Document:

Exhibit 10.02

 

EMPLOYMENT AGREEMENT

 

AGREEMENT made this 21st day of March, 2005,
between KMG America Corporation, a Virginia corporation (the “Company”) and
James E. Nelson (the “Executive”).

 

The Board of Directors of the Company (the “Board”)
recognize that the Executive will make a substantial contribution to the growth
and success of the Company.  The Board
desires to provide for the employment of the Executive with the Company, and
the Executive is willing to commit himself to serve the Company, on the terms
and conditions herein provided.  The
Executive’s employment with the Company is contingent on his execution of this
Employment Agreement.

 

In order to effect the foregoing, the Company
and the Executive wish to enter into an employment agreement on the terms and
conditions set forth below.  Accordingly,
in consideration of the premises and the respective covenants and agreements of
the parties herein contained, and intending to be legally bound hereby, the parties
hereto agree as follows:

 

1.             Employment.  The Company hereby agrees to employ the
Executive, and the Executive hereby agrees to serve the Company, on the terms
and conditions set forth herein.

 

2.             Term.  The employment of the Executive by the
Company as provided in Section 1 will commence on the date hereof and end on
December 31, 2007, unless further extended or sooner terminated as hereinafter
provided.  The Company shall have the
right, but not the obligation, to extend or renew the term of this Agreement by
one year by providing the Executive with written notice of extension on or
before October 31, 2005.  For purposes of
this Agreement, “Term” shall mean the actual duration of Executive’s employment
hereunder, taking into account any extension of such employment or termination
of employment pursuant to Section 6.

 

3.             Position and Duties.  The Executive shall serve as Senior Vice
President, General Counsel and Secretary of Company and shall have such
responsibilities, duties and authority as he may have as of the date hereof and
as may from time to time be assigned to the Executive by the Chief Executive
Officer of the Company (the “CEO”) that are consistent with such
responsibilities, duties and authority, including serving as an officer or
employee of any affiliate of the Company that the CEO deems appropriate.  The Executive shall devote substantially all
of his working time and efforts to the business and affairs of the Company;
provided, that nothing in this Agreement shall preclude Executive from serving
as a director or trustee in any other firm or from pursuing personal real
estate investments and other personal investments, as long as such activities
do not interfere with Executive’s performance of his duties hereunder or
violate Section 8 or 9 of this Agreement.

 

4.             Place of Performance.  In connection with the Executive’s employment
by the Company, the Executive shall be based at the principal executive offices
of the Company in

 

 

 

Minneapolis/St.
Paul, Minnesota, except for required travel on the Company’s business to an
extent substantially consistent with present business travel obligations.

 

5.             Compensation
and Related Matters.

 

(a)           Base
Salary.  The Company shall pay the
Executive a base salary annually (the “Base Salary”), which shall be payable in
periodic installments according to the Company’s normal payroll practices.  The initial Base Salary shall be
$200,000.  During the Term, the Board or
the Compensation Committee of the Board (the “Compensation Committee”) shall,
after taking into account the recommendations of the CEO, review the Base
Salary at least once a year to determine whether the Base Salary should be
increased effective the following January 1. 
The amount of any increase shall be determined before March 31 of each
year and shall be retroactive to January 1.  The Base Salary, including any increases,
shall not be decreased during the Term. 
For purposes of this Agreement, the term “Base Salary” shall mean the
amount established and adjusted from time to time pursuant to this Section
5(a).

 

(b)           Annual Cash Incentive Awards.  The Executive shall be eligible to
participate in the Company’s annual cash incentive bonus plan adopted by the
Compensation Committee for each fiscal year during the Term of this Agreement
(the “Bonus Plan”), subject to the terms and conditions of the Bonus Plan.  If the Executive or the Company, as the case
may be, satisfies the performance criteria contained in such Bonus Plan for a
fiscal year, he shall receive an annual cash incentive bonus (the “Incentive
Bonus”) in an amount determined by the Compensation Committee and subject to
ratification by the Board, if required, but not to exceed 100% of the Executive’s
then current Base Salary.  If the
Executive or the Company, as the case may be, fails to satisfy the performance
criteria contained in such Bonus Plan for a fiscal year, the Compensation
Committee may determine whether any Incentive Bonus shall be payable to
Executive for that year, subject to ratification by the Board, if
required.  Beginning January 1, 2005, the
Bonus Plan shall contain both individual and group goals established by the
Compensation Committee.  The annual
Incentive Bonus shall be paid to the Executive no later than thirty (30) days
after the date the Compensation Committee determines whether the criteria in
the Bonus Plan for such fiscal year were satisfied.  For purposes of this Agreement, the term “Incentive
Bonus” shall mean the amount established pursuant to this Section 5(b).

 

(c)           Stock Based Awards.  The Company has established the 2004 Stock
Incentive Plan (“Stock Incentive Plan”) for the benefit of the employees of the
Company and its subsidiaries.  Subject to
the terms and conditions of the Stock Incentive Plan, the Executive shall be
eligible to participate in the Stock Incentive Plan, and shall be eligible to
receive annual stock option and/or restricted stock awards under the Stock
Incentive Plan.  The Compensation
Committee shall approve any such awards made to the Executive pursuant to the
Stock Incentive Plan.

 

(i)            2004 Stock Incentive Plan Option
Grants.  Option awards under the
Stock Incentive Plan will have an exercise price per share equal to the closing
price of Company’s common stock on the trading day immediately preceding the
date of grant, will have a term of ten (10) years and will vest and become
exercisable with respect to 1/4 of the underlying shares of Company common
stock on the first, second, third and fourth anniversaries, respectively, of
the date of grant; provided, however,
that the 

 

 

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Executive will be 100% vested in
all outstanding option awards, including the unvested portion of such awards,
and shall be permitted to exercise all vested option awards only during the
90-day period following such accelerated vesting upon (i) termination of the
Executive’s employment by the Company or the Board, other than a termination
for “Cause” pursuant to Section 6(c) or any resignation by the Executive
without “Good Reason” (as defined herein), following a Change in Control (as
defined in the Stock Incentive Plan), (ii) a termination by the Company without
Cause (as defined herein), (iii) a termination by the Executive for Good Reason
(as defined herein), (iv) the Executive’s death, or (v) the Disability (as
defined below) of the Executive, and that the Executive will forfeit all
unvested options if he is terminated for Cause or he terminates his employment
hereunder for other than Good Reason. 
Effective as of March 24, the Company shall grant the Executive options
to purchase 35,000 shares of the Company’s common stock under the Stock
Incentive Plan with an exercise price equal to the closing price per share of
the Company’s common stock on March 24, 2005, subject to the vesting provisions
described above.

 

(ii)           2004 Stock Incentive Plan Restricted
Stock Awards.  The Stock Incentive
Plan provides for the issuance of shares of Company common stock as restricted
common stock (“Restricted Stock Grants”) to the extent that such shares of
common stock are available thereunder. 
Restricted Stock Grants awarded to the Executive shall be subject to
forfeiture restrictions that will terminate with respect to 1/4 of the awarded
shares on the first, second, third and fourth anniversaries of the date of the
issuance; provided, further, that
the Executive will be 100% vested and all restrictions on each outstanding
Restricted Stock Grant will lapse upon (i) termination of the Executive’s
employment by the Company or the Board, other than a termination for “Cause”
pursuant to Section 6(c) or any resignation by the Executive without “Good
Reason” (as defined herein), following a Change in Control (as defined in the
Stock Incentive Plan), (ii) a termination by the Company without Cause (as
defined herein), (iii) a termination by the Executive for Good Reason (as defined
herein), (iv) the Executive’s death, or (v) the Disability (as defined below)
of the Executive, and that the Executive will forfeit all shares with respect
to which the forfeiture restrictions have not terminated if he is terminated
for Cause or he resigns for other than Good Reason.  The common stock issued as Restricted Stock
Grants will have voting and dividend rights.

 

(d)           Benefits.

 

(i)            Vacation.  The Executive shall be entitled to four (4)
weeks of paid vacation per full calendar year. The Executive shall be entitled
to cash in lieu of any unused vacation time. 
The Executive shall not be entitled to carry over any unused vacation
time from year to year.

 

(ii)           Sick and Personal Days.  The Executive shall be entitled to sick and
personal days in accordance with the policies of the Company.

 

(iii)          Employee Benefits.

 

 

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(A)          Participation in Employee Benefit Plans.  Subject to the terms of any applicable plans,
policies or programs, the Executive and his spouse and eligible dependents, if
any, and their respective designated beneficiaries where applicable, will be
eligible for and entitled to participate in any Company sponsored employee
benefit plans applicable to employees of the Company, including but not limited
to benefits such as group health, dental, accident, disability insurance, group
life insurance, and a 401(k) plan, as such benefits may be offered from time to
time, on a basis no less favorable than that applicable to other executives of
the Company.

 

(B)           Disability Insurance.  The Company will, during the Term, maintain a
renewable long-term Disability plan that, subject to the terms of such plan and
any applicable plans, policies or programs, provides for payment of not less
than 60% of the Executive’s Base Salary.

 

(iv)          Directors and Officers Insurance.  During the Term and for a period of 24 months
thereafter, the Executive shall be entitled to director and officer insurance
coverage for his acts and omissions while an officer and director of the
Company on a basis no less favorable to him than the coverage provided to
current officers and directors.

 

(v)           Key Man Life Insurance.  The Company may purchase on the life of the
Executive up to $3.0 million of key man life insurance with the Company as the
beneficiary of the death benefit.

 

(vi)          Expenses, Office and Secretarial
Support.  The Executive shall be
entitled to reimbursement of all reasonable expenses, in accordance with the
Company’s policy as in effect from time to time and on a basis no less
favorable than that applicable to other executives of the Company, including,
without limitation, telephone, reasonable travel and reasonable entertainment
expenses incurred by the Executive in connection with the business of the
Company, promptly upon the presentation by the Executive of appropriate
documentation.  The Executive shall also
be entitled to appropriate office space, administrative support, and such other
facilities and services as are suitable to the Executive’s positions and
adequate for the performance of the Executive’s duties.

 

(vii)         Reimbursement of Certain
Professional Fees and Other Dues. 
The Company shall reimburse, at the request of the Executive, reasonable
fees for professional organizations reasonably related to the life and health
insurance businesses, and shall reimburse financial advisory fees of $5,000 per
year during the Term.

 

6.             Termination.  The Executive’s employment hereunder may be
terminated without any breach of this Agreement only under the following
circumstances:

 

(a)           Death.  The Executive’s employment hereunder shall
terminate upon his death.

 

(b)           Disability.  If, in the written opinion of a qualified
physician reasonably agreed to by the Company and the Executive, the Executive
shall become unable to perform his duties hereunder due to Disability, the
Company may terminate the Executive’s employment hereunder.  As used in this Agreement, the term “Disability”
shall mean inability of the Executive, due to 

 

 

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physical or
mental condition, to perform the essential functions of the Executive’s job,
after consideration of the availability of reasonable accommodations, for more
than 180 total calendar days during any period of 12 consecutive months.

 

(c)           For Cause.  The Company may terminate the Executive’s
employment hereunder for Cause.  For
purposes of this Agreement, the Company shall have “Cause” to terminate the
Executive’s employment hereunder upon a determination by the Company that the
Executive (i) has committed fraud or misappropriated, stolen or embezzled
funds or property from the Company or an affiliate of the Company or secured or
attempted to secure personally any profit in connection with any transaction
entered into on behalf of the Company or any affiliate of the Company,
(ii) has been convicted of a felony in a final non-appealable judgment, or
entered a plea of guilty or “nolo contendre”
to a felony, which is likely to cause material harm to the Company’s (or any
affiliate of the Company) business, customer or supplier relations, financial
condition or prospects, (iii) has, notwithstanding not less than 30 days’
prior written notice from the Company, willfully failed to perform (other than
by reason of illness or temporary disability ) his material duties hereunder,
(iv) has knowingly violated or breached any material law or regulation to the
material detriment of the Company or any affiliates of the Company or its
business, or (v) has breached any non-competition, non-disclosure or
non-solicitation agreement between Executive, and the Company which causes or
is reasonably likely to cause material harm to the Company or any of its
affiliates.  For purposes of this
provision, no act or failure to act, on the part of the Executive, shall be
considered “willful” unless it is done, or omitted to be done, by the Executive
in bad faith or without reasonable belief that his action or omission was in
the best interests of the Company and its affiliates.

 

(d)           Without Cause.  The Company may at any time terminate the
Executive’s employment hereunder without Cause.

 

(e)           Termination
by the Executive.

 

(i)            The Executive may terminate his
employment hereunder (A) for Good Reason or (B) at any time after the date
hereof by giving sixty (60) days prior notice of his intention to terminate.

 

(ii)           For purposes of this Agreement, “Good
Reason” shall mean (A) a failure by the Company to comply with any material
provision of this Agreement (other than the Company’s payment obligations
referred to in clause (E) below) which has not been cured within thirty (30)
days after notice of such noncompliance has been given by the Executive to the
Company, (B) the assignment to the Executive of any material duties
inconsistent with the Executive’s position with the Company or a substantial
adverse alteration in the nature or status of the Executive’s responsibilities
without the consent of the Executive, (C) without the consent of the Executive,
a material reduction in employee benefits other than a reduction generally
applicable to similarly situated executives of the Company, (D) without the
consent of the Executive, relocation of the Company’s principal place of
business outside a fifty (50) mile radius of Minneapolis/St. Paul, Minnesota,
or (E) any failure by the Company to pay the Executive Base Salary or any
Incentive Bonus to which he is entitled under the Bonus Plan or hereunder which
failure has not been cured within ten (10) days after notice of such
noncompliance has been

 

 

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given by the Executive to the
Company or any failure of the Compensation Committee to approve a Bonus Plan
for any fiscal year.

 

(f)            Any termination of the Executive’s
employment by the Company or by the Executive (other than termination pursuant
to subsection (a) or (b) of this Section 6) shall be communicated by written
Notice of Termination to the other party hereto in accordance with Section
13.  For purposes of this Agreement, a “Notice
of Termination” shall mean a notice which shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive’s employment under the provision so indicated.

 

(g)           “Date of Termination” shall mean (i)
if the Executive’s employment is terminated by his death, the date of his
death, (ii) if the Executive’s employment is terminated pursuant to subsection
(b) above, the date as of which the physician’s written opinion is received by
the Company, (iii) if the Executive’s employment is terminated pursuant to
subsection (c) above, the date specified in the Notice of Termination, and (iv)
if the Executive’s employment is terminated for any other reason, the date
sixty (60) days following the date on which a Notice of Termination is given.

 

7.             Compensation Upon Termination,
Death or During Disability.

 

(a)           Disability.  During any period that the Executive fails to
perform his duties hereunder as a result of his incapacity due to a physical or
mental condition (“disability period”), the Executive shall continue to receive
his full Base Salary at the rate then in effect for such disability period (and
shall not be eligible for payments under the disability plans, programs and
policies maintained by Parent or the Company or in connection with employment
by the Company (“Disability Plans”)) until his employment is terminated
pursuant to Section 6(b) hereof, and upon such termination, the Executive
shall, within ten (10) days of such termination, be entitled to all amounts to
which the Executive is entitled pursuant to the Disability Plans.  The Executive’s rights under any long-term
Disability Plan shall be determined in accordance with the provisions of such
plan, but in no event will Parent or the Company maintain a long-term
Disability plan that provides for payment of less than 60% of the Executive’s
Base Salary.  In addition, upon the
Executive’s termination in accordance with Section 6(b) hereof, all stock
options, restricted stock grants awards and any other equity awards granted by
the Company to the Executive shall become fully vested, unrestricted and
exercisable as of the Date of Termination. All vested options shall remain
exercisable by the Executive or his agent until 90 days after the Date of
Termination and shall then expire and no longer be exercisable.

 

(b)           Death.  If the Executive’s employment is terminated
by his death pursuant to Section 6(a) hereof, the Company shall within ten (10)
days following the date of the Executive’s death, pay to the Executive’s
designated beneficiary(ies) any earned and accrued but unpaid installment of
Base Salary through the date of death, an amount equal to the Executive’s
annual Base Salary for the year in which the termination took place, and an
amount equal to the Executive’s target Bonus for the year in which the
termination took place, together with any other amounts to which the Executive
is entitled pursuant to death benefit plans, programs and policies.  In addition, all stock options, restricted
stock awards and any other equity awards granted by Parent to the Executive
shall become fully vested, unrestricted and exercisable as of 

 

 

6

 

the Date of
Termination. All vested options shall remain exercisable by the Executive’s
estate or designated beneficiary(ies) until 90 days after the Date of
Termination and shall then expire and no longer be exercisable.

 

(c)           Cause or other than Good Reason.  If the Executive’s employment shall be
terminated by the Company for Cause or by the Executive for other than Good
Reason, the Company shall pay the Executive his full Base Salary through the
Date of Termination at the rate in effect at the time Notice of Termination is
given and reimburse the Executive for all reasonable and customary expenses
incurred by the Executive in performing services hereunder prior to the Date of
Termination in accordance with Section 6(d), and the Company shall have no
further obligations to the Executive under this Agreement.

 

(d)           Termination by the Company without
Cause (other than for death or Disability) or Termination by the Executive for
Good Reason.  If  the Company shall terminate the Executive’s
employment other than for death, Disability pursuant to Section 6(b) or Cause,
or the Executive shall terminate his employment for Good Reason, then:

 

(i)            the Company shall pay the Executive
any earned and accrued but unpaid installment of Base Salary through the Date
of Termination at the rate in effect at the time Notice of Termination is given
and all other unpaid and pro rata amounts to which the Executive is entitled as
of the Date of Termination under any compensation or bonus plan or program of
the Company applicable to the Executive, including without limitation, the
approved annual Bonus Plan for the year in which the Date of Termination occurs
and all accrued but unused vacation time, such payments to be made in a lump
sum on or before the tenth day following the Date of Termination;

 

(ii)           in lieu of any further salary
payments to the Executive for periods subsequent to the Date of Termination,
the Company shall pay as liquidated damages to the Executive an amount equal to
the product of (A) the sum of (1) the Executive’s Base Salary in effect as of
the Date of Termination and (2) the average Annual Bonus that the Executive
earned in the most recent two fiscal years, and (B) the quotient of the number
of whole months remaining in the term of this Agreement as of the Date of
Termination (such period is sometimes referred to herein as the “Severance
Period”) divided by twelve (12); such payment to be made in a lump sum on or
before the tenth day following the Date of Termination.  In addition, all stock options, restricted
stock awards and any other equity awards granted by the Company to the
Executive shall become fully vested, unrestricted and exercisable as of the
Date of Termination;

 

(iii)          In the case of a termination of the
Executive’s employment by the Company without Cause or for Disability, or by
the Executive for Good Reason, the Company shall pay the full cost for the
Executive to participate in the health insurance plan in which the Executive
was enrolled immediately prior to the Date of Termination for a period of
eighteen (18) months, provided that the Executive’s continued participation is
possible under the general terms and provisions of such plans and
programs.  In the event that the
Executive’s participation in any such plan or program is barred, the Company
shall arrange to provide the Executive with benefits substantially

 

 

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similar to those which the
Executive would otherwise have been entitled to receive under such plan from
which his continued participation is barred; and

 

(iv)          The obligations of the Company to make
any payments to Executive required under Section 7(d)(ii) hereof shall be
conditioned on the execution and delivery by the Executive of a general release
of claims in form and substance reasonably satisfactory to the Company.

