Contents

Interpretation    1

Defined terms    1

Construction    7

Umbrella Agreement    9

Letting and Term    9

Creation of the Term    9

Quiet enjoyment    9

Re-entry    9

Effect of termination    10

VAT on Principal Rent    10

Rights and reservations    10

Rights and reservations    10

Implied Rights    10

No new covenants    10

Title matters    11

Rents    11

Rents payable    11

Payment of Principal Rent    11

“Net Lease”    12

Value Added Tax    12

Interest on late payments    13

Insurance obligations    13

Tenant's obligations    13

Block Policies    14

Insured Parties    14

General insurance provisions    15

Reinstatement of the Premises by the Tenant    16

Manner of reinstatement    17

Damage or destruction by UnInsured Events    17

Impossibility of reinstatement and termination    19

Commission and agency fees    19

Certificate of insurance    19

Invalidation of insurance    19

Compliance with insurer's requirements    19

Notification    20

Tenant’s Default    20

Financial obligations    20

Payment of outgoings    20

Loss of rating relief    21

Utilities    21

Shared facilities    21

To pay costs    21

Indemnity    22

No liability of Landlord    22

Repair and redecoration    22

Upkeep of the Premises    22

Manner of redecoration    24

Making good disrepair    24

Defective premises    24

Alterations    24

Prohibited alterations    24

Alterations    25

Non-structural alterations not requiring consent    25

General obligations    25

Indemnity    27

Use of the Premises    27

Authorised Use    27

Prohibited uses    27

Restrictions on use    27

Regulations    28

No warranty as to use    28

Assignment    29

Permitted assignments    29

Conditions for assignment    29

Prohibited assignments    30

General provisions    31

Underletting    31

Underletting of whole    31

Undertenant's covenants    32

Terms of the underlease    32

Undertenant's guarantor    33

Observing the terms of the underlease    33

General provisions    34

Charging    35

Restrictions on alienation    35

No sharing of occupation, etc.    35

Other permitted occupation    35

Notification of dispositions    36

Legislation    36

Planning    36

Approval of permissions    36

Statutes and Applicable Law    36

Statutory notices    37

Environmental    37

Third party rights    37

Loss of existing rights benefiting the Premises    37

Creation of new rights over the Premises    37

Notification    38

Management Agreements    38

Operational Requirements    38

End of the Term    39

Return of the Premises    39

Transfer of Operations    40

Rents    41

Contractual rights of third parties    41

Supervening impossibility, etc.    41

Contact Details    41

Reserved for Kingsclear/Oaken Holt Provision    41

Tenant’s Break Right    42

Notices    42

Statutory renewal rights etc. excluded    44

Law and jurisdiction    44

English law    44

Jurisdiction    44

Execution and delivery    44

Landlord’s Mortgagee; Estoppel Certificate    45

Notice to Landlord’s Mortgagee    45

Estoppel    45

Tenant’s Personal Property    45

Miscellaneous Terms    47

49

52

53

the Tenant is deemed to be unable to pay its debts under s.123 Insolvency Act 1986 (if a company) or s.268 Insolvency Act 1986 (if an individual); or

the Tenant makes any arrangement, scheme or composition for the benefit of its creditors, including a voluntary arrangement under part I (if a company) or part VIII (if an individual) of the Insolvency Act 1986; or

if the Tenant is a company:

it has an administration order made against it under the Insolvency Act 1986; or

an administrator is appointed; or

a notice of intention to appoint an administrator is filed; or

if the Tenant is an individual, a bankruptcy petition against him is presented to the Court, he has a bankruptcy order made against him or he is otherwise adjudged to be bankrupt; or

any bona fide step is taken to enforce security over or to obtain possession of the Premises including the appointment of a receiver or manager; or

if the Tenant is a company, it enters into liquidation whether compulsory or voluntary or its members resolve by special resolution that the Tenant be wound up voluntarily whether solvent or insolvent, except (in any such case) for and followed by a reconstruction, amalgamation, reorganisation, merger or consolidation of the Tenant while solvent; or

in respect of a Tenant incorporated or resident in a jurisdiction outside England and Wales, any event or circumstance occurs which under the laws of that jurisdiction has an analogous or equivalent effect to any of the Events of Insolvency defined in this definition; or

any of the Events of Insolvency defined in this definition occur in relation to any guarantor of the Tenant.

    an election to waive exemption in relation to the Premises made before 1 June, 2008;

    an option to tax in relation to the Premises; or

a real estate election from which the Premises is not excluded.

references to Statute include references to that Statute as amended or re-enacted or as other Statutes modify its application from time to time and any subordinate legislation made or to be made under that Statute; and

references to clauses or schedules are references to clauses in or schedules to this Lease and references to paragraphs are references to paragraphs in the schedule in which those references are made; and

references to the singular include the plural and vice versa; references to the parties include their successors in title; references to persons include individuals, companies, firms, partnerships, government bodies or agencies and corporations sole and aggregate references to the masculine gender include the feminine and the neuter genders and vice versa, and in relation to the Landlord references to companies include references to limited liability partnerships; and

references to an indemnity mean an indemnity against all actions, claims, demands and proceedings made against the Landlord and all costs, expenses, liabilities and losses incurred directly or indirectly by the Landlord and "indemnify" and "indemnified' shall be construed in the same way; and

references to the Premises include any part of them; and

references to the end of the Term include the determination of the Term before the end of the Term hereby granted; and

where the Lease requires the Tenant to obtain the consent of the Landlord to any Alterations, any change of the Authorised Use or any assignment or any underletting, such consent shall not be effective unless given by way of a formal licence executed as a deed; and

any reference to the date of assignment shall mean the date of the deed of assignment or transfer of this Lease and any covenants given to the Landlord on any assignment of this Lease shall take effect from such date; and

any obligation on the Tenant includes an obligation on the Tenant to use reasonable endeavours to ensure that any person deriving title under the Tenant and its and their agents, employees, licensees and any other person under its or their control comply with that obligation and any reference to an act or default or omission of the Tenant includes the act or default or omission of those persons; and

any obligation on the Tenant not to do an act or thing includes an obligation to use reasonable endeavours not to permit or allow that act or thing to be done where the Tenant is aware that such act or thing is being done; and

any obligations entered into by more than one person in this Lease are entered into jointly and severally; and

the headings shall not affect the interpretation of this Lease; and

references to any consent or approval of the Landlord shall mean a written consent or approval of the Landlord; and

references in this agreement to the Landlord and the Tenant are intended to bind and to inure to the benefit of their respective successors and permitted assigns, subject to the limitations of assignment and underletting set forth in this agreement; and

if any provision in this Lease is held to be illegal, void, invalid or unenforceable for any reason, the legality, validity and enforceability of the remainder of this Lease shall not be affected; and

capitalised terms not defined in this Lease but which are defined in the Umbrella Agreement or the Facility Agreement shall have the meaning given to such terms in said agreements.

