Underlease Agreement between Grosvenor West End Properties and CanArgo Energy Corporation for 148/150 Buckingham Palace Road, London
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This agreement is an underlease between Grosvenor West End Properties and CanArgo Energy Corporation for the first and second floors of 148/150 Buckingham Palace Road, London. The lease starts on June 24, 2000, and runs for 10 years, ending on June 23, 2010, with an initial annual rent of £141,950. The contract outlines the rights and responsibilities of both parties, including rent payments, maintenance, insurance, and use of the premises. It also covers conditions for alterations, subletting, and dispute resolution.
EX-10.23 3 0003.txt EXHIBIT 10(23) DATED September 8, 2000 - ---------------------------------------------------------- - ---------------------------------------------------------- (1) GROSVENOR WEST END PROPERTIES (2) CANARGO ENERGY CORPORATION - --------------------------------------------------------- - --------------------------------------------------------- UNDERLEASE of first and second floors 148/150 Buckingham Palace Road London SW1 - --------------------------------------------------------- From: 24 June 2000 Term: 10 years Expires: 23 June 2010 Initial rent: UK Pounds 141,950 DATED September 8, 2000 - -------------------------------------------------------- - -------------------------------------------------------- (1) GROSVENOR WEST END PROPERTIES (2) CANARGO ENERGY CORPORATION - -------------------------------------------------------- - -------------------------------------------------------- Counterpart/ UNDERLEASE of first and second floors 148/150 Buckingham Palace Road London SW1 - -------------------------------------------------------- From: 24 June 2000 Term: 10 years Expires: 23 June 2010 Initial rent: UK Pounds 141,950 INDEX ----- INTERPRETATION .....................................................1 Defined terms...............................................1 End of the Term.............................................6 Landlord and Tenant (Covenants) Act.........................7 Construction of obligations.................................7 Statutes....................................................7 Value Added Tax.............................................7 Indemnities.................................................8 Superior interests..........................................8 Approvals...................................................8 Vitiation of insurance......................................8 Parties and joint and several obligations...................9 Clause numbers..............................................9 TERM RIGHTS & RENTS.................................................9 TENANT'S COVENANTS..................................................10 Rent........................................................10 Interest on arrears.........................................10 Outgoings...................................................11 Empty rates.................................................11 Value Added Tax.............................................11 Gas electricity and other services..........................12 Repair......................................................12 To clean windows............................................12 Internal decoration.........................................12 Standard of works...........................................13 Reinstatement and delivery at end of Term...................13 Alienation..................................................14 Enforcement of underlease terms.............................14 Registration of dealings....................................15 Alterations.................................................15 Permitted user..............................................15 No nuisance.................................................15 No overloading..............................................16 Other restrictions..........................................16 Contamination...............................................16 Waste and refuse............................................16 Plant and machinery.........................................17 Aerials.....................................................17 Signs.......................................................17 Preservation of rights and boundaries.......................18 Reletting notices...........................................18 Rights of entry.............................................18 To permit Landlord to remedy breach.........................19 Statutory obligations.......................................20 Copies of notices...........................................20 To pay charges under Planning Acts..........................21 No planning applications etc without consent................21 Copies of permissions.......................................21 To obtain approval of permissions...........................21 To complete works before end of Term........................21 Landlord's costs............................................22 Indemnities.................................................23 Regulations.................................................23 LANDLORD'S COVENANTS................................................23 Quiet enjoyment.............................................23 Compliance with superior lease..............................23 Services....................................................23 Access to data hub..........................................24 INSURANCE OBLIGATIONS...............................................24 Landlord to effect insurance................................24 Landlord to obtain consents for rebuilding..................24 Landlord to reinstate (other than minor damage).............25 Cesser of rent..............................................26 Tenant's insurance obligations..............................26 PROVISOS............................................................28 Forfeiture..................................................28 No implied rights...........................................29 No restrictions on adjoining property.......................29 Exclusion of liability......................................29 Compensation................................................29 Service of notices..........................................30 Alterations to the Communal Garden..........................30 Representations.............................................30 Disputes....................................................31 Exclusion of third party rights.............................31 Sums due to Landlord treated as rent........................31 Stamp duty certificate......................................31 Governing law and jurisdiction..............................31 RENT REVIEW.........................................................32 Frequency of review.........................................32 Upwards only reviews........................................32 Basis of valuation..........................................32 Treatment of rent free periods..............................34 Method of determination.....................................35 Interim arrangements........................................36 Time not of the essence.....................................36 Statutory restrictions......................................37 Memoranda...................... ............................37 SCHEDULE 1..........................................................37 (Particulars of the Premises)...............................37 SCHEDULE 2..........................................................38 (Rights granted)............................................38 SCHEDULE 3..........................................................39 (Exceptions and reservations)...............................39 SCHEDULE 4..........................................................40 (The Service Charge)........................................40 (Definitions)...............................................40 (Calculation and payment)...................................41 (Services)..................................................44 (Expenses)..................................................45 SCHEDULE 5..........................................................48 (Alienation conditions).....................................48 (Requirements for an assignment)............................48 (General requirements)......................................50 THIS UNDERLEASE made the 8th day of September 2000 - --------------- BETWEEN: - ------- (1) GROSVENOR WEST END PROPERTIES (Company Registration Number 956235) -------------------------------- whose registered office is at 70 Grosvenor Street London W1X 9DB ("the Landlord") and (2) CANARGO ENERGY CORPORATION whose registered office is at 32 Loockerman ---------------------------- Square Suite L-100 Dover Delaware 19904 Dover Kent (address for service in the UK is c/o McGrigor Donald 63 Queen Victoria Street London EC4N 4ST ("the Tenant") WITNESSES as follows: - --------- INTERPRETATION - -------------- 1. IN this Lease the headings and index shall be ignored in its construction and unless the context otherwise requires: Defined terms - -------------- 1.1 The following expressions have the meanings set against them: "Basic Rent" the rent payable under Clause 2.1 "Building" the whole and each part of the land and building known as 148/150 Buckingham Palace Road London SW1 for identification purposes only edged green on the attached plan being the land registered at H M Land Registry under title number NGL772951 including: (a) any ancillary vaults (b) all additions and alterations thereto (c) all fixtures annexed thereto (except tenant's fixtures) "Common Parts" those parts of the Building which are not from time to time let or intended to be let to any occupational tenants including (but without limiting the foregoing) staircases entrance halls and coffee point on the third floor of the Building "Communal the garden at the rear of 126 to 158 Buckingham Palace "Garden"Road London SW1 "Conduits" pipes sewers drains cisterns ducts gutters watercourses wires cables channels flues telecommunications equipment and other conducting media and any other ancillary apparatus "Contractual the date on which the contractual term created by Clause Expiry Date" 2 will expire if the Term does not end earlier "Full Cost of" such amount as the Landlord from time to time determines Reinstatement as the cost of rebuilding the relevant part or parts of the Building after destruction by an Insured Risk ( including the cost of shoring-up demolition site clearance any works that may be required by statute fees payable on any applications for planning permission or other consents professional fees and other incidental expenses ) when the rebuilding occurs including any increases in building costs up to the time of completion "Insurance Rent" such sums as shall be a fair proportion (as determined from time to time by the Landlord save in the case of loss of Rent when the proportion shall be 100%) of the amount which the Landlord pays by way of gross premium (or if the Premises or the Building are insured with other property where applicable a fair proportion of such sums payable under the relevant insurance policy determined from time to time by the Landlord): (1) for effecting insurance under Clause 5.1 and (2) in respect of the Landlord's Liability Insurance Together with the said proportion of: (3) all expenses incurred by the Landlord in connection with assessing the Full Cost of Reinstatement of the Building provided that the Tenant shall not be liable for the cost of assessment any more than once in every year of the Term and (4) any excesses under any policy of insurance effected by the Landlord under Clause 5.1 in respect of any Insured Damage that occurs "Insured damage or destruction to any part of the Building which is Damage" caused by a risk against which and to the extent that at the time of the damage or destruction the Landlord has or should have effected insurance of that part of the Building under Clause 5.1 "Insured fire lightning storm explosion impact aircraft and other Risks" aerial devices and articles dropped therefrom riot malicious damage civil commotion earthquake (fire and shock) bursting or overflowing of water tanks apparatus or pipes subsidence heave landslip for so long as each such risk remains insurable with insurers of repute at reasonable commercial rates or is actually insured by the Landlord in its discretion for the purposes of this Lease together with such other risks of damage or destruction against which the Landlord from time to time decides to effects insurance for the purposes of this Lease (if any) "Landlord's insurance against all liability of the Landlord to third Liability parties arising out of or in connection with the Building Insurance" or any matter relating to the Building on such terms and in such amount as the Landlord from time to time determines "Loss of the amount of the Rents for the time being payable during Rent" a period of three years (or for so long as the Landlord so elects during such longer period as the Landlord from time to time reasonably determines necessary in order to rebuild the Building) including any increase in the Basic Rent during such period which the Landlord estimates will occur as a result of any review due under Clause 7 "Outgoings" (in relation to the