 

8.             Nondisclosure.  During the Executive’s employment with the
Company and for a period of twenty-four (24) months following the Executive’s
Date of Termination, the Executive shall hold in a fiduciary capacity for the
benefit of the Company all secret or confidential information, knowledge or
data relating to the Company or any of its affiliated companies, and their
respective businesses, which shall have been obtained by the Executive during
the Executive’s employment by the Company or any of its affiliated companies
and which shall not be or become public knowledge (other than by acts by the
Executive or representatives of the Executive in violation of this
Agreement).  After termination of the
Executive’s employment with the Company, the Executive shall not, without the
prior written consent of the Company or as may otherwise be required by law or
legal process, communicate or divulge any such information, knowledge or data
to anyone other than the Company and those designated by them.  The agreement made in this Section 8 shall be
in addition to, and not in limitation or derogation of, any obligations
otherwise imposed by law or by separate agreement upon the Executive in respect
of confidential information of the Company and its affiliates.

 

9.             Non-Competition and
Non-Solicitation.  During the
Executive’s employment with the Company and for a period thereafter equal to
the Severance Period, the Executive shall not, for himself or herself or on
behalf of or in conjunction with any other person, persons, company, firm,
partnership, corporation, business, group or other entity (each, a “Person”),
work in the principal line of business engaged in, or planned to be engaged in,
by the Company and its affiliates at the Date of Termination within any state
where the Company or its affiliates are doing business or have plans for
commencing business as of the Date of Termination.  The Executive’s passive ownership of less
than five percent (5%) of the securities of a public company shall not be
treated as an action in competition with the Company and its affiliates.

 

(a)           Executive hereby acknowledges and
agrees that his employment with the Company places him in a position of trust
and confidence with respect to the business operations, customers, prospects
and personnel of the Company and its affiliates.  He agrees that, due to his position and
knowledge, his engaging in any business that competes in the principal line of
business as the Company will cause the Company and its affiliates significant
and irreparable harm.

 

(b)           In consideration of the compensation
and benefits extended to him under this Agreement, Executive agrees that,
during the term of Executive’s employment by the Company and for a period
thereafter equal to the Severance Period, the Executive shall not, for any
reason whatsoever, directly or indirectly, for himself or herself or on behalf
of or in conjunction with any other Person with whom the Executive works or is
affiliated:

 

 

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(i)            solicit and/or hire any Person who
is on the Date of Termination, or has been within six (6) months prior to the
Date of Termination, an employee of the Company or its affiliates;

 

(ii)           solicit, induce or attempt to induce
or hire any Person who is, at the Date of Termination, or has been within six
(6) months prior to the Date of Termination, an actual customer, client,
business partner, or a prospective customer, client, business partner of the
Company or its affiliates, for the purpose or with the intent of (A) inducing
or attempting to induce such Person to cease doing business with the Company or
its affiliates, (B) enticing or attempting to entice such Person to do business
with Executive or any affiliate of Executive, or (C) in any way interfering
with the relationship between such Person and the Company or its affiliates; or

 

(iii)          solicit, induce or attempt to induce
any Person who is or that is, at the time of the Date of Termination, or has
been within six (6) months prior to the Date of Termination, a supplier,
licensee or consultant of, or provider of goods or services to the Company or
its affiliates, for the purpose or with the intent of (A) inducing or
attempting to induce such Person to cease doing business with the Company or
its affiliates or (B) in any way interfering with the relationship between such
Person and the Company or its affiliates.

 

(c)           In the event the Severance Period is
less than 12 months, or in the event there is no Severance Period, the Company
shall have the right, but not the obligation, to extend the period of time
during which the restrictive covenants set forth in clauses (a) and (b) above
shall remain in effect for up to 24 additional months following the Severance
Period or the Date of Termination, as the case may be, subject to paying
consideration to the Executive for such extended period in cash in an amount
equal to the Executive’s Base Salary in effect on the Date of Termination,
payable monthly in arrears.  The Company
shall provide written notice to the Executive at least 60 days prior to the
second anniversary of the Date of Termination of the Company’s election to
extend the restrictive covenants as provided herein.

 

(d)           Because of the difficulty of
measuring economic losses to the Company as a result of a breach of the
foregoing covenants, and because of the immediate and irreparable damage that
could be caused to the Company and its affiliates for which it would have no
other adequate remedy, Executive agrees that the foregoing covenants in this
Section 9, in addition to and not in limitation of any other rights, remedies
or damages available to the Company at law, in equity or under this Agreement,
shall be enforced by the Company in the event of the breach or threatened
breach by Executive, by injunctions and/or restraining orders.

 

(e)           It is agreed by the parties that the
covenants contained in this Section 9 impose a fair and reasonable restraint on
Executive in light of the activities and business of the Company and its
affiliates on the date of the execution of this Agreement and the current plans
of the Company and its affiliates; but it is also the intent of the Company and
Executive that such covenants be construed and enforced in accordance with the
changing activities, business and locations of the Company and its affiliates
throughout the term of these covenants. 
Executive also acknowledges that this restraint will not prevent him
from earning a living in his chosen field of work.

 

 

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(f)            The covenants in this Section 9 are
severable and separate, and the unenforceability of any specific covenant shall
not affect the provisions of any other covenant.  Moreover, in the event any court of competent
jurisdiction shall determine that the scope, time or territorial restrictions
set forth herein are unreasonable, then it is the intention of the parties that
such restrictions be enforced to the fullest extent that such court deems
reasonable, and the Agreement shall thereby be reformed to reflect the same.

 

(g)           All of the covenants in this Section
9 shall be construed as an agreement independent of any other provision in this
Agreement, and the existence of any claim or cause of action of Executive
against the Company whether predicated on this Agreement or otherwise shall not
constitute a defense to the enforcement by the Company of such covenants.  It is specifically agreed that the duration
of the period during which the agreements and covenants of Executive made in
this Section 9 shall be effective shall be computed by excluding from such
computation any time during which Executive is in violation of any provision of
this Section 9.

 

(h)           Notwithstanding any of the foregoing,
if any applicable law, judicial ruling or order shall reduce the time period
during which Executive shall be prohibited from engaging in any competitive
activity described in Section 9 hereof, the period of time for which Executive
shall be prohibited pursuant to Section 9 hereof shall be the maximum time
permitted by law.

 

10.           Successors; Binding Agreement.  This Agreement shall be binding upon and
inure to the benefit of successors and permitted assigns of the parties.  This Agreement may not be assigned, nor may
performance of any duty hereunder be delegated, by either party without the
prior written consent of the other; provided,
however, the Company may assign this Agreement to any successor to
its business, including but not limited to in connection with any subsequent
merger, consolidation, sale of all or substantially all of the assets or stock
of the Company or similar transaction involving the Company or a successor
corporation.

 

11.           Additional
Payments by the Company.

 

(a)           If
it is determined (as hereafter provided) that any payment or distribution by
the Company to or for the benefit of the Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise pursuant to or by reason of any other agreement, policy, plan,
program or arrangement, including without limitation any option, share
appreciation right or similar right, or the lapse or termination of any
restriction on or the vesting or exercisability of any of the foregoing (a “Payment”),
would be subject to the excise tax imposed by Section 4999 of the Code (or any
successor provision thereto) or to any similar tax imposed by state or local
law, or any interest or penalties with respect to such excise tax (such tax or
taxes, together with any such interest and penalties, are hereafter
collectively referred to as the “Excise Tax”), then Executive will be entitled
to receive an additional payment or payments (a “Gross-Up Payment”) in an
amount such that, after payment by Executive of all taxes (including any
interest or penalties imposed with respect to such taxes), including any Excise
Tax, imposed upon the Gross-Up Payment, Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payments.

 

(b)           All determinations required to be made under this Section
11, including whether an Excise Tax is payable by Executive and the amount of
such Excise Tax and whether a Gross-Up 

 

10

 

Payment is
required and the amount of such Gross-Up Payment, will be made by the Company’s
then current outside auditors; provided that if that firm is unwilling or
unable to provide such services, another accounting firm may be selected by the
Company (such accounting firm the “Accounting Firm”).  The Company will direct the Accounting Firm
to submit its determination and detailed supporting calculations to both the
Company and Executive within 30 calendar days after the date of the change in
control or the date of Executive’s termination of employment, if applicable,
and any other such time or times as may be requested by the Company or
Executive.  If the Accounting Firm
determines that any Excise Tax is payable by Executive, the Company will pay
the required Gross-Up Payment to Executive no later than five calendar days
prior to the due date for Executive’s income tax return on which the Excise Tax
is included.  If the Accounting Firm
determines that no Excise Tax is payable by Executive, it will, at the same
time as it makes such determination, furnish Executive with an opinion that he
has substantial authority not to report any Excise Tax on his federal, state,
local income or other tax return.  Any
determination by the Accounting Firm as to the amount of the Gross-Up Payment
will be binding upon the Company and Executive. 
As a result of the uncertainty in the application of Section 4999 of the
Code (or any successor provision thereto) and the possibility of similar
uncertainty regarding applicable state or local tax law at the time of any
determination by the Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Company should have been made (an
“Underpayment”), consistent with the calculations required to be made
hereunder.  In the event that the Company
exhausts or fails to pursue its remedies pursuant to Section 11(f) hereof and
Executive thereafter is required to make a payment of any Excise Tax, Executive
shall so notify the Company, which will direct the Accounting Firm to determine
the amount of the Underpayment that has occurred and to submit its
determination and detailed supporting calculations to both the Company and Executive
as promptly as possible.  Any such
Underpayment will be promptly paid by the Company to, or for the benefit of,
Executive within five business days after receipt of such determination and
calculations.

 

(c)           The Company and Executive will each
provide the Accounting Firm access to and copies of any books, records and
documents in the possession of the Company or Executive, as the case may be,
reasonably requested by the Accounting Firm, and otherwise cooperate with the
Accounting Firm in connection with the preparation and issuance of the
determination contemplated by Section 11(b) hereof.

 

(d)           The federal, state and local income
or other tax returns filed by Executive will be prepared and filed on a
consistent basis with the determination of the Accounting Firm with respect to
the Excise Tax payable by Executive.  To
the extent the Excise Tax has not been previously withheld from amounts paid to
the Executive, Executive will make proper payment of the amount of any Excise
Tax, and at the request of the Company, provide to the Company true and correct
copies (with any amendments) of his federal income tax return as filed with the
Internal Revenue Service and corresponding state and local tax returns, if
relevant, as filed with the applicable taxing authority, and such other
documents reasonably requested by the Company, evidencing such payment.  If prior to the filing of Executive’s federal
income tax return, or corresponding state or local tax return, if relevant, the
Accounting Firm determines that the amount of the Gross-Up Payment should be
reduced, Executive will within five business days pay to the Company the amount
of such reduction.

 

 

11

 

(e)           The fees and expenses of the
Accounting Firm for its services in connection with the determinations and
calculations contemplated by Sections 11(b) and 11(d) hereof will be borne by
the Company.  If such fees and expenses
are initially advanced by Executive, the Company will reimburse Executive the
full amount of such fees and expenses within five business days after receipt
from Executive of a statement therefore and reasonable evidence of his payment
thereof.

 

(f)            Executive will notify the Company in
writing of any claim by the Internal Revenue Service that, if successful, would
require the payment by the Company of a Gross-Up Payment.  Such notification will be given as promptly
as practicable but no later than ten (10) business days after Executive
actually receives notice of such claim and Executive will further apprise the
Company of the nature of such claim and the date on which such claim is
requested to be paid (in each case, to the extent known by Executive).  Executive will not pay such claim prior to
the earlier of (x) the expiration of the 30-calendar-day period following the
date on which he gives such notice to the Company and (y) the date that any
payment of amount with respect to such claim is due.  If the Company notifies Executive in writing
prior to the expiration of such period that it desires to contest such claim,
Executive will:

 

(i)            provide the Company with any written
records or documents in his possession relating
to such claim reasonably requested by the Company;

 

(ii)           take such action in connection with
contesting such claim as the Company reasonably requests in writing from time
to time, including without limitation accepting legal representation with
respect to such claim by an attorney competent in respect of the subject matter
and reasonably selected by the Company;

 

(iii)          cooperate with the Company in good
faith in order effectively to contest such claim; and

 

(iv)          permit the Company to participate in
any proceedings relating to such claim; provided, however, that the Company
will bear and pay directly all costs and expenses (including interest and
penalties) incurred in connection with such contest and will indemnify and hold
harmless Executive, on an after-tax basis, for and against any Excise Tax or
income tax, including interest and penalties with respect thereto, imposed as a
result of such representation and payment of costs and expenses.  Without limiting the foregoing provisions of
this Section 11(f), the Company will control all proceedings taken in
connection with the contest of any claim contemplated by this Section 11(f)
and, at its sole option, may pursue or forego any and all administrative
appeals, proceedings, hearings and conferences with the taxing authority in
respect of such claim (provided that Executive may participate therein at his
own cost and expense) and may, at its option, either direct Executive to pay
the tax claimed and sue for a refund or contest the claim in any permissible
manner, and Executive agrees to prosecute such contest to a determination
before any administrative tribunal, in a court of initial jurisdiction and in
one or more appellate courts, as the Company will determine; provided, however,
that if the Company directs Executive to pay the tax claimed and sue for a
refund, the Company will advance the amount of such payment to Executive on an
interest-free basis and will indemnify and hold Executive harmless, on an
after-tax basis, from any Excise Tax or 

 

 

12

 

income tax, including interest
or penalties with respect thereto, imposed with respect to such advance; and
provided further, however, that any extension of the statute of limitations
relating to payment of taxes for the taxable year of Executive with respect to
which the contested amount is claimed to be due is limited solely to such
contested amount.  Furthermore, the
Company’s control of any such contested claim will be limited to issues with
respect to which a Gross-Up Payment would be payable hereunder and Executive
will be entitled to settle or contest, as the case may be, any other issue
raised by the Internal Revenue Service or any other taxing authority.

 

(g)           If, after the receipt by Executive of
an amount advanced by the Company pursuant to Section 11(f) hereof, Executive
receives any refund with respect to such claim, Executive will (subject to the
Company’s complying with the requirements of Section 11(f)) hereof) promptly
pay to the Company the amount of such refund (together with any interest paid
or credited thereon after any taxes applicable thereto). If, after the receipt
by Executive of an amount advanced by the Company pursuant to Section 11(f)
hereof, a determination is made that Executive will not be entitled to any
refund with respect to such claim and the Company does not notify Executive in
writing of its intent to contest such denial or refund prior to the expiration
of 30 calendar days after such determination, then such advance will be
forgiven and will not be required to be repaid and the amount of such advance
will offset, to the extent thereof, the amount of Gross-Up Payment required to
be paid pursuant to this Section 11. If, after the receipt by Executive of a
Gross-Up Payment but before the payment by Executive of the Excise Tax, it is
determined by the Accounting Firm that the Excise Tax payable by Executive is
less than the amount originally computed by the Accounting Firm and
consequently that the amount of the Gross-Up Payment is larger than that
required by this Section 11, Executive shall promptly refund to the Company the
amount by which the Gross-Up Payment initially made to Executive exceeds the
Gross-Up Payment required under this Section 11.

 

12.           Continued Performance.  Provisions of this Agreement shall survive
any termination of Executive’s employment hereunder if so provided herein or if
necessary or desirable fully to accomplish the purposes of such provisions,
including, without limitation, the obligations of the Executive under the terms
and conditions of Sections 8 and 9.  Any
obligation of the Company to make payments to or on behalf of the Executive
under Section 7 is expressly conditioned upon the Executive’s continued
performance of the Executive’s obligations under Sections 8 and 9 for the time
periods stated in Sections 8 and 9.  The
Executive recognizes that, except to the extent, if any, provided in Section 7,
the Executive will earn no compensation from the Company after the Date of
Termination.

 

13.           Notices.  For the purposes of this Agreement, notices,
demands and all other communications provided for in this Agreement shall be in
writing and shall be deemed to have been duly given when delivered or (unless
otherwise specified) mailed by United States certified or registered mail,
return receipt requested, postage prepaid, addressed as follows:

 

 

13

 

If to the Executive:

 

James
E. Nelson

2328
150th Avenue N.W.

Andover,
Minnesota  55304

 

If to the Company:

 

c/o
KMG AMERICA CORPORATION

12600
Whitewater Drive

Suite
150

Minnetonka, Minnesota 55343

Attention:  Chief Executive Officer

FAX:  (952) 930-4802

 

With a copy to:

 

Hunton & Williams LLP

Riverfront Plaza, East Tower

951 E. Byrd Street

Richmond, Virginia 23219

Attention: 
Daniel M. LeBey, Esq.

FAX:  (804)
788-8218

 

or
to such other address as any party may have furnished to the others in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.

 

14.           Miscellaneous.  No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing signed by the Executive and such officer of the Company as
may be specifically designated by the Board. 
No waiver by either party hereto at any time of any breach by the other
party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.  No agreements or
representations, oral or otherwise, express or implied, with respect to the subject
matter hereof have been made by either party which are not set forth expressly
in this Agreement.  The validity,
interpretation, construction and performance of this Agreement shall be
governed by the laws of the Commonwealth of Virginia without regard to its
conflicts of law principles.

 

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

 

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

 

 

14

 

(c)           Disputes.  Any dispute or controversy arising under or
in connection with this Agreement shall, at the Executive’s sole discretion, be
settled exclusively by such judicial remedies as the Executive may seek to
pursue or by arbitration conducted before a panel of three arbitrators in
Minneapolis, Minnesota in accordance with the rules of the American Arbitration
Association then in effect; provided, however, that the Company shall be
entitled to seek a restraining order or injunction in any court of competent
jurisdiction with respect to any violation or threatened violation of the
provisions of Sections 8 or 9 of this Agreement and the Executive hereby
consents that such restraining order or injunction may be granted without the
necessity of  the Company’s posting any
bond.  Judgment may be entered on the
arbitrator’s award in any court having jurisdiction.  The expenses of arbitration shall be borne by
the Company.