the Rents or any part of them remain unpaid fourteen days after becoming payable, whether formally demanded or not; or

the Tenant does not comply with Tenant's Covenants within 28 days of formal notice of breach from the Landlord; or

there is an Event of Insolvency; or

any process of distress, execution or similar process is levied against any of the assets and undertaking of the Tenant at the Premises; or

the Tenant or any guarantor of the Tenant's obligations under this Lease, if a company, changes the liability of its shareholders from limited to unlimited or vice versa.

together with the rights set out in Part 2 of Schedule 1 for the benefit of the Tenant and any person deriving title under the Tenant; and

subject to the rights, reserved throughout the Term for the benefit of the Landlord over the Premises set out in Part 3 of Schedule 1; and

subject to the title matters set out in Part 4 of Schedule 1 and all other easements, covenants, privileges and rights enjoyed over or against the Premises so far as any of them are still subsisting and capable of taking effect.

subject to and with the benefit of the leases (if any) set out in Part 5 of Schedule 1,

without previous demand, notice or presentment the Principal Rent by equal monthly payments on the 7th day of each month such payments to be in respect of the calendar month within which that payment date falls; and

any other sums expressed to be payable as additional rent under this Lease, which shall be payable on demand.

The Principal Rent for the period from and including the Rent Commencement Date to the immediately following day for payment of Principal Rent shall be paid on the Rent Commencement Date.

All rent payable under this Lease shall be made payable to the Landlord and sent by wire transfer of immediately available funds to an account designated from time to time by the Landlord. The Landlord may elect to have all rent payable hereunder sent to the Landlord’s address as may be designated by written notice from Landlord to Tenant. All rent payable under this Lease shall be made in British Pounds Sterling as currency which shall be legal tender for all debts, public and private.

Tenant agrees that it will not pay any instalment of Principal Rent more than one (1) month in advance of the due date thereof.

The Tenant and Landlord (a) acknowledge that Landlord intends the Lease to be classified as a “true lease” for United States Federal income tax and (b) agree that this Lease does not constitute a financing agreement under US law. To the extent not prohibited by law or applicable accounting standards; each party shall reflect the transaction represented hereby in all applicable books, records and reports in a manner consistent with treating the Lease as a lease treatment rather than as a financing instrument.

Each sum payable by the Tenant under this Lease shall be treated as being exclusive of Value Added Tax. Subject to clause 4.4.2 the Tenant shall pay as additional rent any Value Added Tax properly demanded by the Landlord by delivery of a valid VAT invoice addressed to the Tenant.

The Landlord (including for these purposes its successors and assignees) warrants that it has not and shall not during the Term exercise a VAT Election in respect of the Premises, and, to the extent this clause 4.4.2 is breached, the Tenant shall not be liable to pay to the Landlord an amount of or in respect of Value Added Tax for which the Landlord is liable to account for HMRC on any Rents or other payments due from the Tenant under this Lease.

The Tenant shall at its own cost effect insurance cover to insure the Premises and other risks in accordance with the following provisions of this clause 5.1:

the Premises themselves (including the Landlord's fixtures and fittings and the Tenant’s Personal Property) against damage or destruction by the Insured Risks in their full reinstatement cost or replacement cost

the cost of demolition, site clearance, hoarding and shoring up

surveyor's, architect's, legal and other professional fees and statutory fees incurred in reinstatement of the Premises;

Value Added Tax which would be incurred and not recoverable;

three years' loss of Principal Rent (and, as the case may be, Index Rent) in the event of damage or destruction of the Premises by the Insured Risks taking into account any increase in the Principal Rent that would occur following a Review Date or indexation increase;

its liability for personal injury or property damage under a policy of commercial general public liability insurance with a single limit per occurrence in respect of bodily injury and death and property damage of ten million pounds (£10,000,000);

its liability arising out of malpractice in an amount not less than five million pounds (£5,000,000) for each person or for each occurrence;

its employer's liability in an amount of not less than ten million pounds (£10,000,000) for each occurrence; and

during the period of construction in respect of Alterations, improvements or additions, such other insurances and in such amounts as the Landlord reasonably deems necessary for its protection from the consequences of an act or omission of the Tenant's contractors or sub-contractors of which it notifies to the Tenant.

The Tenant may insure for greater amounts then set out in clause 5.1 as are obtainable on reasonable commercial terms in the United Kingdom insurance market as the Tenant on the advice of its insurance brokers as to common industry practice from time to time as it reasonably considers appropriate.

The Tenant shall effect the insurance of the Premises and other matters in such substantial insurance offices of good repute in the United Kingdom and through such reputable and substantial agency as the Tenant may from time to time determine or through underwriters at Lloyd's as the Landlord has first approved, approval not to be unreasonably withheld or delayed.

the sums to be insured in respect of the Premises as set out in clause 5.1, and the premiums applicable to them, are independently to apply to the Premises under the block policy, and

the sums so insured are not to be subject to reduction because of damage or destruction suffered, by Insurance Events or claims in relation to other properties also covered by the block policy,

do so in the names of the Landlord and Tenant as co-insured parties by way of composite cover of their respective interests in the Premises;

have the interest of any mortgagee of the Landlord noted against such policy or policies and the interest of the Landlord on the cover under clause 5.1.1(f);

procure that the policy contains a non-invalidation clause so that it should not be avoided by any act, omission or matter unknown to or beyond the control of the Landlord or the Tenant whereby the risk of destruction or damage to the Premises is increased; and

to procure that where the aggregate value of a particular claim is greater than £50,000 the Landlord is (subject to insurers’ requirements) to be named as loss payee and, in the event of damage to the Premises resulting in a claim payment is to be made (subject to the insurers’ requirements) into the Landlord’s notified account to meet payments due in respect of works of reinstatement and the Landlord will disburse payments promptly to enable

cover being normally available with insurance offices of good repute in the United Kingdom or through underwriters at Lloyd's on reasonable commercial terms;

such excesses, exclusions and conditions in the United Kingdom insurance market in which the insurance is placed as are applicable to the area in which the Premises are situated or the type of premises;

the policy of insurance not being made void or voidable by any act or default of the Landlord; and.

The policy to be effected with an insurance company being either (a) one of the top six insurers in the UK market by reference to their net asset value, or (b) rated “A:VIII” or better in “Best’s Insurance Guide” (or any substitute guide acceptable to the Landlord (acting reasonably)) and at least rated “A” by Standard & Poor’s Ratings Group.