Building the Common Parts the Premises or other property as the context requires) all present and future rates charges taxes assessments impositions and outgoings of any kind (including without limiting the foregoing any which are of a capital or non-recurring nature or wholly novel)assessed charged imposed or payable by or on any owner or occupier of or on or in respect of the Building the Common Parts the Premises or other property respectively excluding (save for Value Added Tax) any payable by the Landlord or any superior landlord occasioned by receipt of the Rents or the rents payable under a superior lease or by any dealing with any interest in the Premises of the Landlord or any superior landlord "Planning the Town and Country Planning Act 1990 the Planning(Listed Acts" Buildings and Conservation Areas) Act 1990 and the Planning (Hazardous Substances) Act 1990 and any other statutes relating to town and country planning "Plant" all plant and machinery now or hereafter in or serving the Building including(but without limiting the foregoing) any lifts and lift machinery boilers public address system internal telephones air conditioning heating and ventilation plant and machinery sprinklers and associated Conduits electrical systems fire detection and fire prevention systems central or monitoring systems and installations and any plant and machinery from time to time installed to replace any of the foregoing "Premises" the whole and each part of the part of the first and second floors of the Building more particularly described in Schedule 1 "Prescribed four per cent per annum above the base rate of National Rate" Westminster Bank plc or above such other rate of interest as the Landlord from time to time reasonably determines "Quarter Days" 25 March 24 June 29 September and 25 December in each year "Rents" the Basic Rent the Insurance Rent and the Service Charge "Service Charge"the sums payable by the Tenant at the times and in the manner set out in "Services" the services set out in Part III of Schedule 4 "Term" the term of years granted by Clause 2 with any period of holding-over extension or continuance by statute or common law "Visitor" the Tenant any undertenant (however remote)of the whole or any part of the Premises and any person at or near the Building expressly or by implication with the authority of the Tenant or any such undertenant "1954 Act" the Landlord and Tenant Act 1954 End of the Term - ------------------ 1.2 "The last year of the Term" and "the end of the Term" mean the last twelve months of and the end of the Term however it ends (including by expiry forfeiture or surrender) Landlord and Tenant (Covenants) Act - --------------------------------------- 1.3 The expressions "excluded assignment" "authorised guarantee agreement" and "collateral agreement" have in relation to this Lease the meanings specified in Sections 11(1) 16 and 28(1) of the Landlord and Tenant (Covenants) Act 1995 Construction of obligations - ----------------------------- 1.4 Obligations by the Tenant: 1.4.1 not to do or omit to do anything in relation to the Premises or the Building include an obligation to ensure that It is not done or omitted by (in relation to the Premises) Any other person and ( in relation to other parts of the Building) any Visitor 1.4.2 to do anything in relation to the Premises or the Building include an obligation to ensure that (in the case of the Premises) all other persons and (in the case of other parts of the Building) all Visitors comply with them 1.5 References to obligations of the Tenant in this Lease include obligations of the Tenant in any document entered into pursuant to this Lease and in any collateral agreement Statutes - -------- 1.6 References to a statute or a statutory instrument include any extension amendment or re-enactment for the time being in force and any regulations instruments permissions directions orders or notices for the time being made or issued under them Value Added Tax - ----------------- 1.7 References to Value Added Tax include any similar tax substituted for or levied in addition to it Indemnities - ----------- 1.8 Obligations to indemnify the Landlord against a matter are obligations to indemnify the Landlord against liabilities actions proceedings damages penalties costs expenses claims and demands of whatsoever nature and any fees and expenditure incurred arising directly or indirectly from or in connection with that matter Superior interests - ------------------- 1.9 References to the Landlord include any superior landlord and any chargee of the Landlord or of any superior landlord where: 1.9.1 the relevant superior lease or charge requires the approval of the superior landlord or chargee to a matter and the Landlord's approval to that matter is required under this Lease (although nothing in this Lease shall prevent the Superior landlord or chargee from withholding its approval if it is entitled to do so under the relevant superior lease or charge) 1.9.2 there is provision for repayment to the Landlord of any expenses incurred and 1.9.3 there is an indemnity in favour of the Landlord Approvals - --------- 1.10 References to the approval or consent of or to a matter being approved by a person are to its prior written approval or consent Vitiation of insurance - ------------------------ 1.11 References to insurance being vitiated are to the insurance effected under Clause 5.1 (and if relevant any other insurance effected by the Landlord against damage or destruction to neighbouring property or Landlord's Liability Insurance or other similar insurance) being vitiated and/or payment of the insurance monies under such insurance being refused in whole or part by reason of any act or omission by any Visitor (whether or not also resulting from an act or omission by any other person) Parties and joint and several obligations - ---------------------------------------------- 1.12 References to "the Landlord" and "the Tenant" include the immediate landlord and tenant for the time being under this Lease and (if respectively more than one person) their obligations are joint and several Clause numbers - --------------- 1.13 Without further designation references to numbered Clauses and Schedules are to clauses of and schedules to this Lease TERM RIGHTS & RENTS - ---------------------- 2. THE Landlord LEASES the Premises to the Tenant ------ TOGETHER WITH (in common with the Landlord those authorized by it and -------------- others with similar rights) the rights specified in Schedule 2 RESERVING to the Landlord and those authorised by it the rights specified --------- in Schedule 3 SUBJECT to all rights and obligations affecting the Premises ------- TO HOLD to the Tenant from and including the 24th day of June 2000 for -------- a term of ten years PAYING to the Landlord: ------ 2.1 Yearly during the Term (and proportionately for any shorter period) 141,950 (One hundred and forty-one thousand and nine hundred and fifty pounds) (subject to increase in accordance with Clause 7) by equal quarterly payments in advance on the Quarter Days the first to be made on the date of this Lease proportionate from and including the 18th day of October 2000 to and including the 24th day of December 2000 2.2 By way of further rent the Insurance Rent on demand 2.3 By way of further rent the Service Charge TENANT'S COVENANTS - ------------------- 3. THE Tenant COVENANTS with the Landlord during the Term and thereafter as - -- --- --------- specified as follows: Rent ---- 3.1 To pay the Rents: 3.1.1 in accordance with Clause 2 without any deduction and not to exercise any right or claim to withhold rent or legal or equitable set-off 3.1.2 (if so requested by the Landlord in writing) by standing order to a bank account in the United Kingdom nominated by the Landlord Interest on arrears - --------------------- 3.2 To pay the Landlord interest at the Prescribed Rate from when the rent or other sum was due or incurred until actual payment or reimbursement (whether formally demanded or not and before and after judgment) on: 3.2.1 any part of the Basic Rent unpaid on the due date 3.2.2 any other sum due under this Lease unpaid seven days after it is due and 3.2.3 any sum incurred by the Landlord as a result of a failure by the Tenant to comply with its obligations in this Lease PROVIDED THAT this sub-clause is without prejudice to any other right -------------- of the Landlord and Rents and other sums shall be deemed unpaid if the Landlord has refused to accept a payment so as not to waive a right to forfeit this Lease Outgoings - --------- 3.3 To pay and indemnify the Landlord against all Outgoings which relate to the Premises Empty rates - ------------ 3.4 To make good to the Landlord any loss of rating relief for the Premises applicable to empty premises which the Landlord suffers after the end of the Term because the relief is allowed to the Tenant or any other person for any earlier period Value Added Tax - ----------------- 3.5 To pay the Landlord as additional rent any Value Added Tax chargeable on any payments or other consideration (including the Rents) made or given by the Tenant under or in connection with this Lease such Value Added Tax to be payable in addition to such payments or other consideration 3.6 Where under this Lease the Tenant agrees to pay the Landlord or any other person (including without limitation by way of service charge indemnity or reimbursement) a sum calculated by reference to an amount expended by the Landlord or another person to pay in addition a sum equal to any Value Added Tax on such amount save to the extent (if any) that it will be recoverable by the Landlord or other person respectively without (if respectively it has not done so) exercising any election to waive exemption from Value Added Tax Gas electricity and other services - -------------------------------------- 3.7 To pay to the suppliers all charges for gas electricity and other services consumed or used at or in connection with the Premises and all charges for meters and telephones and to comply with all regulations and requirements of the supplying authorities insofar as they relate to the Premises Repair - ------ 3.8 To keep the Premises (including the tiles carpeting and other furnishing of the floors) in good and substantial repair and condition (including decorative condition) and (when necessary) to renew and rebuild the Premises except Insured Damage save where the insurance against such Insured Damage is vitiated 3.9 To keep the Premises in a clean and tidy condition and clear of all rubbish 3.10 To replace any landlord's fixtures in the Premises which are or become beyond repair with other good quality fixtures 3.11 To give written notice to the Landlord of any defect or item requiring repair in the Premises or the Building which might give rise to a common law or statutory duty on the Landlord in favour of the Tenant or any other person as soon as it comes to the attention of the Tenant or those deriving title under it 3.12 To indemnify the Landlord against any breach of any such duty To clean windows - ------------------ 3.13 To clean the inside of all windows of the Premises as often as necessary and at least once in every month Internal decoration - -------------------- 3.14 In the fifth year of the Term and in the last month of the last year of the Term to paint enamel french polish or otherwise treat such parts of the interior of the Premises as are or should be so treated with two coats of good quality paint or best quality polish or other suitable material of the best quality (the colour scheme and materials to be used on the last such occasion during the Term to be such as is required by the Landlord) and wash down all tiles and similar washable surfaces 3.15 In the last month of the last year of the Term to supply and lay throughout the Premises new fitted carpets all such carpets to be of no less quality than those in the Premises at the date of this Lease and of a colour and design required by the Landlord acting reasonably 3.16 As often as is in the reasonable opinion of the Landlord necessary to clean and treat in a proper manner and in accordance with any instructions issued by the Landlord all other surfaces and fixtures in the Premises not required to be painted Standard of works - ------------------- 3.17 To carry out the repairs decorations and other works required under this Lease in a good and workmanlike manner and to the reasonable satisfaction of the Landlord and in the last year of the term such decorations are to be in colours reasonable approved by the Landlord such approval for to be unreasonably withheld or delayed Reinstatement and delivery at end of Term - ----------------------------------------------- 3.18 Before the end of the Term: 3.18.1 (save to the extent that the Landlord otherwise directs in writing) to remove any additions or alterations made to the Premises during the Term 3.18.2 to remove any advertisements or signs erected on or near the Premises 3.18.3 to make good any damage caused by such removal and the removal of tenant's fixtures and chattels 3.19 At the end of the Term to deliver the Premises up in repair and in accordance with the Tenant's obligations in this Lease Alienation - ---------- 3.20 Not to assign charge underlet hold on trust for another or otherwise part with or share possession or occupation of or suffer any other person to occupy or have an interest in the whole or