 

(d)           Indemnification.  The Company shall indemnify and hold the
Executive harmless to the maximum extent permitted by the laws of the
Commonwealth of Virginia (and the law of any other appropriate jurisdiction
after any reincorporation of the Company) against judgments, fines, amounts
paid in settlement and reasonable expenses, including attorneys’ fees incurred
by Executive, in connection with the defense of, or as a result of any action
or proceeding (or any appeal from any action or proceeding) in which Executive
is made or is threatened to be made a party by reason of the fact that he is or
was an officer or trustee of the Company, regardless of whether such action or
proceeding is one brought by or in the right of the Company to procure a
judgment in its favor (or other than by or in the right of the Company); provided, however, that this
indemnification provision shall not apply to any action or proceeding relating
to a dispute between the Company and the Executive based on any alleged breach
or violation of this Agreement.

 

(e)           Entire Agreement.  This Agreement sets forth the entire
agreement of the parties hereto in respect of the subject matter contained
herein and supersedes all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto; and any prior
agreement of the parties hereto in respect of the subject matter contained
herein.

 

[Signatures
on following page]

 

 

15

 

IN WITNESS WHEREOF, the
parties have executed this Agreement on the date and year first above written.

 

	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  KMG AMERICA CORPORATION

  
	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Gail Buysse

  	
   

  	
  By:

  	
  /s/ Kenneth U. Kuk

  	
   

  
	
   

  	
   

  	
   

  	
  Name: Kenneth U. Kuk

  
	
   

  	
   

  	
   

  	
  Title: Chairman, President
  & Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
  Attest:

  	
  JAMES E. NELSON

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Gail Buysse

  	
   

  	
   

  	
  /s/ James E. Nelson

  	
   

  
							

 

 

16Exhibit 10.1

 

DATED 30
March 2005

 

 

(1)                                 BALFOUR BEATTY PLC

 

(2)                                 EVOLVING SYSTEMS LIMITED
(FORMERLY CALLED TERTIO TELECOMS LIMITED)

 

 

LEASE

of

Premises on
the

Fourth Floor

Block 1

Angel Square

City Road

London EC1

 

 

CONTENTS

 

	
  Clause

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  1.

  	
  DEFINITIONS AND
  INTERPRETATION

  	
   

  
	
  2.

  	
  DEMISE

  	
   

  
	
  3.

  	
  TENANT’S
  COVENANTS

  	
   

  
	
  3.1

  	
  Payment
  of rents

  	
   

  
	
  3.2

  	
  Rent
  Review

  	
   

  
	
  3.3

  	
  Outgoings

  	
   

  
	
  3.4

  	
  Statutory Services

  	
   

  
	
  3.5

  	
  Value
  Added Tax

  	
   

  
	
  3.6

  	
  Landlord’s costs on
  breach

  	
   

  
	
  3.7

  	
  Costs
  of Distress

  	
   

  
	
  3.8

  	
  Costs
  of consents

  	
   

  
	
  3.9

  	
  Tenant’s repair
  and redecoration

  	
   

  
	
  3.10

  	
  To
  decorate

  	
   

  
	
  3.11

  	
  Repairs after
  Landlord’s notice

  	
   

  
	
  3.12

  	
  Yielding
  up

  	
   

  
	
  3.13

  	
  Waste and alterations

  	
   

  
	
  3.14

  	
  Items used in common

  	
   

  
	
  3.15

  	
  To view

  	
   

  
	
  3.16

  	
  To
  inspect

  	
   

  
	
  3.17

  	
  To permit entry to
  repair

  	
   

  
	
  3.18

  	
  Statutory obligations

  	
   

  
	
  3.19

  	
  Planning

  	
   

  
	
  3.20

  	
  Advertisements
  and display of goods

  	
   

  
	
  3.21

  	
  Compliance
  with Landlord’s regulations

  	
   

  
	
  3.22

  	
  Compliance with
  fire regulations

  	
   

  
	
  3.23

  	
  To observe covenants

  	
   

  
	
  3.24

  	
  User

  	
   

  
	
  3.25

  	
  Prohibitions on use

  	
   

  
	
  3.26

  	
  Obstruction

  	
   

  
	
  3.27

  	
  Refuse
  disposal

  	
   

  
	
  3.28

  	
  Encroachments

  	
   

  
	
  3.29

  	
  Indemnity for the
  Landlord

  	
   

  
	
  3.30

  	
  Assignment and
  Underletting

  	
   

  
	
  3.31

  	
  Registration

  	
   

  
	
  3.32

  	
  Covenants in the
  Superior Lease

  	
   

  
	
  3.33

  	
  Information

  	
   

  

 

 

	
  3.34

  	
  Keyholders

  	
   

  
	
  3.35

  	
  New
  guarantor

  	
   

  
	
  3.36

  	
  Landlord’s rights

  	
   

  
	
  3.37

  	
  2002 Act

  	
   

  
	
  4.

  	
  INSURANCE

  	
   

  
	
  4.1

  	
  Landlord to insure

  	
   

  
	
  4.2

  	
  Landlord
  to produce evidence of insurance

  	
   

  
	
  4.3

  	
  Destruction of the
  Building

  	
   

  
	
  4.4

  	
  Option
  to determine by the Landlord or the Tenant

  	
   

  
	
  4.5

  	
  Frustration

  	
   

  
	
  4.6

  	
  Payment
  of insurance monies refused/excess

  	
   

  
	
  4.7

  	
  Benefit of other
  insurances

  	
   

  
	
  4.8

  	
  Insurance becoming void

  	
   

  
	
  4.9

  	
  Requirements of insurers

  	
   

  
	
  4.10

  	
  Notice by Tenant

  	
   

  
	
  4.11

  	
  Cesser of rent

  	
   

  
	
  5.

  	
  LANDLORD’S COVENANTS

  	
   

  
	
  5.1

  	
  Quiet enjoyment

  	
   

  
	
  5.2

  	
  Services

  	
   

  
	
  5.3

  	
  Superior lease

  	
   

  
	
  6.

  	
  PROVISOS AND AGREEMENTS

  	
   

  
	
  6.1

  	
  Re-entry

  	
   

  
	
  6.2

  	
  Exclusion of
  Landlord’s liability

  	
   

  
	
  6.3

  	
  Landlord not
  responsible for goods

  	
   

  
	
  6.4

  	
  Disputes

  	
   

  
	
  6.5

  	
  Notices

  	
   

  
	
  6.6

  	
  Value Added Tax

  	
   

  
	
  6.7

  	
  Exclusion of
  statutory compensation

  	
   

  
	
  6.8

  	
  No rights of light etc

  	
   

  
	
  6.9

  	
  Landlord free to develop

  	
   

  
	
  6.10

  	
  Landlord
  free to build into Structure

  	
   

  
	
  6.11

  	
  Exclusion of use
  warranty

  	
   

  
	
  6.12

  	
  Entire understanding

  	
   

  
	
  6.13

  	
  Representations

  	
   

  
	
  6.14

  	
  Licences etc under hand

  	
   

  
	
  6.15

  	
  Tenant’s property

  	
   

  
	
  6.16

  	
  Enforcement of
  Landlord’s covenants

  	
   

  
	
  6.17

  	
  Entry for Distress

  	
   

  
	
  6.18

  	
  Acceptance of rent no
  waiver

  	
   

  

 

 

	
  6.19

  	
  Interference with
  easements

  	
   

  
	
  6.20

  	
  Rights easements etc

  	
   

  
	
  6.21

  	
  Jurisdiction

  	
   

  
	
  6.22

  	
  Covenants
  relating to Adjoining or Neighbouring Premises

  	
   

  
	
  6.23

  	
  Effect of waiver

  	
   

  
	
  6.24

  	
  Perpetuity period

  	
   

  
	
  7.

  	
  GUARANTOR’S COVENANTS

  	
   

  
	
  7.1

  	
  To pay observe and
  perform

  	
   

  
	
  7.2

  	
  To take lease
  following disclaimer

  	
   

  
	
  7.3

  	
  To make
  payments following disclaimer

  	
   

  
	
  7.4

  	
  Tenant’s Covenants

  	
   

  
	
  7.5

  	
  AGA

  	
   

  
	
  8.

  	
  DETERMINATION

  	
   

  
	
  9.

  	
  LANDLORD AND TENANT ACT
  1954

  	
   

  
	
  10.

  	
  CONTRACTS
  (RIGHTS OF THIRD PARTIES) ACT 1999

  	
   

  

 

	
  SCHEDULE 1  -  TENANT’S RIGHTS

  	
   

  
	
  SCHEDULE
  2  -  EXCEPTIONS AND RESERVATIONS TO THE LANDLORD

  	
   

  
	
  SCHEDULE
  3  -  DESCRIPTION OF DOCUMENTS CONTAINING MATTERS
  SUBJECT

  TO WHICH THE DEMISE IS MADE

  	
   

  
	
  SCHEDULE
  4  -  PROVISIONS RELATING TO THE SERVICE CHARGE

  	
   

  
	
  PART 1  -  THE ESTATE CHARGE

  	
   

  
	
  PART 2  -  THE
  BLOCK CHARGE

  	
   

  
	
  PART 3  -  CAR
  PARKING CHARGE

  	
   

  
	
  PART 4  -  SERVICE
  CHARGE

  	
   

  
	
  SCHEDULE 5  -  THE SUPERIOR LEASE

  	
   

  

 

 

THIS LEASE is made 30 March 2005

 

BETWEEN

 

(1)                                                             BALFOUR BEATTY PLC a company
incorporated in England under number 395826 whose registered office is at 130
Wilton Road London SW1V 1LQ (“the Landlord” which expression where
appropriate includes any estate owner for the time being of the immediate
reversion to this lease)

 

(2)                                                             EVOLVING SYSTEMS LIMITED (FORMERLY
CALLED TERTIO TELECOMS LIMITED) a company incorporated in England under
number 02325854 whose registered office is at 1 Angel Square Torrens Street
London EC1V 1PL (“the Tenant” which expression where appropriate includes
any person deriving title through or under the Tenant)

 

1.                                                                  DEFINITIONS AND INTERPRETATION

 

The Landlord
and the Tenant agree that this lease shall be subject to the following:

 

1.1                                                             In this lease all words shown in inverted commas in clause 1.2 are
to be defined terms for the purposes of this lease and any reference in this
lease to a clause paragraph or a schedule means a reference to a clause
paragraph or schedule of this lease

 

1.2                                                           Definitions

 

	
  “Adjoining or Neighbouring Premises”

  	
   

  	
  the Estate the Car Park the Building the buildings known as Blocks 2
  and 3 Angel Square and all other property adjoining or neighbouring the
  Building in which the Landlord or a company in the same group as the Landlord
  or any person holding on trust for the Landlord has a freehold or leasehold
  interest

  
	
   

  	
   

  	
   

  
	
  “Block Charge”

  	
   

  	
  17.3% (or such other percentage as the Landlord shall from time to
  time reasonably determine) of the expenses incurred in each Service Charge
  Year in connection with the provision of the Services set out in part 2 of
  schedule 4 hereto

  
	
   

  	
   

  	
   

  
	
  “Building”

  	
   

  	
  the premises known as Block 1 Angel Square the location of which is
  shown for identification purposes only on the Lease Plan numbered 1 and each
  and every part thereof together with the appurtenances thereto belonging
  together with all additions alterations and improvements thereto which may be
  carried out during the Term or reinstatements thereof or building(s)
  substituted therefor and shall also include all landlord’s fixtures and
  fittings from time to time in and about the same but for the avoidance of
  doubt excluding the Car Park

  
	
   

  	
   

  	
   

  
	
  “Car Park”

  	
   

  	
  the area shown for identification purposes edged green on the Lease
  Plans numbered 2 and 3 from and including at basement level the surface
  finishes to the basement slab up to but not including the basement slab or
  the underside of the slab at Lower Ground Floor Level

  

 

 

	
  “Car Parking Charge”

  	
   

  	
  8% (or such other percentage as the Landlord shall from time to time
  reasonably determine on the basis of the number of the car parking spaces
  which the Tenant is entitled to occupy bears to the total number of car
  parking spaces within the car park) of the expenses incurred in each Service
  Charge Year in connection with the provision of the Services set out in part
  3 of schedule 4 hereto

  
	
   

  	
   

  	
   

  
	
  “Common Accessways”

  	
   

  	
  the accessways courtyards and footpaths shown hatched brown on the
  Lease Plans

  
	
   

  	
   

  	
   

  
	
  “Common Parts”

  	
   

  	
  any entrances entrance halls lifts (including lift shafts) stairs
  passage ways landings lavatory accommodation cleaners’ cupboards boiler rooms
  and other parts of the Building available or intended to be available either
  for use in common by or for the provision of services to two or more of the
  Landlord’s tenants of the Building or their premises

  
	
   

  	
   

  	
   

  
	
  “Conduits”

  	
   

  	
  all pipes wires drains cables ducts and mains and other conducting
  media of any kind

  
	
   

  	
   

  	
   

  
	
  “Demised Premises”

  	
   

  	
  ALL THOSE premises situate on level four of the Building shown edged
  red on Lease Plan numbered 5 together with:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (a)          the internal faces of the
  walls and columns which enclose the said premises including the plaster paint
  paper and other decorative finishes thereof

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (b)         the entirety of all walls
  and columns within the said premises (other than those which are structural
  or load bearing) and one half of the thickness of any non structural walls
  dividing the said premises from other parts of the Building and the internal
  faces of all structural or load bearing walls and columns within the said
  premises including the plaster paint paper and other decorative finishes
  thereof

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (c)          the screed and finish of
  the floors within the said premises and all carpets therein

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (d)         the internal faces of the
  ceilings of the said premises including the plaster paint paper and other
  decorative finishes thereof and all suspended ceilings and light fittings
  therein

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (e)          all doors door furniture
  door frames and glass in such doors of or within the said premises

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (f)            all sanitary and hot and
  cold water apparatus and the radiators within the said premises

  

 

2

 

	
   

  	
   

  	
  (g)         all Conduits in or upon
  over or under and exclusively serving the said premises save those of
  statutory undertakers

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (h)         all landlord’s fixtures and
  fittings (including any air-conditioning units machinery and apparatus and
  any fire detection fire alarm fire precaution and sprinkler systems) which
  may at any time be in or upon the said premises

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  but excluding the Structure and all window frames window furniture
  and sash cords (if any) and all glass in the windows within the said premises

  
	
   

  	
   

  	
   

  
	
  “Estate”

  	
   

  	
  the development known as Angel Square City Road London EC1 of which
  the Demised Premises form part and shown for the purpose of identification
  only edged orange on the Lease Plans but excluding the Building and the
  buildings known as Blocks 2 and 3

  
	
   

  	
   

  	
   

  
	
  “Estate Charge”

  	
   

  	
  6.43% (or such other percentage as the Landlord shall from time to
  time reasonably determine) of the expenses incurred in each Service Charge
  Year in connection with the provision of the Services set out in part 1 of
  schedule 4 hereto

  
	
   

  	
   

  	
   

  
	
  “Higher Rate Interest”

  	
   

  	
  where specified in this lease as applying to any sum interest upon
  such sum calculated on a daily basis at the rate of four per centum per annum
  above the Base Rate from time to time of Barclays Bank PLC (or such other
  equivalent rate as the Landlord may notify to the Tenant in writing) from the
  date on which such sum falls due until the date on which such sum is paid and
  whether before or after judgment

  
	
   

  	
   

  	
   

  
	
  “Insurance Rent”

  	
   

  	
  a due proportion (to be properly determined by the Landlord as being
  attributable to the Demised Premises) of all sums (including any insurance
  valuation fees) which the Landlord may from time to time pay for insuring and
  keeping insured the Building against loss or damage by the Insured Risks and
  the other matters referred to in clause 4 of this lease such rent to be paid
  within ten days of written demand therefor

  
	
   

  	
   

  	
   

  
	
  “Insured Risks”

  	
   

  	
  fire storm tempest flood earthquake aircraft and other aerial devices
  and articles dropped therefrom riot and civil commotion and malicious damage
  bursting or overflowing of water tanks apparatus or pipes and impact and such
  other risks as the Landlord or any superior landlord may in its absolute
  discretion from time to time determine (but does not include terrorist
  activities unless actually insured against by the Landlord) subject to such
  exclusions excesses and limitations as may be imposed by the insurers

  
	
   

  	
   

  	
   

  
	
  “Lease Plans”

  	
   

  	
  the plans annexed hereto

  

 

3

 

	
  “Lower Rate Interest”

  	
   

  	
  where specified in this lease as applying to any sum interest upon
  such sum calculated on a daily basis at the Base Rate from time to time of
  Barclays Bank PLC (or such other equivalent rate as the Landlord may notify
  to the Tenant in writing) whether before or after judgment

  
	
   

  	
   

  	
   

  
	
  “Permitted Part”

  	
   

  	
  any part of the Demised Premises which is capable (having regard to
  its location and extent and to the rights intended to be appurtenant thereto)
  of providing self-contained accommodation and which the Landlord has first
  approved in writing (such approval not to be unreasonably withheld or
  delayed)

  
	
   

  	
   

  	
   

  
	
  “Planning Acts”

  	
   

  	
  the Town and Country Planning Act 1990 and any other statutes
  relating to town and country planning in force from time to time

  
	
   

  	
   

  	
   

  
	
  “Service Charge”

  	
   

  	
  the total of the Block Charge and the Estate Charge and the Car
  Parking Charge as hereinafter defined

  
	
   

  	
   

  	
   

  
	
  “Service Charge Year”

  	
   

  	
  every year of the Term ending on 24 December or such other date
  as the Landlord may notify to the Tenant in writing

  
	
   

  	
   

  	
   

  
	
  “Services”

  	
   

  	
  the services set out in parts 1 2 and 3 of schedule 4 to this lease

  
	
   

  	
   

  	
   

  
	
  “Structure”

  	
   

  	
  the exterior and the structure of the Building including its
  foundations roof (including roof structure and coverings) external walls and
  internal load-bearing walls and its main columns beams timbers slabs or frame
  and all window frames furniture and sash cords (if any) and all glass in the
  windows

  
	
   

  	
   

  	
   

  
	
  “Superior Lease”

  	
   

  	
  the lease and all other supplemental deeds and documents brief
  particulars of which are set out in schedule 5

  
	
   

  	
   

  	
   

  
	
  “Term”

  	
   

  	
  a term of years from and including 30 March 2005 and expiring on 24
  March 2015 subject to the right of earlier determination set out in this
  lease

  
	
   

  	
   

  	
   

  
	
  “Value Added Tax”

  	
   

  	
  value added tax and any other tax of a like nature

  
	
   

  	
   

  	
   

  
	
  “1927 Act”

  	
   

  	
  the Landlord and Tenant Act 1927 and all statutes regulations and
  orders included by virtue of clause 1.3.13

  
	
   

  	
   

  	
   

  
	
  “1954 Act”

  	
   

  	
  the Landlord and Tenant Act 1954 and all statutes regulations and
  orders included by virtue of clause 1.3.13

  
	
   

  	
   

  	
   

  
	
  “1995 Act”

  	
   

  	
  the Landlord and Tenant (Covenants) Act 1995 and all statutes
  regulations and orders included by virtue of clause 1.3.13