Neither Landlord nor Tenant shall be liable to the other or to any insurance company (by way of subrogation or otherwise) insuring the other party for any loss or damage to any building, structure or other tangible property, or any resulting loss of income, or losses under worker’s compensation laws and benefits, even though such loss or damage might have been occasioned by the negligence of such party, its agents or employees if, and to the extent, that any such loss or damage is covered by insurance benefiting the party suffering such loss or damage or was required to be covered by insurance pursuant to this Lease. The provisions of this clause shall prevail over any conflicting provision in the Lease, it being the intention of Landlord and Tenant that wherever applicable the waiver of subrogation contained in this clause shall take precedence over any other provision providing for the liability of one party to the other.

promptly make and shall diligently pursue all potential claims under the policy of insurance effected by the Tenant in respect of the Premises:

use all reasonable endeavours to obtain requisite planning permissions and other approvals for the rebuilding and reinstatement of the Premises;

if the design and specification of the works of rebuilding and reinstatement of the Premises and any access way or essential services are materially different from those of the Premises before the occurrence of the Insurance Event (the “former design”), to obtain the prior approval of the Landlord to them which, having regard to the former design and the provisions of clause 5.6, is not to be unreasonably withheld or delayed; and

subject to requisite planning permissions and approvals, and the approval of Landlord being obtained (approval not to be unreasonably withheld or delayed) and (if relevant) the Landlord laying out insurance proceeds in accordance with clause 5.3.4, procure that:

all insurance moneys received from the insurer by virtue of clause 5.1.1(a) be laid out towards rebuilding or reinstating the Premises,

with all convenient speed,

with good quality materials,

in a good, substantial and workmanlike manner, and

in accordance with the terms of planning permissions and approvals so obtained.

When rebuilding or reinstating the Premises, they shall be rebuilt or reinstated:

with the object and intention of providing at least as many beds or bedrooms (whichever was the greater number) for residents and patients at the Premises as were previously enjoyed; and

to a configuration and specification (including, without limitation, as to number of rooms, room sizes, provision of en-suite facilities, provision of day space) in accordance with the requirements of Statute and the lawful requirements of any government department or competent authority in respect of them;

containing not less than the number of licensed beds or residential rooms within the Premises as they were before the occurrence of the damage or destruction, unless the Landlord has consented (consent not to be unreasonably withheld or delayed) to a reduction of the number or as is required by Statute and/or the lawful requirements of any government department or competent authority.

the Tenant may:

use materials of a different quality, type (provided such materials are good and suitable and used in a good and workmanlike manner in accordance with good building practice) or specification; and

make reasonable changes in the original design, layout or specification of the Premises so long as the extent of the Premises is not materially altered;

if the Premises have been destroyed or substantially damaged, the Tenant shall use all reasonable endeavours to procure that:

duty of care deeds or collateral warranties in respect of the reinstatement works and their design are provided by the building contractor, its sub-contractors (in respect of material works) and the professional consultants engaged in the design and specification of them in accordance with current good construction industry practice then applicable to projects of similar kind.

for the purposes of clause 7.1 such destruction or damage shall be deemed to have been destruction or damage caused by an Insurance Event;

within six months of the destruction or damage in question the Landlord shall give written notice to the Tenant (the Election Notice) stating whether or not the Landlord proposes to rebuild or reinstate the Premises or any access way or access ways (or any part of them) to them or any essential services to them at its own cost;

if the Election Notice states that the Landlord does propose to rebuild or reinstate the Premises or any access way or access ways (or any part of them) to them or any essential services to them at its own cost then for all the purposes of this Lease the destruction or damage shall be deemed to have been caused by an Insurance Event in respect of which the full cost of rebuilding or reinstating are recovered;

if the Election Notice states that the Landlord does not propose to rebuild or reinstate the Premises or any access way or access ways (or any part of them) to them or any essential services to them or if the Election Notice is not served within the period of six months referred to in clause 5.7.2 then either the Landlord or the Tenant may determine this Lease with immediate effect by serving written notice on the other but without prejudice to any claim by either of them for any antecedent breach of the provisions of this Lease.

the Principal Rent or a proper proportion according to the nature and extent of the damage or destruction will be suspended from the date of the destruction or damage until the earlier of (1) the date the Premises or any access way or

Time shall be of the essence of the service of the Election Notice by the Landlord.

The Tenant shall provide to the Landlord:

full details of any insurance effected by it under clause 5.1.1(a)(a); and

if commercially available a certificate issued by the insurer, other proper evidence of the current cover in force and of the interest of the Landlord and its mortgagee (if any) with respect to it

The Tenant shall provide to the Landlord a certified true copy of the original policy within ten (10) Working Days after receipt of Landlord’s written request to that effect.

The Tenant shall give notice to the Landlord of the occurrence of a material Insurance Event within two (2) Working Days of the occurrence thereof, or within two (2) Working Days after subsequently determining that the estimated cost of repairing the same is reasonably expected to be in excess of £30,000; and

Each party shall promptly give notice to the other if it becomes aware of any matter which might invalidate or give the insurers of the Premises grounds for avoiding any policy of insurance relating to the Premises or which might increase the premium payable for any insurance of the Premises maintained by the Tenant.

The lawful and proper preparation and service of any notice and any proceedings under ss.146 or 147 Law of Property Act 1925 or the Leasehold Property (Repairs) Act 1938 whether or not forfeiture is avoided other than by relief granted by the court; and

the preparation and service of any notice under s.6 Law of Distress Amendment Act 1908; and

the preparation and service of any notice under s.17 of the 1995 Act; and

the recovery of any arrears of the Rent, whether by action or otherwise; and

the preparation and service of a schedule of dilapidations at any time during or within three months after the end of the Term; and

the application for consent to any matter for which the consent or approval of the Landlord is required under this Lease whether such-consent is granted or not for any reason unless the Landlord acts unreasonably in refusing consent or offers the same subject to some unlawful or unreasonable condition.

Without prejudice to the generality of clause 6.6 it is hereby agreed and declared that to the maximum extent possible the Landlord shall have no liability (other than pursuant to the Landlord's express obligations under this Lease or any agreement pursuant to which this Lease was made) in respect of the state or condition of the Premises or their occupation use repair alteration or maintenance or for the presence of any substance or article or other thing (of whatsoever nature) on or emanating from the Premises (including any which may have been on the Premises before the grant of this Lease).

