EXHIBIT 10.49(a)

EX-10.9 5 v84143exv10w9.txt EXHIBIT 10.9 Exhibit 10.9 LEASE of First Floor 124-130 Southwark Street London SE1 DATED 5 JUNE 2002 NAIRN DEVELOPMENTS LIMITED (Landlord) BAM ENTERTAINMENT LIMITED (Tenant) BAM ENTERTAINMENT INC. (Surety) [LOGO] DENTON WILDE SAPTE LONDON CONTENTS 1 DEFINITIONS AND INTERPRETATION ................................... 1 1.1 Definitions ...................................................... 1 1.2 Interpretation ................................................... 5 2 DEMISE AND RENTS ................................................. 5 3 TENANT'S COVENANTS ............................................... 6 3.1 Rent ............................................................. 6 3.2 Interest ......................................................... 6 3.3 VAT .............................................................. 6 3.4 Rates and Outgoings .............................................. 6 3.5 Repair ........................................................... 7 3.6 Decoration ....................................................... 7 3.7 Cleaning ......................................................... 7 3.8 Alterations ...................................................... 7 3.9 Overloading of floors and services ............................... 8 3.10 Aerials, signs and advertisements ................................ 8 3.11 Default notices .................................................. 9 3.12 Use .............................................................. 9 3.13 Nuisance and prohibited uses ..................................... 9 3.14 Alienation ....................................................... 10 3.15 Compliance with Enactments etc ................................... 14 3.16 Planning ......................................................... 15 3.17 Yielding up ...................................................... 16 3.18 Encroachments, easements and third party rights .................. 16 3.19 Reletting and sale notices ....................................... 16 3.20 Landlord's costs ................................................. 17 3.21 Indemnity ........................................................ 17 3.22 Regulations ...................................................... 17 3.23 New surety ....................................................... 17 3.24 Other obligations ................................................ 17 4 LANDLORD'S COVENANTS ............................................. 18 4.1 Quiet enjoyment .................................................. 18 4.2 Services ......................................................... 18 4.3 Enforcement ...................................................... 18 5 INSURANCE ........................................................ 18 5.1 Landlord to insure ............................................... 18 5.2 Suspension of rent ............................................... 19 5.3 Reinstatement following damage or destruction .................... 20 5.4 Reinstatement prevented etc ...................................... 20 5.5 Tenant's insurance obligations ................................... 20 6 FORFEITURE ....................................................... 21 7 SURETY'S COVENANTS ............................................... 22 8 MISCELLANEOUS .................................................... 22 Contents (i) 8.1 No implied easements ............................................. 22 8.2 Exclusion of warranty as to use .................................. 22 8.3 Representations .................................................. 22 8.4 Exclusion of Landlord's liability ................................ 22 8.5 Covenants relating to the Building and/or Adjoining Property ..... 22 8.6 Disputes with adjoining occupiers ................................ 22 8.7 Exclusion of statutory provisions ................................ 23 8.8 VAT .............................................................. 23 8.9 Notices .......................................................... 23 8.10 Stamp Duty ....................................................... 23 8.11 New tenancy ...................................................... 23 8.12 Effect of document ............................................... 23 8.13 Commencement ..................................................... 23 8.14 Third Parties .................................................... 23 8.15 Removal of Tenant's Goods ........................................ 24 8.16 Perpetuity Period ................................................ 24 9 OPTION TO DETERMINE .............................................. 24 SCHEDULE 1- THE PREMISES/THE BUILDING .................................... 25 SCHEDULE 2 - RIGHTS AND EASEMENTS GRANTED ................................ 26 SCHEDULE 3 - EXCEPTIONS AND RESERVATIONS ................................. 27 SCHEDULE 4 - DEEDS AND DOCUMENTS AFFECTING THE PREMISES .................. 28 SCHEDULE 5 - RENT REVIEW ................................................. 29 SCHEDULE 6 - SERVICE CHARGE .............................................. 33 SCHEDULE 7 - COVENANTS BY THE SURETY ..................................... 36 Contents (ii) LEASE DATED 5 June 2002 BETWEEN (1) NAIRN DEVELOPMENTS LIMITED (LANDLORD) a company registered in fine British Virgin Islands whose registered office is at Trident Trust Company (B.V.I.) Limited, Trident Chambers, PO Box 146, Road Town, Tortola British Virgin Islands and whose address for service in the United Kingdom is at Hamels Overseas Limited, St Georges Chambers, Douglas, Isle of Man IM 1 1LD (or such other address as the Landlord may notify to the Tenant in writing); (2) BAM ENTERTAINMENT LIMITED (TENANT) Company Registration Number 04112030 whose registered office is at 3rd Floor, Upper Borough House, Upper Borough Walls, Bath, Avon, BAI 1RG; and (3) BAM ENTERTAINMENT INC. (SURETY) whose registered office is at Suite 930, 333 West Santa Clara St., San Jose, California, CA 95113, USA Company Registration Number 7372 Delaware. IT IS AGREED 1 DEFINITIONS AND INTERPRETATION 1.1 DEFINITIONS In this Lease the following definitions apply. 1954 ACT means the Landlord and Tenant Act 1954. 1995 ACT means the Landlord and Tenant (Covenants) Act 1995. ADJOINING PROPERTY means all parts of the Building (except the Premises) and other property adjoining or near the Premises. AUTHORITY means any statutory, public, local or other competent authority or a court of competent jurisdiction. BUILDING means the building described in Part 2 of Schedule 1. COMMON PARTS means: (a) those parts of the Building; and (b) such other amenities available in connection with the Building as the Landlord may designate acting reasonably from time to time for use in common by the Landlord and the tenants and other occupiers of the Building. CONDUITS means media and ancillary apparatus capable of being used far conducting or transmitting Utilities. CONTAMINATION means the contamination or pollution (as defined by Environmental Law) of any land water or air or the environment by any substance in on under or emanating from the Premises. Page 1 ENACTMENT means statute, statutory instrument, statutory guidance, treaty, regulation, directive, byelaw, code of practice, guidance note, circular, common law and any notice, order, direction or requirement given or made pursuant to any of them, for the time being in force. END OF THE TERM means the date on which the Term actually ends (however determined). ENVIRONMENTAL LAW means all Enactments relating to the environment and/or pollution of the environment (as those terms are defined in Section 1 of the Environmental Protection Act 1990). GROUP means a group of companies within the meaning of section 42 of the 1954 Act. INSOLVENCY EVENT means any of the following: (a) in relation to an individual: (i) the making of an application for the appointment of an interim receiver in respect of the individual's property under section 286 of the Insolvency Act 1986; (ii) the making of a bankruptcy order in respect of the individual; (iii) the making of an application for an interim order under section 253 of the Insolvency Act 1986 in respect of the individual; (iv) the appointment of any person by the court to prepare a report under section 273 of the Insolvency Act 1986 in respect of the individual; (b) in relation to a company: (i) the making of an administration order in respect of the company; (ii) the appointment of an administrative receiver in respect of the company; (iii) the making of an order or the passing of a resolution to wind up the company; (iv) the appointment of a provisional liquidator in respect of the company; (v) the making of a proposal under section 1 of the Insolvency Act 1986 for a voluntary arrangement in respect of the company; and (c) in relation to any person (whether an individual or a company): (i) the appointment of a receiver (including an administrative receiver) in respect of any of the person's assets; (ii) the person entering into an arrangement for the benefit of creditors; (iii) any distress or execution being levied on any of the person's assets; (iv) the person ceasing for any reason (except for a release pursuant to the provisions of the 1995 Act) to be or remain liable to perform its obligations contained in this Lease. INSURANCE RENT means a fair proportion (determined by the Landlord) of the sums (including the proper cost of valuations for insurance purposes and gross of any commission payable to the Landlord which the Landlord pays from time to time for insuring the Building against the Insured Risks and the other matters Page 2 referred to in Clause 5.1.1 and the whole of the sums which the Landlord pays from time to time for insuring against loss of the Rent and additional rents payable under this Lease. INSURED RISKS means fire, storm, tempest, flood, lightning, impact, aircraft (other than hostile aircraft) and other aerial devices and articles dropped therefrom, riot, civil commotion and malicious damage, bursting or overflowing of water tanks, apparatus or pipes (but excluding such risks as the Landlord in its reasonable discretion considers cannot be insured against in the UK market at a reasonable rate) and such other risks as the Landlord may in its absolute discretion from time to time determine subject in each case to such exclusions, excesses and limitations as may be imposed by the insurers. INTEREST means interest at the rate of four per cent (4%) per annum above the base lending rate from time to time of National Westminster Bank PLC (or of such other bank as the Landlord may designate from time to time by giving Notice to the Tenant) both before and after any judgment, calculated on a daily basis from the date on which interest becomes chargeable on any payment due under this Lease to the date on which such payment is made, such interest to be compounded quarterly on the usual quarter days. LANDLORD means the person who is from time to time entitled to the reversion immediately expectant on the determination of this Lease. LANDLORD'S CONSENT means consent in writing signed by or on behalf of the Landlord. LEASE means this lease and any document supplemental to it or entered into pursuant to its terms. LETTABLE AREA means accommodation in the Building from time to time let or intended to be let to occupational tenants. NOTICE means written notice given by a Party to any other Party. PARTY means a party to this Lease and Parties means more than one Party. PERMITTED HOURS means the hours of 8.00 am to 6.00 pm on Working Days or such extended hours as the Landlord may stipulate in respect of the Building ox the part of the Building in which the Premises are located. PERMITTED USE means use as offices within Class B1(a) of the Town and Country Planning (Use Classes) Order 1987. PERSONNEL means servants, employees, contractors, workmen, agents, licensees and visitors. PLANNING ENACTMENTS means all Enactments relating to town and country planning. PLAN A means the Plan annexed and so marked. PLAN B means the Plan annexed and so marked. PREMISES means the premises described in Part 1 of Schedule 1. RENT means the yearly rent of EIGHTY FOUR THOUSAND FOUR HUNDRED AND SEVENTY EIGHT POUNDS ((pound)84,478) or such other yearly rent agreed or determined pursuant to Schedule 5. RENT COMMENCEMENT DATE means 14 October 2002. RETAINED PARTS means all parts of the Building which are not from time to time Lettable Areas including: (a) the structure, walls, foundations and roofs of the Building; Page 3 (b) the Common Parts; (c) office, storage and other accommodation reserved within the Building for the Landlord's Personnel; (d) parts of