  

 

4

 

	
  “2002 Act”

  	
   

  	
  the Land Registration Act 2002

  
	
   

  	
   

  	
   

  
	
  “2003 Rules”

  	
   

  	
  the Land Registration Rules 2003 or any statutory modification or
  replacement thereof

  

 

1.3                                                       Interpretation

 

1.3.1                                                Unless otherwise specified any reference in this lease to any
statute by-law directive order or other legislation is to be deemed to include
reference to any amendment or re-enactment of the same

 

1.3.2                                                The index and clause headings in this lease are for ease of
reference only and have no other significance

 

1.3.3                                                Any reference in this lease to the end or expiration of the Term
shall mean the expiration or earlier termination of this lease for whatever
reason and references to ‘the last year of the Term’ include the last year of
the Term if the Term shall determine otherwise than by effluxion of time

 

1.3.4                                                Except in connection with the review of rent where provision is made
in this lease for arbitration in respect of any dispute between the Tenant and
any other person as to their respective rights or obligations in connection
with any matter relating to this lease such matter shall be referred (if the
parties are unable to agree within two months of the dispute arising) to a
single arbitrator (if the parties are able to agree on one) or (if they are not
able so to agree) to two arbitrators one to be appointed by each party or their
umpire in accordance with the provisions of the Arbitration Act 1996

 

1.3.5                                                There shall be implied in every Tenant’s obligation in this lease a
covenant by the Tenant (as far as it is able) to prevent any person under its
control from breaking such obligation

 

1.3.6                                                Unless otherwise provided any consent or approval required from the
Landlord under this lease shall be given at the Landlord’s absolute discretion
and subject to any conditions it may choose to impose

 

1.3.7                                                All the covenants contained in clause 3 are covenants made by the
Tenant unless otherwise specified

 

1.3.8                                                Words importing one gender include all other genders and words
importing the singular include the plural and vice versa

 

1.3.9                                                The expression ‘Guarantor’ includes not only the third party to this
lease (if any) but also any person who enters into covenants with the Landlord
pursuant to clauses 3.30.8 and/or 3.35

 

1.3.10                                          Where the Landlord the Tenant or the Guarantor for the time being
are two or more persons obligations expressed or implied to be made by or with
such party are deemed to be made by or with such persons jointly and severally
and references herein to the Landlord the Tenant or the Guarantor shall include
reference to any one of such persons

 

1.3.11                                          References to any right of the Landlord to have access to the Demised
Premises shall be construed as extending to any superior landlord and any
mortgagee of the Demised Premises and to all persons authorised by the Landlord
and any superior landlord or mortgagee (including agents professional advisers
contractors workmen and others) and the expressions “superior landlord” and “superior
landlords” mean

 

5

 

any person or
persons now or hereafter having a title to the Demised Premises in reversion
mediately or immediately expectant upon the termination of the Landlord’s title

 

1.3.12                                          Any provisions in this lease referring to the consent or approval of
the Landlord shall be construed as also requiring the consent or approval of
any mortgagee of the Demised Premises and any superior landlord where such
consent shall be required but nothing in this lease shall be construed as
implying that any obligation is imposed upon any mortgagee or any superior
landlord not unreasonably to refuse any such consent or approval

 

1.3.13                                          Any references to a specific statute include any statutory extension
or modification amendment or re-enactment of such statute (except the Town and
Country Planning (Use Classes) Order 1987) and any regulations or orders made
under such statute (including the said Order) and any general reference to ‘statute’
or ‘statutes’ or ‘Act of Parliament’ or ‘Acts of Parliament’ includes any
regulations or orders made under such statute or statutes

 

2.                                                              DEMISE

 

IN
consideration of the rents and other obligations on the Tenant’s part contained
in this lease the Landlord demises the Demised Premises to the Tenant TOGETHER
WITH the rights specified in schedule 1 and EXCEPTING AND RESERVING to the
Landlord (including its successors in title) and all persons authorised by the
Landlord and/or who have or to whom the Landlord may grant the same or similar
rights the rights specified in schedule 2 TO HOLD the Demised Premises for a
term of years commencing on 30 March 2005 and expiring (subject to the earlier
determination as hereinafter provided) on 24 March 2015 (“the Contractual Term”)
SUBJECT to the matters contained or referred to in the documents specified in
schedule 3 YIELDING AND PAYING for the Demised Premises for the period
beginning on the commencement of the Term to 29 March 2006  the rent of a peppercorn if demanded and
thereafter during the Term (and by way of bankers standing order if so required
by the Landlord) the principle yearly rent of ONE HUNDRED AND SIXTY THOUSAND
THREE HUNDRED POUNDS (£160,300) or such other amount as shall become payable
under the provisions of clause 3.2 such yearly rent to be paid by equal
quarterly payments in advance on the four usual quarter days in every year
during the Term the first such payment (or due proportion) being payable on 30
March 2006  in respect of the period from
30 March 2006  to the quarter day next
following AND ALSO PAYING as further rent during the Term and so in proportion
for any fraction of a year to the Landlord the Insurance Rent the Service
Charge and any other sums payable pursuant to the terms of this lease AND in
the event of any of the above rents being in arrear ten days after they have
become due the Tenant shall pay Higher Rate Interest on the amount outstanding
from the relevant due date until the actual date of payment

 

3.                                                              TENANT’S COVENANTS

 

The
Tenant COVENANTS with the Landlord as follows:

 

PAYMENTS

 

3.1                                                       Payment of rents

 

During the
continuance of the Term to pay the rents reserved by this lease as and when
stipulated without any deduction or set-off save as may be required by statute

 

6

 

3.2                                                       Rent Review

 

3.2.1                                                In this clause 3.2 the following expressions shall have the meanings
assigned to them hereunder:

 

“rent review
date” means 30 March 2010

 

“open market rent”
means the yearly rent (being the rent payable following the expiry of any
period at the beginning of the term which might reasonably be negotiated in the
open market for the purpose or purposes of the fitting out of the Demised
Premises by the willing tenant during which no rent or a concessionary or
discounted rent is payable) at which the Demised Premises might reasonably be
expected to be let with vacant possession on the rent review date in the open
market (without the willing landlord taking a premium or any other
consideration for the grant thereof) by a willing landlord to a willing tenant
for a term of ten years commencing on the rent review date and otherwise upon
the terms and conditions (save as to the amount of rent payable but including these
provisions for the review of rent) contained in this lease and on the
assumptions (if not facts) that:

 

3.2.1.1                                       the Demised Premises are suitable and fit for immediate occupation
and use and are ready for and fitted out and equipped for immediate occupation
and use and beneficial trading for the purpose or purposes required by the
willing tenant

 

3.2.1.2                                       no work has been carried out to the Demised Premises by or on behalf
of the Tenant or any undertenant during the Term which has diminished the
rental value of the Demised Premises

 

3.2.1.3                                       if the Demised Premises or the Building or the Estate or the
Adjoining or Neighbouring Premises or any part or parts thereof have been
destroyed or damaged they have been fully rebuilt and reinstated

 

3.2.1.4                                       all the covenants on the part of the Landlord (but not in relation
to any subsisting and material breaches of any of its covenants) and the Tenant
contained in this lease have been fully performed and observed

 

3.2.1.5                                       all Value Added Tax payable by the Tenant under the provisions of
this lease is recoverable by the Tenant in full and would be recoverable by
any/every prospective willing tenant

 

3.2.1.6                                       that no reduction is or ought to be made to take account of any rent
free period or period of rental concession or discount which on a new letting
with vacant possession might be granted to the incoming tenant it being assumed
that any such period has been given to the willing tenant and has expired
and/or any such discount has been given to the willing tenant

 

THERE being
disregarded:

 

3.2.1.7                                       any effect on rent of the fact that the Tenant or any undertenant
has been in occupation of the Demised Premises

 

3.2.1.8                                       any goodwill attached to the Demised Premises by reason of the
carrying on of the business of the Tenant or any undertenant

 

7

 

3.2.1.9                                       any increase in the rental value of the Demised Premises
attributable to the existence at the rent review date of any improvement (shown
to be such by the Tenant) to the Demised Premises and which is:

 

3.2.1.9.1                              completed
not more than 21 years before the rent review date regardless of whether
carried out pursuant to the terms of this lease or during the term of any
previous lease and

 

3.2.1.9.2                              carried
out with the consent (where required) of the Landlord by the Tenant or any
undertenant

 

3.2.1.10                                 the
effect on rent of the works authorised by a licence to underlet and to alter
dated 9 June 1995 and made between (1) Mesongage Limited (2) BICC
Developments Limited (3) BICC Plc and (4) Tertio Limited shall be disregarded
at the rent review date

 

3.2.2                                                any inability of the Tenant or any/every prospective willing tenant
to recover Value Added Tax

 

3.2.3                                                From and after the rent review date the yearly rent payable
hereunder shall be whichever is the higher of:

 

3.2.3.1                                       the yearly rent reserved hereunder immediately before the rent
review date and

 

3.2.3.2                                       the open market rent

 

3.2.4                                                If the Landlord and the Tenant have not agreed the open market rent
by a date one month prior to the rent review date the open market rent may at
the option of either the Landlord or the Tenant be determined by a Chartered
Surveyor of not less than ten years’ standing being experienced in the
valuation and leasing of property similar to the Demised Premises in the
location of the Demised Premises (“the Appointed Surveyor”) to be agreed upon
in writing by the Landlord and the Tenant or in default of such agreement by
the rent review date to be nominated by the President for the time being of the
Royal Institution of Chartered Surveyors (or his duly appointed deputy or any
person authorised by the President to make appointments on his behalf) upon the
application of either the Landlord or the Tenant

 

3.2.5                                                The Appointed Surveyor shall at the sole and absolute discretion of
the Landlord act either as an independent expert or as an arbitrator and his
award or determination of the open market rent by the Appointed Surveyor shall
be final and binding on the Landlord and the Tenant (and without recourse to
the provisions for arbitration contained in this lease) and the fees of the
Appointed Surveyor shall be borne as he directs or failing direction by the
Landlord and the Tenant in equal shares and paid without undue delay and if one
party pays them all that party shall be entitled to recover such proportion of
them (if any) as the other party is to pay as herein provided

 

3.2.6                                                If the Appointed Surveyor is to act as an expert:

 

3.2.6.1                                       he shall invite the Landlord and the Tenant to submit to him within
such time limits (not being less than fifteen working days) as he shall
consider appropriate a valuation accompanied if desired by a statement of
reasons and such representations and cross representations as to the amount of
the open market rent with such supporting evidence as they may respectively
wish

 

8

 

3.2.6.2                                       he shall if required by the Landlord or Tenant give written reasons
for his determination and

 

3.2.6.3                                       if the Appointed Surveyor does not give written notice of his determination
within two months of his appointment or if he shall die or become unwilling to
act or incapable of acting or if for any other reason he is unable to act then
either the Landlord or the Tenant may request the said President to discharge
the Appointed Surveyor and appoint another surveyor in his place which
procedure may be repeated as many times as necessary

 

3.2.7                                                If the Appointed Surveyor is to act as an arbitrator the arbitration
shall be conducted in accordance with the Arbitration Act 1996 except that if
any Appointed Surveyor shall die or decline to act or become incapable of
acting the President may on the application of either party discharge the
Appointed Surveyor and appoint another in his place

 

3.2.8                                                If on the rent review date the open market rent shall not have been
agreed or determined as set out above the yearly rent reserved under this lease
immediately before the rent review date shall continue to be payable until
agreement is reached or the determination of the open market rent by the
Appointed Surveyor is made and the demand payment and/or acceptance thereof
shall not be or be construed to be a waiver by the Landlord of any of its
rights and benefits under this clause 3.2 but so that immediately on demand
after such agreement or determination the difference (if any) over the amount
actually so paid and the amount which would have been payable had the agreement
or determination been made before the rent review date shall be paid by the
Tenant to the Landlord as rent recoverable in arrear together with Lower Rate
Interest on such difference for each instalment of rent due on and after the
rent review date (such interest being payable from the date on which the
instalment was due to the date of demand)

 

3.2.9                                                After any substituted rent has been ascertained under this clause
3.2 memoranda recording the amount of such rent signed by or on behalf of the
parties shall be exchanged Such memoranda shall (if the Landlord so requires)
be prepared by the Landlord’s solicitors whose proper and reasonable costs
shall be paid by the Tenant

 

3.2.10                                          For the avoidance of all doubt (and in particular but without
limitation notwithstanding clause 8) it is agreed by the Landlord and the
Tenant that time shall not be of the essence in relation to the provisions
contained above for the review of the yearly rent

 

3.3                                                       Outgoings

 

3.3.1                                                Whenever required during the Term to pay and discharge and indemnify
the Landlord against all monetary obligations of any kind (including rates and
taxes) (whether parliamentary parochial local or of any other description and
whether or not of a recurring nature but excluding any tax payable by the
Landlord occasioned by any disposition in dealing with or ownership of the
reversion of this lease) which may at any time be payable in respect of the
Demised Premises at any time during the Term or by the owner or occupier in
respect of the Demised Premises and an apportioned part as properly determined
by the Landlord of any such obligations which may be payable in respect of the
Demised Premises in common with other premises

 

3.3.2                                                If the Landlord shall suffer any loss of rating relief which may be
applicable to empty premises after the end of the Term by reason of such relief
being allowed to the 

 

9

 

Tenant in
respect of any period before the end of the Term to make good such loss to the
Landlord

 

3.4                                                       Statutory Services

 

To pay for all
gas electricity and water consumed on the Demised Premises together with all
connection and standing charges and to comply at the Tenant’s expense with all
requirements of the relevant supply Boards insofar as such requirements relate
to or affect the Demised Premises

 

3.5                                                       Value Added Tax

 

In addition to
all rents service charges insurance costs fees disbursements expenses and other
sums payable by the Tenant from time to time hereunder to pay also on demand
and indemnify the Landlord from and against:

 

3.5.1                                                Value Added Tax chargeable in respect of any rents or other payments
made by the Tenant under any of the terms of or in connection with this lease
and/or in respect of any supply of goods or services by the Landlord to the
Tenant and

 

3.5.2                                                a sum equal to the amount of any Value Added Tax (and/or any tax of
a similar nature that may be substituted for it or levied in addition to it)
chargeable on any payments fees charges or costs where the Tenant is obliged to
reimburse the Landlord or indemnify the Landlord against such payments fees
charges or costs

 

3.6                                                       Landlord’s costs on breach

 

To pay to the
Landlord all costs fees charges disbursements and expenses (including without
prejudice to the generality of the above those payable to counsel solicitors
surveyors bailiffs and any superior landlord and mortgagee) properly and
reasonably incurred by the Landlord for the purpose of or incidental to or in
contemplation of the recovery of arrears of rent or the preparation and service
of a notice under section 146 or 147 of the Law of Property Act 1925 requiring
the Tenant to remedy a breach of any of the covenants in this lease even if
forfeiture for such breach is avoided otherwise than by relief granted by the
Court or incidental to the preparation and service of a schedule of
dilapidations

 

3.7                                                       Costs of Distress

 

To pay to the
Landlord all costs charges and expenses (including all sheriffs’ and bailiffs’
fees) properly incurred by the Landlord in exercising any right of distress
against the Tenant

 

3.8                                                       Costs of consents

 

To pay to the
Landlord all reasonable costs fees charges disbursements and expenses properly incurred
resulting from any applications by the Tenant for any consent required by this
lease including cases where the application is withdrawn or consent is refused

 

REPAIRS
AND ALTERATIONS

 

3.9                                                       Tenant’s repair and redecoration

 

To keep the
Demised Premises in good and substantial repair decorative order and condition
and (insofar as the cost thereof does not properly form part of the Service
Charge) as often as may be necessary for the purpose of repair to renew any of
the 

 

10

 

landlord’s
fixtures and fittings in the Demised Premises or substitute new ones of
equivalent quality and value to the Landlord’s reasonable satisfaction (damage
by the Insured Risks excepted unless payment of the insurance monies is
withheld in whole or in part by reason of any act neglect or default of the
Tenant or any person under its control)

 

3.10                                                To decorate

 

In the fifth
year and also during the last quarter of the last year of the Term (however
determined) to paint all the inside walls wood and metalwork and other
previously painted inside parts of the Demised Premises and all additions
thereto with two coats of good quality paint and in the case of redecoration in
the last quarter of the last year of the Term in a colour previously approved
in writing by the Landlord (such approval not to be unreasonably withheld or
delayed) in a proper and workmanlike manner to the reasonable satisfaction of
the Landlord and with every such inside painting the Tenant will clean and
treat the inside of all aluminium doors and windows and grain varnish and
colour the inside wood of the Demised Premises previously so grained varnished
and coloured

 

3.11                                                Repairs after Landlord’s notice

 

Without
prejudice to any other obligation upon the Tenant within two months after any
notice from the Landlord of defects in the state of repair and condition of the
Demised Premises for which the Tenant is responsible (or immediately in case of
emergency) to make good all such defects at the Tenant’s cost PROVIDED ALWAYS
that if the Tenant fails to comply with the requirements of any such notice it
shall be lawful for the Landlord (but without prejudice to the right of
re-entry under this Lease) or its agents employees and licensees to enter the
Demised Premises at any time after the expiration of such two months (or
immediately in case of emergency) to execute such repairs and works the cost of
which (including any surveyors fees) shall be repaid by the Tenant to the
Landlord on demand and in default shall be immediately recoverable by action or
by distress as rent in arrear and shall carry Higher Rate Interest

 

3.12                                                Yielding up

 

3.12.1                                          At the end of the Term to yield up to the Landlord the Demised
Premises duly kept in accordance with the Tenant’s obligations under this lease
together with all additions and improvements made in the meantime and all
fixtures Provided however that the Tenant shall be entitled to remove (and upon
written notice from the Landlord at any time shall be obliged to remove) all
tenant’s or trade fixtures making good nevertheless at the expense of the
Tenant and to the reasonable satisfaction of the Landlord any damage to the
Building caused by such removal

 

3.12.2                                          If at such time as the Tenant has vacated the Demised Premises after
the expiration of the Term the Demised Premises shall not be in a condition
consistent with clause 3.12.1 the Landlord shall be entitled to carry out the
works necessary to put the Demised Premises into such condition consistent with
clause 3.12.1 at the entire cost of the Tenant

 

3.13                                                Waste and alterations

 

3.13.1                                          Not to:

 

3.13.1.1                                 commit
any waste

 

3.13.1.2                                 make
any addition to the Demised Premises

 

11

 

3.13.1.3                                 unite
the Demised Premises with any adjoining premises

 

3.13.1.4                                 make
any alteration to the Demised Premises save as permitted by the following
provisions of this clause

 

3.13.2                                          Not to make internal non-structural alterations to the Demised
Premises without:

 

3.13.2.1                                 obtaining
and complying with all necessary consents (if any) of any competent authority
and paying all charges of any such authority in respect of such consents