The parties acknowledge that immediately prior to the execution and delivery of this Lease the Tenant or its Affiliate was the owner of the Premises was (and as of the date hereof is currently) in possession of the Premises and therefore has examined the Premises is familiar with the physical condition expenses operation and maintenance planning requirements status of title and use that may be made of the Premises and every other matter or thing affecting or related to the Premises and is leasing the same in its present condition;

The Landlord has not made and does not make any representations or warranties whatsoever with respect to the Premises or otherwise with respect

keep the Premises (as a whole including fixtures and fittings and any Tenant’s Personal Property) in good and substantial repair and condition. Without limiting the generality of the foregoing, Tenant shall make all repairs and replacements (structural and non-structural, ordinary and extraordinary foreseen and unforeseen) and shall perform all maintenance necessary to cause the Premises to comply with all Statutes and Applicable Laws. As used herein, the term “repairs” shall include all necessary replacements, renewals and substitutions. If the requirements of any Statute or Applicable Law mandate a higher standard than what is required by this Lease, then the Tenant shall be obligated to cause the Premises to comply with such higher standard. The Landlord shall not be responsible for the cost of any Alterations or replacements of or maintenance or repairs to the Premises of any nature whatsoever (structural or non-structural ordinary or extraordinary foreseen or unforeseen) whether or not now in the contemplation of the parties; and

replace any fixtures, any carpets and other floor coverings and any blinds, curtains or other window coverings in the Premises with new articles of a similar kind and quality if they become incapable of repair or, in the case of plant and equipment, if they cease to operate properly; and

keep all Tenant's Personal Property (other than Consumables) in good and substantial repair and condition PROVIDED that the Tenant's Liability for repair under this clause 7.1.3 shall not extend to wants of repair occasioned by fair wear and tear; and

keep any parts of the Premises which are not built upon in a clean and tidy condition with any landscaped areas well-tended and laid out; and

keep the whole of the Premises properly cleaned with all windows and glass, both inside and out, being cleaned as often as is reasonably necessary; and

redecorate the Premises externally in every fifth year of the Term and within the three months before the end of the Term but not twice within any period of 24 months; and

redecorate the Premises internally in every fifth year of the Term and within the three months before the end of the Term but not twice within any period of 24 months.

The Landlord and the Tenant acknowledge the items of disrepair specifically identified in the Schedule of Condition. The Landlord agrees that there shall be no breach of this Lease if such items are left unrepaired (provided that (a) there is no material further deterioration and (b) the Tenant proceeds with the repair of such items with commercially reasonably diligence and completes the same within the time period specified in the Schedule of Condition); however such forbearance on the part of the Landlord shall not in any way be deemed to act as a waiver of the Tenant’s general duty under Clause 7.

it shall give the Landlord prior written notice of the Alteration with plans, drawings and specifications showing the Alteration; and

the Alteration (a) does not adversely affect (i) the business operated therein or (ii) the load bearing capacity of the structural parts of the building comprised in the Premises; and (b) have an aggregate estimated cost of less than £100,000 for any one divisible project (excluding Alterations made on an emergency basis to protect health or welfare of persons or imminent loss or damage to the Premises or any part thereof) in which case the Tenant shall notify the Landlord in writing of such emergency Alteration as soon as practicable.

provide the Landlord in triplicate with plans, drawings and specifications showing the Premises before and after the proposed Alterations (reflecting the as-built condition); and

obtain all necessary consents to the Alterations; and

give the insurers of the Premises full details of the Alterations and obtain their approval to them and if required by the insurers pay any additional premium; and

carry out the Alterations with good quality materials, in a good, substantial and workmanlike manner in accordance with the terms of all consents obtained for the Alterations and the requirements of the local planning and other authorities; and

comply with the requirements of any Statute and Applicable Law which affects the Alterations or the manner in which they are carried out; and

where the consent of the Landlord is required for the Alterations, carry out the Alterations to the reasonable satisfaction in all respects of the Landlord; and

give to the Landlord full details of the reinstatement value of the Alterations for insurance purposes.

for any sale by auction; or

for any offensive, noxious or noisy trade, business or occupation; or

for illegal or immoral purposes.

discharge anything into the Conduits which is or may become corrosive or harmful or cause any blockage or destruction of them; or

do anything to obstruct any means of escape or other facilities serving the Premises; or

do anything on the Premises or install or operate any machinery or mechanical equipment which may be or become a legal nuisance or damage or result in damage to the Premises PROVIDED ALWAYS that the proper use of the Premises for the Authorised Use shall not in any circumstances constitute a breach of this obligation; or

overload the floors or suspend any excessive weight from the ceilings or walls of the Premises or overload the lifts serving the Premises; or

overload the electrical systems in the Premises or connect any equipment to the electrical systems except in accordance with the design and specification of the electrical systems; or

install or operate any machinery or mechanical equipment in or on the Premises, except for office machinery and equipment used by the Tenant in the normal operation of its business, without the prior written consent of the Landlord, such consent not to be unreasonably withheld or delayed; or

erect, exhibit or hang any signs, advertisements, placards, flags, posters or, aerials, flags, poles, masts or satellite dishes (other than satellite dishes for satellite TV reception which shall be permitted) or any other thing whatsoever on the exterior of the Premises without the consent of the Landlord (which consent shall not be unreasonably withheld or delayed) PROVIDED ALWAYS that nothing in this clause 9.3.7 shall preclude the Tenant from displaying signs with its usual corporate or trade logo where to do so would be consistent with the use of the Premises as a high quality care home, and provided further that all such signs shall comply with the requirements of all Applicable Laws, statutes, regulations and codes; or

store any refuse in the Premises except in suitable containers for that purpose with all food waste and other pungent or perishable refuse being removed from the Premises as often as occasion shall reasonably require.

any lawful requirements or regulations made in respect of the Utilities by the supply companies;

the lawful requirements and recommendations of the local fire officer in respect of the Premises or their use; and

the requirements of all Applicable Laws.

The Tenant shall not assign this Lease or the whole of the Premises without the Landlord’s prior written consent and subject to the conditions in clause 10.2 below.

The Landlord shall have the right to dispose of its reversionary interest in the Lease without the prior consent of the Tenant.

on or before the date of the assignment, the Tenant obtains the prior written consent of the Landlord to the assignment and the assignee, which consent Landlord may withhold in its sole and absolute discretion.

on or before the date of the assignment the Tenant has paid to the Landlord the whole of any arrears of the Principal Rent and remedied any other material default of this Lease as reasonably required by the Landlord; and

on or before the date of the assignment the Landlord receives a direct covenant by way of a guarantee that the assignee will comply with the Tenant's Covenants from the date of the assignment until the date the assignee is released from its obligations under the 1995 Act from the Tenant by way of a guarantee to be given to the Landlord in a reasonable form in line with market practice and meeting the particular circumstances of the assignment at the relevant time; and

on or before the date of the assignment the assignee grants the Landlord by way of security fixed and floating charges to replicate any subsisting pre-assignment; and

on or before the date of the assignment the assignee enters into a direct covenant with the Landlord to comply with the Tenant's Covenants from the date of the assignment until the date the assignee is released from its obligations under the 1995 Act; and

on or before the date of the assignment, if reasonably required by the Landlord, a letter of credit for in an amount requested by the Landlord shall be provided to the Landlord on terms and from a bank acceptable to the Landlord acting reasonably;

the conditions specified (for the purposes of s.19(1A) Landlord and Tenant Act 1927) in clause 10.2 are fulfilled; and

any letter of credit applicable to this Lease shall remain in full force and effect after completion of the assignment and apply to any act, default of or circumstance affecting the assignee as fully as it would have applied to any of or affecting the Tenant or if the same will not remain in full force and effect and applicable as aforesaid unless on or before the date of the assignment a replacement shall be provided to the Landlord on terms and from a bank acceptable to the Landlord acting reasonably;

the circumstances specified (for the purposes of s.19(1A) Landlord and Tenant Act 1927) in clause 10.3 do not apply.