any part of the Premises save by way of an assignment charge or underletting of the whole of the Premises or an underletting of part of the Premises satisfying the relevant requirements of Schedule 5 Enforcement of underlease terms - ---------------------------------- 3.21 In relation to any underlease however remote of the whole or any part of the Premises: 3.21.1 not to waive or vary its terms 3.21.2 to procure that the tenant for the time being complies with the covenants given or which it should have given to the Landlord pursuant to Part II of Schedule 6 and in any document entered into by the Tenant pursuant to this Lease 3.21.3 to operate properly any provisions for the review of rent thereby reserved so as to increase such rent to the maximum extent in accordance with its terms 3.21.4 to submit to any court expert or arbitrator determining such rent any representations that the Landlord reasonably requests and 3.21.5 within fourteen days to give notice to the Landlord of the details of the determination of every rent review Registration of dealings - -------------------------- 3.22 Within twenty-one days after any assignment charge underlease or transmission or other disposition or devolution relating to the whole or any part of the Premises or any derivative interest in them to give notice of such to the Landlord and to produce to the Landlord a certified copy of the relevant document and to pay the Landlord's solicitors' proper charges for the registration of every such document Alterations - ----------- 3.23 Not to erect any new buildings on the Premises nor to annex the Premises to other premises nor to make any alterations or additions which will alter the height elevation or architectural appearance of the Premises and not to make any other external or any structural alterations or additions to the Premises 3.24 Subject to Clause 3.23 not to make any other alterations or additions to the Premises without the Landlord's approval (such approval not to be unreasonably withheld or delayed) nor without having entered into such obligations as the Landlord shall reasonably require as to their execution and reinstatement Permitted user - --------------- 3.25 To use the Premises only as business or professional office within sub-class (a) of Class B1 of the Schedule to the Town and Country Planning (Use Classes) Order 1987 (ignoring for this purpose any Extension amendment or revocation of such Order made after the date of this Lease) but not governmental or diplomatic offices No nuisance - ------------ 3.26 Not to do on the Premises or the Building anything which in the opinion of the Landlord may become or cause a nuisance disturbance damage annoyance or inconvenience to the Landlord or its lessees or to the owners or occupiers of neighbouring property No overloading - --------------- 3.27 Not to do or bring in or on the Premises or the Building anything which may put any weight or impose a strain in excess of that which the Premises or the Building are designed to bear with due margin for safety and not to fix any machinery to the walls ceilings or roof of the Premises or the Building Other restrictions - ------------------- 3.28 To keep the entrance ways of and exits from the Premises clear and unobstructed at all times and not to cause an obstruction in any part of the Building 3.29 Not to hold any sale by auction on the Premises 3.30 Not to permit any person to sleep in the Premises nor to use the Premises or the Building for any residential illegal or immoral purpose or for the purposes of prostitution 3.31 Not to allow to pass into the sewers drains or watercourses serving the Premises or the Building any noxious or deleterious effluent or other Substance which may obstruct or damage them and to make good any such obstruction or damage caused thereto by any Visitor Contamination - ------------- 3.32 Not to allow any noxious or deleterious effluent or any form of contaminant or pollutant or other substance to seep into or otherwise enter the buildings or other structures on the Premises or the ground below them Waste and refuse - ------------------ 3.33 Not to discharge trade effluent or waste without the approval of the Landlord 3.34 To make proper and adequate arrangements for the frequent removal from the Premises of all trade and other waste in accordance with the requirements of any competent authority and any regulations from time to time made by the Landlord Plant and machinery - --------------------- 3.35 Not without the approval of the Landlord to erect or install in the Premises or the Building any engine or machinery or other appliance or Apparatus of any description (other than usual office machinery in the Premises) and to ensure that any such erected or installed is properly installed and safely maintained and not liable to leak or cause a fire or explosion 3.36 Not to overload the electrical wiring or drainage installations and apparatus in or serving the Premises or the Building and to ensure that any in or solely serving the Premises comply with the terms conditions and regulations of the relevant authorities 3.37 To keep all Plant within and exclusively serving the Premises in working order Aerials - ------- 3.38 Not to erect on the exterior of the Premises or the Building any pole mast wire or aerial radio or television mast aerial or dish or any erection of any kind whatsoever Signs - ----- 3.39 Not to fix or exhibit on the exterior of or (if visible from the exterior) the interior of the Premises nor anywhere on the Building any name-place bill sign placard notice fascia board flag banner blind advertisement or similar device so that there shall be no indication of the use of the Premises save with the approval of the Landlord such approval not to be unreasonably withheld or delayed for one small name-plate on or at the front entrance door of the Building or (if the Landlord so requires) on the communal nameboard for the Building and nameplates on the doors of the Premises Preservation of rights and boundaries - ----------------------------------------- 3.40 Not to obstruct any window or light enjoyed by the Premises and to use best endeavours to prevent the loss of any right belonging to the Premises 3.41 To prevent any encroachment on the Premises and the acquisition of any right over the Premises and to notify the Landlord immediately if an encroachment or the acquisition of a right is attempted or made Reletting notices - ------------------ 3.42 To permit the Landlord at any time after the date six months before the Contractual Expiry Date to fix and retain on any suitable (to both Landlord and Tenant acting reasonably) part of the Premises a notice for re-letting the Premises and not to remove or obscure such notice and to permit all persons with the authority of the Landlord to view the Premises at reasonable hours on prior appointment Rights of entry - ----------------- 3.43 To permit the Landlord and those authorised by it to enter the Premises to: 3.43.1 ascertain whether the Tenant has complied with its obligations in this Lease 3.43.2 assess the Full Cost of Reinstatement 3.43.3 take schedules of fixtures and chattels to be yielded up at the end of the Term 3.43.4 provide the Services and carry out the other matters referred to in Schedule 4 3.43.5 carry out repairs decorations alterations or other works to neighbouring property 3.43.6 inspect repair renew connect to cleanse move relay or construct existing or new Conduits or Plant in over or under the Premises serving or to serve any neighbouring property 3.43.7 comply with the obligations in any superior lease 3.43.8 do anything else reasonable which cannot otherwise be conveniently done And anyone exercising the right of entry shall: --- 3.43.9 (except in an emergency) do so only at reasonable times and on reasonable notice 3.43.10 cause as little damage and inconvenience as reasonably practicable and 3.43.11 make good any resulting damage to the Premises To permit Landlord to remedy breach - ---------------------------------------- 3.44 To permit the Landlord and all those authorised by it to enter the Premises without liability to the Tenant for any damage or inconvenience Thereby created to remedy any breach of the Tenant's obligations in this Lease specified by the Landlord by notice to the Tenant if: 3.44.1 one month thereafter the Tenant has not started or is not continuing diligently to remedy the breach 3.44.2 two months thereafter the Tenant has not completed remedying the breach or 3.44.3 in the Landlord's opinion the Tenant is unlikely to have completed remedying the breach within two months thereafter or such shorter period as the Landlord reasonably considers necessary in the circumstances AND the costs so incurred by the Landlord (including solicitors' and --- surveyors' fees) shall be a liquidated debt and paid by the Tenant to the Landlord on demand Statutory obligations - ---------------------- 3.45 To comply with the present and future requirements of any statute government department local or other public or competent authority or court relating to the Premises or their use whether imposed on any owner or occupier of them 3.46 To execute all works and provide and maintain all arrangements on or in respect of the Premises or their use that are thereby required 3.47 Not to do or omit to do in the Premises or the Building anything as a result of which the Landlord may under any statute have imposed upon it . or become liable to pay any penalty damages compensation costs charges or expenses Copies of notices - ------------------- 3.48 Immediately after receipt to give to the Landlord full particulars of any notice order proposal or recommendation given to or served on the Tenant or any owner or occupier of the Premises affecting the Premises or neighbouring property whether advertised or served directly on the Tenant or any such owner or occupier or the original (or a copy) is received by any of them from any other person 3.49 If so requested by the Landlord to produce any such notice order proposal or recommendation and at the request and cost of the Landlord to make or join in making such objections or representations in respect of it as the Landlord requests To pay charges under Planning Acts - --------------------------------------- 3.50 To pay any charge or levy imposed under the Planning Acts during or after the Term in respect of the carrying out or maintenance of any operations at the Premises or the commencement or continuance of any use of the Premises during the Term No planning applications etc without consent - ------------------------------------------------- 3.51 Not to serve any notice on nor to enter into any agreement with the planning authority nor without the approval of the Landlord make any application for permission under the Planning Acts Copies of permissions - ----------------------- 3.52 Immediately on receipt to give to the Landlord a copy of the grant refusal or modification of any permission or other decision under the Planning Acts To obtain approval of permissions - ------------------------------------- 3.53 Notwithstanding any consent or approval granted by the Landlord not to make any alteration or addition to the Premises or any change of use until the Landlord has approved every necessary permission such approval not to be unreasonably withheld PROVIDED THAT the Landlord may refuse ------------- approval inter alia on the grounds that any condition contained in it or anything omitted from it or any other thing referred to in it would in the opinion of the Landlord be (or be likely to be) prejudicial to the Landlord's interest in the Premises during or after the end of the Term To complete works before end of Term - ------------------------------------------ 3.54 To carry out and complete before the end of the Term: 3.54.1 any works to be carried out to the Premises by a date after the end of the Term by a condition of any planning permission granted for any development begun before the end of the Term and 3.54.2 any development begun upon the Premises in respect of which the Landlord shall or may be liable for any charge or levy under the Planning Acts Landlord's costs - ----------------- 3.55 To pay to the Landlord on demand and indemnify the Landlord against all costs fees damages charges and expenses (including without limitation those of agents bailiffs and professional advisers) properly incurred by the Landlord in connection with or incidental to: 3.55.1 any application by the Tenant or any person deriving title under the Tenant in connection with the Premises or any term of this Lease whether It proceeds or is granted refused or granted subject to conditions 3.55.2 the preparation and service of a notice under Section 146 of the Law of Property Act 1925 or any steps taken in or in reasonable contemplation of proceedings under Sections 146 or 147 of that Act or otherwise requiring the Tenant to remedy any breach of the Tenant's obligations in this Lease (notwithstanding that forfeiture is avoided otherwise than by relief granted by the court and whether or not any right of forfeiture is waived by the Landlord or a notice served under the said Section 146 is complied with by the Tenant) 3.55.3 any steps taken in or towards preparing or serving a schedule of dilapidations whether during or after the end of the Term and the negotiation and agreement of the amount payable by the Tenant in respect of any items