 

3.13.2.2                                 making
an application to the Landlord supported by drawings and where appropriate a
specification in duplicate prepared by an architect or member of some other
appropriate profession

 

3.13.2.3                                 paying
the proper and reasonable fees of the Landlord any superior landlord any
mortgagee and their respective professional advisers

 

3.13.2.4                                 entering
into such covenants as the Landlord may require as to the execution and
reinstatement of the alterations and

 

3.13.2.5                                 ensuring
that the mechanical and electrical services in the Building and the Adjoining
or Neighbouring Premises remain unaffected thereby

 

3.13.3                                          Subject to the provisions of clause 3.13.2 not to make any internal
non-structural alterations to the Demised Premises without the prior written
consent of the Landlord such consent not to be unreasonably withheld or delayed

 

3.13.4                                          To remove any additional buildings additions alterations or
improvements made to the Demised Premises at the expiration of the Term if so
reasonably requested by the Landlord and reinstate the Demised Premises to
their former state and condition in all respects and to make good any part or
parts of the Demised Premises which may be damaged by such removal in all
respects to the reasonable satisfaction of the Landlord

 

3.13.5                                          Save as expressly provided for elsewhere in this lease not to make
connection with the Conduits that serve the Demised Premises

 

3.14                                                Items used in common

 

Insofar as
such matters are not recoverable as part of the Service Charge to pay to the
Landlord on demand a proper proportion of the proper and reasonable expenses
(including proper and reasonable professional fees and a reasonable management
charge) of cleansing repairing maintaining or rebuilding and lighting as
appropriate any thing used or enjoyed or capable of being used or enjoyed by
the Tenant or the Demised Premises in common with any other person or premises
including (without prejudice to the generality of the foregoing) any boundary
walls fences gutters sewers drains and party structures and any dispute shall
be referred to arbitration

 

ENTRY
ON THE DEMISED PREMISES BY THE LANDLORD

 

3.15                                                To view

 

To
permit the Landlord and its agents employees and licensees after at least two
working days notice and at reasonable times (except in cases of urgency or
emergency when entry can be at any time without notice) to enter the Demised
Premises to view (and to open up parts of the Demised 

 

12

 

Premises
where such opening up is required in order to view) the state and condition of
the same or any other part of the Building and to give the Tenant notice of any
defects in the state of repair and condition of the Demised Premises which are
its responsibility Provided that any such opening up shall be made good by and
at the expense of the Landlord unless it reveals a breach of the Tenant’s
covenants (in which case it shall be paid for by the Tenant) or is required or
desirable for the maintenance of the Structure of the Building (in which case
it shall be recoverable as part of the Service Charges)

 

3.16                                                To inspect

 

3.16.1                                          To permit the Landlord and all persons authorised by it to enter the
Demised Premises after not less than two working days prior written notice at
all reasonable times for taking schedules or inventories of the fixtures and
things to be yielded up at the end of the Term and during the six months
immediately preceding the end of the Term for the purpose of fixing upon any
part of the Demised Premises (but not to unduly interfere with the Tenant’s
business) a notice for reletting or selling the same and to permit all persons
with authority from the Landlord at all reasonable times during the daytime to
enter and view the Demised Premises

 

3.16.2                                          To permit at any time upon not less than two working days prior
written notice during the Term prospective purchasers of or agents instructed
in connection with the sale of the Landlord’s reversion or of any other
interest superior to the Term to view the Demised Premises without interruption
and to permit the Landlord at any time upon reasonable notice and by prior
appointment (the Tenant not to unreasonably withhold consent to the making of such
an appointment) during the Term to enter upon the Demised Premises and affix
and retain anywhere upon the Demised Premises a notice for any such sale

 

3.17                                                To permit entry to repair

 

To permit the
Landlord and any person authorised by the Landlord to enter the Demised
Premises at reasonable times upon reasonable notice (except in cases of urgency
or emergency when entry can be at any time without notice) to execute repairs
or alterations (so far as they cannot conveniently be done outside the Demised Premises)
to other parts of any Adjoining or Neighbouring Premises the person so entering
causing as little inconvenience to the Tenant as practicable and making good
forthwith all damage which may be so caused to the Demised Premises

 

OBLIGATIONS
AND REGULATIONS

 

3.18                                                Statutory obligations

 

3.18.1                                          To do anything required by virtue of or deriving validity from any
Act of Parliament for the time being in force which may be required to be done
in respect of the Demised Premises or their use whether by the landlord or
tenant or any occupier

 

3.18.2                                          To give full particulars to the Landlord of any notice direction
order or proposal for the Demised Premises made given or issued to the Tenant
by any local or public authority (including but without limitation a proposal
for alteration of the Valuation List in respect of the Demised Premises) within
seven days of receipt and if so required by the Landlord to produce it to the
Landlord and without delay to take all necessary steps to comply with the
notice direction or order and at the request of the Landlord but at the joint
cost of the Landlord and the Tenant to make or join with 

 

13

 

the Landlord
in making such objection or representation against or in respect of any notice
direction order or proposal as the Landlord shall deem expedient

 

3.18.3                                          To give notice to the Landlord of any defect in the Demised Premises
which might give rise to an obligation on the Landlord to do or refrain from
doing any act or thing in order to comply with the provisions of this lease or
the duty of care imposed on the Landlord pursuant to the Defective Premises Act
1972 and at all times to display and maintain all notices which the Landlord
may from time to time reasonably require to be displayed at the Demised
Premises

 

3.19                                                Planning

 

3.19.1                                          At all times during the Term to comply in all respects with the
provisions and requirements of the Planning Acts and all consents permissions
and conditions (if any) granted or imposed or having effect under the Planning
Acts so far as the same respectively relate to or affect the Demised Premises
or any part thereof or any operations works acts or things to be done or
omitted on the Demised Premises or the use of the Demised Premises for any
purpose

 

3.19.2                                          During the Term whenever required at the expense of the Tenant to
obtain from (as the case may be) the local planning authority or the First
Secretary of State at the Office of the Deputy Prime Minister or such other
authority as may from time to time be appropriate all such consents and
permissions (if any) as may be required for the carrying out of any operations
on the Demised Premises or the institution or continuance on the Demised
Premises of any use which may constitute development within the meaning of the
Planning Acts but so that no application for planning permission shall be made
without the previous written consent of the Landlord

 

3.19.3                                          Without prejudice to any consent which may be granted by the
Landlord or any obligation upon the Tenant under this lease not to carry out or
make any alteration or addition to the Demised Premises or any change of use of
the Demised Premises (being an alteration or change of use which is prohibited
by or for which the Landlord’s consent is required to be obtained under this
lease and for which a planning permission needs to be obtained) before a
planning permission for such work or change of use has been produced to the
Landlord and acknowledged by it in writing as satisfactory to it and the
Landlord may refuse to express its satisfaction with any such planning
permission inter alia on the ground that the period of it or any condition
contained in it or omitted from it or to which it is subject would in the
reasonable opinion of the Landlord be likely to be prejudicial to its interest
in the Demised Premises and/or any Adjoining or Neighbouring Premises

 

3.19.4                                          Unless the Landlord shall otherwise direct to carry out before the
end of the Term any works stipulated to be carried out to the Demised Premises
by a date subsequent to such determination as a condition of any planning
permission which may have been granted on any application made by or on behalf
of the Tenant or any undertenant

 

3.19.5                                          If and when called upon so to do to produce to the Landlord or its
surveyor all such plans and documents as the Landlord may reasonably require in
order to satisfy itself that the provisions of this covenant have been complied
with in all respects

 

3.19.6                                          Not to serve any purchase notice under the Planning Acts requiring
any local or other authority to purchase the Tenant’s interest in the Term

 

3.19.7                                          If the Tenant receives any compensation with respect to its interest
under this lease because of a restriction placed upon the user of the Demised
Premises under or by 

 

14

 

virtue of the
Planning Acts then if and when its interest hereunder is surrendered or
assigned or determined under the power of re-entry contained in this lease
immediately to make such provision as is just and equitable for the Landlord to
receive its due benefit from such compensation

 

3.20                                                Advertisements and display of goods

 

3.20.1                                          Not at any time to advertise audibly or visibly on or from the
Demised Premises

 

3.20.2                                          Unless otherwise agreed in writing by the Landlord not to leave
place fix or suspend anything outside the Demised Premises or to block the
access of light to the Demised Premises

 

3.20.3                                          Not to erect any signs on the exterior elevations of the Demised
Premises facing Islington High Street City Road or Torrens Street or on any
glass in the Demised Premises or without the previous consent in writing of the
Landlord to erect any signs elsewhere on the exterior of the Demised Premises

 

3.21                                                Compliance with Landlord’s regulations

 

To observe all
reasonable regulations made by the Landlord from time to time and notified in
writing to the Tenant having as their object the maintenance and general
amenity of the Adjoining or Neighbouring Premises or any part of them Provided
That such regulations shall not prevent the beneficial occupation and use of
the Demised Premises

 

3.22                                                Compliance with fire regulations

 

3.22.1                                          To comply with all requirements and recommendations from time to
time of the appropriate authority the insurers of the Demised Premises and the
Landlord in relation to fire precautions affecting the Demised Premises and in
particular to keep all requisite log-books up to date

 

3.22.2                                          To keep the Demised Premises sufficiently supplied and equipped with
such fire fighting and extinguishing appliances as shall from time to time be
required by any statute or by the fire or other competent authority or insurers
of the Demised Premises or as shall be reasonably required by the Landlord or
(at the Landlord’s option) to pay to the Landlord on demand the cost of
providing and installing any of the same and such appliances shall be open to
inspection and shall be maintained to the reasonable satisfaction of the
Landlord

 

3.22.3                                          If so required by the Landlord to connect any fire alarm system for
the Demised Premises into any fire alarm system for the Building generally

 

3.23                                                To observe covenants

 

To observe and
perform the agreements covenants and other matters contained or referred to in
the documents specified in schedule 3 in so far as the same are substantially
and capable of being enforced relate to or affect the Demised Premises and to
keep the Landlord indemnified against all actions proceedings costs claims
demands expenses and liability in any way relating thereto

 

15

 

USE
OF THE DEMISED PREMISES

 

3.24                                                User

 

Not to use the
Demised Premises otherwise than as business commercial or professional offices
(but not as diplomatic offices or as a betting office or bookmaker’s office or
passport office or a Social Security or other welfare benefits office or a Job
Centre or employment agency or exchange or for any sales of goods on the
Demised Premises to visiting members of the public or as a public caller office
for either the payment of welfare benefits or the processing of immigration
applications) or for such other use within Class B1 of the Town and Country
Planning (Use Classes) Order 1987 (notwithstanding any re-enactment or
substitution or amendment or revocation of the same) as shall first be approved
by the Landlord in writing (such approval not to be unreasonably withheld or
delayed) Provided Always that nothing in this sub-clause 3.24 shall prohibit
Evolving Systems Limited (formerly called Tertio Telecoms Limited) from using
the Demised Premises for the purposes of the recruitment of Software
Consultants but only on the basis that such recruitment of Software Consultants
is ancillary to their main office use)

 

3.25                                                Prohibitions on use

 

3.25.1                                          Not to do or allow any of the following from or on the Demised
Premises:

 

3.25.1.1                                 any
auction sale

 

3.25.1.2                                 storage
of any specially inflammable or explosive substance or material

 

3.25.1.3                                 any
activity which the Landlord reasonably considers inappropriate to the amenity
or good order of the Building and/or the Adjoining or Neighbouring Premises or
which is or which may become illegal or immoral or causes any nuisance damage
or loss to any other person

 

3.25.1.4                                 the
playing of any music or the making of any other sound audible from outside the
Demised Premises

 

3.25.1.5                                 any
thing whatsoever which may invalidate any insurance or render any increased or
extra premium payable for the insurance of the Demised Premises or other parts
of the Adjoining or Neighbouring Premises against the Insured Risks and in case
of any increase in any such premium so caused by the Tenant to repay to the
Landlord upon demand all sums paid by way of increased premiums and all
expenses incurred by it in consequence of a breach of any of the provisions
contained in this clause 3.25.1.5 and all such payments shall be added to the
rents reserved by this lease and be recoverable as rent in arrear together with
Higher Rate Interest on such sum

 

3.25.2                                          Not to use the Demised Premises or allow them to be used in
conjunction with any adjoining premises without the prior written consent of
the Landlord

 

3.25.2.1                                 not
to install or use in or upon the Demised Premises any machinery or apparatus
which will cause noise or vibration which can be heard or felt in nearby
premises or outside the Demised Premises or which may cause structural damage

 

3.25.2.2                                 to
keep all machinery and equipment upon the Demised Premises properly maintained
and in good working order and for that purpose to employ reputable contractors
to be first approved in writing by the 

 

16

 

Landlord such
approval not to be unreasonably withheld or delayed for the regular periodic
inspection and maintenance of them to renew all working and other parts as and
when necessary or when recommended by such contractors to ensure by directions
to the Tenant’s staff and otherwise that such plant apparatus and machinery are
properly operated and to avoid damage to the Demised Premises and any Adjoining
or Neighbouring Premises by vibration or otherwise

 

3.25.3                                          Not to discharge into any of the Conduits serving the Demised
Premises any oil grease or other deleterious matter or any substance which
might be or become a source of danger or injury to the drainage system

 

3.25.4.1                                 Not to bring or permit to remain on the Demised Premises any safes
machinery goods or other articles which shall or may strain or damage the
Building or any part of it

 

3.25.4.2                                 Not without the prior written consent of the Landlord to suspend
anything from any ceiling or roof of the Building

 

3.25.4.3                                 On any application by the Tenant for the Landlord’s consent under
clause 3.25.4.2 the Landlord shall be entitled to consult and obtain the advice
of an engineer or other person in relation to the ceiling loading proposed by
the Tenant and the Tenant shall repay to the Landlord on demand the reasonable
and proper fees of such engineer or other person

 

3.26                                                Obstruction

 

Not to impede
the use by any other person of any area used by the Tenant in common with any
other person

 

3.27                                                Refuse disposal

 

Not to allow
rubbish to accumulate on the Demised Premises or in the immediate vicinity

 

3.28                                                Encroachments

 

Not in any way
to obstruct the access of light to the Demised Premises or the Building nor to
permit any third person to acquire any rights in respect of the Demised
Premises and to give immediate notice to the Landlord of any attempt by such
third person so to do and on the request of the Landlord but at the cost of the
Tenant take such action as may be reasonably required for preventing any such
rights from being acquired AND the Landlord may enter upon the Demised Premises
to take such action if the Tenant fails to do so

 

3.29                                                Indemnity for the Landlord

 

To indemnify
the Landlord from and against liability in respect of all loss damage actions
proceedings claims demands costs damages liability and expenses in respect of
any breach non-observance or non-performance of the tenants covenants within
this lease

 

3.30                                                Assignment and Underletting

 

Alienation

 

In this clause
3.30 the following expressions shall have the following meanings.

 

17

 

“Application”                                                                     the application made by the Tenant for the Landlord’s consent to the
Proposed Assignment

 

“Current Tenant”                                                   the Tenant in whom the Term is vested at the date of the Application

 

“Proposed Assignee”                           the person to whom the Current Tenant wishes to assign this lease as
stated in the Application

 

“Proposed Assignment”             the assignment for which Landlord’s consent is requested by the
Application

 

“Proposed Guarantor”                         the person who will guarantee to the Landlord the obligations of the
Proposed Assignee but this expression shall not include the Current Tenant

 

3.30.1                                          Not to hold on trust for another or (save pursuant to a transaction
permitted by and effected in accordance with the provisions of this lease) part
with or share the possession of the whole or any part of the Demised Premises
or permit another to occupy the whole or any part of the Demised Premises

 

3.30.2                                          Not to assign part only of the Demised Premises

 

3.30.3                                          Not to mortgage or charge the whole or any Permitted Part of the
Demised Premises save at arm’s length to a bona fide bank or other substantial
financial institution and then only with the prior written consent of the
Landlord (such consent not to be unreasonably withheld or delayed) save that no
consent shall be required for the creation of any floating charges

 

3.30.4                                          Not to underlet any part of the Demised Premises save a Permitted
Part in accordance with this clause 3.30

 

3.30.5                                          For the purposes of section 19(1A) of the 1927 Act it is agreed that
the Landlord may withhold its consent to an assignment of the whole of the
Demised Premises in the following circumstances:

 

3.30.5.1                                 where
the Proposed Assignee enjoys diplomatic or state immunity

 

3.30.5.2                                 where
the Proposed Assignee:

 

3.30.5.2.1                        is
incorporated established or ordinarily resident or

 

3.30.5.2.2                        primarily
operates its business or

 

3.30.5.2.3                        predominantly
holds its assets

 

otherwise than
in the United Kingdom or a jurisdiction where reciprocal arrangements exist for
the enforcement of judgements of the Courts of the United Kingdom

 

3.30.5.3                                 where
in the reasonable opinion of the Landlord the Proposed Assignee is not of
sufficient financial standing to enable it to comply with the covenants on the
part of the Tenant and the conditions contained in this lease

 

3.30.5.4                                 where
it is proposed that the Proposed Guarantor shall act as guarantor for the
Proposed Assignee pursuant to clause 3.30.7 and the circumstances described in
clauses 3.30.5.1  3.30.5.2 and 3.30.5.3
but 

 

18

 

with the
substitution of references to the Proposed Guarantor for references to the
Proposed Assignee or any of them exist PROVIDED that if there is a Proposed
Guarantor and none of the said circumstances exist in relation to the Proposed
Guarantor then the Landlord shall not be entitled to withhold its consent pursuant to this clause 3.30.5 only on the grounds
that any of the said circumstances exist in relation to the Proposed Assignee

 

3.30.6                                          For the purposes of section 19(1A) of the 1927 Act it is further
agreed that:

 

3.30.6.1                                 any
consent of the Landlord to an assignment of the whole of the Demised Premises
shall be subject to the payment to the Landlord of all rents and other sums
which have become due and payable under this lease prior to the date of
completion of the Proposed Assignment

 

3.30.6.2                                 the
Landlord may withhold its consent to the Proposed Assignment until the Landlord
has received certified copies of the audited accounts of the Proposed Assignee
and (if applicable) the Proposed Guarantor for each of the three financial
years of the Proposed Assignee and (if applicable) the Proposed Guarantor
immediately preceding the date of the Application or where the Proposed Assignee
or (as the case may be) the Proposed Guarantor is a limited company and either
its accounts for the financial year immediately preceding the date of the
Application have not been audited or it has not been trading for the three
years immediately preceding the date of the Application such audited management
or other accounts as are available for each of those three years and has had a
reasonable opportunity to consider the same

 

3.30.6.3                                 the
Proposed Assignee shall covenant with the Landlord to comply with section 6(1)
of the 2002 Act in respect of the assignment and indemnify and keep indemnified
the Landlord from and against all actions proceedings costs claims losses and
liabilities arising as a result of any failure to do so