the Building reserved for the housing of plant, machinery and equipment for the supply of Utilities and/or for the provision of the Services; (e) Conduits and Facilities (as defined in Schedule 6) in, on, over, under or serving the Building, except any which are within and exclusively serve any Lettable Area. REVIEW DATE means the fifth anniversary of the date on which the Term commences. SERVICE CHARGE has the meaning described in Schedule 6. SERVICES has the meaning described in Schedule 6. SUPERIOR LANDLORD means any persons) entitled to any estate or interest superior to the interest of the Landlord in the Building. SURETY means: (a) any person named as "Surety" in this Lease; and/or (b) any person who guarantees compliance with the Tenant's Covenants; and/or (c) the successors in title and assigns of any such person and, in the case of an individual, his personal representatives. SURVEYOR means a person appointed by the Landlord to perform the function of a surveyor for any purpose of this Lease (including an employee of the Landlord or of a company in the same Group as the Landlord and any person appointed by the Landlord to collect the rents and manage the Building) but does not include the Independent Surveyor defined in Schedule 5. TENANT includes every person who is at any time the tenant under this Lease and, in the case of an individual, his personal representatives. TENANT'S COVENANTS means the covenants, terms, conditions, agreements, restrictions, stipulations and obligations falling to be complied with by the Tenant under this Lease. TENANT'S PERSONNEL means the Personnel of the Tenant together with any sub-tenant, licensee or other occupier from time to time of the premises and their respective personnel. TERM means the term granted by this Lease and the period of any holding over or any extension or continuation of it by statute or at common law. UTILITIES means water, gas, sewerage, electricity and telephone and such other supplies as are available for the benefit of the Premises for the Permitted Use from time to time. VAT means Value Added Tax as provided for in the Value Added Tax Act 1994 and any tax similar or equivalent to Value Added Tax. WORKING DAY means any day except Saturday, Sunday and public holidays in England. Page 4 1.2 INTERPRETATION 1.2.1 Where a Party includes two or more persons, the covenants made by that Party are made by those persons jointly and severally. 1.2.2 Words implying one gender include all other genders, words implying the singular include the plural and vice versa and words implying persons include any person or entity capable of being a legal person. 1.2.3 A covenant by the Tenant not to do any act or thing includes a covenant not to permit or suffer such act or thing to be done. 1.2.4 A reference to any right of the Landlord to access or enter the Premises extends to any Superior Landlord and all persons authorised by the Landlord and/or any Superior Landlord, including in each case their Personnel, mortgagees, professional advisers and others, with or without equipment, plant and machinery. 1.2.5 Subject to Clause 3.12.1, a reference to any Enactment (including the 1954 Act and the 1995 Act) includes all modifications, extensions, amendments and/or re-enactments of such statute in force for the time being and all instruments, orders, notices, regulations, directions, bye-laws, permissions and plans for the time being made, issued or given under them or deriving validity from them. 1.2.6 Anything requiring the consent or approval of the Landlord is conditional also on the consent or approval of any Superior Landlord and any mortgagee being given (if required under the terms of the relevant lease or mortgage) and a consent or approval from the Landlord is not effective for the purposes of this Lease unless it is in writing and signed by or on behalf of the Landlord. 1.2.7 Provisions are to be construed independently and if any provision is void or wholly or partly unenforceable, then that provision, to the extent that it is unenforceable, shall be deemed not to form part of this Lease, but the validity and enforceability of the remainder of that provision or of the Lease shall not be affected. 1.2.8 A reference to a numbered clause, schedule or paragraph is a reference to the relevant clause, schedule or paragraph in this Lease. 1.2.9 Headings to clauses, schedules and paragraphs are for convenience only and do not affect the meaning of this Lease. 1.2.10 The words "including" and "in particular" shall be construed as being by way of illustration or emphasis only and shall not limit the generality of the preceding words. 1.2.11 A reference to the Adjoining Property, the Building, the Common Parts, the Lettable Areas, the Premises or the Retained Parts shall include in each case each and every part of the same. 2 DEMISE AND RENTS The Landlord DEMISES to the Tenant the Premises for ten years beginning on and including the 5 day of June 2002. TOGETHER WITH the rights and easements specified in Schedule 2 EXCEPT AND RESERVING the rights and easements specified in Schedule 3 SUBJECT TO (and where applicable with the benefit of) the provisions of the documents listed in Schedule 4 and all rights, easements, quasi-easements, privileges, covenants, restrictions and stipulations affecting the Premises PAYING to the Landlord during the Term: Page 5 (a) the Rent by equal quarterly payments in advance on the usual quarter days and proportionately for any period of less than a year, the first payment being a proportionate sum for the period from and including the Rent Commencement Date to the day before the quarter day following the Rent Commencement Date, and to be made on the Rent Commencement Date; and (b) on demand as additional rent (and recoverable as rent): (i) the Insurance Rent; (ii) the Service Charge; and (iii) all other moneys (including VAT) payable by the Tenant under this Lease. 3 TENANT'S COVENANTS The Tenant covenants with the Landlord throughout the Term to comply with the requirements of this Clause 3. 3.1 RENT 3.1.1 The Tenant shall pay the Rent, Insurance Rent, Service Charge and all other moneys (including VAT) payable by the Tenant under this Lease at the times and in the manner specified in this Lease. 3.1.2 The Tenant shall not exercise or seek to exercise any right or claim to legal or equitable set-off, or to withhold payment of any of the Rent, Insurance Rent, Service Charge or any other moneys (including VAT) payable by the Tenant under this Lease. 3.1.3 The Tenant shall pay the Rent by banker's order or credit transfer to any bank account in the United Kingdom designated by the Landlord, if the Landlord gives the Tenant Notice to that effect. 3.2 INTEREST The Tenant shall pay Interest on: (a) any Rent (whether or not formally demanded) and VAT on the Rent if applicable which remains unpaid after the date when payment is due; and (b) any other sum of money payable to the Landlord by the Tenant under this Lease which is not paid within seven days after the date when payment is due. 3.3 VAT 3.3.1 The Tenant shall pay to the Landlord all VAT in respect of the Rent and other consideration for any supply to the Tenant under this Lease at the same time and in the same manner as the consideration to which it relates. The Landlord shall provide a valid VAT invoice within 28 days of such payment. 3.3.2 In every case where the Tenant is required to reimburse the Landlord for any payment made by the Landlord under the terms of or in connection with this Lease, then the Tenant shall also reimburse all VAT paid by the Landlord on such payment, except to the extent that the Landlord is able to claim an input credit for such VAT. 3.4 RATES AND OUTGOINGS 3.4.1 The Tenant shall pay and indemnify the Landlord against all rates, taxes, duties, assessments, impositions, duties, charges and other outgoings of any type payable in respect of the Premises or by the owner or Page 6 occupier of them (except any tax assessed on the Landlord in respect of its ownership, rental income from or dealing with its interest in the Premises). 3.4.2 The Tenant shall pay and indemnify the Landlord against the proportion properly attributable to the Premises of any such outgoings which are payable in respect of any premises (including the Building) of which the Premises form part. 3.4.3 The Tenant shall pay and indemnify the Landlord against all charges for supplies of Utilities to the Premises during the Term, including any connection charges, standing charges and meter rents. 3.4.4 The Tenant shall not agree any rateable value for the Premises without the Landlord's Consent (which shall not be unreasonably withheld or delayed). 3.4.5 The Tenant shall not appeal against any rateable value assessed or imposed in relation to the Premises without the Landlord's Consent (which shall not be unreasonably withheld or delayed) and, if the Landlord appeals against any such rateable value, the Tenant shall give to the Landlord promptly such assistance for the pursuit of such appeal as the Landlord acting reasonably requests. 3.5 REPAIR 3.5.1 The Tenant shall keep the Premises at all times in good and substantial repair and condition (but the Tenant shall not be liable to repair or make good damage to the Premises by the Insured Risks, except to the extent that payment of insurance moneys is withheld because of any act, neglect or default of the Tenant or any Tenant's Personnel or any person under its or their control). 3.5.2 The Tenant shall replace with new items of no lesser quality than the original (when new) any landlord's fixtures and fittings which at any time during the Term become missing, damaged, broken or destroyed. 3.5.3 Without prejudice to the generality of Clauses 3.5.1 and 3.5.2 the Tenant shall replace the carpets whenever necessary and in any case at the End of the Term with carpets of no lesser quality than the original (when new) and of a design and colour approved by the Landlord. 3.6 DECORATION 3.6.1 The Tenant shall keep the Premises decorated to a good standard. 3.6.2 In every fifth year of the Term and in the last three months before the End of the Term the Tenant shall decorate (with two coats of good quality paint) or otherwise treat as appropriate all internal parts of the Premises in a good and workmanlike manner and to the reasonable satisfaction of the Surveyor, (such decoration and treatment in the last three months of the Term to be in such colours and materials as the Landlord may reasonably require) provided that the Tenant shall not be required to decorate the Premises more than once in any one year. 3.7 CLEANING The Tenant shall keep the Premises in a clean and tidy condition and free of vermin and pests and at least once in every month shall clean the insides of all windows and both sides of the window frames and all other glass in the Premises. 3.8 ALTERATIONS 3.8.1 The Tenant shall not alter or interfere with any part of the Building which is not included in the Premises. 3.8.2 The Tenant shall make no alteration or addition to the Premises except as permitted by Clause 3.8.3. Page 7 3.8.3 The Tenant may make the following alterations: (a) an alteration to the interior of the Premises which does not alter or in any way affect the whole or any part of the structure of the Building; and/or (b) the installation of or an alteration to a Conduit forming part of the Premises; and/or (c) such alterations as the Tenant may be obliged to carry out pursuant to or in anticipation of any Enactment (including the Disability Discrimination Act 1995) with the Landlord's Consent (which shall not be unreasonably withheld or delayed and shall be contained in a formal licence). 3.8.4 Before consenting to any alteration under Clause 3.8.3 the Landlord may require: (a) the submission to the Landlord of drawings and specifications (in triplicate) showing the proposed alteration; and (b) the execution of the formal licence to carry out the proposed alteration referred to in Clause 3.8.3, in such form as the Landlord requires acting reasonably, which may incorporate a covenant for the reinstatement of the Premises at the End of the Term, and such assurances, warranties and further covenants (including any from any relevant third party) as the Landlord requires acting reasonably; and/or (c) if it is reasonable for the Landlord to require it, the provision of security (by way of bond, the deposit of money or otherwise) sufficient to enable the Landlord to complete or reinstate the works if the Tenant begins but does not complete them within a reasonable time, such security to be provided before the works are begun and to be released when they have been completed to the satisfaction of the Surveyor acting reasonably. 