of disrepair or other breaches of covenant which it has not remedied at the end of the Term 3.55.4 the recovery or attempted recovery of arrears of the Rents or other sums due from the Tenant under this Lease or any other breach by the Tenant of its obligations in this Lease Indemnities - ----------- 3.56 To indemnify the Landlord against any act omission or negligence of any Visitor and any breach of the Tenant's obligations in this Lease by any Visitor Regulations - ----------- 3.57 To comply with any written regulations from time to time made by the Landlord relating to the management security occupation or use of the Building or the Communal Garden LANDLORD'S COVENANTS - --------------------- 4. THE Landlord COVENANTS with the Tenant as follows: --- --------- Quiet enjoyment - ---------------- 4.1 That the Tenant shall peaceably hold and enjoy the Premises during the Term without interruption or disturbance from or by the Landlord or any Person lawfully claiming under or in trust for the Landlord Compliance with superior lease - --------------------------------- 4.2 To pay the rent and other payments payable pursuant to or reserved by the superior lease dated 26 February 1999 made between (1) Grosvenor (Belgravia) Estate and (2) the Landlord and (by way of indemnity only) to comply with the essee's obligations in it insofar as they are not the responsibility of the Tenant under this Lease Services - -------- 4.3 (Subject to payment by the Tenant of the Service Charge) throughout the Term to use its reasonable endeavours to carry out the Services in Accordance with the principles of good estate management PROVIDED -------- THAT: ---- 4.3.1 notwithstanding any implied or express obligation the Landlord shallnot be liable to the Tenant for any failure or interruption in any of the Services by reason of any breakdown maintenance or repair works renewals or any cause beyond its control 4.3.2 the Landlord may from time to time add to vary or discontinue the Services so long as the addition variation or discontinuation complies with the principles of good estate management Access to data hub - --------------------- 4.4 That on written request from the Tenant the Landlord will at the sole cost of the Tenant and subject to the provisions of Clause 3.23 hereof carry out such works as are required to connect the data hub in the Premises to the trunking from the data hub and main riser in the lower ground floor of the Building INSURANCE OBLIGATIONS - ---------------------- 5. THE Landlord and the Tenant AGREE with each other as follows: --- ----- Landlord to effect insurance - ------------------------------- 5.1 (Unless the insurance is vitiated and subject to such reasonable or usual exclusions qualifications and excesses as the insurers require) the Landlord shall insure and keep insured the Building(excluding tenant's fixtures)and any items which the Tenant covenants to insure)against risk of loss or damage by the Insured Risks in the Full Cost of Reinstatement and for Loss of Rent Landlord to obtain consents for rebuilding - ----------------------------------------------- 5.2 If the Building suffers Insured Damage the Landlord shall use its reasonable endeavours to obtain all planning permissions or other permits and consents required under the Planning Acts or other statutes (if any) ("the Permissions") to enable it to rebuild the parts of the Building which have suffered the Insured Damage so as to make good the Insured Damage PROVIDED THAT: ------------- 5.2.1 if the insurance against any Insured Damage (or any damage or destruction which would be Insured Damage but for such vitiation) is vitiated the Landlord's obligations in Clauses 5.2 and 5.3 shall not apply in relation to that damage or destruction unless and until the Tenant has within six months of the occurrence of the damage or destruction paid to the Landlord in full any sums due under Clause 5.5.2 as a result of the vitiation 5.2.2 all sums received in respect of such insurance shall belong beneficially solely to the Landlord Landlord to reinstate (other than minor damage) - ----------------------------------------------------- 5.3 If the Building suffers Insured Damage the Landlord shall as soon as reasonably practicable ( or where required as soon as reasonably practicable after the Permissions have been obtained) rebuild the parts of the Building which have suffered the Insured Damage so as to make good the Insured Damage PROVIDED THAT the Landlord shall not be liable -------------- to rebuild under this sub-clause if and for so long as such rebuilding is prevented because: 5.3.1 the Landlord has failed despite using its reasonable endeavours to obtain all the Permissions 5.3.2 any of the Permissions is granted subject to a lawful condition which it is unreasonable to expect or impossible for the Landlord to comply with 5.3.3 some defect or deficiency in the site on which it is to take place makes rebuilding impossible or incapable of being undertaken at a reasonable cost 5.3.4 of war act of God governmental action strike lockout or 5.3.5 of any other circumstances beyond the control of the Landlord Cesser of rent - ---------------- 5.4 If the Building suffers Insured Damage so as to render the whole or any part of the Premises or the means of access thereto in the Building unfit for occupation or use and the insurance against such Insured Damage has not been vitiated the whole or (according to the nature and extent of the Insured Damage) a fair proportion of the Rents shall be immediately suspended either until the parts of the Building which have suffered the Insured Damage have been rebuilt so that the Premises and the means of access thereto in the Building are no longer unfit for occupation or use as a result of the Insured Damage or until the end of three years (or if longer of the period for which insurance for Loss of Rent against the Insured Damage has been effected under Clause 5.1) from The Insured Damage whichever first occurs PROVIDED THAT if the Building ------------- (or any part thereof) has not been reinstated within three years following the Insured Damage so that the Premises are fit for occupation and use then either party may determine this Lease (within six months from the expiry of such three year period) by giving to the other notice in writing whereupon this Lease shall cease and determine absolutely but without prejudice to the rights of either party against the other in respect of any antecedent breach of covenant Tenant's insurance obligations - -------------------------------- 5.5 The Tenant shall: Notice of damage ------------------ 5.5.1 give notice to the Landlord immediately if the Premises are destroyed or damaged by any of the Insured Risks or if any event occurs which might affect any insurance policy relating to the Premises Payment after vitiation ------------------------- 5.5.2 pay to the Landlord on demand the insurance monies (other than for Loss of Rent) which would have been payable but for such insurance being vitiated if Landlord's Liability Insurance or similar insurance for neighbouring property of the Landlord is vitiated or if the Premises or the Building or any neighbouring property of the Landlord are damaged or destroyed by any of the Insured Risks and the insurance against such damage or destruction is vitiated Tenant's insurance monies --------------------------- 5.5.3 apply all monies to which the Tenant is entitled by virtue of any insurance of the Premises in making good the loss or damage in respect of which they are payable No dangerous substances ------------------------- 5.5.4 not without the consent of the Landlord bring or do on the Premises or the Building anything of a dangerous combustible inflammable or explosive nature Not to vitiate ---------------- 5.5.5 not do or omit to do on the Premises or the Building anything which may result in an increase in the premium for the insurance of the Premises or the Building or any neighbouring property of the Landlord (unless the Tenant (with the approval of the Landlord such approval not to be unreasonably withheld) has paid such increased premium) or which may vitiate any insurance of the Premises the Building or any neighbouring property of the Landlord Insurer's requirements ----------------------- 5.5.6 comply with the requirements and recommendations from time to time of the insurers of the Premises and the Building Tenant's third party liabilities ----------------------------------- 5.5.7 insure and keep insured the Premises against the Tenant's third party public and occupiers' liability risks in a sum reasonably to be approved by the Landlord such approval not to be unreasonably withheld or delayed PROVISOS - -------- 6. IT IS FURTHER AGREED as follows: ----------------------- Forfeiture ---------- 6.1 Whenever: 6.1.1 the Rents are in whole or part unpaid fourteen days after becoming payable whether formally demanded or not 6.1.2 there is a breach of any of the Tenant's obligations in this Lease 6.1.3 the Tenant (which expression includes in Clauses 6.1.3 to 6.1.7 any person in whom this Lease is then vested) becomes bankrupt or is the subject of an interim order under the Insolvency Act 1986 6.1.4 the Tenant goes into voluntary or compulsory liquidation (except solely for the purpose of a bona fide solvent amalgamation or reconstruction) or is the subject of a winding-up order or a petition for an administration order or is otherwise dissolved wound up or ceases to exist 6.1.5 a receiver or a receiver and manager or an administrative receiver is appointed in respect of the whole or any part of the Tenant's undertaking or assets 6.1.6 the Tenant enters into any arrangement or composition for the benefit of or with its creditors or 6.1.7 the Tenant has any distress or execution levied on its goods from the Premises Then the Landlord may re-enter the Premises or any part of them in the ---- name of the whole and the Term will determine absolutely but without prejudice to the rights of the Landlord in respect of any prior breach of the Tenant's obligations in this Lease or any surety for them No implied rights - ------------------- 6.2 Save for the rights expressly set out in Schedule 2 the Tenant is not and shall not be entitled by implication of law or otherwise to any right or privilege over or against the remainder of the Building or any neighbouring property which belongs to the Landlord now or in the future No restrictions on adjoining property - ----------------------------------------- 6.3 Nothing contained or implied in this Lease shall impose or be deemed to impose any restriction on the use of any land or building (other than the Premises) or give the Tenant the benefit of or prevent the release or modification of any obligation entered into by any purchaser lessee or occupier of any neighbouring property Exclusion of liability - ------------------------ 6.4 Except insofar as liability may be covered by insurance effected by the Landlord in force when the liability is incurred the Landlord shall not be responsible to the Tenant or anyone at the Premises or the Building for any accident happening or injury suffered or for any Damage to or loss of any chattel sustained in the Premises or the Building whether caused by negligence or otherwise Compensation - ------------ 6.5 Save to the extent prohibited by any rule of law neither the Tenant nor any undertenant shall be entitled on quitting the whole or any part of the Premises to claim any compensation from the Landlord under the 1954 Act or any other present or future statute and the Tenant shall indemnify the Landlord against any claim for such compensation Service of notices - -------------------- 6.6 Any notice served under this Lease: 6.6.1 shall be in writing 6.6.2 may be addressed to "the Landlord" or "the Tenant" by that designation without naming the person who is the Landlord or the Tenant 6.6.3 shall be validly served if left at the addressee's last known place of abode or business in the United Kingdom 6.6.4 shall (in the case of the Tenant)be validly served if attached to or left at the Premises and 6.6.5 shall be validly served on the third day (excluding Saturdays Sundays and statutory bank holidays) after being posted if it Is posted to the addressee's last known place of abode or business in the United Kingdom in a registered letter or by recorded delivery service unless returned through the post office undelivered Alterations to the Communal Garden - -------------------------------------- 6.7 The Landlord may for any reason and during such time as the Landlord thinks fit change the layout planning or extent available to the Tenant of the Communal Garden and or restrict access to or close the whole or any part of it Representations - --------------- 6.8 The Tenant acknowledges that it has not entered into this Lease in reliance wholly or partly on any written oral or implied representation by or on behalf of the Landlord other than the Landlord's solicitor's replies to the Tenant's solicitor's written enquiries or contained in correspondence from the Landlord's solicitors 6.9 Clause 6.8 only excludes or restricts any liability or remedy for misrepresentation to the extent that (notwithstanding the exclusion or restriction) it would be a fair and reasonable term to include in this Lease having regard to the circumstances which at the date of this Lease were or ought reasonably to have been known to or in the