 

3.30.7                                          For the purposes of section 19(1A) of the 1927 Act and section 16 of
the 1995 Act it is agreed that any consent of the Landlord to an assignment of
the whole of the Demised Premises shall be subject to a condition that the
Current Tenant shall prior to such assignment being completed execute and
deliver to the Landlord an authorised guarantee agreement which shall be
prepared by the Landlord’s solicitors containing covenants on the part of the
Current Tenant in such form as the Landlord may reasonably require and in compliance
with section 16 of the 1995 Act

 

3.30.8                                          If the Landlord reasonably so requires the Tenant shall obtain a
guarantor (who shall be a person who is reasonably acceptable to the Landlord)
for any person to whom this lease is to be assigned and such guarantor shall
execute and deliver to the Landlord a deed containing covenants by that
guarantor (or if more than one joint and several covenants) with the Landlord
as a primary obligation in the terms set out in clause 7 (with any necessary
changes) or in such other terms as the Landlord may reasonably require

 

3.30.9                                          Without prejudice to the foregoing provisions of this clause the
Tenant shall not assign the whole of the Demised Premises without the prior
written consent of the Landlord and (save in relation to the circumstances set
out in clause 3.30.5 and the conditions mentioned in clauses 3.30.6 and 3.30.7 which shall have effect in accordance with
section 19 of the 1927 Act and the 1995 Act) the Landlord shall not
unreasonably withhold or delay such consent and the parties hereby agree that
in 

 

19

 

considering
whether or not the Landlord is reasonably withholding such consent due and
proper regard shall be had to the provisions and effect of the 1995 Act

 

3.30.10                                    The
Landlord may at any time or times during the Term abandon any of the
circumstances set out in clause 3.30.5 and/or any of the conditions referred to
in clause 3.30.6 by serving written notice to that effect on the Tenant and
upon service of any such notice the circumstance(s) or condition(s) therein
specified shall be deemed to be deleted from this lease and of no further
effect

 

3.30.11                                    Not
to underlet the whole of the Demised Premises or a Permitted Part save in
accordance with the provisions of clauses 3.30.12 and 3.30.13 hereof and then
only with the prior written consent of the Landlord which consent shall not be
unreasonably withheld or delayed

 

3.30.12                                    That
each and every permitted underlease shall be granted without any fine or
premium at a rent not less than the then open market rental value of the
premises to be underlet (“the underlet premises”) such rent being payable in
advance on the usual quarter days and shall contain provisions:

 

3.30.12.1                           for the
upwards only review of the rent reserved by such underlease on the bases and on
the dates on which the yearly rent is to be reviewed under this lease

 

3.30.12.2                           prohibiting
the undertenant from doing or allowing any act or thing in relation to the
underlet premises inconsistent with or in breach of the provisions of this
lease

 

3.30.12.3                           for
re-entry by the Landlord on breach of any covenant by the undertenant

 

3.30.12.4                           imposing an
absolute prohibition against all dispositions of or other dealings whatever
with the underlet premises other than an assignment or charge of the whole

 

3.30.12.5                           prohibiting
any assignment of the whole without the prior consent of the Landlord which
shall not be unreasonably withheld or delayed under this lease and any mortgage
or charge of the whole save at arm’s length to a bona fide bank or other
substantial institution and then only with the prior written consent of the
Landlord under this lease which shall not be unreasonably withheld or delayed

 

3.30.12.6                           prohibiting
the undertenant from permitting another to occupy the whole or any part of the
underlet premises

 

3.30.12.7                           providing
that for the purposes of section 19(1A) of the 1927 Act and section 16 of the
1995 Act any consents to an assignment of the underlease shall be subject to a
condition that the undertenant of the underlease shall prior to such assignment
being completed execute and deliver to the Tenant and the Landlord of this
lease a deed which shall be prepared by the Landlord’s solicitors containing
covenants on the part of the then undertenant with the Tenant and as separate
covenants with the Landlord in such form as the Landlord may reasonably require

 

3.30.12.8                           excluding
the operation of sections 24 to 28 (inclusive) of the 1954 Act in relation to
the tenancy created by such underlease

 

20

 

3.30.12.9                           requiring
the undertenant to comply with section 6(1) of the 2002 Act in respect of the
underlease and to indemnify and keep indemnified the Landlord from and against
all actions proceedings costs claims losses and liabilities arising as a result
of any failure to do so

 

3.30.13                                    Prior
to any permitted underletting to procure that:

 

3.30.13.1                           the
undertenant enters into direct covenants with the Landlord to perform the
covenants on the part of the Tenant contained in this lease (except payment of
all the rents reserved by the lease) insofar as the same affect or relate to
the premises comprised in such underlease

 

3.30.13.2                           if the
Landlord shall reasonably so require at least two directors of the undertenant
(if the permitted undertenant is a limited company) or some other guarantor or
guarantors reasonably acceptable to the Landlord enter into direct covenants
with the Landlord in similar form to the Guarantor’s covenants in this lease
but with such amendments as shall be necessary to make them applicable to an
underlease

 

3.30.13.3                           an order of
the court authorising an agreement between the parties to such underlease
excluding the operation of sections 24 to 28 (inclusive) of the 1954 Act in
relation to the tenancy created by such underlease has been obtained and
produced to the Landlord

 

3.30.14                                    To
enforce the performance and observance by every such undertenant of the
provisions of the underlease and not at any time either expressly or by
implication to waive any of the covenants or conditions on the part of any
undertenant or assignee of any underlease or any breach thereof nor (without
the consent of the Landlord) vary the terms of any permitted underlease insofar
as such terms were required in order to comply with the provisions of this
lease and not to be party or privy to any agreement or arrangement for the
commutation in whole or in part of any annual rent to be reserved and made
payable by any underletting and no rent reserved by an underlease shall be
payable more than one quarter in advance

 

3.30.15                                    In
relation to any permitted underlease:

 

3.30.15.1                           to ensure
that the rent is reviewed in accordance with the terms of the underlease

 

3.30.15.2                           not to
agree the reviewed rent with the undertenant without the prior written approval
of the Landlord (such approval not to be unreasonably withheld or delayed)

 

3.30.15.3                           to give
notice to the Landlord of the details of the agreement or determination of
every rent review within fourteen days

 

3.30.16                                    Prior
to the assignment of any permitted underlease the Tenant shall procure that
there are delivered:

 

3.30.16.1                           to the
Landlord a deed containing covenants by the assignee with the Landlord in such
form as the Landlord may reasonably require to perform and observe all the
tenant’s covenants in and all other provisions of the underlease during the
residue of the term of the underlease (including any continuation thereof) and

 

3.30.16.2                           to the
Landlord and separately to the Tenant a deed containing covenants by the
assignor with the Landlord in such form as the 

 

21

 

Landlord may
reasonably require if the Landlord’s consent to such assignment is subject to a
condition that the undertenant enters into a deed as contemplated by clause
3.30.12.7

 

3.30.16.3                           to the
Landlord a deed containing covenants by the assignee with the Landlord to
comply with section 6(1) of the 2002 Act in respect of the assignment and
indemnify and keep indemnified the Landlord from and against all actions
proceedings costs claims losses and liabilities arising as a result of any
failure to do so

 

3.30.17                                    Prior
to the grant of an underlease of any Permitted Part the Tenant will obtain any
planning permission and other consents or approvals required and subject to the
Landlord first approving in writing any such permission and consents (such
approval only to be withheld on the basis that in the Landlord’s reasonable
opinion any condition does or might prejudice the Landlord’s interest in the
Demised Premises or the Adjoining or Neighbouring Premises or any part or parts
thereof) the Tenant will carry out all necessary works (which have been
approved by the Landlord in accordance with clause 3.13) to enable such
Permitted Part and the remainder of the Demised Premises to form separate
self-contained accommodation all such works to be carried out in a good and
workmanlike manner and in accordance with plans and specifications which shall
have first been approved by the Landlord the approval of the Landlord being
subject to the same conditions and provisions and as set out in clause 3.13

 

3.30.18                                    Notwithstanding
anything herein contained at no time during the Term shall more than one
Permitted Part be underlet at any time

 

3.30.19                                    Within
21 days of any written request by the Landlord to supply to the Landlord such
information as the Landlord may reasonably require in respect of any
application made pursuant to this clause 3.30 and in respect of any tenants or
undertenants or occupiers of the Demised Premises including copies of any
leases or other documents relating thereto and in respect of any expenditure
(incurred by the Tenant within twelve months of such request) on repair and
maintenance of the Demised Premises

 

3.30.20                                    Notwithstanding
anything herein contained it is hereby agreed and declared that the Tenant may
without any consent of the Landlord share occupation of the Demised Premises or
any part or parts thereof with (as licensee only)

 

3.30.20.1                           any wholly
owned subsidiary (as defined by section 736 of the Companies Act 1985) for the
time being of the Tenant

 

3.30.20.2                           any holding
company (as defined by the said section 736) for the time being of the Tenant
(not being the Tenant itself)

 

PROVIDED
THAT no relationship of landlord and tenant is thereby created and that any
such company or body immediately vacates the Demised Premises on its ceasing to
be a company as described in clauses 3.30.20.1 and 3.30.20.2

 

3.31                                                Registration

 

3.31.1                                          To register with the Landlord within 21 days’ notice of any dealing
or devolution whatsoever with the interest and estate created by this lease (or
any review of the rent payable under an underlease) together with the identity
and address of any person (whether mediate or intermediate) to whom any
interest or estate has passed and produce to the Landlord’s solicitors a
certified copy of the assurance 

 

22

 

underlease or
other relevant deed or document (including a rent review memorandum) and to pay
to them their reasonable fees for such registration

 

3.31.2                                          Within seven days of completion of the registration of such
assignment or underlease or other disposition or devolution pursuant to the
2002 Act to provide to the Landlord official copies showing the registration
thereof

 

3.32                                                Covenants in the Superior Lease

 

To observe and
perform the covenants on the part of the Landlord as tenant under the Superior
Lease (save for the payment of rents) insofar as the same relate to or affect
the Demised Premises

 

3.33                                                Information

 

If called upon
to do so to furnish to the Landlord or any person acting as the third party
determining any rent in default of agreement between the parties under any
provisions for rent review contained in this lease such information as may
reasonably be requested in writing in relation to the implementation of any
provisions for rent review

 

3.34                                                Keyholders

 

To ensure that
at all times the Landlord has written notice of the name home address and home
telephone number of at least one keyholder of the Demised Premises

 

3.35                                                New guarantor

 

Within
fourteen days of the death during the Term of any Guarantor or of such person
having a receiver appointed under the Mental Health Act 1983 or there occurring
in relation to any Guarantor a Terminating Event as defined in clause 6.1.2 to
give notice of this to the Landlord and if so required by the Landlord at the
expense of the Tenant to procure some other person acceptable to the Landlord
to execute a guarantee in respect of the Tenant’s obligations contained in this
lease in the form of the Guarantor’s covenants contained in this lease within
28 days of being so required by the Landlord

 

3.36                                                Landlord’s rights

 

To permit the
Landlord and all others authorised by it at all times subject to the prescribed
notice periods set out in this lease during the Term to exercise without
interruption or interference any of the rights granted to it by virtue of the
provisions of this lease

 

3.37                                                2002 Act

 

3.37.1                                          To comply with section 6(1) of the 2002 Act in respect of the grant
of this lease or a subsequent assignment thereof and to indemnify and keep
indemnified the Landlord from and against all actions proceedings costs claims
losses and liabilities arising as a result of any failure to do so

 

3.37.2                                          If this lease or any easement or any other matters therein are
registered or noted in any registers pursuant to the 2002 Act then on the
expiration or sooner determination of the Term to deliver to the Landlord the
original of this lease and any other documentation in the Tenant’s possession
or control necessary to procure 

 

23

 

the closure of
the registered title thereto and the cancellation of any such noting thereof

 

4.                                                              INSURANCE

 

4.1                                                       Landlord to insure

 

The Landlord
covenants with the Tenant during the period whilst it is the Landlord and
without liability in respect of any subsequent period to use all reasonable
endeavours to ensure that the landlord under the Superior Lease keeps the
Building insured with some publicly quoted insurance company or with Lloyds’
Underwriters and through such agency as the superior landlord shall from time
to time decide subject to such exclusions excesses and limitations as may be
imposed by the insurers in accordance with the covenant to insure contained in
the Superior Lease:

 

4.1.1                                                in the full reinstatement cost of the Building against loss or
damage by the Insured Risks including architects’ surveyors’ and other
professional fees (and Value Added Tax thereon) and expenses incidental thereto
the cost of shoring up demolition and site clearance and similar expenses

 

4.1.2                                                the breakdown and explosion of any engineering and electrical plant
and machinery to the extent that they are not covered by clause 4.1.1

 

AND to use all
reasonable endeavours to ensure that the landlord under the Superior Lease
and/or the Landlord insures (subject to such exclusions excesses and
limitations as may be imposed by the insurers) the loss of rent (excluding
Service Charge and Insurance Rent but including any Value Added Tax chargeable
on the rent firstly reserved) or rental value from time to time payable or
reasonably estimated to be payable for such period (being four years) as may be
reasonably required by the Landlord from time to time having regard to the
likely period required for reinstatement of the Building in the event of
partial or total destruction and property owners’ liability and such other
insurances as the Landlord or any superior landlord may from time to time deem
necessary to effect

 

4.2                                                       Landlord to produce evidence of insurance

 

At the request
of the Tenant the Landlord shall as soon as reasonably practicable produce to
the Tenant reasonable evidence from the insurers of the terms of the policy of
such insurance and the fact that the policy is subsisting and in effect

 

4.3                                                       Destruction of the Building

 

If the Demised
Premises or any part of the Building is destroyed or damaged by any of the
Insured Risks but subject always to the provisions of clause 4.4 hereof then:

 

4.3.1                                                unless payment of the insurance monies shall be refused in whole or
in part by reason of any act or default of the Tenant or any undertenant or any
person under its or their control and

 

4.3.2                                                subject to the Landlord being able to obtain any necessary planning
consents and all other necessary licences approvals and consents which the
Landlord shall use its reasonable endeavours to obtain but shall not be obliged
to institute any appeals and

 

24

 

4.3.3                subject to the necessary labour and materials being and remaining
available which the Landlord shall use its reasonable endeavours to obtain as
soon as practicable

 

the Landlord shall use its reasonable
endeavours to procure that the superior landlord under the Superior Lease lays
out the net proceeds of such insurance (other than any in respect of loss of
rent) in the rebuilding and reinstatement of the premises so destroyed or
damaged substantially as the same were prior to any such destruction or damage

 

4.4                                                       Option to determine by the Landlord or the Tenant

 

If any destruction or damage shall render
the Building or the Demised Premises or the means of access thereto or the
plant and equipment serving the Demised Premises unfit for use or occupation
and such destruction or damage is not reinstated within three years and six
months of such destruction or damage then either the Landlord or the Tenant may
determine this lease by giving to the other not less than six months’ notice in
writing but in the case of the Tenant it shall not be entitled to give notice
where the insurance monies are wholly or partially irrecoverable by reason
solely or in part of any act default or neglect of the Tenant its servants
agents or licensees and such determination shall be without prejudice to any
claim by either party against the other in respect of any antecedent breach of
covenant PROVIDED ALWAYS that if such option shall be exercised then the
Landlord shall be relieved from the obligation to lay out the net proceeds of
such insurance as aforesaid and shall be solely entitled to all monies payable
under or by virtue of any such insurance

 

4.5                                                       Frustration

 

If for any reason whatsoever the obligation
by the Landlord to rebuild or reinstate as set out in this lease or that of the
superior landlord under the Superior Lease becomes impossible to perform such
obligation shall immediately be deemed to have been discharged and the Landlord
shall be solely entitled to all monies payable by virtue of any such insurances
and the Landlord may at any time thereafter by notice in writing given to the
Tenant determine this lease but without prejudice to any claim by either party
against the other in respect of any antecedent breach of covenant

 

4.6                                                       Payment of insurance monies refused/excess

 

4.6.1                                                If the payment of any insurance monies is refused in whole or in
part as a result of some act or default of the Tenant or any undertenant or any
person under its control the Tenant shall pay to the Landlord on demand the
amount so refused together with Higher Rate Interest on such amount from the
date of such demand

 

4.6.2                                                If at any time any claim shall be made under the insurance policy
effected by the Landlord against the Insured Risks the Tenant shall repay to
the Landlord on demand any amount (or a proportion thereof as properly
determined by the Lessor where the claim relates to the Demised Premises and
other premises) which may be deducted or disallowed by the insurers pursuant to
any excess provision in the insurance policy upon settlement of any claim

 

4.7                                                       Benefit of other insurances

 

If the Tenant becomes entitled to the
benefit of any insurance on the Demised Premises which is not effected or
maintained in pursuance of the obligations contained in this lease then the
Tenant shall apply all monies received by virtue of

 

25

 

such insurance in making good the loss or
damage in respect of which such monies were received

 

4.8                                                       Insurance becoming void

 

The Tenant shall not do anything to cause
any policy of insurance in respect of the Demised Premises or the Building and
against damage by any of the Insured Risks to become void or voidable or to
cause the rate of premium payable to be increased and shall repay on demand to
the Landlord all sums paid by way of increased premiums and all expenses
incurred by the Landlord

 

4.9                                                       Requirements of insurers

 

The Tenant shall at all times comply with
all requirements of the superior landlord’s and/or the Landlord’s insurers so
far as such requirements are known to the Tenant

 

4.10                                                Notice by Tenant

 

The Tenant shall immediately upon becoming
aware of the same give notice to the Landlord of the occurrence of any event
against which insurance is likely to have been effected by the Landlord or any
superior landlord

 

4.11                                                Cesser of rent

 

If the Demised Premises or the Building or
any part of either of them is destroyed or damaged by any of the Insured Risks
so as to render the Demised Premises unfit for occupation and use or
inaccessible and the policy or policies of insurance have not been vitiated or
payment of the policy monies refused in whole or in part in consequence of some
act or default of the Tenant or any undertenant or any person under the Tenant’s
and/or the undertenant’s control then the rent first reserved under this lease
(or a fair proportion according to the nature and extent of the damage
sustained) shall be suspended until the Demised Premises shall be again
rendered fit for occupation and use and accessible or until the expiration of
four years commencing on the date of the destruction or damage (whichever shall
be the earlier) any dispute regarding the cesser of rent shall be referred to
arbitration PROVIDED ALWAYS that under no circumstances shall the amount of the
rent which ceases to be payable hereunder exceed the amount received by the
Landlord in respect of the loss of rent insurance relating to the Demised
Premises

 

5.                                                              LANDLORD’S COVENANTS

 

5.1                                                           Quiet enjoyment

 

The Landlord covenants that the Tenant may
peaceably and quietly hold and enjoy the Demised Premises for the Contractual
Term without any interruption from the Landlord or any person lawfully claiming
through under or in trust for the Landlord