3.8.5 The Tenant shall not install or erect any exterior lighting, shade, canopy, awning or other structure in front of or elsewhere outside the Premises. 3.9 OVERLOADING OF FLOORS AND SERVICES 3.9.1 The Tenant shall not overload the floors of the Premises or suspend any excessive weight from the roofs, ceilings, walls or structure of the Building and shall not overload the Conduits or Utilities in or serving the Premises or the Building. 3.9.2 The Tenant shall not do anything which may subject the Premises or the Building to any strain beyond that which they are designed to bear (with due margin for safety). 3.10 AERIALS, SIGNS AND ADVERTISEMENTS 3.10.1 The Tenant shall not erect or display on the exterior of the Premises, or in the windows of the Premises so as to be visible from outside, any flag, aerial, mast, satellite dish, advertisement, television, moving display, poster, notice or other sign or thing, except for a sign stating the Tenant's name and the nature of its business, subject to the Landlord's Consent (which shall not be unreasonably withheld or delayed) as to its size, style and position. 3.10.2 The Tenant shall display and maintain all notices which the Landlord may from time to time require acting reasonably to be displayed at the Premises. Page 8 3.11 DEFAULT NOTICES 3.11.1 If the Landlord gives to the Tenant Notice of any defects, wants of repair or breaches of the Tenant's Covenants, the Tenant shall as soon as is reasonably practical and in any event within two months of such Notice, or as soon as reasonably possible in an emergency, begin and then diligently continue to comply with such Notice to the satisfaction of the Landlord acting reasonably. 3.11.2 If the Tenant fails to comply with the provisions of Clause 3.11.1, or fails to complete compliance with the relevant Notice (to the satisfaction of the Landlord acting reasonably) as soon as is reasonably practical and in any event within three months, the Landlord may enter the Premises and carry out or cause to be carried out all or any of the works referred to in the Notice and the Tenant shall pay to the Landlord on demand as a debt all costs and expenses (including professional fees) thereby incurred. 3.12 USE 3.12.1 The Tenant shall not use the Premises except for the Permitted Use. 3.12.2 The Tenant shall secure the Premises against intrusion when not in use and shall not leave the Premises continuously unoccupied for more than 28 consecutive days without both notifying the Landlord and providing or paying for such caretaking or security arrangements as the Landlord may reasonably require in order to protect the Premises from vandalism, theft or unlawful occupation. 3.12.3 The Tenant shall ensure that the Landlord has at all times written notice of the name, home address and home telephone number of at least two keyholders of the Premises and shall provide the Landlord with a set of keys to the Premises to enable the Landlords to enter the Premises for security purposes or in an emergency. 3.12.4 If the Tenant requires access to the Premises outside the Permitted Hours the Tenant shall: (a) ensure that the doors giving access to the Building axe locked after entry and/or exist by the Tenant; and (b) take reasonable steps to ensure that the Tenant is not (in locking such doors) locking any other tenants of or lawful visitors to the Building into the Building. 3.13 NUISANCE AND PROHIBITED USES 3.13.1 Nuisance (a) The Tenant shall not do anything in or about the Premises or the Building which is or might be or become a nuisance or which causes or might cause danger, damage, annoyance, inconvenience or disturbance to the Landlord or to the owners, tenants or occupiers of the Adjoining Property, or which might be injurious to the value, tone, amenity or character of the Premises or the Building. (b) If any nuisance occurs at the Premises, the Tenant shall forthwith take all necessary action to abate it. 3.13.2 The Tenant shall not emit from the Premises any noise, vibration, smell, fumes, smoke, dust, soot, ash, grit or any noxious or deleterious substances, effluvia or effluent. 3.13.3 Conduits (a) The Tenant shall not overload any Conduits or discharge into any Conduits any noxious or deleterious effluent, fluid or substance or any substance which might cause an obstruction, or might be or become a source of danger, or which might cause damage or injury to any person or Page 9 be deleterious to health, or which might harm the Premises or any Adjoining Property or any Conduits. (b) The Tenant shall take due precautions to avoid water freezing in Conduits within the Premises. 3.13.4 The Tenant shall make available for collection refuse as and when specified from time to time by the Landlord and shall not deposit on the Common Parts or on any other part of the Building any waste, rubbish or refuse other than in proper receptacles provided for the purpose. 3.13.5 The Tenant shall not do or omit to do in relation to the Premises or their use or occupation anything by reason of which the Landlord may incur any liability for costs, any penalty, damages, compensation or otherwise. 3.13.6 The Tenant shall not: (a) use the Premises for any public or political meeting, nor for any dangerous, noisy, noxious or offensive trade, business or occupation, nor for any illegal or immoral purpose, nor for residential or sleeping purposes; or (b) invite the public generally, or any specified section of it, to come to the Premises (except by prior appointment) and shall not use the Premises for a purpose which attracts casual callers. 3.13.7 The Tenant shall not conduct on the Premises any gambling, betting or gaming and shall not play or use any musical instrument, loud speaker, sound amplification equipment or similar apparatus in such a manner as to be audible outside the Premises and shall not hold any auction on the Premises. 3.13.8 The Tenant shall not: (a) load or unload any goods arriving at or dispatched from the Premises in such a way that access to or egress from any Adjoining Property is obstructed; or (b) permit loading, unloading, delivery or despatch of goods to be carried out in areas or by means other than the entrances designated for such purposes and at the times stipulated by the Landlord; or (c) use the service areas for loading or unloading at times other than those stipulated by the Landlord. 3.13.9 The Tenant shall not bring onto or keep on the Premises, or do, any thing which might increase the risk of damage or destruction to the Building. 3.13.10 The Tenant shall not keep or operate in or on the Premises any machinery which is unduly noisy or causes vibration or which is likely to annoy or disturb the owners or occupiers of any Adjoining Property. 3.14 ALIENATION 3.14.1 DEFINITIONS In this Clause the following definitions apply. ASSIGNEE means a person to whom the Tenant proposes to assign the whole of the Premises. AUTHORISED GUARANTEE AGREEMENT means an authorised guarantee agreement within the meaning of section 16 of the 1995 Act in such form as the Landlord requires acting reasonably. Page 10 CIRCUMSTANCES means the circumstances listed in Clause 3.14.4, which are specified for the purposes of Section 19(1A) of the Landlord and Tenant Act 1927. CONDITIONS means the conditions listed in Clause 3.14.5, which are specified for the purposes of Section 19(1A) of the Landlord and Tenant Act 1927. QUALIFYING PERSON means a person who is able to demonstrate to the satisfaction of the Landlord acting reasonably that it is able to meet all of the Tenant's commitments pursuant to this Lease (and an Assignee shall be treated as a Qualifying Person if a Qualifying Person acts as surety for the Assignee and covenants with the Landlord in the terms set out in Schedule 7). SUBTENANT means a person to whom the Tenant proposes to sublet the whole or a Permitted Part of the Premises. 3.14.2 ALIENATION PROHIBITED Unless permitted by this Clause the Tenant shall not do any of the following: (a) assign or sublet the Premises or agree to do so (unless such agreement is conditional upon obtaining the Landlord's Consent); (b) mortgage or charge the Premises; (c) hold the Premises expressly or impliedly on trust for another person; (d) part with possession or occupation of the Premises; (e) share possession or occupation of the Premises; (f) allow anyone other than the Tenant, any lawful subtenant or their respective officers and employees to occupy the Premises. 3.14.3 Assignment (a) The Tenant shall not assign part (as distinct from the whole) of the Premises. (b) The Tenant may assign the whole of the Premises with the Landlord's Consent (which shall not be unreasonably withheld or delayed and shall be contained in a formal licence). (c) The Landlord may withhold its consent to an assignment in any of the Circumstances. (d) The Landlord may grant its consent to an assignment subject to any or all of the Conditions. (e) The Landlord may if it is reasonable to do so: (i) withhold its consent to an assignment in circumstances other than the Circumstances; and/or (ii) impose conditions instead of or as well as the Conditions. 3.14.4 CIRCUMSTANCES The Circumstances are: (a) the Rent or any other money due under this Lease remains unpaid; Page 11 (b) the proposed assignee is not a Qualifying Person; (c) there is a material breach of the Tenant's Covenants which has not been remedied at the date of the Tenant's application; (d) that in the opinion of the Landlord acting reasonably the proposed assignment will have a detrimental effect on the value of the Landlord's interest in the Premises or adversely affect the Landlord's ability to dispose of such interest. 3.14.5 CONDITIONS The Conditions are: (a) that the Assignee has, if required by the Landlord acting reasonably, procured that two individuals who are acceptable to the Landlord (acting reasonably) or a company which is a Qualifying Person have or has covenanted by deed with the Landlord as surety for the Assignee as set out in Schedule 7; (b) that the Assignee has, if required by he Landlord acting reasonably deposited with the Landlord a sum equivalent to six months' Rent or such higher sum as the Landlord requires acting reasonably, as security for the Assignee's performance of the Tenant's Covenants; (c) that the Tenant has entered into an Authorised Guarantee Agreement; (d) that the Surety has entered into an agreement (if such agreement may be required lawfully) in such terms as the Landlord requires acting reasonably, guaranteeing the performance by the Tenant of its obligations under the Authorised Guarantee Agreement; (e) that none of the Circumstances applies between the date of the Tenant's written application for consent to an assignment of the Premises to the Assignee and the date of the proposed assignment. 3.14.6 Charging (a) The Tenant shall not charge a part (as distinct from the whole) of the Premises. (b) The Tenant may charge the whole of the Premises to a bank or another financial institution for a bona fide commercial purpose, with the Landlord's Consent (which shall not be unreasonably withheld or delayed and shall be contained in a formal licence). 