contemplation of the parties hereto Disputes - -------- 6.10 All cases of dispute between the Tenant or any undertenant of the Premises and the occupiers of any neighbouring property or the tenants Or occupiers of any other part of the Building in connection with the use or occupation of the Premises shall be submitted to the decision of a surveyor appointed by the Landlord acting as expert and not arbitrator whose decision shall be final and binding on matters of fact on all the parties to the dispute Exclusion of third party rights - ----------------------------------- 6.11 It is not intended that any term of this Lease is enforceable by a third party under Section 1 of the Contracts (Rights of Third Parties) Act 1999 Sums due to Landlord treated as rent - ------------------------------------------ 6.12 Any sum due from the Tenant to the Landlord under this Lease shall be additional rent hereby reserved and paid by the Tenant (save where otherwise provided) on demand and shall be recoverable by action or distress and the word "Rents" shall be construed accordingly Stamp duty certificate - ------------------------ 6.13 It is hereby certified that there is no agreement for lease to which this Lease gives effect Governing law and jurisdiction - --------------------------------- 6.14.1 This Lease shall be governed by and construed in accordance with the laws of England and Wales 6.14.2 The parties hereto (which expression in this Clause includes their respective successors in title and in the case of an individual his personal representatives) hereby confer jurisdiction on the High Court of Justice of England and Wales (hereinafter called "the High Court") to settle all disputes which may arise in relation to this Lease or the Premises(other than any which under the terms hereof are to be submitted For determination to arbitration or to an independent expert or other person but including where possible any appeal from the determination of any dispute so submitted) 6.14.3 The Tenant hereby agrees that service of notices and other documents (including originating process) relating to this or the Premises may be validly effected at 63 Queen Victoria Street London EC4N 4ST or such other address in England and Wales as it from time to time notifies in writing to the other party hereto RENT REVIEW - ------------ 7. THE Basic Rent for the time being payable under this Lease shall be --- reviewed as follows: Frequency of review --------------------- 7.1 For the purposes of this Clause "the Review Date" means the day after the date of expiry of the fifth year of the Term Upwards only reviews ---------------------- 7.2 From and including each Review Date the Basic Rent shall be whichever is the greater of the amount of the Basic Rent payable during the twelve months immediately preceding that Review Date(ignoring for this purpose but without prejudice to any suspension under Clause 5) and the open market rent for the Premises at that Review Date Basis of valuation -------------------- 7.3 (Subject to Clause 7.4) the open market rent for the Premises at each Review Date shall be the amount agreed by the Landlord and the Tenant (or if they fail to agree determined in accordance with Clause 7.5) to be the rent per year at which the Premises might reasonably be expected to be let in the open market on that Review Date: 7.3.1 as a whole 7.3.2 by a willing lessor to a willing lessee 7.3.3 with vacant possession 7.3.4 without taking any fine or premium 7.3.5 for a term of ten years starting on that Review Date 7.3.6 on the terms of this Lease including this Clause other than as to the amount of the Basic Rent and the rent-free period (if any) applicable at the start of the Term ON THE ASSUMPTIONS that at that Review Date: -------------------- 7.3.7 the Landlord (save for material breach) and the Tenant have fully complied with their obligations in this Lease 7.3.8 the Premises and the Building and all other necessary services and facilities are in good and ubstantial repair and condition and fit and available for immediate beneficial occupation and use 7.3.9 no work has been carried out and nothing has occurred on or directly relating to the Premises which has diminished the rental value of the Premises 7.3.10 if the Premises or the Building have been damaged or destroyed they have been fully rebuilt 7.3.11 the Premises may be lawfully used for any of the purposes permitted by this Lease as varied or extended by any licence pursuant to this Lease BUT DISREGARDING: ----------------- 7.3.12 the fact that the Tenant any undertenants or their respective predecessors in title shall have been in occupation of the Premises 7.3.13 any goodwill that shall have become attached to the Premises from the carrying on of the business of the Tenant or any undertenants or their respective predecessors in such business 7.3.14 any effect on rent of the Premises attributable to the existence at such Review Date of any improvement to the Premises lawfully carried out by the Tenant any undertenants or their respective predecessors in title with the consent of the Landlord ( where necessary) under the terms of this Lease otherwise than in pursuance of any obligation to the Landlord and/or their immediate landlord 7.3.15 the fact that the Premises or the Building or any necessary facilities or services shall be defective in any way Treatment of rent free periods - ---------------------------------- 7.4 The open market rent for the Premises shall be ascertained without making any discount reduction or allowance to reflect (or compensate the Tenant or the hypothetical tenant for the absence of) any rent-free period or concessionary rent period during which fitting-out works would be carried out which it might then be the practice in open market lettings for a landlord to make so that the open market rent for the Premises shall be that which would be payable after the expiry of any such rent-free or concessionary rent period Method of determination - ------------------------- 7.5 If the Landlord and the Tenant fail to agree the open market rent for the Premises by a date three months before any Review Date then: 7.5.1 the determination of the open market rent for the Premises at that Review Date may be referred to an independent chartered surveyor ("the Surveyor") with experience in the letting of office premises in Central London 7.5.2 the Surveyor shall be appointed by the Landlord and the Tenant jointly and (if they fail to agree) shall be nominated at the request of the Landlord or the Tenant by or on behalf of the President (or Senior Officer) ("the President") for the time being of The Royal Institution of Chartered Surveyors 7.5.3 if the Surveyor dies delays or becomes unwilling unfit or incapable of acting or if for any other reason the President thinks fit he may on the application of the Landlord or the Tenant by writing discharge the Surveyor and appoint another in his place 7.5.4 the costs and expenses of the Surveyor (including the costs of his appointment) shall be borne as he shall direct or in default of direction by the Tenant 7.5.5 the Surveyor shall act as an arbitrator or (at the option of the Landlord) independent expert 7.5.6 if the Surveyor is an arbitrator (subject to Clause 7.5.3) the arbitration shall be conducted in accordance with the Arbitration Act 1996 7.5.7 if the Surveyor is an independent expert: 7.5.7.1 his decision shall be final and binding and 7.5.7.2 he shall afford the Landlord and the Tenant an opportunity to make representations to him and to comment to him on the other's representations Interim arrangements - --------------------- 7.6 If the open market rent for the Premises payable from any Review Date has not been ascertained in accordance with this Clause before that Review Date then: 7.6.1 the Tenant shall until the first quarter day after the date on which it is ascertained continue to pay the Basic Rent at the rate applicable but for the review due at that Review Date 7.6.2 within seven days after the date on which it is ascertained the Tenant shall pay to the Landlord as additional Basic Rent: 7.6.2.1 the amount (if any) of the shortfall between (a) the amount of the Basic Rent so payable by the Tenant down to such quarter day and (b) the amount Which would have been payable if it had been Ascertained before that Review Date and 7.6.2.2 interest at 4% below the Prescribed Rate on each further payment of Basic Rent which would have been payable if it had been ascertained before that Review Date for the period from when such payment would have been payable until due for payment under this sub-clause Time not of the essence - --------------------------- 7.7 In respect of the time limits mentioned in this Clause time shall not be or be deemed to be of the essence Statutory restrictions - ----------------------- 7.8 If at any Review Date there is in force a statute or other instrument which prevents restricts or modifies the Landlord's rights to review the Basic Rent in accordance with this Lease and/or to recover any increase in the Basic Rent then (if such prevention restriction or modification is removed relaxed or modified but without prejudice to its rights (if any) to recover any Basic Rent the payment of which has only been deferred by law) the Landlord may by giving not less ,than one month's nor more than three months' notice in writing to the Tenant at any time within six months of it being removed relaxed or modified proceed with any review of the Basic Rent which was prevented or further review the Basic Rent in respect of any review where the Landlord's right was restricted or modified and the date of expiry of such notice shall be deemed to be a Review Date (provided that nothing in this sub-clause shall vary any subsequent Review Dates) and to recover any increase in Basic Rent thereby resulting with effect from the earliest date permitted by law Memoranda - --------- 7.9 Whenever the Basic Rent has been agreed or determined in accordance with this Clause memoranda of it shall be signed by or on behalf of the Landlord and the Tenant and attached to this Lease and its counterpart IN WITNESS whereof this Lease has been duly executed by the parties hereto and - ----------- is delivered as a Deed the day and year first before written SCHEDULE 1 ---------- (Particulars of the Premises) The Premises are shown for identification purposes only coloured pink on the attached plan and exclude all structural and external parts and any Conduits and Plant within the Premises which do not exclusively serve the Premises and subject thereto include: 1. All additions and alterations to the Premises 2. All fixtures from time to time annexed to the Premises 3. Any interior screeding plaster work wall and ceiling finishes (including any false ceilings and the airspace above the false ceilings) and all ornamental or architectural features 4. All non-structural walls and partitioning and where such walls and or partitioning abut any other part of the Building which is suitable for letting by the Landlord for independent occupation one half (severed vertically) of each of such walls or partitioning 5. The boards and screeds of floors and any floor coverings in the Premises now or in the future provided by or at the cost of the Landlord 6. The glass and inside surfaces of the windows window frames doors and door frames in the walls enclosing or within the Premises 7. All Conduits where not part of Plant within and exclusively serving the Premises 8. All Plant within and exclusively serving the Premises SCHEDULE 2 ---------- (Rights granted) Conduits - -------- 1. (So far as the Landlord can grant them and subject to temporary interruption for repair alteration or replacement) the passage of water soil gas electricity and other services to and from the Premises in and through the Conduits which now serve the Premises and are in or over other parts of the Building Common Parts - ------------- 2. (Subject to any regulations from time to time made by the Landlord) the right of access to and egress from the Premises on foot throughout the Common Parts Communal Garden - ---------------- 3. To use the Communal Garden for walking and for escape from the rear of the Building Support - ------- 4. Support shelter and protection for the Premises from other parts of the Building Toilets - ------- 5. The right to use the toilet facilities in the Building SCHEDULE 3 ---------- (Exceptions and reservations) Conduits - -------- 1. The passage of water soil gas electricity and other services to and from all neighbouring property whether belonging to the Landlord or not in and through the Conduits which are now or hereafter in or over the Premises Easements - --------- 2. All other easements or other rights in the nature of easements or quasi-easements now enjoyed by any neighbouring property of the Landlord over the Premises Support - ------- 3. Support shelter and protection from the Premises for adjoining buildings or structures now or hereafter erected against or over the Premises Emergency access - ----------------- 4. In case of emergency to pass through the Premises in accordance with the requirements of any competent authority Entry - ----- 5. To enter the Premises for the purposes mentioned in this Lease To build - --------- 6. To build or rebuild or alter any buildings on any neighbouring land in any manner whatsoever notwithstanding that as a result there is a diminution in the