a company incorporated in a jurisdiction outside the United Kingdom in respect of which there is no applicable treaty for the mutual enforcement of civil judgements unless the Landlord is reasonably satisfied that a judgement obtained in England and Wales against the assignee can be enforced in the relevant jurisdiction; or

in the reasonable opinion of the Landlord, not of sufficient financial standing or operational experience (when taken together with any proposed guarantor or guarantors and any proposed other security for compliance with the Tenant's Covenants) to comply with all the Tenant's Covenants; or

a person enjoying diplomatic or sovereign immunity; or

the conditions of clause 10.2 have not been satisfied; or

any person or entity in which the Landlord or any Affiliate of the Landlord owns, directly or indirectly, a ten percent (10%) or greater interest, within the meaning of Section 856(d)(2)(B) of the Code, or any similar or successor provisions thereto. Any such assignment automatically shall be void. The Landlord will act promptly and reasonably in confirming whether or not that is the case upon request by the Tenant.

clause 10.2 shall operate without prejudice to the right of the Landlord to withhold consent in any other circumstances where such withholding of consent would be reasonable or to impose any further conditions upon the grant of consent where it is reasonable to do so;

any guarantee to be given to the Landlord shall be in a reasonable form in line with market practice and meeting the particular circumstances of the assignment at the relevant time; and

on or before the date of the assignment, the Landlord shall release all fixed and floating charges granted by the Tenant over this Lease, the Premises and other assets of the Tenant (including any Related Agreements).

the underlease is validly excluded from the provisions of ss24 to 28 (inclusive) of the 1954 Act in accordance with the Order; and

the Tenant obtains the prior written consent of the Landlord which shall not be unreasonably withheld or delayed if the conditions set out in this clause 11 are satisfied.

enters into direct covenants with the Landlord to observe and perform the covenants on the part of the undertenant contained in the underlease until the undertenant is released from those obligations under the 1995 Act; and

enters into direct covenants with the Landlord to procure that any assignee of the underlease enters into a direct covenant with the Landlord on the same terms as this clause 11.2; and

contain undertenant's covenants on the same terms as or consistent with the Tenant's Covenants except that further underletting shall be prohibited; any undertenant leasing an immaterial portion of the Premises for the purpose of providing an ancillary service to the residents of the Premises (such us a sundry shop or beautician parlour) need not be obliged to comply with any of the material obligations contained in (or incorporated via) the Umbrella Agreement; and

    be granted at a rent which at the time of the grant of the underlease is the Open Market Rent of the Premises and is payable monthly in advance by equal instalments on the same days as the Principal Rent (but the Tenant may pay a reverse premium or grant the undertenant a rent subsidy by way of a personal arrangement which does not bind the Landlord); and

contain provisions for the review of rent on the same terms (mutatis mutandis) and at the same times as those contained in clause 4.1 or at the discretion of the Tenant such other provisions for rent review as may be approved by the Landlord (such approval not to be unreasonably withheld or delayed); and

contain provisions for re-entry and recovery of insurance premiums on the same terms as this Lease; and

contain provisions requiring the undertenant to obtain the prior written consent of the Landlord before assigning the whole of the premises comprised in the underlease or granting any sub-underlease.

The Tenant shall:

not vary the terms of the underlease; and

enforce the undertenant's covenants and not waive any breach of them so far as the breach also constitutes a breach of the Tenant's Covenants; and

not grant any licence, consent or permission under the terms of the underlease in respect of any matter for which the consent of the Landlord is required under this Lease without the prior written consent of the Landlord, which shall not be unreasonably withheld or delayed where the Landlord could not unreasonably withhold or delay its consent to a similar application under the terms of this Lease; and

procure that the yearly rent payable is reviewed under each underlease in accordance with its terms; and

procure that the rents reserved by any underlease are not commuted in whole or in part or payable more than one month in advance; and

not accept the surrender of part only of the premises underlet by the underlease; and

upon the termination of the underlease (however it occurs) not accept any rent from any undertenant or permit it to hold over or acknowledge any tenancy but forthwith take all necessary steps at the Tenant's expense to secure possession of the premises underlet by the underlease.

On any underletting:

the provisions of clause 11.2 shall operate without prejudice to the Landlord's right to withhold consent on any grounds where such withholding of consent would be reasonable or to impose any further conditions upon the grant of consent where it is reasonable to do so; and

any guarantee to be given to the Landlord shall be in a reasonable form in line with market practice and meeting the particular circumstances of the assignment at the relevant time; and

the quantum of rental to be paid by the tenant pursuant to the underletting shall not be based in whole or in part, on either

the income or profits derived by the business activities of the sublessee or any other person, or

any other formula such that any portion of the rent payable hereunder would or could fail to qualify as “rents from real property” within the meaning of Section 856(d) of the Code, or any similar or successor provisions thereto. Any such sublease automatically shall be void.

Whilst any underletting subsists the Tenant's Covenants including without limitation clause 11.2 shall be construed in a manner consistent with the existence of such an underletting.

If the Tenant requests Landlord consent to an underletting, the Landlord shall be given not less than thirty (30) days’ advance written notice of the proposed underletting, which notice shall be delivered to Landlord together with (i) (once agreed and available) a true and complete copy of the proposed instrument(s) of the underletting, and (ii) such other information and documents as Landlord may reasonably request. Tenant shall pay, on demand, Landlord’s reasonable costs and expenses in connection with their consideration of whether to grant any such consent to the underletting. No underletting may be proposed or completed during any period in which Tenant is in default of this Lease beyond the expiration of all notice and cure periods expressly stated herein. Any consent by Landlord hereunder shall apply only to the specific transaction thereby authorized and shall not relieve Tenant from the requirement of obtaining the prior written consent of Landlord to any further underletting. No underletting shall release or relieve the original named Tenant (or any previously approved transferee) from any obligations of Tenant hereunder, and the original named Tenant (or any previously approved transferee) shall remain liable for the performance of all obligations of Tenant hereunder. Within ten (10) Working Days after receipt Landlord’s written request, Tenant shall deliver to Landlord a schedule of all underlettings, setting forth the names of all subtenants, and provide a true, correct and complete copy of each sublease.

The Tenant shall not charge or create any security interest over the whole or any part of the Premises or its other assets or undertaking without the prior written consent of the Landlord, which consent the Landlord may give or withhold in its sole and absolute discretion.