 

5.2                                                       Services

 

Subject to the payment by the Tenant of the
Service Charge the Landlord covenants with the Tenant to provide or procure the
provision of such Services as the Landlord considers appropriate and desirable
for the proper management maintenance and operation of the Estate the Building
and/or the Car Park acting at all times in accordance with the principles of
good estate management (it being expressly agreed that the principles of good
estate management require the lifts of the Building to be in working order and
for the Demised Premises to be supplied as appropriate with heating and air
conditioning) Provided Nevertheless that the

 

26

 

Landlord shall not be responsible for any
breakdown or delay in the provision of any of the Services due to circumstances
beyond the entire control of the Landlord

 

5.3                                                       Superior lease

 

The Landlord with the Tenant by way of
indemnity only to observe and perform the covenants on the part of the tenant
contained in the Superior Lease but only insofar as they are not the
responsibility of the Tenant pursuant to the terms of this lease

 

6.                                                              PROVISOS AND AGREEMENTS

 

PROVIDED ALWAYS IT IS HEREBY AGREED AND
DECLARED as follows:

 

6.1                                                       Re-entry

 

6.1.1                                                If and whenever during the Term:

 

6.1.1.1             the rents (or any of them or any part of them) under this lease are
outstanding for 21 days after becoming due whether formally demanded or not or

 

6.1.1.2             there is a breach by the Tenant or the Guarantor of any covenant or
other term of this lease or any document supplemental to this lease or

 

6.1.1.3             there occurs in relation to the Tenant or any Guarantor a
Terminating Event as defined in clause 6.1.2

 

the Landlord may re-enter the Demised
Premises (or any part of them in the name of the whole) at any time (and even
if any previous right of re-entry has been waived) and then the Term will
absolutely cease but without prejudice to any rights or remedies which may have
accrued to the Landlord against the Tenant or the Guarantor in respect of any
breach of covenant or other term of this lease (including the breach in respect
of which the re-entry is made)

 

6.1.2                                                For the purposes hereof “Terminating Event” means any of the
following:

 

6.1.2.1             in relation to an individual:

 

6.1.2.1.1          the individual failing to pay a debt or debts which is or are in the
aggregate equal to or in excess of the bankruptcy level from time to time and a
statutory demand in respect thereof having been neither complied with nor set
aside

 

6.1.2.1.2          the making of an application to the Court for an interim order under
part VIII of the Insolvency Act 1986

 

6.1.2.1.3          the presentation of a bankruptcy petition in respect of the
individual

 

6.1.2.1.4          the appointment of an interim receiver in respect of the individual’s
property or any of it

 

6.1.2.1.5          the making of a bankruptcy order in respect of the individual (whether
in England or elsewhere)

 

6.1.2.2             in relation to a company:

 

27

 

6.1.2.2.1          the presentation of a petition for the winding up of the company

 

6.1.2.2.2          the passing of a resolution to wind up the company (other than in
connection with a member’s voluntary winding up for the purposes of an
amalgamation or reconstruction which has the prior written consent of the
Landlord) or the convening of a meeting of the company’s creditors for the
purposes of considering a resolution that the company be wound up voluntarily

 

6.1.2.2.3          the making of a winding up order in relation to the company (whether
in England or elsewhere)

 

6.1.2.2.4          any person becoming entitled to appoint an administrative receiver
of the undertaking of the company or any part of it

 

6.1.2.2.5          the appointment of such an administrative receiver

 

6.1.2.2.6          the passing of a resolution to present a petition for an
administration order in respect of the company

 

6.1.2.2.7          the presentation of a petition for the making of an administration
order in respect of the company

 

6.1.2.2.8          the making of an administration order in respect of the company

 

6.1.2.2.9          the directors of the company or a nominee convening a meeting of the
company’s creditors or any of them or submitting a proposal in respect of a
voluntary arrangement to the company’s creditors or any of them pursuant to
part I of the Insolvency Act 1986

 

6.1.2.2.10        the company making an application to the Court under section 425
of the Companies Act 1985

 

6.1.2.2.11        the publication of a notice pursuant to section 652 of the
Companies Act 1985 in the Gazette with a view to the Company’s name being
struck off the Register of Companies (whether or not the Company is struck off
or is subsequently re-stored on such Register)

 

6.1.2.3             in relation to any person (whether an individual or a company):

 

6.1.2.3.1          the convening of a meeting of the person’s creditors or any of them
or the entering into of any arrangement scheme compromise moratorium or
composition with the person’s creditors or any of them (whether pursuant to
part I or part VIII of the Insolvency Act 1986 or otherwise)

 

6.1.2.3.2          the appointment of a receiver in respect of any of the person’s
assets

 

6.1.2.3.3          any steps being taken to enforce any security over the person’s
property or to repossess goods in the person’s possession under any hire
purchase agreement

 

28

 

6.1.2.3.4          any distress attachment execution or other legal process being
levied on or enforced against any of the person’s assets

 

6.2                                                       Exclusion of Landlord’s liability

 

The Landlord shall be under no liability
for or in respect of any loss or damage which may be caused to the Tenant its
employees or visitors or to the Demised Premises by reason of any act neglect
or default of any third party on any part of the Building and/or the Adjoining
or Neighbouring Premises or in respect of any breach of any obligation on the
part of the Landlord herein contained for repair or maintenance unless the
Landlord has received notice in writing that repair is necessary unless it
knows of the necessity for such work and then only if it is able to obtain all
necessary permissions or consents to the carrying out of such work and if the
necessary labour and materials are available

 

6.3                                                       Landlord not responsible for goods

 

The Landlord shall be under no
responsibility whatsoever in respect of any goods or articles left for the
Tenant with the Landlord’s employees

 

6.4                                                  Disputes

 

Any dispute arising between the Tenant and any
third party as to any easement or rights whatsoever in connection with the use
or occupation of the Demised Premises and any other part of the Building or as
to the Common Parts the Common Accessways and/or any Adjoining or Neighbouring
Premises shall be decided by the Landlord or whom it may direct whose decision
shall be final and binding on the Tenant

 

6.5                                                       Notices

 

The provisions of section 196 of the
Law of Property Act 1925 as amended by the Recorded Delivery Service Act 1962
shall apply to the giving and service of all notices and documents under or in
connection with this lease except that section 196 shall be deemed to be
amended as follows:

 

6.5.1                the final words of section 196 (4) ’... and that service
.... be delivered’ shall be deleted and there shall be substituted ‘... and that
service shall be deemed to be made on the second Working Day after the
registered letter has been posted “Working Day” meaning any day from Monday to
Friday (inclusive) other than Christmas Day Good Friday and any statutory bank
or public holiday’

 

6.5.2                any notice or document shall also be sufficiently served if sent by
telephonic facsimile transmission or any other means of electronic written
transmission to the party to be served and that service shall be deemed to be
made on the day of transmission if transmitted before 4 pm on a Working Day but
otherwise on the next following Working Day (as defined above)

 

and in this clause ‘party’ includes any
Guarantor

 

29

 

6.6                                                       Value Added Tax

 

All sums payable by the Tenant hereunder
which are from time to time subject to Value Added Tax shall be considered to
be tax exclusive sums and Value Added Tax at the appropriate rate shall be
payable by the Tenant in addition thereto

 

6.7                                                       Exclusion of statutory compensation

 

Any statutory right of the Tenant to claim
compensation from the Landlord on vacating the Demised Premises shall be
excluded to the extent that the law allows

 

DEVELOPMENT BY THE LANDLORD

 

6.8                                                       No rights of light etc

 

The Tenant shall not be entitled to any
rights of access of light or air to the Demised Premises which would restrict
or interfere with the free use of any of the Adjoining or Neighbouring Premises
for building or any other purpose

 

6.9                                                       Landlord free to develop

 

Nothing herein contained or implied by this
lease shall impose any restriction on the use or development of any land or
buildings of the Landlord (other than the Demised Premises) whether or not
comprised within the Building and/or any Adjoining or Neighbouring Premises or
give the Tenant the right to enforce or to prevent the release or modification
of any obligation entered into by any tenant of the Landlord in respect of
property other than the Demised Premises or shall operate to prevent or restrict
in any way the development and use of any such land

 

6.10                                                Landlord free to build into Structure

 

Nothing in this lease shall restrict the
right of the Landlord at any time to build into under or upon the Structure
and/or any Adjoining or Neighbouring Premises so long as the services and
amenities properly adequate to permit the Tenant’s use and enjoyment of the
Demised Premises for the purpose permitted hereunder remain available at all
times

 

6.11                                                Exclusion of use warranty

 

Nothing in this lease or in any consent
granted by the Landlord under this lease shall imply or warrant that the
Demised Premises may lawfully be used under the Planning Acts for the purpose
authorised in this lease (or any purpose subsequently authorised)

 

6.12                                                Entire understanding

 

This Lease embodies the entire
understanding of the parties relating to the Demised Premises and to all the
matters dealt with by any of the provisions of this lease

 

6.13                                                Representations

 

The Tenant acknowledges that this lease has
not been entered into in reliance wholly or partly on any statement or
representation made by or on behalf of the Landlord except any such statement
or representation that is expressly set out in this lease or is given in
writing by the Landlord’s solicitors or in written replies of the Landlord’s
solicitors given in response to preliminary enquiries raised by the Tenant’s
solicitors

 

30

 

6.14                                                Licences etc under hand

 

Whilst the Landlord is a limited company or
other corporation all licences consents approvals and notices required to be
given by the Landlord shall be sufficiently given if given under the hand of a
director the secretary or other duly authorised officer of the Landlord

 

6.15                                                Tenant’s property

 

If after the Tenant has vacated the Demised
Premises on the expiry of the Term any property of the Tenant remains in or on
the Demised Premises and the Tenant fails to remove it within seven days after
being requested in writing by the Landlord to do so or if after using its reasonable
endeavours the Landlord is unable to make such a request to the Tenant within
fourteen days from the first attempt so made by the Landlord:

 

6.15.1                                          the Landlord may as the agent of the Tenant sell such property and
the Tenant will indemnify the Landlord against any liability incurred by it to
any third party whose property shall have been sold by the Landlord in the
mistaken belief held in good faith (which shall be presumed unless the contrary
be proved) that such property belonged to the Tenant

 

6.15.2                                          if the Landlord having made reasonable efforts is unable to locate
the Tenant the Landlord shall be entitled to retain such proceeds of sale
absolutely unless the Tenant shall claim them within three months of the date
upon which the Tenant vacated the Demised Premises and

 

6.16                                                Enforcement of Landlord’s covenants

 

The covenants on the part of the Landlord
contained in or obligations on its part implied by this lease shall be binding
in full upon the owner of the reversion expectant upon the expiration of the
Term but shall not be enforceable against any person firm or company who has
owned such reversion after he or it shall have parted with all interest therein

 

6.17                                                Entry for Distress

 

That if the whole or any part of any
payments to be made by the Tenant to the Landlord hereunder shall be in arrear
for 21 days (whether any legal demand therefor shall have been made or not) it
shall be lawful for the Landlord to enter into and upon the Demised Premises at
any time by any means not involving assaulting any person and distrain and to
dispose of the distress or distresses then and there found and to apply the
produce thereof in or towards payment of the said payments in arrear and so
that the power of the Landlord to distrain upon the Demised Premises shall
extend to and include any tenant’s fixtures or fittings not otherwise by Law
distrainable which may from time to time be thereon

 

6.18                                                Acceptance of rent no waiver

 

That no demand for acceptance of or receipt
for rent by the Landlord after knowledge or notice received by the Landlord or
its agents or the Landlord’s surveyor of any breach of any of the Tenant’s
covenants hereunder shall operate as a waiver of any such breach

 

31

 

6.19                                                Interference with easements

 

The Landlord shall not have any liability
in damages or otherwise in respect of the manner of the exercise of the
Landlord’s absolute discretion to take or refrain from taking steps in respect
of any obstruction of or interference with any easements rights or privileges
appurtenant to the Demised Premises by any third parties

 

6.20                                                Rights easements etc

 

The operation of section 62 of the Law
of Property Act 1925 shall be excluded from this lease and the only rights
granted to the Tenant are those (if any) expressly set out in this lease and
the Tenant shall not by virtue of this lease be deemed to have acquired or be
entitled to and the Tenant shall not during the Term acquire or become entitled
to by any means whatever any easement from or over or affecting any other land
or premises now or at any time after the date of this lease belonging to the
Landlord and not comprised in this lease

 

6.21                                                Jurisdiction

 

The English Courts shall have exclusive
jurisdiction regarding all matters appertaining to this lease and the parties
hereto (including any Guarantor) and all other persons or companies concerned
with regard to this lease shall submit to such jurisdiction

 

6.22                                                Covenants relating to Adjoining or Neighbouring Premises

 

Nothing contained in or implied by this
lease shall give the Tenant the benefit of or the right to enforce or to
prevent the release or modification of any covenant agreement or condition
entered into by any tenant of the Landlord in respect of any part of any
Adjoining or Neighbouring Premises

 

6.23                                                Effect of waiver

 

Each of the Tenant’s covenants shall remain
in full force both at law and in equity notwithstanding that the Landlord shall
have waived or released temporarily any such covenant or waived or released
temporarily or permanently revocably or irrevocably any similar covenant or
covenants affecting any Adjoining or Neighbouring Premises

 

6.24                                                Perpetuity period

 

The perpetuity period applicable to this
lease shall be 80 years from the commencement of the Contractual Term and
whenever in this lease either party is granted a future interest there shall be
deemed to be included in respect of every such grant a provision requiring that
future interest to vest within the stated period and for it to be void for
remoteness if it shall not have so vested

 

7.                                                              GUARANTOR’S COVENANTS

 

The Guarantor covenants with the Landlord
that:

 

7.1                                                       To pay observe and perform

 

During the Term the Tenant shall punctually
pay the rents and observe and perform the Tenant’s Covenants (as hereinafter
defined) and other terms of this lease and if at any such time the Tenant shall
make any default in payment of the rents or in observing or performing any of
the Tenant’s Covenants (as hereinafter defined) or

 

32

 

other terms of this lease the Guarantor
will pay the rents and observe or perform the Tenant’s Covenants (as
hereinafter defined) or terms in respect of which the Tenant shall be in
default and make good to the Landlord on demand and indemnify the Landlord
against all losses damages costs and expenses arising or incurred by the
Landlord as a result of such non-payment non-performance or non-observance
(including but without limitation any costs and expenses incurred by the
Landlord in obtaining payment of any monies due from the Guarantor pursuant to
this covenant) notwithstanding:

 

7.1.1                                                Any time or indulgence granted by the Landlord to the Tenant or any
neglect or forbearance of the Landlord in enforcing the payment of the rents or
the observance or performance of the Tenant’s Covenants or other terms of this
lease or any refusal by the Landlord to accept rents tendered by or on behalf
of the Tenant at a time when the Landlord was entitled (or would after the
service of a notice under the Law of Property Act 1925 section 146 have
been entitled) to re-enter the Demised Premises

 

7.1.2                                                That the terms of this lease may have been varied by agreement
between the parties

 

7.1.3                                                That the Tenant shall have surrendered part of the Demised Premises
in which event the liability of the Guarantor under this lease shall continue
in respect of the part of the Demised Premises not so surrendered after making
any necessary apportionments under the Law of Property Act 1925 section 140
and

 

7.1.4                                                Any other act or thing by which but for this provision the Guarantor
would have been released

 

7.2                                                       To take lease following disclaimer

 

If at any time during the Term the Tenant
(being an individual) shall become bankrupt or (being a company) shall enter
into liquidation and the trustee in bankruptcy or liquidator shall disclaim
this lease or if the Crown shall disclaim this lease or if this lease shall be
forfeited by the Landlord under the right in that behalf herein contained the
Guarantor shall if the Landlord shall by notice within 90 days after such
disclaimer or forfeiture so require take from the Landlord a lease of the
Demised Premises for the residue of the Contractual Term which would have
remained had there been no disclaimer or forfeiture at the rents then being
paid under this lease and subject to the same covenants and terms as in this
lease (except that the Guarantor shall not be required to procure that any
other person is made a party to that lease as guarantor) such new/lease to take
effect from the date of such disclaimer or forfeiture and in such case the
Guarantor shall pay the costs of such new lease and execute and deliver to the
Landlord a counterpart of it

 

7.3                                                       To make payments following disclaimer

 

If this lease shall be disclaimed or
forfeited and for any reason the Landlord does not require the Guarantor to
accept a new lease of the Demised Premises in accordance with clause 7.2 the
Guarantor shall pay to the Landlord on demand an amount equal to the rents for
the period commencing with the date of such disclaimer or forfeiture and ending
on whichever is the earlier of the following dates:

 

7.3.1                the date of the expiration of a period of twelve months from the
date of the forfeiture or disclaimer and

 

7.3.2                the date (if any) upon which the Demised Premises are relet

 

33

 

7.4                                                       Tenant’s Covenants

 

The expression “Tenant’s Covenants” used in
this clause 7 means the covenants on the part of the Tenant contained in this
lease

 

7.5                                                       AGA

 

7.5.1                                                In this clause 7 “the AGA Obligations” means the covenants on the
part of the Current Tenant (as defined in clause 3.30 of this lease) and
conditions (if any) contained in any authorised guarantee agreement (as defined
in the 1995 Act) (the “Authorised Guarantee Agreement”) which the Tenant (here
meaning only the person who will be the Tenant upon the execution of this
lease) may be required to enter into pursuant to clause 3.30.7 of this lease

 

7.5.2                                                The Guarantor hereby covenants with the Landlord with effect from
the entering into of such Authorised Guarantee Agreement in the terms of
clauses 7.1 to 7.3 inclusive but with the substitution of “the AGA Obligations”
for “the Tenant’s Covenants” throughout

 

7.5.3                                                The parties hereby record their understanding that the AGA
Obligations do not constitute tenant covenants for the purposes of the 1995 Act
because they fall to be performed by a person who by reason of assignment has
ceased to be the person for the time being entitled to the Term of this lease

 

8.                                                              DETERMINATION

 

If the Tenant wishes to determine this
lease on the fifth anniversary of the commencement of the Term (“the
Determination Date”) and shall give not less than six months’ prior written
notice to the Landlord to that effect and shall at the time of the service of
that notice pay the sum of Forty thousand and seventy five pounds (£40,075) and
up to and including the Determination Date pay the principal yearly rent
reserved by this lease and at the Determination Date deliver up the Demised
Premises to the Landlord free from sub-tenancies and/or any other occupiers
then upon the expiration of such notice this lease shall absolutely cease and
determine but without prejudice to the rights of any party hereunder in respect
of any antecedent claim or breach of covenant

 

9.                                                              LANDLORD AND TENANT ACT 1954

 

9.1                                                         The Landlord and the Tenant have agreed that the provisions of
sections 24 to 28 (inclusive) of the Landlord and Tenant Act 1954 shall not
apply to the tenancy created by this lease