present or future access of light or air to the Premises which it is hereby agreed is and shall be enjoyed with the consent of the Landlord or other the owner or occupier of such land and not as of right SCHEDULE 4 ---------- (The Service Charge) PART I ------ (Definitions) In this Schedule the following expressions have the meanings set against them: "Account Day" the 31st day of December in each year of the Term (or such other day as the Landlord from time to time determines) "Accounting the periods: Period" (1) from and including the start of the Term (or if earlier the date when the Tenant first had or was entitled to have access to the Premises) to and including the first Account Day (2) from and including the day after each Account Day in the Term (except the last one) until and including the next Account Day (3) from but excluding the last Account Day in the Term to the end of the Term "the Service the sums from time to time calculated in accordance with and Charge" payable by the Tenant as set out in Part II of this Schedule "the Service the aggregate of the total cost incurred by the Landlord in or Charge incidental to providing the Services and of the total Expenditure" expenses incurred by the Landlord of the kind set out in Part IV of this Schedule as calculated in Part II of this Schedule PART II ------- (Calculation and payment) Proportion - ---------- 1. The Service Charge shall in relation to any Accounting Period during the Term be 37% of the Service Charge Expenditure incurred in such Accounting Period Annual Estimate - ---------------- 2. Save in respect of the first Accounting Period the Landlord shall before or as soon as practicable after each Account Day prepare a certificate estimating the Service Charge Expenditure for the Accounting Period starting on the day after that Account Day and stating the sum which shall be the provisional Service Charge payable by the Tenant for that Accounting Period Payment on account - -------------------- 3. The Tenant shall pay the provisional Service Charge sum ascertained in accordance with paragraph 2 above by equal quarterly payments on the usual quarter days in that Accounting Period Payment in first year - ------------------------ 4. The Tenant shall pay on the date of this Lease (or if later within seven days of demand) and on each of the following Quarter Days in the first Accounting Period such sum as the Landlord specifies and the aggregate of such sums shall be the provisional Service Charge for that Accounting Period Payment if no estimate - ------------------------- 5. If the Tenant has not been given notice of the Landlord's estimate of the provisional Service Charge for an Accounting Period the Tenant shall on the relevant Quarter Days pay an amount equal to the last quarterly payment of Service Charge in the preceding Accounting Period and any requisite adjustment shall be made to the first quarterly payment due after such notice is given Additional payments on account - --------------------------------- 6. If during an Accounting Period the Landlord incurs Service Charge Expenditure which was not anticipated in the estimate provided under paragraph 2 above for that Accounting Period or the payment due under paragraph 4 above for the first Accounting Period then the Landlord may require the Tenant to repay the percentage of it referred to in paragraph 1 above within fourteen days of written demand and such Service Charge Expenditure so demanded shall not be included in the Statement or payments for that Accounting Period referred to in paragraphs 7 and 8 below Final statement - ---------------- 7. As soon as practicable after each Accounting Period the Landlord shall furnish the Tenant with a statement (which save for the correction of any manifest error in it shall be conclusive and binding on the Tenant) of the Service Charge Expenditure incurred in and the Service Charge payable by the Tenant for that Accounting Period Balancing payment - ------------------ 8. If the Service Charge for any Accounting Period exceeds the provisional Service Charge payable under paragraph 3 or paragraph 4 for that Accounting Period the excess shall be due to the Landlord on demand or if it is less the overpayment shall be credited to the Tenant against the next quarterly payment of the Service Charge (or if necessary subsequent payments) No dispute - ----------- 9. Without prejudice to the preceding provisions of this Part of this Schedule the Tenant shall not question any item of Service Charge Expenditure on the ground that it need not have been incurred in a Particular Accounting Period or could have been provided more economically or on grounds relating to the length of the residue of the Term for the time being if provided at proper cost Inspection of vouchers - ------------------------ 10. The Tenant may once in each Accounting Period at its own expense inspect the vouchers supporting the statement referred to in paragraph 7 above at such reasonable time and place as the Landlord specifies Position after end of Term - ------------------------------ 11. The provisions of this Schedule shall continue to apply notwithstanding the end of the Term but only in respect of the period before its end and any overpayment made by the Tenant in relation to the last Accounting Period and any sums remaining in any sinking fund or reserve fund shall be repaid to the Tenant within twenty-one days of the Landlord sending a certificate of the Service Charge and Service Charge Expenditure for the final Accounting Period Variations to Service Charge - ------------------------------- 12. If at any time during the Term the total property enjoying or capable or enjoying the benefit of any of the Services is increased or decreased on a permanent basis or the benefit of any of the Services is extended on a like basis to any neighbouring property the Service Charge shall be varied with effect from the Account Day following such event in such a manner as the Landlord determines is fair and reasonable in the light of the event in question except that nothing contained in this Lease shall imply an obligation on the Landlord to provide the Services to any neighbouring property Treatment of payments due on Quarter Days - ----------------------------------------------- 13. If any Accounting Period ends on the last day of March June September or December and if the Landlord so requires the payment on account of the Service Charge due on the preceding Quarter Day shall be deemed instead paid on account of the Service Charge for the following Accounting Period and shall be calculated by the Landlord by reference to its Estimate of the Service Charge Expenditure for such following Accounting Period Alternative method - ------------------- 14. The Landlord may elect that for so long as it elects the above provisions shall not apply in relation to any particular costs mentioned in paragraph 10 of Part IV of Schedule 4 and in relation to the costs subject to the election the Tenant shall pay them to the Landlord within 14 days of written demand PART III -------- (Services) Repair - ------ 1. Maintaining repairing renewing (for the purpose of repairing) rebuilding (for the purposes of repair only) decorating cleansing and treating appropriately the Common Parts and the foundations roofs external walls and other structural and external parts of the Building including the repair and external decoration of the frames of the exterior windows (but not the glass in them) Exterior - -------- 2. Landscaping and lighting the external Common Parts Internal heat light and water - --------------------------------- 3. Heating lighting and furnishing the internal Common Parts and providing an adequate supply of hot water and cold water thereto Plant - ----- 4. Maintaining repairing renewing and replacing all Plant in the Building other than that for which the Tenant or any other tenant is responsible and insuring it (save insofar as insured by the Tenant or any other tenant) Conduits - -------- 5. Maintaining repairing renewing and replacing all services Conduits and appliances that serve the Building other than those belonging to the relevant supply authorities or for which the Tenant or any other tenant is responsible Common structures - ------------------ 6. Maintaining repairing renewing cleansing and lighting all ways services or structures used in common with any adjoining or neighbouring premises Security - -------- 7. Providing such security measures as the Landlord from time to time reasonably deems to be expedient or necessary Refuse - ------ 8. Providing facilities for the disposal of refuse from the Building PART IV ------- (Expenses) Fees - ---- 1. The fees and disbursements of: 1.1 any managing agents accountants engineers surveyors solicitors architects or other advisers employed or retained by the Landlord for (or in connection with) any of the provisions of this Schedule and the provision of the Services (which expression in this Part of this Schedule includes any other services and matters referred to in such Part) 1.2 any person providing caretaking or security arrangements and services for the Building 1.3 the Landlord on a fair and reasonable basis if the management and supervision of the Building is carried out by the Landlord Staff - ----- 2. The cost of employing such staff as the Landlord in its absolute discretion from time to time deems necessary for the performance of the Services and all other incidental expenditure in relation to such employment including but without limiting the foregoing: 2.1 insurance pension and welfare contribution 2.2 transport facilities and benefits in kind 2.3 the provision of uniforms and working clothing 2.4 the provision of vehicles tools appliances cleaning and other materials fixtures and other equipment for the proper performance of their duties 2.5 the provision (including related Outgoings) of office and other accommodation in the Building Outgoings - --------- 3. All Outgoings which relate to the Common Parts or the Building as a whole on its own or with other property but not any parts of the Building which are or are intended to be let save for any such parts occupied as office and other accommodation connected to the provision of the Services Electricity gas etc - --------------------- 4. The cost of the supply of electricity gas oil or other fuels telephone and public or statutory utilities in respect of the provision of any of the Services and in respect of the Common Parts and the cost of running all Plant other than that for which the Tenant or any other tenant is responsible and the cost of water supplied to the Building for which no tenant is responsible and the cost of supplying toilet requisites to the lavatory accommodation in the Building Statutory requirements - ----------------------- 5. The cost of taking all steps from time to time reasonably deemed desirable or expedient by the Landlord and for the benefit of all occupiers of the Building for complying with or in connection with or making representations against or otherwise contesting the incidence of the provisions of any statutes concerning town planning public health highways streets drainage safety fire precautions fire regulations or other matters relating to or alleged to relate to the Building for which any tenant is not directly and exclusively liable Nuisance - -------- 6. The cost of the Landlord of abating a nuisance in respect of the Building insofar as not the liability of any individual tenant Leasing - ------- 7. The costs of leasing any item for the purpose of providing any of the Services Interest - -------- 8. Any interest and fees in respect of money borrowed by the Landlord to finance the obligations of the Landlord to provide the Services and if the Landlord provides monies out of his own resources interest on the monies provided at a rate equal to 2% per annum below the Prescribed Rate Financial reserves - ------------------- 9. Such provision (if any) as the Landlord from time to time determines necessary for a sinking fund and reserve fund with a view to meeting future costs Common items and Garden Charge - ---------------------------------- 10. A fair proportion (to be determined by the Landlord) of the cost of maintaining keeping in good order repairing renewing lighting cleansing and resurfacing as appropriate: 10.1 all party walls boundary structures Conduits and other things (whether or not of a similar nature) the use of which is common to the Building and any other property and 10.2 the Communal Garden and the iron railings or other fences gates enclosing it (including the plinths to which they are fixed) and the walks lawns and shrubberies thereof and any other embellishments now or hereafter belonging thereto Other services - --------------- 11. (Without limiting or being limited by reference to the foregoing) the cost of any other service insurance or matter which the Landlord from time to time thinks expedient or necessary for the benefit of the tenants of the Building SCHEDULE 5 ---------- (Alienation conditions) PART I ------ (Requirements for an assignment) Application - ----------- 1. This Part applies for the purposes of Section 19(1A) of the Landlord and Tenant Act 1927 Authorised guarantee agreement - -------------------------------- 2. Before any assignment of the Premises the assignor shall give an authorised guarantee agreement in accordance with the Landlord and Tenant (Covenants) Act 1995 to the Landlord of the performance by the assignee of the Tenant's obligations in this Lease in such form as the Landlord reasonably requires but in any event containing provisions preventing the guarantee from being vitiated by: 2.1 any neglect or forbearance of the Landlord 2.2 any time or indulgence given by the Landlord 2.3 any variation of this Lease or the variation of or entry into any other contract by the Landlord and the Tenant and 2.4 the release of any security or guarantee held in relation to such obligations Guarantor of assignor to join in guarantee - ------------------------------------------------ 3. If the Landlord reasonably so requires the Tenant shall procure that before any assignment of the Premises any person who is then a guarantor of the Tenant's obligations in this Lease (other than a person who shall have previously been the Tenant and its guarantor) gives a guarantee of the guarantee given in relation to that assignment pursuant to paragraph 2 in such form as the Landlord reasonably requires but in any event containing provisions equivalent to those specified in paragraph 2 Disregard of guarantees - ------------------------- 4. In deciding whether to approve a proposed assignment the Landlord may disregard: 4.1 its rights under paragraphs 2 and 3 above and Section 16 of the Landlord and Tenant (Covenants) Act 1995 and 4.2 the fact that the assignor and/or its guarantor would or might give a guarantee of the assignee's obligations to the Landlord No intra-group assignments - ---------------------------- 5. The Premises shall not be assigned to a person who at the date of the assignment is a member of the same group as the assignor or any guarantor of the assignor's obligations in this Lease within the meaning of Section 42 of the 1954 Act unless following such assignment in the Landlord's reasonable opinion (and on the assumption that the Landlord wished to sell its interest in the Premises the day after such assignment) the value of the Landlord's reversionary interest in the Premises would not be reduced as a result of such assignment No arrears - ----------- 6. The Tenant shall not assign the Premises unless it has paid all Rents and other sums which have fallen due under this Lease before the date of the assignment PART II ------- (General requirements) Prior approval to permitted dealings - ---------------------------------------- 1. (Subject to the other provisions of this Schedule and Clause 3.21) the Tenant shall not without the approval of the Landlord (such approval not to be unreasonably withheld or delayed) assign charge or underlet the whole of the Premises Group sharing - -------------- 2. (Notwithstanding the foregoing or any covenant entered into by an undertenant pursuant to this Lease) the Tenant or any undertenant may share occupation of the whole or any part of the Premises with a person who is a member of the same group as the Tenant or the undertenant as the case may be (within the meaning of Section 42 of the 1954 Act) for so long as both the Tenant or undertenant and the other person remain members of that group subject to: 2.1 no landlord and tenant relationship or other interest in the Premises at law or in equity being thereby created and 2.2 the Tenant notifying the Landlord immediately of the identity of the other person Underlettings of part - ----------------------- 3. (Notwithstanding references in this Part and Clause 3.22 to underleases of part of the Premises) there shall be no underletting of any part (as distinct from the whole) of the Premises other than a Permitted Part together with and excepting and reserving such rights as are reasonably necessary in the circumstances and the Premises shall not be occupied in more than two units of occupation (of which (for so long as there is such an underletting) one unit of occupation shall at all times be in the name of the Tenant) No premiums for underleases - ------------------------------ 4. No underlease shall be granted at a fine or premium nor other than at the then full open market rent for the premises underlet such rent to be payable and to be subject to review on the same days and in the same manner as under this Lease Undertenants' direct covenants - -------------------------------- 5. Before the grant or assignment of any underlease the undertenant or assignee shall covenant with the Landlord: 5.1 to comply with the Tenant's obligations in this Lease (save as to payment of rent) until the underlease is assigned by an assignment which is not an excluded assignment (in the case of an underletting of part of the Premises insofar only as they relate to the premises thereby demised) and 5.2 not to assign charge underlet hold on trust for another or otherwise part with or share possession or occupation of or suffer any other person to occupy the whole or any part of the premises underlet save with the approval of the Landlord (such approval not to be unreasonably withheld or delayed) by way of an assignment of the whole thereof complying with the provisions of this Schedule mutatis mutandis to a person who has entered into the covenants required by this paragraph 5 Terms of underleases - ---------------------- 6. Any underlease of the Premises shall be granted on the same terms as this Lease (including the reservation of rents equivalent to the Insurance Rent and Service Charge) modified to the same effect as the alienation covenants to be given to the Landlord pursuant to paragraph 5 Exclusion of security of tenure - ----------------------------------- 7. Before completion of any underlease of the Premises and the occupation by any proposed undertenant of the premises to be demised thereby a valid court order shall be made authorising the exclusion of the provisions of Sections 24 to 28 (inclusive) of the 1954 Act in relation to the tenancy to be created by such underlease and a declaration to that effect shall be included in it and a certified copy of the order and the application for it shall be supplied to the Landlord Definition of "Permitted Part" - --------------------------------- 8. In this Schedule "Permitted Part" means the entirety of one floor of the Premises (other than common parts and structural parts of the Premises) (THE COMMON SEAL of GROSVENOR ----------------- --------- (WEST END PROPERTIES was hereunto --------------------- (affixed in the presence of: Director Director Terms of underleases - ---------------------- 6. Any underlease of the Premises shall be granted on the same terms as this Lease (including the reservation of rents equivalent to the Insurance Rent and Service Charge) modified to the same effect as the alienation covenants to be given to the Landlord pursuant to paragraph 5 Exclusion of security of tenure - ----------------------------------- 7. Before completion of any underlease of the Premises and the occupation by any proposed undertenant of the premises to be demised thereby a valid court order shall be made authorising the exclusion of the provisions of Sections 24 to 28 (inclusive) of the 1954 Act in relation to the tenancy to be created by such underlease and a declaration to that effect shall be included in it and a certified copy of the order and the application for it shall be supplied to the Landlord Definition of "Permitted Part" - --------------------------------- 8. In this Schedule "Permitted Part" means the entirety of one floor of the Premises (other than common parts and structural parts of the Premises) EXECUTED as a Deed by CANARGO ) - -------- ------- ENERGY CORPORATION by the ) - ------------------- signature of a director and its secretary ) or two directors ) /s/Russ Hammond Russ Hammond Director /s/Nils Trulsvik Nils Trulsvik Director DATED September 8, 2000 ------------------------------------ - ----------------------------------------------- (1) CANARGO ENERGY CORPORATION (2) GROSVENOR WEST END PROPERTIES - ----------------------------------------------- - ----------------------------------------------- RENT DEPOSIT DEED relating to Lease of first and second floors 148/150 Buckingham Palace Road London SW1 - ----------------------------------------------- DATED September 8, 2000 -------------------------------------------- - ----------------------------------------------------------- (1) CANARGO ENERGY CORPORATION (2) GROSVENOR WEST END PROPERTIES - ----------------------------------------------------------- - ----------------------------------------------------------- Counterpart/ RENT DEPOSIT DEED relating to Lease of first and second floors 148/150 Buckingham Palace Road London SW1 - ----------------------------------------------------------- INDEX ----- INTERPRETATION...........................................1 PAYMENT INTO ACCOUNT.....................................3 OPERATION OF THE ACCOUNT.................................3 Withdrawal only by Landlord...........................3 Interest..............................................3 Withdrawal for non-payment............................4 Insolvency............................................4 Forfeiture and disclaimer.............................5 Notification of withdrawal............................5 No prejudice to other rights..........................5 Tenant to make up withdrawals.........................6 Rent reviews..........................................6 Value Added Tax.......................................6 RELEASE..................................................7 Date for release......................................7 Definition of Tenant in Clause 4.1.3..................7 No release during subsisting breach...................8 NON-VITIATION............................................8 ASSIGNMENT OF REVERSION..................................9 ASSIGNMENT BY TENANT.....................................9 CHARGE...................................................9 VARIATION OF LEASE......................................10 GOVERNING LAW AND JURISDICTION..........................10 THIS DEED is made the 8th day of September 2000 - ---------- BETWEEN: - ------- (1) CANARGO ENERGY CORPORATION whose registered office is at 32 ---------------------------- Loockerman Square Suite L-100 Dover Delaware 19904 Dover Kent(address for service in the UK c/o McGrigor Donald 63 Queen Victoria Street London EC4N 4ST ("the Tenant") and (2) GROSVENOR WEST END PROPERTIES ( Company Registration Number 956235) ----------------------------- whose registered office is at 70 Grosvenor Street London W1X 9DB ("the Landlord") WHEREAS: - ------- (1) The premises briefly described as first and second floors 148/150 Buckingham Palace Road London SW1 ("the Premises") were demised for a term often years from 24 June 2000 by an underlease ("the Lease") of even date herewith made between (1) the Landlord and (2) the Tenant (2) This Deed is supplemental to the Lease (3) For the purposes of Section 3(6)(a) of the Landlord and Tenant (Covenants) Act 1995 the burden an (without prejudice to Clauses 6 and 7) benefit of the Landlord's and the Tenant's obligations in this Deed are personal to each of them (4) It was a condition precedent to the grant of the Lease that on completion thereof the Tenant would enter into this Deed NOW IT IS AGREED as follows: - ---------------- INTERPRETATION - -------------- 1. In this Deed the headings and index shall be ignored in its construction and unless the context otherwise requires: 1.1 References to numbered Clauses are to the Clauses hereof so numbered 1.2 Whenever the Landlord or the Tenant is more than one person their respective obligations are joint and several 1.3 The expression "the Lease" includes any document entered into pursuant thereto or which is expressed to be supplemental thereto 1.4 References to the term created by the Lease include any period of holding-over extension continuance or renewal thereof whether by statute or common law 1.5 References to Value Added Tax include any similar tax levied in addition to or substitution for it 1.6 The following expressions have the meanings set against them: "the Initial 83,395.00 (Eighty three thousand three hundred and ninety Deposit" -five pounds) "the Bank" National Westminster Bank plc or such other bank as the Landlord from time to time nominates "the Account" a separately identified deposit account at the Bank or (pending payment of the initial Deposit into that account and other than for the purposes of Clause 2.4) an interest bearing client account of the Landlord's Solicitors "the Security the Initial Deposit together with any other sums paid Deposit" into the Account by the Tenant pursuant to this Deed and any interest credited to the Account which has not been released to the Tenant "the Tenant's the obligations of the Tenant in this Deed together with Obligations the obligations of the Tenant to pay the rents reserved by and to comply with theother lessee's obligations in the Lease until it is lawfully assigned (other than by operation of law) and thereafter the obligations of the Tenant in any guarantee of the obligations of the person to whom the Tenant has assigned the Lease PAYMENT INTO ACCOUNT - ---------------------- 2.1 The Landlord acknowledges payment of the Initial Deposit by the Tenant on or before the date hereof 2.2 The Landlord shall act and the Tenant hereby authorises the Landlord to act in connection with the Security Deposit in accordance with this Deed 2.3 The Landlord and the Tenant shall give all necessary