3.14.7 Subletting (a) The Tenant shall not sublet part (as distinct from the whole) of the Premises. (b) The Tenant may sublet the whole of the Premises with the Landlord's Consent (which shall not be unreasonably withheld or delayed and shall be contained in a formal licence) if: (i) the Subtenant has covenanted by deed with the Landlord in such form as the Landlord reasonably requires that during the term of the sublease the Subtenant and its successors in title will comply with the Tenant's Covenants except the covenant to pay the Rent and the lessee's obligations in the sublease; and (ii) (if the Subtenant is a corporate. body and the Landlord so requires acting reasonably) the Subtenant has procured a covenant by two individuals who are acceptable to the Landlord (acting reasonably) or a company which is a Qualifying Person, by deed with the Landlord, as surety for the Subtenant as set out in Schedule 7. Page 12 (c) The Tenant shall not sublet the whole of the Premises except by way of a sublease which: (i) is granted without any fine or premium; and (ii) reserves a yearly rent, payable in advance on the usual quarter days, at least as high as the best rent which the Tenant ought reasonably to obtain in the open market on the grant of such sublease and provides for the review of the yearly rent at the same times and on the same basis as in this Lease; and (iii) requires the Subtenant to obtain the Landlord's Consent (which shall not be unreasonably withheld or delayed) to assignment of the premises comprised in the sublease and requires the assignee on any such assignment to enter into direct covenants with the Landlord to the same effect as those in Clause 3.14.7(b)(i); and (iv) is in the same form as this Lease (except as to Rent and any amendments approved by the Landlord, such approval not to be unreasonably withheld or delayed, but including provisions enabling the Tenant to obtain vacant possession on or before the. date of any determination of this Lease) except that further subletting shall be prohibited; and (v) contains an agreement authorised by the court excluding in relation to the tenancy created by such sublease the provisions of sections 24-28 of the 194 Act and such Court authorisation has been obtained and a certified copy produced to and approved by the Landlord before the sublease is granted. (d) The Tenant shall: (i) enforce and shall not waive or vary the provisions of a sublease (including the dates on which the rent installments are payable or paid) and in particular shall not enter into any collateral deed or side letter varying, or relieving the Subtenant from, any obligation in the sublease, or reduce, waive, commute, set-off or otherwise vary, whether directly or indirectly, the rents reserved by the sublease (except in accordance with the sublease's rent review provisions); and (ii) operate at the relevant times the rent review provisions contained in every sublease, but shall not agree a reviewed rent without the Landlord's Consent (and, if the rent review is determined by a surveyor pursuant to the review provisions of the sublease, to procure that the Landlord's representations as to the rent payable are made to such surveyor); and (iii) upon the termination of any sublease (however it occurs) not accept any rent from any subtenant or permit it to hold over or acknowledge any tenancy but forthwith take all necessary steps at the Tenant's expense to secure possession of the sublet premises. (iv) (if the Tenant exercises its option to determine this Lease in accordance with Clause 9) forthwith exercise its option to determine each sublease and obtain vacant possession of the Premises on or before the date of determination of this Lease; and 3.14.8 GROUP SHARING The Tenant may share occupation of the Premises with a company in the same Group: (a) for so long as both the Tenant and that company remain members of the same Group; and (b) provided that no tenancy is created; and Page 13 (c) provided that within 21 days of such sharing beginning the Landlord receives Notice of the identity of the company sharing occupation and the address of its registered office. 3.14.9 DISPOSITIONS The Tenant shall within 28 days of any assignment, charge or underlease or of any other devolution of this Lease, or of any interest deriving from this Lease, give Notice of such devolution to the Landlord's solicitors, produce for registration the original or a certified copy of the document effecting or evidencing such devolution (together with a copy of any Authorised Guarantee Agreement, made pursuant to Clause 3.14.5(c)) and pay such reasonable registration fee as the Landlord's solicitors may require, being not less than (pound)30 (plus VAT). 3.14.10 DISCLOSING INFORMATION The Tenant shall: (a) notify the Landlord of any change of name, address or registered office of the Tenant or any Surety within three weeks of the change; and (b) from time to time on demand give the Landlord full details of all derivative interests of or in the Premises, including details of the actual user, rents, rent reviews and service and maintenance charges payable in respect of them; and (c) give the Landlord such further information relating to such derivative interests as the Landlord may require (including names, addresses and telephone numbers of the keyholders of the Premises). 3.15 COMPLIANCE WITH ENACTMENTS ETC 3.15.1 ENACTMENTS (a) The Tenant shall: (i) observe and comply with all Enactments applicable to the Premises or their occupation or use; and (ii) carry out (always complying with the provisions of Clause 3.8) such works of modification and improvement to the Premises as are required from time to time by any Enactment; and (iii) promptly give Notice to the Landlord of any damage to or defect in the Premises which might give rise to any obligation, duty of care or liability on the Landlord pursuant to the Defective Premises Act 1972 or otherwise. (b) If the Tenant receives any notice, order or direction, or a proposal for one, it shall forthwith produce a copy to the Landlord and if in the Landlord's reasonable opinion such notice, order or direction is contrary to the interests of the Landlord the Tenant shall make such objection or representation against it as the Landlord reasonably requires. (c) Where any such notice, order or direction requires works to be carried out, the Tenant shall, so far as the same and any relevant Enactment permits, also comply with the provisions of this Lease in relation to such works. 3.15.2 FIRE PRECAUTIONS AND EQUIPMENT Page 14 (a) The Tenant shall comply with the requirements and recommendations of the fire authority, the insurers of the Building and the Landlord in relation to fire precautions affecting the Premises. (b) The Tenant shall not obstruct the access to or means of working of any fire fighting and extinguishing appliances or the means of escape from the Premises or the Building in case of fire or other emergency and shall not use the fire escape doors or corridors except in emergency. (c) If the Premises are occupied by more than one occupier (as a result of any permitted subletting of part or sharing of the Premises) the Tenant shall indemnify the Landlord against any costs expenses fees and disbursements incurred by the Landlord in relation to any fire precaution works which the Landlord is required to carry out to the Premises and in relation to the testing, maintenance and operation of any fire alarm system at the Premises. 3.15.3 ENVIRONMENTAL LAW (a) The Tenant shall not cause or permit any Contamination of the Premises or the Building or any Adjoining Property. (b) The Tenant shall inform the Landlord as soon as practicable after the Tenant becomes aware of any breach or material non-compliance with Environmental Law in relation to the Premises and/or the Permitted Use. 3.16 PLANNING 3.16.1 The Tenant shall not commit a breach of planning control (as defined in section 171A(I) of the Town and Country Planning Act 1990) in relation to the Premises. 3.16.2 The Tenant shall observe and comply with the Planning Enactments in relation to the Premises. 3.16.3 The Tenant shall make no application under the Planning Enactments in relation to the Premises or the Building without the Landlord's Consent and then only in a form previously approved by the Landlord (which consent and approval shall not be unreasonably withheld or delayed in relation to the Premises where works permitted by the Landlord under Clause 3.8 require planning permission). 3.16.4 The Tenant shall promptly supply to the Landlord copies of all notices, orders and directions and other formal communications under the Planning Enactments received by the Tenant which relate to the Premises, and where such communications relate only to the Premises or to an application made by the Tenant then the Tenant shall at its own expense take such action to protect the Landlord's interests as the Landlord may require. 3.16.5 The Tenant shall not implement a planning permission without the Landlord's Consent (such consent not to be unreasonably withheld or delayed where planning permission is granted pursuant to an application approved by the Landlord and where the Landlord's interests are not likely to be prejudiced by the implementation of such planning permission). 3.16.6 Where a planning permission imposes conditions the Landlord may before giving consent to its implementation require the Tenant: (a) to provide reasonable security for compliance with the conditions; and (b) to undertake that if it implements the planning permission it will carry out before the End of the Term all works which the planning conditions require. 3.16.7 Where on the Tenant's application a planning permission is refused or granted subject to conditions and, in the Landlord's opinion (acting reasonably), the Landlord's, interests are thereby materially prejudiced and a Page 15 planning appeal is justified, then the Landlord may give Notice to the Tenant of its desire that a planning appeal be made and, if the Tenant does not make such an appeal (and give Notice of it to the Landlord) within two months of such Notice of the Landlord's desire: (a) the Landlord may make such an appeal (as the Tenant's agent); and (b) if the Landlord does so, the Tenant shall give to the Landlord promptly such assistance for the pursuit of such appeal (including appointing the Landlord as its agent) as the Landlord acting reasonably requests. 3.17 YIELDING UP 3.17.1 Immediately prior to the End of the Term the Tenant shall at its own cost: (a) remove from the Premises any moulding, sign, writing or painting of the name or business of the Tenant or the occupiers of the Premises and all tenant's fixtures, fittings, furniture, plant, machinery and effects and make good to the Landlord's satisfaction acting reasonably all damage caused by such removal; and (b) ensure that wherever any items removed in accordance with Clause 3.17.1(a) are connected to or take supplies from any Utilities, they are disconnected and made safe; and (c) except to the extent released from this obligation by a Notice from the Landlord to that effect remove and make good all alterations or additions made to the Premises during or during any period of occupation prior to the Term and well and substantially reinstate the Premises in such manner as the Landlord may direct and to its satisfaction (acting reasonably). 3.17.2 At the End of the Term the Tenant shall deliver all keys of the Premises to the Landlord and yield up the Premises to the Landlord with vacant possession and in a state of repair and condition and in all other respects in compliance with the Tenant's Covenants. 3.18 ENCROACHMENTS, EASEMENTS AND THIRD PARTY RIGHTS 3.18.1 The Tenant shall not stop up or obstruct any window or light belonging to the Premises and shall not permit any new window, light, opening, doorway, passage, Conduit or other encroachment or easement to be made or acquired into, on or over the Premises and if any person attempts to make or acquire any encroachment or easement the Tenant shall on becoming aware of it give Notice immediately to the Landlord and at the request of the Landlord but at the cost of the Tenant shall adopt such means as the Landlord may reasonably require for preventing any such encroachment or the acquisition of any such easement. 3.18.2 Without prejudice to the provisions of Clause 3.14, the Tenant shall not grant any right in favour of any third party which may continue after the End of the Term (including any right in favour of a communications supplier). 3.19 RELETTING AND SALE NOTICES The Tenant shall permit the Landlord at all reasonable times to enter the Premises and affix and retain without interference on suitable parts of the Premises (but not so as materially to affect the access of light and air to the Premises) during the last six months of the Term notices for reletting the Premises and at any time during the Term notices for selling the Landlord's interest in the Premises or the Building and shall not remove or obscure such notices and shall permit all persons with the written authority of the Landlord to view the Premises at reasonable hours in the daytime on prior appointment. Page 16 3.20 LANDLORD'S COSTS The Tenant shall pay on demand and indemnify the Landlord against all proper costs, fees, charges, disbursements and expenses incurred by the Landlord including, but not limited to, those payable to solicitors, counsel, architects, surveyors, bailiffs and the Landlord's internal management fee in relation to or in contemplation of: (a) the preparation and service of a notice under section 146 of the Law of Property Act 1925 and any proceedings under sections 146 or 147 of that Act even if forfeiture is avoided otherwise than by relief granted by the Court; (b) the preparation and service of notices and schedules relating to wants of repair whether served during or after the End of the Term; (c) the recovery or attempted recovery of arrears of Rent or other additional rents, or other sums due from the Tenant or in remedying any breach of the Tenant's Covenants; (d) any application for consent or approval made necessary by this Lease (such costs to include reasonable management fees and expenses) whether or not consent or approval is granted and whether or not the application is withdrawn provided the costs of such application shall be reasonable; (e) the supervision by the Landlord of any works which the Tenant is obliged to carry out pursuant to any of the provisions of this Lease; and (f) any risk assessment relating to the Premises which the Landlord must carry out in order to comply with any statutory or other obligation of the Landlord. 