Within one month after any assignment, charge or underletting of the Premises or the assignment of any underlease or the grant of any sub-underlease, however remote, the Tenant shall give notice in writing to the Landlord of that disposition together with certified copies of all the documents giving effect to it and shall pay the Landlord a reasonable fee of not less than £35 for its registration.

make any application for planning permission or any application for a determination that planning permission is not required for any Alterations or any change of the Authorised Use without the prior written consent of the Landlord. Consent shall not be unreasonably withheld or delayed; and

carry out any Alterations or change the Authorised Use until all necessary planning permissions have been obtained and approved in writing by the Landlord. Subject to clause 15.2, the Landlord shall not unreasonably withhold or delay its approval where it has given consent to the application for planning permission being made.

impose reasonable conditions to the giving of its approval; and

withhold its approval to any planning permission if any condition contained in or omitted from it or its duration would, in the reasonable opinion of the Landlord, have or be likely to have an adverse effect on the value of the Landlord's interest in the Premises at any time during or after the end of the Term.

damage to the Environment, or

modification or replacement of machinery as a result of damage of the Environment; or

removal or making safe of Hazardous Substances or the maintenance costs of keeping them secure; and

obligations imposed under any Environmental Law arising out of any act or omission whether before or during the Term.

The Tenant shall procure that the Premises and the operator and manager thereof (which may include a peripatetic manager) are registered at all times during the Term under the 2008 Act and shall provide the Landlord with a copy of the current Registration Certificate on request.

The Tenant shall not request or agree to any change in the number of registered beds within the Premises or any other change in the Care Home Registration or the Registration Certificate, nor shall the Tenant take beds out of service save where required by the Health Care Regulatory Agencies without the Landlord's prior written consent such consent not

take not more than 10% of total beds permitted by the Certificate licensed for use from time to time at the Premises out of service in respect of planned Alterations or otherwise in the interests of operational effectiveness; and

there shall be no loss or reduction to the number of licensed beds or residential rooms within the Premises permitted by the certificate; and/or

make registration changes as a consequence of changes of personnel, save for those resulting in a loss or reduction to the number of licensed beds or residential rooms within the Premises permitted by the certificate.

In carrying out the Authorised Use the Tenant shall comply with:

good practice within the care home sector; and

all Statutes and Applicable Laws and the requirements of any statutory or regulatory authorities.

Upon written request from the Landlord the Tenant shall promptly provide the Landlord:

copies of all reports of inspections of the Premises by the competent public authority; and

any management accounts that have been prepared in relation to the business carried on by the Tenant or any undertenant at the Premises for that reporting period.

The Tenant shall use all reasonable endeavours to promote the business of a care home carried on from the Premises.

Upon the expiration or earlier termination of this Lease, the Landlord may, to the extent permitted by Applicable Law, cause the transfer of Health Care Licences relating to the Premises and the operation and management of the Premises and leasing of the Premises to any replacement operator or tenant designated by the Landlord and seek the approval of Health Care Regulatory Agencies in connection therewith. In connection with such transfer the Tenant shall (to the extent permitted or required by Applicable Law and the Healthcare Regulatory Agencies ) at the Landlord’s cost (save following a default by the Tenant, in which case is shall be at the Tenant’s cost) cooperate with the Landlord (including, if required by the Landlord, the execution and delivery of a transfer agreement reasonably acceptable to the parties) and provide for:

the transfer to the successor tenant of all licenses, certifications, approvals and other authorisations that are related to the operation of the Premises to the extent transferable,

the preparation and filing of all notices reasonably required by Applicable Law in connection with such transfer of operations,

the delivery to the successor tenant of all resident charts and records along with appropriate resident consents, which the Tenant shall use reasonable endeavours to procure,

the delivery to the successor tenant of such inventories and supplies at commercially reasonable operating levels, and

the delivery of a copy of all of Tenant’s books and records relating to the Premises and their operations that are necessary to transfer the Premises to the Landlord or the successor tenant, within a reasonable time so as to provide continuation of resident care and minimise disruption.

The Tenant’s obligation to observe and perform this covenant shall survive the expiration or earlier termination of the Term.

The Tenant shall have the right, as long as no default has occurred and is continuing under this Lease, upon the expiration of the Term (but subject to (a) the temporary use by the successor tenant referred to above and (b) the Landlord’s right to purchase the owned Tenant’s Personal Property or takes an assignment of the leased Tenant’s Personal Property , to remove from the Premises all of Tenant’s Personal Property, whether or not the same be attached to the Premises, provided that the Tenant shall at its own cost and expense reasonably restore and repair any damage to the Premises caused by the removal of Tenant’s Personal Property. Such removal shall be done upon reasonable advance notice, at a mutually convenient time approved by the Landlord and without disruption of the successor tenant’s business operations.

Notwithstanding anything to the contrary contained in this Lease, if pursuant to Applicable Law (a) the Tenant is required to continue to operate the Premises after the end of the Term, the Tenant shall do so pursuant to Applicable Law, and the Tenant shall continue to pay the Landlord Principal Rent at the rates then in effect under this Lease and (b) shall (at the Landlord’s expense) use all reasonable endeavours to assist (in accordance with the requirements of the Healthcare Regulatory Agencies) any successor operator of the Premises to obtain applicable requisite consents and certifications in its own name.

No person who is not a party to this Lease shall have any right under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Lease, except as may be provided in the Umbrella Agreement.

Nothing in this Lease contained or implied shall render the Landlord or the Tenant liable in respect of any of the covenants, conditions or provisions contained in this Lease so far only as the performance and observance thereof shall hereafter become impossible or illegal under or by virtue of any Statute, except that the foregoing shall not excuse Tenant from the obligation to pay rent or any other moneys payable under this Lease.

The Landlord shall provide the Tenant with contact details for itself and its managing agents (if any) on request of the Tenant from time to time (but not more frequently than twice in any year) and without request following a change in the identity of the Landlord or a change of managing agents.

The Tenant shall have the right to determine this Lease on [__●__], 2028 and [__●__], 2038 (each a “Break Date”, and each Break Date being subject to adjustment pursuant to the Umbrella Agreement) upon all of the terms and conditions of this Section. The

If this Lease is not determined on a particular Break Date, then on each such Break Date the Principal Rent payable under this Lease for the year following the Break Date shall be reviewed and adjusted in accordance with the provisions of Schedule 4 of the Umbrella Agreement. The Principal Rent for each subsequent year shall increase in the same manner as stated in this Lease (for the avoidance of doubt, by 2.5% on the first anniversary of the Break Date and on each anniversary thereof until the next Break Date or, if no subsequent Break Date occurs, until the Lease is determined.)

A Break Notice shall only be effective if the Tenant serves a notice to the same effect on all other Portfolio Properties (as defined in Schedule 3) where the Tenant is the lessee.

If a Break Notice is effective it shall be without prejudice to any antecedent rights of either party against the other for breaches of any of the provisions of this Lease or the Umbrella Agreement.

Any notice served under or in respect of this Lease shall be in writing and delivered by electronic means (such as by email or fax) followed up by express delivery via an internationally recognized courier (such as Federal Express) for next Working Day delivery (as a Working Day is determined based upon the country to which the notice is being sent). Notices shall be effective and deemed given on the date of receipt (or if the date of receipt is not a Working Day in the country where delivered, then on the next Working Day after delivery).