 

9.2                                                         The Tenant hereby confirms that before the date of this lease:

 

9.2.1                the Landlord served on the Tenant a notice dated 22 March 2005
in relation to the tenancy created by this lease (“the Notice”) in a form
complying with the requirements of schedule 1 to the Regulatory Reform
(Business Tenancies) (England and Wales) Order 2003 (“the Order”) and

 

9.2.2                the Tenant or a person duly authorised by the Tenant in relation to
the Notice made a statutory declaration (“the Declaration”) dated 23 March 2005
in a form complying with the requirements of schedule 2 of the Order

 

34

 

9.3                                                         The Tenant further confirms that where the Declaration was made by a
person other than the Tenant the declarant was duly authorised by the Tenant to
make the Declaration on the Tenant’s behalf

 

9.4                                                         The Landlord and the Tenant confirm that this lease was not granted
pursuant to any agreement for lease

 

10.                                                       CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999

 

10.1                                                   Unless the right of enforcement is expressly provided for in this
lease a person who is not a party to this lease may not by virtue of the
Contracts (Rights of Third Parties) Act 1999 enforce any of its terms

 

10.2                                                   Except to the extent that there is express provision in this lease
to the contrary the parties may by agreement rescind or vary this lease without
the consent of any such person

 

IN WITNESS whereof the parties to this lease have caused this document to be
executed as a deed the day and year first before written

 

SCHEDULE 1

Tenant’s rights

 

1.                                                               The free passage and
running of all services whatsoever from and to the Demised Premises through the
Conduits serving the Demised Premises which are now or may at any time during
the Term be in upon over or under or which may pass through the Building and/or
any Adjoining or Neighbouring Premises

 

2.                                                               The right (subject to
the rights reserved in schedule 2) to support for the Demised Premises
from other parts of the Building and the Car Park

 

3.                                                               The right for the
Tenant (in common with the Landlord and all others from time to time having
similar rights and subject to the rights as set out in schedule 2) to use
at all times of the day and night seven days a week such of the Common Parts as
may be reasonably necessary for the use and enjoyment of the Demised Premises
for the purposes permitted by this lease

 

4.                                                               The right for the
Tenant (in common as aforesaid) to pass and re-pass with or without vehicles at
all times during the day and night seven days a week over and along the Common
Accessways for the purpose of obtaining access to and egress from the Building
and Demised Premises

 

5.                                                               The right to use for
the parking of two private motor cars only two car parking spaces which the
Landlord shall from time to time designate in writing for the use of the Tenant
in the Car Park

 

6.                                                               The right to load and
unload vehicles delivering and picking up materials equipment and other items
for use by the Tenant in the said parking space or such other area of the
basement as shall from time to time be reasonably designated by the Landlord
for the purpose subject to the Tenant making good any damage caused in the
exercise of this right or by the delivery or collection of materials equipment
and other items to and from the said parking space or basement from and to the
Demised Premises

 

7.                                                               The right to connect
into the network termination points and communications equipment and cabling of
British Telecom or Mercury Telephone or any other provider of
telecommunications services and which is now within the basement of

 

35

 

the Building or within the Estate so as to provide
telephone communications from and to the Demised Premises through the conduits
which may serve the same

 

8.                                                               The right to use for
the disposal of rubbish the area shown coloured purple on the Lease Plan
numbered 3

 

9.                                                               The right (at the
Tenant’s own cost) to have displayed the name of the Tenant and any other
authorised occupier of the Demised Premises on the directory boards (if any)
maintained for that purpose by the Landlord

 

SCHEDULE 2

Exceptions and Reservations to the Landlord

 

1.                                                               The right to support
for the remainder of the Building the Car Park the Estate and/or any other
Adjoining or Neighbouring Premises from the Demised Premises

 

2.                                                               The free and
uninterrupted passage and running of all services whatsoever through the
Conduits which are now or may during the Term be in upon over or under or which
may run through the Demised Premises

 

3.                                                               The full right and
liberty at all times during the Term to enter upon the Demised Premises by
reasonable prior notice in order to carry out any works whatsoever which are
required for the drainage of or for the supply of any services from and to any
part of the Adjoining or Neighbouring Premises causing as little inconvenience
or disturbance as reasonably practicable and making good all damage caused to
the Demised Premises in the exercise of such right

 

4.                                                               Full right and
liberty to enter by reasonable prior notice upon the Demised Premises at any
time during the Term in order to erect scaffolding and/or to build on under or into
any part of the Adjoining or Neighbouring Premises including (without prejudice
to the generality of the foregoing) the Structure of the Building or to build
over the Building making good all damage caused to the Demised Premises in the
exercise of such right

 

5.                                                               The right and liberty
to pull down alter divert stop-up or otherwise deal with any buildings
constructions or areas (whether inside or outside the Building or the Estate)
now or at any time standing upon any adjoining or adjacent land and to make or
allow any excavation in any such land and to undermine underpin and shore up
the Demised Premises in such manner as the owner of such land may think fit
with full rights (after giving except in the case of emergency reasonable
previous written notification) to enter into and upon the Demised Premises at
all reasonable times for the purpose of carrying out any works whatsoever in
connection with any such buildings constructions or areas or underpinning or
shoring up or any of such purposes without obtaining the consent of the Tenant
or anyone deriving title from the Tenant as the case may be PROVIDED ALWAYS
that the person exercising this right shall make good all damage caused to the
Demised Premises in the exercise of such right

 

6.                                                               Full right and liberty
at all reasonable times during the Term by reasonable prior notice to enter on
the Demised Premises to view the state and condition of and to execute any
other works whatsoever upon the Adjoining or Neighbouring Premises or for any
reasonable purpose in connection with the Adjoining or Neighbouring Premises or
management of the Building causing as little inconvenience or disturbance as
reasonably possible and making good all damage caused to the Demised Premises
in the exercise of such right

 

36

 

7.                                                               The right with the
Appointed Surveyor determining the rent in default of agreement between the
parties under any provisions for rent review contained in this lease at any
time to enter at all reasonable times during the Term by reasonable prior
notice and inspect and measure the Demised Premises for all purposes connected
with the implementation of the provisions for rent review

 

8.                                                               Exclusive right and
liberty to use the exterior of the Demised Premises for the purpose of erecting
placing or fixing and working maintaining removing renewing and/or replacing by
day and by night any lamps lamp brackets advertisements signs notices forms of
display or any other fixtures or fittings required by the Landlord but so that
access of light or air to the Demised Premises is not thereby substantially
interfered with and that all damage thereby caused to the Demised Premises in
the exercise of such rights is made good

 

SCHEDULE 3

Description of documents containing matters

subject to which the demise is made

 

The Superior Lease and the entries on the Registers of
the registered title of the freehold of the Estate

 

SCHEDULE 4

Provisions relating to the Service Charge

 

Part 1

The Estate Charge

 

1.                                                               The maintenance
repair and insofar only as the same is necessary for the purposes of repair
renewal decoration cleaning and treatment of all external parts of the Estate

 

2.                                                               The maintenance
repair and insofar only as the same is necessary for the purposes of repair
renewal painting decoration cleaning and treatment of all the Common Accessways

 

3.                                                               The provision of
lighting and floodlighting as appropriate and signage throughout the Estate
from time to time

 

4.                                                               Refuse collection and
pest control

 

5.                                                               The provision
maintenance and operation of all apparatus plant machinery and equipment as the
Landlord may reasonably require for the purposes of security maintenance or
management of the Estate and whether or not provided at the date of this lease

 

6.                                                               The provision of
appropriate security services and personnel (including equipment for the
purposes of surveillance and supervision of users of the Estate)

 

7.                                                               The provision and
maintenance of reasonable numbers of horticultural plants and ornamental
features to all landscaped areas now or at any time in the future provided
within the Estate

 

8.                                                               The maintenance
cleansing and treatment as may be required of the Statue in the Estate

 

9.                                                               Rates water rates
taxes duties charges assessments impositions and outgoings whatsoever payable
in respect of the Estate including but without limitation any charges for
electricity gas water and other services

 

37

 

10.                                                         Insurance of the
Estate or ancillary to the Estate services to the extent that the same is not
provided for elsewhere in this lease

 

11.                                                         The provision of any
other services not expressly mentioned above (whether or not ancillary to the
items referred to above whether or not available or contemplated at the date of
this lease) which the Landlord reasonably considers necessary or desirable for
the benefit of the Estate or in the interests of good estate management and
which shall be reasonably calculated to be for the benefit of two or more
tenants of the Estate or be reasonably necessary for the maintenance upkeep or
cleanliness of the Estate and in keeping with the principles of good estate
management

 

Part 2

The Block Charge

 

1.                                                               The maintenance
repair and insofar only as the same is necessary for the purposes of repair
renewal decoration cleaning and treatment of the Structure and the Common Parts

 

2.                                                               The maintenance
repair and insofar only as the same is necessary for the purposes of repair
renewal decoration cleaning and lighting of the Common Parts including the
carpeting re-carpeting as necessary or otherwise covering of the floors in the
Common Parts

 

3.                                                               The inspection
maintenance repair renewal replacement and insurance from time to time of the
lifts within the Building

 

4.                                                               Refuse collection and
pest control within the Building

 

5.                                                               The provision
maintenance and operation of all apparatus plant machinery and equipment as the
Landlord may reasonably require for the purposes of maintenance or management
of the Building

 

6.                                                               The provision of
security services and personnel and including equipment for the purposes of
surveillance and supervision of the Building

 

7.                                                               The provision and
maintenance of appropriate fire alarms fire prevention fire detection and fire
fighting equipment and apparatus throughout the Building

 

8.                                                               The provision of
air-conditioning ventilation and heating to the Building and including its
Common Parts intended to be air-conditioned ventilated and/or heated including
the supply of all fuel for such purpose and the inspection maintenance repair
replacement and renewal from time to time of all equipment plant and machinery
used in connection with the heating air conditioning and ventilation of the
Building

 

9.                                                               The maintenance
repair renewal decoration cleaning and treatment of window frames window
furniture and sash cords (if any) and all glass in the windows within the
Building

 

10.                                                         The provision of hot
and cold water to each level of the Building

 

11.                                                         The maintenance and
repair of the Conduits

 

12.                                                         Business rates water
rates taxes duties charges assessments impositions and outgoings whatsoever payable
in respect of the Common Parts including but without limitation any charges for
electricity gas water and other services

 

38

 

13.                                                         Caretaking
commissionaire security and maintenance services as the Landlord may provide
from time to time including salaries uniforms and other employee benefits of
the staff employed by the Landlord from time to time in the provision of such
services

 

14.                                                         Insurance of the
Building or ancillary to the Building services to the extent that the same is
not provided for elsewhere in this lease

 

15.                                                         The provision of any
other services not expressly mentioned above (whether or not ancillary to the
items referred to above and whether or not available or contemplated at the
date of this lease) which the Landlord reasonably considers necessary or
desirable for the benefit of the Building or in the interests of good estate
management and which shall be reasonably calculated to be for the benefit of
two or more tenants in the Building or be reasonably necessary for the
maintenance upkeep and cleanliness of the Building and in keeping with the
principles of good estate management

 

Part 3

Car Parking Charge

 

1.                                                               Maintenance repair
and insofar only as the same is necessary for the purposes of repair renewal
decoration cleaning and treatment as appropriate of all parts of the Car Park

 

2.                                                               Provision of lighting
(including emergency lighting) throughout the Car Park

 

3.                                                               Refuse collection and
pest control within the Car Park

 

4.                                                               The provision of signage
and other means of traffic control throughout the Car Park

 

5.                                                               The provision of
machinery plant and equipment as the Landlord may reasonably require in
connection with the proper management and maintenance of the Car Park

 

6.                                                               Security and
surveillance facilities and equipment (including items to control entry to and
exit from the Car Park) as the Landlord may in its absolute discretion from
time to time install in the Car Park

 

7.                                                               The provision and
maintenance of fire alarms fire prevention fire detection and fire fighting
equipment and apparatus in the Car Park

 

8.                                                               Insurance of the Car
Park or ancillary to services provided in the Car Park (to the extent that the
same is not provided for elsewhere in this lease)

 

9.                                                               Business rates water
rates taxes duties charges assessments impositions and outgoings whatsoever
payable in respect of the Car Park

 

10.                                                         The provision of any
other services not expressly mentioned above (whether or not ancillary to the
items referred to above and whether or not available or contemplated at the
date of this lease) which the Landlord reasonably considers necessary or
desirable for the benefit of the Car Park or in the interests of good estate
management and which shall be reasonably calculated to be for the benefit of
two or more users of the Car Park or be reasonably necessary for the
maintenance upkeep or cleanliness of the Car Park and in keeping with the
principles of good estate management

 

39

 

Part 4

Service Charge

 

1.1                                                         As soon as practical after the end of each Service Charge Year the
Landlord will furnish the Tenant with a statement (which shall be conclusive
and binding except in the case of manifest error) of the management fee charged
by the Landlord and the expenditure incurred in respect of the Services for the
immediately preceding Service Charge Year (or part)

 

1.2                                                         The Tenant shall pay to the Landlord within fourteen days after the
issue to the Tenant of such statement any balance shown by such statement to be
due from the Tenant as being in excess of the aggregate amount of the quarterly
payments paid by the Tenant on account of the Service Charge during the
immediately preceding Service Charge Year (or lesser period if appropriate) and
if the aggregate amount so paid by the Tenant on account of the Service Charge
during the immediately preceding Service Charge Year (or lesser period if
appropriate) exceeds the Service Charge for the immediately preceding Service
Charge Year the Landlord shall credit the amount of the excess by way of set
off against the next quarterly payment (and successive quarterly payments if
necessary) due from the Tenant on account of the Service Charge except in the
case of an amount owing at the end of the Term which shall be paid or repaid as
the case may be

 

1.3                                                         Pending the ascertainment of the Service Charge for each Service
Charge Year the Tenant shall pay by equal quarterly payments in advance on the
four usual quarter days in every year such provisional sum by way of Service
Charge as the Landlord shall specify in writing as being the amount of Service
Charge reasonably required to enable the provision of the Services for such
Service Charge Year PROVIDED THAT the Landlord shall have the right to vary the
amount of any such quarterly payments to take account of any material changes
in the estimated costs of providing the Services for such Service Charge Year

 

1.4                                                         Any Service Charge payment not made within a period of fourteen days
of the demand therefor shall carry Higher Rate Interest on such sum

 

1.5                                                         For the avoidance of doubt the following expenses and costs incurred
in connection with the provision of the services as set out in parts 1 2 and 3
of this schedule 4 (and the expression service or services where it occurs
in this schedule shall apply to all or any of such services as the context
may admit) shall from part of the Service Charge apportioned as the case may be
between the Estate Charge the Block Charge and the Car Parking Charge for the
purposes of calculation of the Service Charge and payment of the Service Charge
or on account of the Service Charge by the Tenant:

 

1.5.1                the
proper and reasonable costs charges expenses and disbursements of the Landlord’s
Surveyor for or in connection with the performance of the duties ascribed to him
under the provisions of this lease

 

1.5.2                the
proper and reasonable fees of any accountant or surveyor employed to determine
the cost of the Services

 

1.5.3                the
proper and reasonable fees of any firm of managing agents or other appointed
agents employed or retained for or in connection with the general overall
management and administration and supervision of the Estate and the Building
and Car Park provided that in the event that the Landlord undertakes such
functions in-house or through an associated or subsidiary company so that there
is no firm of managing or appointed agents the Landlord shall be entitled to
charge a management

 

40

 

administration or supervision fee not exceeding 10% of
the Service Charge

 

1.5.4                the
cost of carrying out any works required to comply with any statutory
requirements

 

1.5.5                all
proper and reasonable costs in connection with the provision of staff the
Landlord may deem appropriate for the provision of any of the Services including
but not limited to:

 

1.5.5.1             salaries National Insurance health care pension and other employee
benefits

 

1.5.5.2             uniforms working clothes tools utensils furniture equipment and
other sundries as may be required for the proper performance of the duties of
any such staff

 

1.5.5.3             the provision of administrative or residential accommodation as may
be required from time to time whether within or outside of the Estate for such
staff and including any notional rent for such accommodation

 

1.5.6                all
proper costs of leasing or hiring any items of equipment which may be required
from time to time for the better provision of the Services

 

1.5.7                a
reasonable allowance in respect of depreciation of plant equipment and
machinery used for the provision of the Services

 

1.5.8                taking
any steps deemed necessary in the interests of good estate management by the
Landlord in enforcing covenants of other tenants within the Building or making
representations against third parties

 

1.5.9                any
proper and reasonable costs and expenses (not specifically referred to above)
which may be incurred in providing other services and in carrying out the
Landlord’s obligations under this lease as the Landlord may in its reasonable
discretion but subject to the principles of good estate management deem
desirable or necessary for the benefit of the Estate the Building and its
tenants and occupiers

 

1.5.10              Value
Added Tax on any of the services

 

1.5.11              There
is to be excluded from the Service Charge any liability or expense for which
the Tenant or other tenants or occupiers of the Building and of Buildings 2 and
3 Angel Square may individually be exclusively responsible to the Landlord
under the terms of the lease pursuant to which they are in occupation

 

1.5.12              The
percentage payable by the Tenant of the Service Charge may not be increased or
altered by reason only that any part of the Building and of Blocks 2 and 3
Angel Square may be vacant or be occupied by the Landlord or that any tenant or
occupier of another part of them may default in payment or be responsible to
pay less than the percentage of the Service Charge attributable to that part

 

41

 

SCHEDULE 5

The Superior Lease

 

	
  Date

  	
   

  	
  Document

  	
   

  	
  Parties

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  31.03.1995

  	
   

  	
  Lease

  	
   

  	
  Mesongage Limited (1)

  BICC Developments Limited (2)

  BICC plc (3)

  

 

as varied by:

 

(a)                   a deed made
25 March 1997 between (1) Helical Properties Investment Limited (2) BICC
Developments Limited and (3) BICC plc

 

(b)                   a Licence to Assign
and Deed of Variation made 23 December 1997 between (1) Helical
Properties Investment Limited (2) BICC Developments Limited and (3) BICC
plc

 

Executed as a deed by

BALFOUR BEATTY PLC by the

affixing of its common seal in the

presence of:

 

 

	
   

  	
   

  
	
  Director

  
	
   

  
	
   

  	
   

  
	
  Secretary

  
			

 

Signed by DAVID KEITH CHRISTOPHER GIBBON

As attorney (without personal liability) for

EVOLVING SYSTEMS LIMITED (FORMERLY CALLED
TERTIO TELECOMS LIMITED)

by the affixing of its common seal

in the presence of:

 

 

	
  /S/ DKC Gibbon as attorney

  	
   

  
	
   

  
	
   

  
	
  Witness:

  	
  /s/ Shona Kelly

  	
   

  
				

 

42

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