3.21 INDEMNITY The Tenant shall indemnify and keep the Landlord fully indemnified against all actions, proceedings, claims, demands, losses, costs, expenses, damages and liabilities arising directly or indirectly out of the state of repair or use or condition of the Premises or any breach of the Tenant's Covenants or any act, default or negligence of the Tenant or any person deriving title from the Tenant or their respective Personnel. 3.22 REGULATIONS The Tenant shall comply with such regulations in connection with the use and operation of the Premises and/or the Building as are made by the Landlord in accordance with the principles of good estate management from time to time and communicated to the Tenant in writing. 3.23 NEW SURETY If an Insolvency Event occurs in relation to the Surety then the Tenant shall within 14 days give Notice of that fact to the Landlord, and if the Landlord so requires the Tenant shall within 30 days of service of such Notice procure that some other person acceptable to the Landlord executes and delivers to the Landlord a deed containing a covenant with the Landlord as a primary obligation in the terms contained in Schedule 7. 3.24 OTHER OBLIGATIONS The Tenant shall comply with the agreements, covenants, restrictions and stipulations referred to in the deeds and documents listed in Schedule 4 so far as they are still subsisting and capable of taking effect and relate to the Premises and shall indemnify and keep the Landlord fully indemnified against all actions, claims, demands, losses, costs, expenses, damages and liabilities relating to them. Page 17 4 LANDLORD'S COVENANTS The Landlord covenants with the Tenant throughout the Term to comply with the requirements of this Clause 4. 4.1 QUIET ENJOYMENT The Landlord shall permit the Tenant peaceably and quietly to hold and enjoy the Premises without any interruption or disturbance from or by the Landlord or any person claiming under or in trust for the Landlord. 4.2 SERVICES The Landlord shall use its reasonable endeavours to carry out the Services PROVIDED THAT the Landlord will have no liability to the Tenant: (a) for any failure to provide Services during any period when the Tenant is in arrears with payment of Rent, Insurance Rent, Service Charge or any other moneys due from the Tenant to the Landlord under the Lease; (b) for the interruption of a Service for reasons of inspection, maintenance, repair, cleaning or other works (in which event the Landlord will restore the Service as soon as reasonably practicable); (c) for failure to provide a Service due to damage, breakdown, inclement weather, shortage of fuel or water, or any other cause beyond the Landlord's reasonable control (although the Landlord will then take all reasonable steps to restore such Service or provide an alternative Service as soon as reasonably practicable); (d) for withdrawal of a Service if the Landlord considers, acting reasonably, it is no longer appropriate; (e) for temporary closure of the Common Parts (subject to adequate means of access to the Premises being maintained) if necessary to prevent their dedication or the accrual of any third party rights over them or for the purpose of inspection, maintenance, repair, cleaning or other works to them; or (f) in respect of any act, omission or negligence of any employee of the Landlord or other person providing or purporting to provide any services unless the act, omission or negligence arises from the direct instructions of the Landlord. 4.3 ENFORCEMENT At the reasonable request and- at the Tenant's cost (the Tenant providing such reasonable security for costs as shall reasonably be required by the Landlord) to take reasonable steps to enforce any building contract or collateral warranty in respect of the refurbishment of the Building carried out in the year 2001 of which the Landlord may from time to time have the benefit. 5 INSURANCE 5.1 LANDLORD TO INSURE The Landlord and the Tenant covenant with each other throughout the Term to comply with the requirements of this Clause 5. Page 18 5.1.1 The Landlord shall insure against damage or destruction by the Insured Risks in a reputable insurance office or with such underwriters and through such agency as the Landlord may choose from time to time and (except to the extent that the insurance is invalidated by any act or default of the Tenant or of any of the Tenant's Personnel) such insurance covering: (a) the Building (excluding tenant's fixtures and fittings) for such sum as the Landlord acting reasonably estimates to be sufficient to cover the full cost of reinstatement assuming total loss, including professional fees, the cost of obtaining all necessary consents, the cost of demolition, site clearance and shoring up, ancillary costs, all applicable VAT and appropriate allowance for inflation but the Landlord shall not be required to include in the full cost of reinstatement any alteration or addition to the Premises carried out by the Tenant unless: (i) the alteration or addition was carried out in accordance with the provisions of this Lease; and (ii) following completion of the alteration or addition the Tenant has given the Landlord Notice of the necessary increase in the full cost of reinstatement; and (b) the loss of the Rent (plus any applicable VAT) which the Landlord acting reasonably estimates to be payable under this Lease (taking account of any review of the Rent which may become due under this Lease) for three years or such longer period as the Landlord from time to time considers (acting reasonably) sufficient to complete the reinstatement of the Building following a total loss; and (c) third party and public liability at the Building for such sum as the Landlord considers prudent from time to time. 5.1.2 At the request of the Tenant (but no more than once a year) the Landlord shall produce to the Tenant reasonable evidence of the terms of the insurance policy and the fact that the policy is in force. 5.2 SUSPENSION OF RENT If the Building or any part of it is damaged or destroyed by any of the Insured Risks so that the Premises are unfit for use and occupation or inaccessible and the insurance has not been invalidated or payment of any insurance moneys refused as a result of some act or default of the Tenant or any of the Tenant's Personnel then: (a) the Rent or a fair proportion of it according to the nature and extent of the damage sustained shall be suspended until: (i) the Premises are fit for use and occupation (and accessible); or (ii) the expiry of three years (or such longer period as the Landlord insures loss of the Rent pursuant to Clause 5.1.1(b)) from the date of the damage or destruction (whichever is the earlier); and (b) any dispute over such suspension of the Rent shall be referred to a single arbitrator appointed by agreement between the Landlord and the Tenant or otherwise (on the application of either Party) by or on behalf of the President for the time being of the Royal Institution of Chartered Surveyors (or any successor organisation) in accordance with the Arbitration Act 1996. Page 19 5.3 REINSTATEMENT FOLLOWING DAMAGE OR DESTRUCTION If the Building or any part of it is damaged or destroyed by any of the Insured Risks so as to make the Premises unfit for use and occupation or inaccessible then unless payment of the insurance moneys is refused because of any act or default of the Tenant or any of the Tenant's Personnel: (a) the Landlord shall use its reasonable endeavours to obtain all consents necessary to enable the Building to be rebuilt and reinstated but shall not be obliged to appeal against any refusal to grant them; and (b) the Landlord, save in any of the circumstances referred to in Clause 5.4.1 shall apply all insurance money received in respect of such damage or destruction (other than any in respect of loss of the Rent or additional rents) in connection with replacing the Building or the parts, as the case may be, so damaged or destroyed with such premises as the Landlord elects to build, and making up any shortfall in such reinstatement from its own resources and provided such shortfall does not result from some act or default of the Tenant or any of the Tenant's Personnel, but so that the Premises are of a substantially commensurate size and with amenities no worse than they were prior to the damage or destruction. 5.4 REINSTATEMENT PREVENTED ETC 5.4.1 The circumstances referred to in Clause 5.3(b) are: (a) the insurance policy has been invalidated or the payment of insurance moneys is refused (unless the Tenant reimburses the Landlord with all such moneys in accordance with Clause 5.5.3); (b) despite having used its reasonable endeavours to do so, the Landlord is unable to obtain all necessary consents on terms acceptable to the Landlord acting reasonably; (c) the necessary labour and materials cannot be obtained at reasonable cost; (d) the destruction or damage occurred during the last three years of the Term; (e) the Building has been totally destroyed; (f) there are, other circumstances beyond the Landlord's reasonable control which would make it uneconomic or not feasible to carry out works pursuant to Clause 5.3(b) within a reasonable time. 5.4.2 If any destruction or damage renders the Premises unfit for occupation and use or inaccessible and either: (a) any of the circumstances mentioned in Clause 5.4.1 apply then the Landlord (only); or (b) the Premises have not been rendered fit for occupation and use and accessible before the insurance for loss of the Rent effected by the Landlord has expired then the Landlord or (unless the circumstances in clause 5.4.1(a) apply) the Tenant may in such event upon giving to the Tenant or, as appropriate, the other Notice, determine this Lease forthwith (but such determination shall be without prejudice to any claim by the Landlord in respect of any prior breach of covenant). 5.4.3 If this Lease is determined pursuant to Clause 5.4.2 then the Landlord shall be solely entitled to all the insurance moneys. 5.5 TENANT'S INSURANCE OBLIGATIONS 5.5.1 The Tenant shall comply with all the requirements and recommendations of the insurers in respect of the Building and the Premises. Page 20 5.5.2 The Tenant and the Tenant's Personnel shall not do or omit to do anything: (a) that could cause any policy of insurance in respect of the Premises and/or the Building and/or any Adjoining Property to become void or voidable (wholly or partly); or (b) that could cause any additional insurance premium to become payable; or (c) that could cause the payment of any insurance moneys to be refused; or (d) that could cause any policy of insurance to become subject to any excess, exclusion or limitation. 5.5.3 Without prejudice to the indemnity given by the Tenant in Clause 3.21 the Tenant shall on demand pay to the Landlord: (a) all expenses incurred by the Landlord in reinstating` any policy which the Tenant has caused to be void or voidable; and (b) any increased insurance premium attributable to the Tenant; and (c) an amount equal to all moneys which the Landlord is unable to recover under any insurance policy because of an act, default or omission of the Tenant plus Interest and a fair proportion of all such moneys which are irrecoverable because of (i) a condition of the policy; or (ii) the imposition by the insurer or the acceptance by the Landlord (acting reasonably) of an obligation to bear part of an insured loss (commonly called an excess). 5.5.4 The Tenant shall not effect any insurance of the type specified in Clause 5.1 but if it does so it shall pay to the Landlord all moneys received as a result of such insurance. 5.5.5 The Tenant shall give Notice to the Landlord forthwith on the happening of any event or thing which might affect any insurance policy relating to the Building or the Premises. 