the break option contained in Clause 47.1 then (so long as such warranties or
reports as herein referred to are capable of being assigned) the Tenant shall
assign the residue of any warranties or reports granted to the Tenant by the
Landlord’s contractor and members of its professional team at the start of the
Lease to any third party nominated by the Landlord and it is hereby agreed that
the provisions of this Clause 47.2 shall apply in the event of any earlier
determination of the Lease howsoever occurring

48.          ENVIRONMENTAL
MATTERS

48.1         The parties agree notwithstanding any
other provisions in the Lease (other than in respect of contamination or
pollution actually caused or introduced by or acquiesced to by the Tenant) any
liability for the same or any responsibility or liability for taking any
Remedial Action or dealing with Hazardous Material or dealing with any
Environmental Liabilities or complying with any Environmental Laws shall be
borne solely by the Landlord.  This is an
agreement for the purposes of paragraph D.38 of the Annex 3 of the Statutory
Guidance containing in DETR Circular 02/2000 on the Environmental Protection
Act 1990 Part 2A (Contaminated Land). 
Each party consents to the provisions of this agreement and the
remainder of the Lease being disclosed to any Enforcing Authority under Part 2A
of the Environmental Protection Act 1990 or an similar or substituted or
amended Enactment or Environmental Laws. 
The parties further agree that any contamination, pollution or
Environmental Liabilities, the presence of Hazardous Material and any
non-compliance with Environmental Laws shall be deemed not to have been caused
by the Tenant in the absence of conclusive evidence to the contrary

48.2         The parties further agree that the
Tenant will not alter penetrate or damage the concrete floor or apron of the
Premises without the Landlord’s prior written consent and in the event that any
aperture break or penetration occurs to the concrete floor or apron then the
Tenant will at its own costs reinstate and reseal the said concrete floor or
apron to the same specification as is currently installed including the re-sealing
of any membrane to the reasonable satisfaction of the Landlord or any
environmental authority

49.          It is hereby certified that there is
no Agreement for Lease to which the Lease gives effect

FIRST SCHEDULE — RIGHTS

(None)

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SECOND SCHEDULE - EXCEPTIONS AND
RESERVATIONS

The
rights which the Tenant covenants to permit under part three of the Lease are
excepted and reserved to the Landlord and all those duly authorised by it
subject where a person has a right to enter the Premises in order to carry out
works to that person (a) first giving reasonable notice in writing of at least
48 hours to the Tenant (except in emergency) and (b) exercising the right in a
manner which causes as little damage and inconvenience as is practicable in the
circumstances, and (c) making good any physical damage caused (but without
liability for loss of trade or other consequential loss) as soon as reasonably
practicable to the Tenant’s reasonable satisfaction and (d) that such works
cannot otherwise be reasonably carried out economically and speedily

THIRD
SCHEDULE - DOCUMENTS

All the entries in the
Property and Charges Registers of Title No. HP25636 (save for those entries in
the Charges Register relating to mortgages or charges of a financial nature) so
far as the same are still subsisting and capable of taking effect in relation
to the Premises

EXECUTED as a DEED by ERACHANGE       )

LIMITED acting by a Director and
the                             )

Company Secretary or two Directors                                )

Director

Director/Secretary

EXECUTED as a DEED by RUSS BERRIE     )

(UK) LIMITED acting by a Director
and the   )

Company Secretary or two Directors                                )

Director  /s/
Chris Robinson

Director/Secretary /s/ Trevor Rowcliffe

 

 34

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