The addresses and fax numbers for service of notices are:

Bradbury House, 830

A party may change its details for service of notices as specified in clause 24.2 by giving notice in writing to the other party. An address for service need not be located within the UK. Any change notified pursuant to this clause shall take effect at 9.00 am UK time on the later of:

the date (if any) specified in the notice as the effective date for the change; or

five Working Days after deemed receipt of the notice of change.

A notice is deemed to have been received (provided that all other requirements in this clause have been satisfied):

if sent by fax, at the time of transmission; or

if sent by pre-paid first class post, recorded delivery or special delivery, upon actual receipt; or

if sent by airmail to an address outside the country from which it is sent, upon actual receipt; or

if sent by reputable international overnight courier to an address outside the country from which it is sent, at the time of actual receipt; or

if delivery is by fax transmission, it shall be effective only if also sent by one of the other means permitted in this clause. For the purposes of this clause, all references to time are to local time in the place of deemed receipt.

To prove service, it is sufficient to prove that:

if delivered by reputable international overnight courier, the notice was delivered to the correct address; or

if sent by fax, a transmission report was received confirming that the notice was successfully transmitted to the correct fax number; or

if sent by post or by airmail, the envelope containing the notice was properly addressed, paid for and posted.

The parties confirm that:

the Landlord served a notice on the Tenant as required by section 38A(3)(a) of the Landlord and Tenant Act 1954 (”the 1954 Act”) and which applies to the tenancy created by this Lease before the parties entered into the agreement for the grant of this Lease and;

[             ] who was duly authorised by the Tenant to do so made a statutory declaration dated [ [x] July 2013] in accordance with the requirements of section 38A(3)(b) of the 1954 Act.

The parties agree that the provisions of sections 24 to 28 inclusive of the 1954 Act are excluded in relation to the tenancy created by this Lease.

At the expiration or earlier termination of the Lease the Landlord shall have the right to (i) for no consideration, take an assignment of the Tenant’s interest in all of the leased Tenant’s Personal Property free and clear of all charges and encumbrances (other than said lease), save where the assignment of such is contractually barred, is and (ii) purchase all of Tenant’s owned Tenant’s Personal Property free and clear of all charges and encumbrances for the fair market value thereof, which right must be exercised by Landlord upon irrevocable written notice to Tenant at least ninety (90) days prior to expiration of the Term (save in the event of default, in which event no such notice shall be required). For purposes of determining the fair market value of the owned Tenant’s Personal Property (“Personal Property Fair Market Value”), the following procedure shall apply.

If Landlord has timely delivered the aforementioned notice, the Tenant shall within twenty (20) days deliver to Landlord a written notice of Tenant’s determination of the Personal Property Fair Market Value (the “Value Notice”).

Within fifteen (15) days after Landlord’s receipt of the Value Notice, Landlord shall give Tenant a notice (“Landlord’s Value Response Notice”) electing either (i) to accept the Personal Property Fair Market Value set forth in the Value Notice, in which case the Personal Property (so far as the Tenant is able to sell the same) Fair Market Value shall be as set forth in the Value Notice, or (ii) not to accept Tenant’s determination of the Personal Property Fair Market Value set forth in the Value Notice in which case Landlord’s Value Response Notice shall include Landlord’s determination of the Personal Property Fair Market Value, whereupon Landlord and Tenant shall endeavour to agree upon the Personal Property Fair Market Value on or before the date that is thirty (30) days after Tenant’s receipt of Landlord’s Value Response Notice. If the Landlord

If the Landlord and the Tenant shall fail to agree upon the Personal Property Fair Market Value within thirty (30) days of the date of Tenant’s receipt of the Landlord’s Value Response Notice, then, within ten (10) Working Days thereafter, the Landlord and the Tenant each shall give notice to the other setting forth the name and address of an independent valuer or consultant having at least ten (10) years’ experience in the business of valuing or determining the value of personal property comparable to Tenant’s Personal Property in the general location of the Premises. If either party shall fail to give notice of such designation within such ten (10) Working Day period, then the valuer chosen shall make the determination alone. If two valuers have been designated, such two valuers may consult with each other and shall, not later than the sixtieth (60th) day after the Tenant’s receipt of the Landlord’s Value Response Notice choose either Landlord’s or Tenant’s determination of the Personal Property Fair Market Value by simultaneously giving written notice thereof to each of the Landlord and the Tenant, in which case the determination so chosen shall be final and binding upon the Landlord and the Tenant and their respective Affiliates. If such two appraisers shall fail to concur within such thirty (30) day period, then such two appraisers shall, within the next ten (10) days, designate a third appraiser meeting the above requirements. The third appraiser shall within thirty (30) days after its designation, choose either Landlord’s or Tenant’s determination (and no other) by simultaneously delivering to the Landlord and the Tenant signed and acknowledged original counterparts of his or her determination within seven (7) days thereof, which determination shall be final and binding upon the Landlord and the Tenant. The determination of the valuers pursuant to this clause 32.1.3 shall be deemed to be binding. The parties shall thereafter execute and deliver any documents required to transfer Tenant’s Personal Property pursuant to such valuers determination.

The fees, costs and expenses of each party’s valuer shall be paid by such party. The fees, costs and expenses of the third valuer shall be shared equally by the Landlord and the Tenant. If a decision is rendered by a single valuer due to the other party’s failure to designate an valuer, then the fees, costs and expenses of the appraiser so rendering the decision shall be shared equally by the Landlord and the Tenant.

This Lease and the other agreements referenced herein contain the entire agreement between the parties regarding the subject matter set forth herein and may not be extended, renewed, restated, terminated or otherwise modified in any manner except by an

No receipt of moneys by the Landlord from the Tenant after the termination or expiry of this Lease shall reinstate, continue or extend the Term, or affect any notice theretofore given to the Tenant, or affect or otherwise operate as a waiver of the right of the Landlord to enforce the payment of Principal Rent then due, or thereafter falling due, or operate as a waiver of the right of the Landlord to recover possession of the Premises by proper, action, proceeding or remedy. The acceptance of any cheque or payment bearing or accompanied by any endorsement, legend or statements shall not, of itself, constitute any change in or termination of this Lease. The failure of the Landlord to enforce any agreement, condition, covenant or term, by reason of its breach by the Tenant shall not be deemed to void, waive or affect the right of the Landlord to enforce the same agreement, condition, covenant or term on the occasion of a subsequent default or breach. No surrender of the Premises by the Tenant (prior to any termination of this Lease) shall be valid unless consented to in writing by the Landlord.

Notwithstanding any provision of this Lease or the provisions of any other existing agreement between the parties hereto to the contrary, the Landlord may publicly file, disclose, report or publish any and all information related to this Lease (including the information provided to the Landlord pursuant to this clause) that may be reasonably interpreted as being required by US law.