6 FORFEITURE If and whenever during the Term: (a) any of the rents reserved by this Lease are unpaid 28 days, after becoming payable (whether or not formally demanded); or (b) there is a material breach of any of the Tenant's Covenants; or (c) there is a breach of any of the covenants by the Surety contained in this Lease; or (d) there occurs in relation to the Tenant or the Surety (or where the Tenant or any Surety comprises two or more persons there occurs in relation to any of such persons) an Insolvency Event; or (e) distress or execution is levied on the Tenant's goods at the Premises then the Landlord may at any time thereafter re-enter the Premises or any part of them in the name of the whole and thereupon the Term shall absolutely cease arid determine but without prejudice to any rights or remedies of any Party in respect of any antecedent breach of any of the obligations contained in this Lease. Page 21 7 SURETY'S COVENANTS Where there is a Surety named as a party to this Lease the Surety covenants with the Landlord as a direct and primary obligation in the terms set out in Schedule 7. 8 MISCELLANEOUS 8.1 NO IMPLIED EASEMENTS Nothing contained in this Lease shall impliedly confer on or grant to the Tenant any easement, right or privilege other than those expressly granted by this Lease. 8.2 EXCLUSION OF WARRANTY AS TO USE Nothing contained in this Lease or in any consent or approval given by the Landlord pursuant to the terms of this Lease shall imply or warrant that the Premises or the Building may be used under the Planning Enactments for the Permitted Use or for any other purpose authorised by the Landlord and the Tenant hereby acknowledges that the Landlord has not given or made at any time any representation or warranty that any such use is or will be or will remain a lawful use under the Planning Enactments. 8.3 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 statements and representations expressly made in this Lease and any written replies made prior to the grant of this Lease by the Landlord's solicitors in reply to written questions or enquiries made by the Tenant's solicitors in relation to the Premises. 8.4 EXCLUSION OF LANDLORD'S LIABILITY The Landlord shall not incur any liability: (a) for any inconvenience or any injury or death of any person or any damage to property arising through mechanical breakdown, failure or malfunction of any equipment, plant or machinery (other than that arising through any failure of the Landlord to comply with its obligations under and subject to the terms of this Lease), strikes, labour disputes, shortages, malicious damage or terrorist activity; or (b) for any other cause or circumstance beyond the reasonable control of the Landlord. 8.5 COVENANTS RELATING TO THE BUILDING AND/OR ADJOINING PROPERTY 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 person in respect of any property not comprised in this Lease. 8.6 DISPUTES WITH ADJOINING OCCUPIERS Any dispute arising between the Tenant and the tenants or occupiers of any part of any Adjoining Property belonging to the Landlord as to any easement, quasi-easement, right, privilege or Conduit used in connection with the Premises or such Adjoining Property shall be determined by the Landlord and the proper costs which the Landlord so incurs shall be paid as the Landlord directs acting reasonably. Page 22 8.7 EXCLUSION OF STATUTORY PROVISIONS Pursuant to an order of the Mayor's and City of London Court made on 1 May 2002 (Case Number RG 203821) under Section 38(4) of the 1954 Act (as amended by the Law of Property Act 1969) the Landlord and Tenant agree that the provisions of Sections 24 to 28 of the 1954 Act shall be excluded in relation to the tenancy created by this Lease. 8.8 VAT The consideration for any supply made by the Landlord under this Lease is exclusive of VAT and any applicable VAT shall be paid by the Tenant in addition to the consideration. 8.9 NOTICES Section 196 of the Law of Property Act 1925 shall apply to all Notices served under this Lease but such provisions shall be extended as follows: (a) where the expression "Tenant" or "Surety" includes more than one person service on any one of them shall be deemed to be service on them all. (b) any Notice shall be correctly served if it is sent by recorded delivery post in a stamped addressed envelope, addressed to the Landlord or to the Tenant or to the Surety as the case may be, at the last known place of abode or business or registered office in the United Kingdom or in the case of the Tenant at the address of the Premises and any Notice sent shall on proof of post be deemed to have been received. (c) any demand or Notice sent by mail shall be treated conclusively as having been made, given or served on the second Working Day after the day of posting. 8.10 STAMP DUTY It is certified that there is no agreement for lease to which this Lease gives effect. 8.11 NEW TENANCY This Lease creates a "new tenancy" as defined by section 28(1) of the 1995 Act. 8.12 EFFECT OF DOCUMENT This Lease is intended to be and shall take effect as a deed and shall be governed by and construed in accordance with the laws of England and Wales and the Parties irrevocably agree that the courts of England and Wales shall have exclusive jurisdiction in respect. of any dispute, suit, action or proceedings which may arise out of or in connection with this Lease. 8.13 COMMENCEMENT For the avoidance of doubt the provisions of this document (other than those contained in this Clause) shall not have any effect until this document has been dated. 8.14 THIRD PARTIES The Parties to this Lease do not intend that any term of this Lease shall be enforceable solely by virtue of the Contracts (Rights of Third Parties) Act 1999 by any person who is not a Party. Page 23 8.15 REMOVAL OF TENANT'S GOODS 8.15.1 If after the End of the Term any property of the Tenant remains in or on the Premises and the Tenant fails to remove it within seven days after the Landlord requests it to do so then the Landlord may as the Tenant's agent (and the Tenant appoints the Landlord to act in that capacity) sell such property. 8.15.2 If the Landlord sells any property pursuant to Clause 8.15.1, it shall hold the sale proceeds (after deducting the costs and expenses of removal, storage and sale reasonably and properly incurred and any other debts owed by the Tenant to the Landlord) to the Tenants order, provided that the Tenant will indemnify the Landlord against any liability the Landlord incurs to any third party whose property the Landlord sells in the bona fide mistaken belief (which shall be presumed unless proved otherwise) that such property belonged to the Tenant. 8.15.3 If, having made reasonable efforts to do so, the Landlord is unable to contact the Tenant, then the Landlord may sell property in accordance with this Clause and retain the sale proceeds absolutely, unless the Tenant claims them within six months of the End of the Term. 8.16 PERPETUITY PERIOD The perpetuity period applicable to this Lease is 80 years from the beginning of the Term and if any Party is granted a future interest by this Lease that interest will be void for remoteness if it does not vest within that period. 9 OPTION TO DETERMINE 9.1 If either party wishes to terminate this Lease at the end of the fifth year of the Term then that party shall serve not less than six (6) months nor more than twelve (12) months prior Notice on the other party following expiry of which this Lease shall terminate provided always that: (a) the Tenant shall have paid the Rent the Insurance Rent and the Service Charge in full down to the date of termination; and (b) the Tenant shall give vacant possession on the date of termination. 9.2 Termination of this Lease under the provisions of Clause 9.1 and 9.2 shall be without prejudice to the rights of any Party in respect of any pre-existing breach in the teams of this Lease. 9.3 Where the Tenant under this Lease is also the Tenant of Part Ground Floor pursuant to a lease dated the 5 day of June, 2002 between the Landlord (1) and Tenant (2) ("the Part Ground Floor Lease") any Notice served pursuant to Clause 9.1 of this Lease shall also constitute a valid Notice by the Landlord under Clause 9.1 of the Part Ground Floor Lease. The provision of this Clause 9.3 shall only apply for so long as BAM Entertainment Limited is the Tenant under this Lease and the Part Ground Floor Lease. EXECUTED by the Parties as a Deed. Page 24 SCHEDULE 1- THE PREMISES/THE BUILDING PART 1 - THE PREMISES All those office premises on the First Floor of the Building shown for the purpose of identification only edged red on Plan A and including: (a) the internal surfaces of all walls enclosing the said premises; (b) all non loadbearing walls within the said premises; (c) all ceilings of the said premises up to the level of (but excluding) the bottom of the joists, beams or slabs above them; (d) all floors and floorboards of the said premises down to the level of (but excluding) the tops of the joists, beams or slabs below them and all carpets and floor coverings in the said premises; (e) the window frames and the glass in all windows of the said premises; (f) all internal and external doors and door frames belonging to the said premises; (g) all additions alterations and improvements to the said premises; (h) all fixtures and fittings from time to time in or on the said premises except those fixed by the Tenant which are generally regarded as tenant's or trade fixtures; (i) all Conduits and Facilities within and exclusively serving the said premises but not including any part of the structure or the exterior of the Building. PART 2 - THE BUILDING All that land, together with the building or buildings from time to time on it or on any part of it, known as 124-130 Southwark Street London SE1, shown for the purpose of identification only edged blue on Plan B and registered at H.M. Land Registry under Title Numbers 326644, SGL91499 and 340625. Page 25 SCHEDULE 2 - RIGHTS AND EASEMENTS GRANTED The following rights and easements are granted to the Tenant for the benefit of the Premises and the Tenant's Personnel (in common with the Landlord and others having the right), but any person exercising such rights shall cause as little damage and disturbance as possible to any Adjoining Property and its owners and occupiers and shall at its own expense and as quickly as possible make good all damage caused in the exercise of such rights. 1 The right at all times to use the Common Parts for reasonable purposes ancillary to the reasonable use and enjoyment of the Premises for the Permitted Use, subject to compliance with any regulations made from time to time by the Landlord. 2 In relation to Utilities: (a) subject always to paragraph 2(b), the free passage and running of Utilities (subject to temporary interruption for repair, alteration or replacement) to and from the Premises through the Conduits which are now or during the Term laid in, on, under, over or through other parts of the Building, so far as is necessary for the reasonable use and enjoyment of the Premises for the Permitted Use; (b) the Landlord retains the right to change the location and arrangements for use by the Tenant of any of the Conduits, provided there remains available for the benefit of the Premises access to Utilities reasonably commensurate with that granted at the date of this Lease. 3 The right of support and protection for the benefit of the Premises as now enjoyed from other parts of the Building. 4 The right to use common toilet accommodation within the Retained Parts in accordance with reasonable regulations relating thereto from time to time published by the Landlord. Page 26 SCHEDULE 3 - EXCEPTIONS AND RESERVATIONS The following rights and easements are excepted and reserved out of the Premises to the Landlord and any Superior Landlord and the owners and occupiers of the Adjoining Property and their respective Personnel and all other persons having similar rights and easements or being similarly authorised: 1 The free and uninterrupted passage and running of Utilities through the Conduits which are now or in the future in, on, under, over or through the Premises. 