instructions to the Bank to give effect to the terms of this Deed 2.4 The Landlord shall forthwith (if it has not done so already) pay the Initial Deposit into the Account or (if the Account is not yet opened) Shall procure that the Initial Deposit is forthwith placed by its Solicitors in an interest bearing client account (subject until paid into the Account to the other terms of this Deed) and open the Account as soon as practicable and immediately thereafter procure that the Security Deposit is transferred to the Account OPERATION OF THE ACCOUNT - --------------------------- Withdrawal only by Landlord - ------------------------------ 3.1 Only the Landlord may withdraw monies from the Account Interest - -------- 3.2 All interest earned by the Account during such times as there is no subsisting breach of the Tenant's Obligations shall belong to the Tenant and shall be mandated direct to the Tenant at quarterly or such other intervals as the Bank from time to time determines after payment of any bank charges payable in respect of the Account and after deduction of any tax as required by law PROVIDED THAT if there shall be any -------------- subsisting breach of the Tenant's Obligations the interest shall be retained in the Account until released pursuant to this Clause 3.2 or to Clause 4 and accumulated and form part of the Security Deposit and PROVIDED FURTHER that the Landlord shall notify the Tenant in the event - ---------------- that it shall withhold monies pursuant to the provisions of this clause Withdrawal for non-payment - ---------------------------- 3.3 The Landlord may withdraw from the Account for its own use the whole of the Security Deposit or so much thereof as shall be required to satisfy any such rent or other payment or sum if and whenever: 3.3.1 any rent or other payment due to the Landlord under the Lease is not paid to the Landlord within seven days of the due date for payment or 3.3.2 the Landlord incurs any other sums as a result of a failure by the Tenant to comply with the Tenant's Obligations which are not reimbursed by the Tenant to the Landlord within seven days of being incurred Insolvency - ---------- 3.4 The Landlord may withdraw from the Account and appropriate to such purposes the whole or such part of the Security Deposit as the Landlord requires to make good to the Landlord any loss or liability suffered by the Landlord arising out of any breach of the Tenant's Obligations which has then already arisen or which may thereafter arise if the Tenant: 3.4.1 (being an individual) becomes bankrupt or is the subject of an interim order under the Insolvency Act 1986 or 3.4.2 (being a body corporate) enters into liquidation whether voluntary or compulsory (other than voluntary iquidation for the purposes of solvent reconstruction or amalgamation) or is the subject of a petition for an administrative order or has a receiver or a receiver and manager or an administrative receiver appointed in respect of the whole or any part of its undertaking or assets Forfeiture and disclaimer - --------------------------- 3.5 If the Lease is forfeited or is disclaimed by a trustee in bankruptcy liquidator the Treasury Solicitor or any other competent person or if the Tenant (being a body corporate) is otherwise dissolved wound up or ceases to exist then the Landlord may withdraw from the Account and appropriate the whole or such part of the Security Deposit as the Landlord requires and apply the same in discharge of: 3.5.1 any loss damage or liability to the Landlord arising as a result thereof or out of what would have been a breach of the Tenant's Obligations if the Lease had not determined and 3.5.2 (to the extent not included in the above) an amount equal to the rents reserved under the Lease which would have been payable if the Lease had not determined until the Landlord has relet the whole of the Premises and all rent free periods applicable thereto have expired Notification of withdrawal - ---------------------------- 3.6 If the Landlord withdraws the whole or part of the Security Deposit From the Account pursuant to Clauses 3.3 3.4 or 3.5 it shall in Each case notify the Tenant in writing of the amount withdrawn as far as reasonably practicable No prejudice to other rights - -------------------------------- 3.7 Any withdrawal from the Account shall be without prejudice to any Other rights and remedies of the Landlord under the Lease or Otherwise and any appropriation under Clause 3.4 shall not be Deemed to be payment of rent under the terms of the Lease so as to Prejudice the Landlord's right of re-entry in the Lease Tenant to make up withdrawals - --------------------------------- 3.8 Within fourteen days of receipt of any written notification under Clause 3.6 the Tenant shall pay into the Account such sums as shall when added to the monies remaining to the credit of the Account (exclusive of any interest earned thereon) equal the aggregate of the Initial Deposit and all sums previously paid into the Account under Clauses 3.9 and 3.10 Rent reviews - ------------- 3.9 If and whenever a review of rent takes place pursuant to the Lease the Tenant shall within seven days of the date of ascertainment of the amount of the increased rent pay into the Account a sum equivalent to one half of the annual increase in the rent resulting from such review Value Added Tax - ----------------- 3.10.1 If at the time any sum is due under Clause 3.9 the rents (which expression in Clause 3.10 excludes insurance contributions service charges and reimbursement of other sums incurred by the Landlord reserved as rent under the Lease) reserved by the Lease are subject to the addition of Value Added Tax (or an amount equal to Value Added Tax in respect thereof) the Tenant shall at that time also pay into the Account an amount equal to the rate of such Value Added Tax then in force on the sum due under Clause 3.9 3.10.2 If rents reserved by the Lease are at any time subject to the addition of Value Added Tax (or an amount equal to Value Added Tax thereon) and the rate of Value Added Tax on or in respect of such rents at any time thereafter increases then the Tenant shall within fourteen days after each such increase pay an amount equal to such increase in the rate of Value Added Tax on the aggregate of the sums (other than interest) which are then in the Account and the sums which ought then to have been or are due within fourteen days thereafter to be paid into the Account RELEASE - ------- Date for release - ------------------ 4.1 THE Landlord shall release the Security Deposit or any remaining Balance thereof together with all interest accrued thereon (less tax and bank charges) to the Tenant within one month after the happening of whichever of the following events first occurs: 4.1.1 the determination of the Lease (other than by reason of or in connection with the events mentioned in 3.5) 4.1.2 Receipt by the Landlord of written notice of a lawful assignment of the Lease (other than by operation of law) by a person to whom the Lease shall have previously been lawfully assigned (other than by operation of law) 4.1.3 the Tenant giving to the Landlord copies of its audited accounts (and to the extent to which the Tenant has or ought to have prepared such accounts for such period audited consolidated accounts for itself and its subsidiaries) for each of the three consecutive years immediately before that date showing annual profits (before tax and extraordinary and exceptional profits or income and excluding profits from operations discontinued before that date) of an amount equal to three times one year's Basic Rent (as defined in the Lease) at the rate payable in respect of such date (ignoring any suspension thereof under Clause 5.4 thereof) TOGETHER WITH there being in the Landlord's reasonable opinion no ground to -------------- suspect that the Tenant will not be able to comply with the Tenant's Obligations thereafter PROVIDED THAT there shall be no release under Clause ------------- 4.1.3 for so long as any increase in the said Basic Rent is due but not finally ascertained Definition of Tenant in Clause 4.1.3 - ----------------------------------------- 4.2 References in Clause 4.1.3 to "the Tenant" are references only to the person in whom the Lease is vested for the time being No release during subsisting breach - --------------------------------------- 4.3 (Notwithstanding Clause 4.1) if on occurrence of any event mentioned in Clause 4.1 there is a subsisting breach of any of the Tenant's Obligations which is capable of remedy the Landlord shall forthwith notify the Tenant of such breach then the Landlord shall not be obliged to release the Security Deposit until seven days after all such breaches have been remedied to its reasonable satisfaction NON-VITIATION - ------------- 5. The Landlord may at any time without discharging in any way or affecting any part of its security hereunder: 5.1 grant to the Tenant any time or indulgence 5.2 release to the Tenant such sums as it may from time to time at its sole discretion determine 5.3 neglect or forbear to enforce the payment of the rents reserved by the Lease or compliance with the Tenant's Obligations 5.4 refuse to accept any payment in order not to waive any right to re-enter the Premises 5.5 release any security or guarantee held by the Landlord in relation to the Tenant's Obligations 5.6 vary the Lease (including by accepting a surrender of part of the Premises) or enter into or vary any other contract with the Tenant 5.7 do or omit to do any other act or thing (other than a release by Deed) by which the Tenant's liability would otherwise be released in whole or part ASSIGNMENT OF REVERSION - ------------------------- 6.1 THE Landlord shall not assign the benefit of this Deed in whole or part except to a person to whom the reversion immediately expectant on the determination of the term created by the Lease is also transferred and shall thereon either: 6.1.1 assign the same to such person and procure that such person enters into covenants with the Tenant to comply with the Landlord's obligations in this Deed or 6.1.2 discharge the security hereby created and repay the Security Deposit 6.2 Each of the Tenant and its successors in title hereby releases each person now or hereafter included in or comprising the Landlord from any breach of the Landlord's obligations herein occurring after that person's immediate assignee has given the covenant required by Clause 6.1 6.3 The covenants to be given by the Landlord's successors in title pursuant to Clause 6.1 shall contain a release in the same terms as Clause 6.2 ASSIGNMENT BY TENANT - ---------------------- 7.1 The Tenant shall not assign the benefit of this Deed in whole or part except to a person to whom the term created by the Lease is also transferred 7.2 The Tenant shall forthwith give written notice to the Landlord of any such assignment and until the Landlord has been given such notice the Landlord shall not be liable to the assignee if it repays the Security Deposit to or pays interest to the assignor CHARGE - ------ 8.1 The Tenant with full title guarantee charges its equitable interest in the Security Deposit to the Landlord as security for the observance and performance of the Tenant's Obligations 8.2 Any monies withdrawn from the Account or otherwise appropriated by the Landlord in accordance with this Deed shall be thereby freed from the Said charge and become the absolute property of the Landlord 8.3 The Security Deposit shall at all times be and remain in equity the property of the Tenant but subject to the said charge 8.4 The security hereby created shall be a continuing security to the Landlord and shall be in addition to and shall not operate so as in anyway to prejudice or affect the obligations of the Tenant or any other rights of the Landlord VARIATION OF LEASE - -------------------- 9. The right of re-entry in the Lease shall be exercisable if there is a breach by the Tenant of any of the terms of this Deed while the Lease is vested in the Tenant GOVERNING LAW AND JURISDICTION - --------------------------------- 10.1 This Deed shall be governed by and construed in accordance with the laws of England and Wales 10.2 The parties hereto (which expression in this Clause includes their respective successors in title and in the case of an individual his personal representatives) hereby confer jurisdiction on the High Court of Justice of England and Wales (hereinafter called "the High Court") to settle all disputes which may arise in relation to this (other than any which under the terms hereof are to be submitted for determination to arbitration or to an independent expert or other person but including where possible any appeal from the determination of any dispute so submitted) 10.3 The Tenant hereby agrees that service of notices and other documents (including originating process) relating to this Deed may be validly effected at 63 Queen Victoria Street London EC4N 4ST or such other address in England and Wales as it from time to time notifies in writing to the other party hereto IN WITNESS whereof this Deed has been duly executed by the parties hereto and - ---------- is delivered as a Deed the day and year first above written THE COMMON SEAL of CANARGO ) - ----------------- ------- ENERGY CORPORATION was hereunto ) - ------------------- affixed in the presence of: ) /s/Russ Hammond Russ Hammond Director /s/Nils Trulsvik Nils Trulsvik Director