2 The right at all reasonable times, after at least forty-eight hours' Notice by or on behalf of the Landlord (save in emergency), to enter (or in an emergency to break and enter) the Premises with materials and equipment in order to: (a) view and examine the state and condition of the Premises and to take schedules or inventories of the Landlord's fixtures; (b) inspect, cleanse, maintain, repair, connect, remove, lay, renew, re-lay, replace, alter or execute any works to or in connection with the Conduits or any other services; (c) execute repairs, decorations, alterations and any other works and to make installations to the Premises or to the Adjoining Property or to do anything which the Landlord may or must do under this Lease; (d) exercise any of the rights excepted and reserved by this Lease; (e) have access to (for all purposes) all risers, ducts, manholes, boiler and plant rooms, cable trays, switchgear and meter cupboards and rooms, under pavement vaults, distribution boards and common plant and machinery and for any other purpose connected with the interest of the Landlord in the Premises or the Building, including valuing or disposing of any interest of the Landlord, but any person exercising such rights shall cause as little inconvenience as possible to the Premises and shall make good without unreasonable delay any damage caused to the Premises. The right to: (a) carry out any works of repair, construction, development, improvement, alteration, cleaning or otherwise to any Adjoining Property (including to raise the height of any Adjoining Property or to erect new buildings of any height on any Adjoining Property); (b) use in any way the Adjoining Property and for such purposes to oversail the Premises with cranes and cradles and to erect scaffolding notwithstanding interference with the access of light or air to the Premises or temporary interference with any other right or easement. 4 All rights of light, air, support, protection and shelter and all other easements and rights which now or in future belong to or are enjoyed by the Adjoining Property over the Premises. 5 The right in the case of fire and other emergency to pass through the Premises and to enter the Premises, with or without workmen equipment and materials, to execute and take all necessary or desirable measures or precautions. Page 27 SCHEDULE 4 - DEEDS AND DOCUMENTS AFFECTING THE PREMISES The register entries for title numbers 326644, SGL91499 and 340625. Page 28 SCHEDULE 5 - RENT REVIEW 1 DEFINITIONS 1.1 In this Schedule the following definitions apply. 1.2 Assumptions means each of the following: (a) that the Premises are ready and fit for immediate occupation and use for any use permitted by this Lease and that all Utilities and other facilities necessary for such occupation and use are connected to and immediately available for use at the Premises; (b) that no work has been carried out to the Premises by the Tenant, any undertenant or their respective predecessors in title which has diminished the rental value of the Premises; (c) that if the Premises or the Building or the means of access to them, or any Utilities or other facilities necessary for their occupation and use, have been destroyed or damaged (or, in the case of Utilities or other facilities, suspended), they have been fully rebuilt and restored; (d) that all the covenants and conditions contained in this Lease have been fully complied with (but without prejudice to any rights of any Party in respect of the same); (e) that the Permitted Use and the Premises comply with all Enactments (and any work to comply with Enactments has been done so as to avoid as far as reasonably practicable any decrease in usable area in the Premises); (f) that all licences and consents required for the Permitted Use (and for the actual use if different) have been obtained and are effective. DECISION DATE means the date on which the amount of the Reviewed Rent is agreed or determined in writing. DISREGARDED MATTERS means each of the following: (a) the fact that the Tenant, any undertenant or their predecessors in title in their respective businesses has been in occupation of the Premises or any part of them; (b) any goodwill attached to the Premises by reason of any business conducted at the Premises; (c) any increase in rental value of the Premises attributable to the existence at the Relevant Review Date of any improvement to the Premises, carried out: (i) during the Term; and (ii) by the Tenant, or any subtenant or their respective predecessors in title; and (iii) with the Landlord's Consent where required; and (iv) not pursuant to or in anticipation of an obligation to the Landlord; and (v) within 21 years before the Review Date. HYPOTHETICAL TERM means a term equal to 10 years from the Review Date. Page 29 INDEPENDENT SURVEYOR means an independent chartered surveyor of not less than ten years' standing who is experienced in the rental valuation of property similar to the Premises and is acquainted with the market for such premises in the locality. INTERIM PERIOD means a period beginning on the Review Date and ending on the next quarter day after a Decision Date. OPEN MARKET RENT means the yearly rent which could reasonably be expected to become payable for the Premises after the expiry of a rent free or concessionary rent period (or the receipt of a sum by way of contribution or other inducement in lieu of the same) which might be negotiated in the open market for fitting out purposes (a) on a new letting of the Premises as a whole or of the whole Premises in Permitted Parts if this would produce a higher aggregate rent in the open market on the Review Date (b) by a willing landlord to a willing tenant (c) with vacant possession (d) without any fine or premium payable by either party for the grant of it (e) for the Hypothetical Term and otherwise on the terms and conditions and subject to the covenants and provisions contained in this Lease (i) other than as to the amount of the Rent immediately before the Review Date; (ii) but including (aa) these provisions for the review of rent, such reviews to be deemed to occur on the fifth anniversary of the first day of the Hypothetical Term; and (bb) the option to determine the term contained in Clause 9, such option to be deemed to occur on the fifth anniversary of the first day of the Hypothetical Term (f) and making the Assumptions but disregarding any effect on value attributable to the Disregarded Matters and any decrease in value attributable to any temporary works, operations or other activities on any Adjoining Property. PRESIDENT means the President for the time being of the Royal Institution of Chartered Surveyors or any successor organisation and includes any person authorised by the President to make appointments on his behalf. RENT RESTRICTIONS means the statutory restrictions for the control of rent in force on a Review Date or on the date on which any increased rent is ascertained under this Schedule and which limit in time or amount an increase in the Rent. REVIEWED RENT means the higher o(pound) (a) the Rent payable immediately before the Review Date (or if payment of the Rent or part of it has been suspended, the Rent which would otherwise have been payable); and (b) the Open Market Rent on the Review Date. 2 RENT REVIEW Page 30 From and including each Review Date the Rent shall be the Reviewed Rent. 3 AGREEMENT OR DETERMINATION OF THE REVIEWED RENT 3.1 The Open Market Rent at any Review Date may be agreed in writing at any time between the Landlord and the Tenant, but the Landlord and/or the Tenant (as the case may be) may at any time not earlier than three months before the Review Date: (a) either by agreement between them, or (c) by the Landlord or the Tenant giving Notice to the other require the Open Market Rent to be determined by the Independent Surveyor. 3.2 Any such determination by the Independent Surveyor shall be the Open Market Rent on the Review Date, unless the Open Market Rent has been agreed in writing by the Landlord and the Tenant at any time prior to such determination. 4 APPOINTMENT OF INDEPENDENT SURVEYOR The Independent Surveyor shall be appointed by agreement between the Landlord and the Tenant or, failing such agreement, nominated by the President on the written application of either the Landlord or the Tenant. 5 FUNCTIONS OF THE INDEPENDENT SURVEYOR (ACTING AS EXPERT) 5.1 The Independent Surveyor shall act as expert. 5.2 The Independent Surveyor shall invite the Landlord and the Tenant to submit to him a valuation accompanied by a statement of reasons with supporting evidence and to submit such representations and cross representations in respect of the other Party's valuation, statement of reasons and supporting evidence as they wish and shall give to each of them written notice of the amount of the Open Market Rent as determined by him. 6 COSTS OF REFERENCE TO THE INDEPENDENT SURVEYOR The costs of any reference to the Independent Surveyor shall be in the award of the Independent Surveyor and failing such award the costs shall be payable by the Landlord and the Tenant in equal shares. 7 APPOINTMENT OF NEW INDEPENDENT SURVEYOR If the independent Surveyor fails to give notice of his determination within 90 days of his appointment or dies or is unwilling to act or becomes incapable of acting or for any reason is unable to act, then either the Landlord or the Tenant may request the President to discharge the Independent Surveyor and to appoint another surveyor in his place and this procedure may be repeated as many times as necessary. 8 INTERIM PAYMENTS PENDING DETERMINATION If the amount of the Reviewed Rent has not been agreed or determined before the Review Date then the Tenant shall continue to pay the Rent at the rate applicable immediately before the Review Date and within 14 days of the Decision Date the Tenant shall pay to the Landlord as arrears of Rent the amount by which the Reviewed Rent for the Interim Period exceeds the Rent actually paid during the Interim Period (apportioned on a daily basis) together with interest at the base lending rate from time to time of National Westminster Bank PLC (or of such other bank as the Landlord may designate from time to time by giving Notice to the Tenant) from the Relevant Review Date to the date of actual payment (inclusive). Page 31 9 RENT RESTRICTIONS Whenever Rent Restrictions prevent or prohibit either wholly or partially either the operation of the above provisions for review of the Rent or the normal collection and retention by the Landlord of any increase in the Rent or any installment or part of it, THEN: (a) the operation of such provisions for review of the Rent shall be postponed to take effect on the first date or dates upon which such operation may occur; and (b) the collection of any increase or increases in the Rent shall be postponed to take effect on the first date or dates that such increase or increases may be collected and/or retained in whole or in part and on as many occasions as shall be required to ensure the collection of the whole increase AND until the Rent Restrictions are relaxed the Rent shall be the maximum sum from time to time permitted by such Rent Restrictions as may be applicable. 10 MEMORANDA OF REVIEWED RENT Within 28 days after the Reviewed Rent has been agreed or determined, memoranda shall be signed by or on behalf of the Landlord and the Tenant and annexed to this Lease and the counterpart of it and the Parties shall bear their own associated costs. 11 TIME NOT OF THE ESSENCE For the purpose of this Schedule time shall not be of the essence. Page 32 SCHEDULE 6 - SERVICE CHARGE 1 DEFINITIONS In this Schedule the following definitions apply. ACCOUNT DATE means 31 December in each year or such other date in each year as the Landlord may stipulate from time to time. ACCOUNT PERIOD means the period from but excluding one Account Date up to and including the next Account Date. ACCOUNT STATEMENT means a statement certified by the Surveyor (and in the absence of manifest error to be accepted by the Tenant as conclusive), showing the Total Charge for the relevant Account Period; the Due Proportion; the Service Charge; details of all Estimated Service Charge received in respect of the relevant Account Period; and any balance of Service Charge due from the Tenant or refund due to the Tenant. DUE PROPORTION means a fair proportion as conclusively determined by the Surveyor which will have regard to the proportion which the floor area of the Premises during the relevant Account Period bears to the total floor area of all Lettable Areas at the Building during the relevant Account Period, provided that if the Landlord reasonably considers that the Tenant: (a) is the sole beneficiary of or receives materially more benefits than the other occupiers of the Building from the provision of any one of the particular Services; or (b) is in breach of any of the Tenant's Covenants resulting in the Landlord incurring additional and/or extra-ordinary Service Costs then the Landlord reserves the right to include in the Service Charge the whole or an appropriate proportion of the cost of providing the same. ESTIMATED SERVICE CHARGE means payment on account of the Service Charge. FACILITIES means such systems, facilities and Utilities as may from time to time be provided for the general amenity of the Building, including, to the extent provided from time to time, security and surveillance systems; fire alarm and prevention equipment; sprinklers; heating; ventilation and air conditioning plant; air cooling and air extraction; lifts; reception facilities; communal nameplates and signs; car park equipment; public address and other communication facilities. SERVICES means: (a) keeping the Retained Parts in good and substantial repair and condition (including, at the Landlord's discretion, inspection, testing, maintenance, servicing, refurbishment and, where beyond economic repair, renewal); (b) keeping any Facilities in good working order and the Common Parts adequately cleaned and lit; (c) decorating and furnishing the Retained Parts and decoration external parts of window frames within the Building; (d) operating all Facilities required by an Authority and during the Permitted Hours such other Facilities as may from time to time be provided; Page 33 (e) carrying out such works and taking such other action in respect of the Retained Parts as may be appropriate in order to comply with the lawful requirements or recommendations of an insurer or an Authority; (f) providing refuse disposal (when the same as provided by the Landlord). SERVICE CHARGE means the Due Proportion of the Total Charge. SERVICE COSTS means the aggregate of the following costs and expenses incurred by the Landlord: (a) the cost of complying with the Landlord's obligations contained in Clause 4.2; (b) all rates, taxes, charges, assessments and outgoings payable in respect of all or any part of the Retained Parts or in respect of the Building as a whole (as distinct from any one or more Lettable Areas); (c) the cost of electricity, gas, oil or other fuel supplies for the provision of the Services or otherwise consumed in the Retained Parts; (d) the cost of employing or arranging for the employment of staff to provide the Services, such cost to include all incidental expenditure such as (without prejudice to the generality of the foregoing) that relating to insurance, pension and welfare contributions; the provision of clothing; the provision of tools and equipment; employer's liability insurance the provision of accommodation (and where such accommodation is provided in the Building a notional rent for it being such figure as the Landlord is from time to time advised by the Surveyor represents its open market rent); (e) the cost of providing, maintaining, inspecting and renewing such equipment materials and supplies as are from time to time required in order to provide the Services; (f) the cost of all maintenance and other contracts entered into in relation to the provision of the Services; (g) all contributions to roads, pipes, walls, structures or other things common to or used in common by the Building and any Adjoining Property; (h) the cost to the Landlord of complying with or contesting the requirements or proposals of any Authority insofar as they relate to the Building (as distinct from any particular Lettable Area or Areas); (i) commitment fees, interest and any other cost of borrowing money where necessary to finance the Service Costs; (j) the fees of managing agents retained by the Landlord in relation to the management of the Building, the provision of the Services and the routine collection of Rent, Service Charge and Estimated Service Charge due from tenants and occupiers of the Building (but not the collection of arrears of the same) (or where any such task is carried out by the Landlord a reasonable charge for the Landlord in relation thereto); (k) the cost of preparing and auditing Service Charge accounts (whether carried out by the Landlord or by the Landlord's agents or accountants); (l) the cost of obtaining such professional advice as may from time to time be required in relation to the management of the Building and the provision of Services; Page 34 (m) the cost of pedestrian control, security and the preparation and enforcement of regulations; (n) the cost of the insurance of plant and equipment and of the furnishings and contents of the Retained Parts and such other insurance relating to the management of the Building as the Landlord may consider prudent; (o) the cost of providing and maintaining decorative features (such as landscaped areas, flowers and seasonal decorations); (p) the cost of providing such further and improved Facilities as the Landlord may require for the greater amenity of those using the Building or the more efficient management of the Building, or as an Authority may require; (q) VAT (or other tax) where chargeable on any of the Service Costs to the extent that it cannot be recovered by the Landlord; (r) all other costs, charges, expenses and outgoings properly incurred in or incidental to the provision of the Services; and (s) such provision for anticipated future expenditure in relation to the Services as may in the Landlord's opinion (acting reasonably) be appropriate TOTAL CHARGE means the total of all Service Costs during an Account Period net of any receipts from insurers, the Tenant or other occupiers of the Building or third parties (otherwise than by way of a payment for services) which are properly applicable towards payment of such Service Costs. 2 THE SERVICE CHARGE 2.2 The Tenant covenants to pay to the Landlord by way of equal instalments in advance on each quarter day during the Term (the first payment or proportionate payment to be made on the first day of the Term) an Estimated Service Charge of such sum as the Landlord may reasonably demand, having regard to actual and anticipated Service Costs (being the First Estimated Service Charge during the first Account Period of the Term). 2.2 As soon as practicable after an Account Date, the Landlord shall submit to the Tenant an Account Statement for the Account Period ending on that Account Date and: (a) if the Account Statement shows that a balance of Service Charge is due from the Tenant, the Tenant shall pay such balance to the Landlord within fourteen days of receipt of the Account Statement; (b) if the Account Statement shows that a refund is due to the Tenant, such refund shall during the Term be set off against future Service Charge Payments and following the determination of the Term be set off against any other moneys due from the Tenant to the Landlord and the balance (if any) paid to the Tenant. 2.3 Where the date of this Lease and/or the End of the Term do not coincide with the beginning or end respectively of an Account Period, the Service Charge for the initial and/or final partial Account Periods shall be that proportion of the Service Charge which relates to the period from and including [the first day of the Term] or ending on the End of the `Term as the case may be, apportioned on a daily basis according to the number of days in the whole of the relevant Account Period. 2.4 The provisions of this paragraph 2 will survive the End of the Term (but only in respect of the period up to the End of the Term). Page 35 SCHEDULE 7 - COVENANTS BY THE SURETY 1 INDEMNITY BY SURETY The Tenant or the Surety shall while the Tenant remains bound by the Tenant's Covenants comply with the Tenant's Covenants and the Surety shall indemnify the Landlord against all claims, demands, losses, damages, liabilities, costs, fees and expenses sustained by the Landlord by reason of or arising out of any default by the Tenant in complying with the Tenant's Covenants. 2 SURETY JOINTLY AND SEVERALLY LIABLE WITH TENANT The Surety shall be jointly and severally liable with the Tenant (whether before or after any disclaimer by a liquidator or trustee in bankruptcy or any forfeiture of this Lease) for the fulfillment of all the obligations of the Tenant under this Lease and agrees that the Landlord in the enforcement of its rights under this Lease may proceed against the Surety as if the Surety were named as the Tenant in this Lease. 3 WAIVER BY SURETY The Surety waives any right to require the Landlord to proceed against the Tenant or to pursue any other remedy whatsoever which may be available to the Landlord before proceeding against the Surety. 4 NO RELEASE OF SURETY None of the following or any combination of them shall release, discharge or lessen or affect the liability of the Surety under this Lease: (a) any neglect, delay or forbearance of the Landlord in endeavouring to obtain payment of [the Rent or any additional rents] or in enforcing compliance with the Tenant's Covenants; (b) any refusal by the Landlord to accept rent tendered by or on behalf of the Tenant at a time when the Landlord is entitled (or would after the service of a notice under section 146 of the Law of Property Act 1925 be entitled) to re-enter the Premises; (c) any extension of time given by the Landlord to the Tenant; (d) save as provided for in the 1995 Act any variation of the terms of this Lease (including any reviews of the Rent) or the transfer of the Landlord's reversion or the assignment of this Lease; (e) any surrender by the Tenant of any part of the Premises (in which event the liability of the Surety shall continue in respect of the part of the Premises not so surrendered after making any necessary apportionments); (f) any other act, omission, matter or thing whereby but for this provision the Surety would be exonerated wholly or in part (other than a release under seal given by the Landlord). 5 DISCLAIMER OR FORFEITURE OF LEASE 5.1 If the Tenant (being an individual) becomes bankrupt or (being a company) enters into liquidation and the trustee in bankruptcy or liquidator disclaims or surrenders this Lease or this Lease is forfeited THEN the Surety shall if the Landlord gives Notice to the Surety within 90 days after such disclaimer or other event accept from and execute and deliver to the Landlord at the cost of the Surety a counterpart of a new lease of the Premises: (a) to take effect from the date of the disclaimer or other event; Page 36 (b) for a term beginning on the date of the disclaimer and equal in length to the residue of the Term which would have remained had there been no disclaimer; (c) reserving by way of initial rent an amount equal to the Rent payable immediately before the date of the disclaimer or other event such initial rent to be payable from that date; (d) imposing on the Surety the same obligations as the Tenant was subject to immediately before the disclaimer or other event; and (e) otherwise containing the same terms and provisions as this Lease, including the provisions for rent review, except that the Surety shall not be required to procure that any other person is made a party to the new lease as surety. 5.2 If the Landlord does not require the Surety to take a new lease, the Surety shall nevertheless on demand pay to the Landlord a sum equal to the rents and other sums that would have been payable under this Lease (and for the avoidance of doubt the provisions of Schedule 5 shall apply mutatis mutandis) but for the disclaimer or other event, from and including the date of such disclaimer or other event for the period of two years or (if sooner) until the date on which a lease or underlease of the Premises to a third party is completed. 6 SUPPLEMENTAL DOCUMENTS The Surety shall at the request of the Landlord join in any document made supplemental or collateral to this Lease. 7 AUTHORISED GUARANTEE AGREEMENT The Surety shall join in as a party to any Authorised Guarantee Agreement entered into by the Tenant in order to guarantee that the Tenant shall duly perform and observe the obligations it undertakes within such Authorised Guarantee Agreement and shall covenant to indemnify the. Landlord against all claims, demands, losses, damages, liabilities, costs, fees and expenses sustained by the Landlord by reason of or arising out of any default by the Tenant in complying with such obligations. 8 ADDRESS FOR SERVICE The Surety shall immediately notify the Landlord in writing of any change in the Surety's address for service and until such Notice has been given the Surety's address for service shall be the Surety's address for service most recently notified in writing to the Landlord. Page 37 THE COMMON SEAL OF ) NAIRN DEVELOPMENTS LIMITED ) was affixed ) in the presence of: ) Director /S/ ILLEGIBLE Secretary /S/ ILLEGIBLE EXECUTED as a deed by ) BAM ENTERTAINMENT LIMITED ) acting by its secretary and a director or by) two directors ) Director /s/ ANTHONY R. WILLIAMS --------------------------- Director/Secretary /s/ RHYS WILLIAMS ----------------- SIGNED as a deed on behalf of ) BAM ENTERTAINMENT INC. a company ) incorporated in Delaware by Anthony ) /s/ ANTHONY R. WILLIAMS Williams being persons who, in accordance ) -------------------------------- with the laws of that territory, are ) Director acting under the authority of the company ) Authorised Signatories