The Landlord shall not be liable for any injury or damage to any property or to any person happening in on or about the Premises, nor for any injury or damage to any property of the Tenant, or of any other person or persons contained therein unless the same is caused by Landlord negligence or wilful misconduct. The Tenant agrees to look solely to the Landlord for recovery of any judgment in respect of the provisions of this Lease from such Landlord and in no event shall the Tenant look to any other landlord, nor shall any landlord (or its partners, shareholders, members, managers, officers, directors or Affiliates) ever be personally liable for any such judgment.

The parties took equal part in drafting this Lease and no rule of construction that would cause any of the terms hereof to be construed against the drafter shall be applicable to the interpretation of this Lease.

Subject to the express terms of this Lease the Tenant hereby waives, to the fullest extent permitted by Applicable Law, any and all rights that it may now have or that at any time hereafter may be conferred upon it, by Applicable Law or otherwise, to modify, terminate,

If the Landlord becomes concerned that any person who directly owns a controlling interest in or otherwise directly controls the Tenant is, (i) listed on the Specially Designated Nationals and Blocked persons List (the “SDN List”) maintained by the US Office of Foreign Assets Control (“OFAC”), US Department of the Treasury, and/or on any other similar list (“Other Lists” and, collectively with the SDN List, the “Lists”) maintained by the OFAC pursuant to any authorizing statute, US Executive Order or regulation (collectively, “OFAC Laws and Regulations”); or (ii) a person (a “Designated Person”) designated under Sections 1(a), 1(b), 1(c) or 1(d) of Executive Order No. 13224, 66 Fed. Reg. 49079 (published September 25, 2001) or similarly designated under any related enabling legislation or any other similar Executive Orders (collectively, the “Executive Orders”) then it shall provide the Tenant with as much information as it is able to do and the Tenant will if the information is verified then use all reasonable and lawful endeavours to terminate said person’s employment by or association with the Tenant.

On the exercise of any rights of entry on to the Premises, the person entering shall give reasonable prior notice (but in the case of entry other than for the purpose of carrying out works no more than 24 hours' notice shall be required) to the Tenant unless the rights need to be exercised in an emergency, cause as little damage and inconvenience as reasonably practicable in the exercise of the rights and make good any physical damage caused to the Premises in the exercise of those rights and the Landlord shall use reasonable endeavours to not disrupt the operation of the business conducted at the Premises and to preserve the privacy and dignity of residents of the Premises.

Such rights of access shall not be construed as obligating the Landlord to make any repairs to or replacements to the Premises or as obligating the Landlord to make any inspection or examination of the buildings;

The Landlord’s Contributions

Provided that Tenant is not in default under the Lease beyond the expiration of applicable notice and cure periods the Tenant shall be entitled to receive a contribution from the Landlord (the “Landlord’s Contribution ‘) in the amount of up to £[4.75million (Oakenholt) and £7.95million (Kingsclear) total £12.7million] to pay the cost of the Tenant’s Works incurred in connection with the improvements of the Premises (the “Tenant Improvements”).

The Tenant Improvements shall be deemed to be Alterations and shall be designed and built in accordance with the terms of this Lease save there shall be no obligation on the Tenant

The Tenant will procure that the Tenant’s Works be carried out:

in a proper and workmanlike manner and in accordance with the terms of the Building Contract;

with materials as specified in the Building Contract;

in accordance with the Plans and the Requisite Consents;

in compliance with all statutes and statutory orders and regulations made under or deriving validity from them, and codes of practice of local authorities and competent authorities, affecting the Tenant’s Works as at the date of the Building Contract; and

with due diligence.

within 27 months [Kingsclear] // 18 months [Oaken Holt] of the date of this Lease (and all Payment Applications (save for any residual sums due post Practical Completion) shall be requested with that period)

with a minimum 5% contract sum retention arrangement, (2.5% to be released at practical completion of the Tenant’s Works under the Building Contract and the remainder 12 months thereafter)

If any of the materials required for the Tenant’s Works are not obtainable within a reasonable time or at a reasonable cost, the Tenant may substitute such other materials as are of equivalent or superior standard and which are obtainable.

The Tenant may from time to time make such variations to the Plans as may in the circumstances reasonably be necessary, but, if the variations would have the effect of materially reducing the size or the amenities of the Premises, the Tenant may not do so without the consent of the Landlord (such consent not to be unreasonably withheld) or delayed.

The Tenant Works

For the purposes of the rent review provisions in the Lease, the Tenant’s Works are to be treated as improvements, which may be rentalised, and the rent review provisions are, if necessary, to be modified to give effect to this Clause.

Defects liability

The Tenant will enforce the defects liability provisions in the Building Contract in relation to the Tenant’s Works.

The Landlord’s Contribution shall be used only to pay:

the cost of materials and labour used to construct the Tenant Improvements, and

design costs, professional fees, development fees, third party consents, or other costs and expenses (collectively the “Tenant Improvement Allowance Items”), provided that the Landlord Contribution shall be used to pay only those expenses detailed on a budget for the Tenant Works prepared by Tenant and approved by Landlord, which approval shall not be unreasonably withheld, conditioned or delayed.

Disbursement of Landlord Contribution.

Payment Applications

a request for payment (in a form that the Landlord reasonably requires) detailing the work performed and amounts to be paid;

such other information reasonably requested by the Landlord as to the application of such sums. The Landlord will supply any such further requests within five Working Days of a Tenant request. The Tenant shall be permitted to submit a Payment Application only once each month.

invoices from the Tenant’s contractors or suppliers addressed to the Tenant itemising the cost of the Tenant’s Works items (in so far as covered by the particular invoice) and such further evidence as the Landlord reasonably

a certificate from the Tenant’s architect or project manager addressed to the Landlord specifying the individual items installed in the Property insofar as attributable to the Landlord’s Contribution (disregarding VAT)

Monthly Disbursements

If a contractor reasonably requires the Tenant to hold any retention then the Landlord will provide such sums to the Tenant to be held in accordance with the building contract.

Production by the Tenant of a VAT invoice in respect of any VAT charged on or in respect of the Landlord’s Contribution.

Adjustment to Principal Rent: Allowance Amendment

The annual Principal Rent payable under this Lease shall be increased by an amount equal to the product obtained by multiplying (i) the portion of the Landlord Contribution disbursed to or for the benefit of Tenant by (ii) 7.5% with future increases of Principal Rent required hereunder being based upon said escalated rental amount. Increases in Principal Rent resulting from payments of the Landlord Contribution shall be effective as of the date or dates on which the Landlord Contribution or portions thereof are disbursed to or for the benefit of Tenant: however, these increases in Principal Rent shall not be payable until the first day of the first full calendar month following the date that is the earlier of (A) the date on which the entire Landlord Contribution has been paid in full to or for the benefit of Tenant or (B) Practical Completion (defined below) of the Tenant Improvements (said earlier date being referred to as the “Close-Out Date”). Once these increases in Principal Rent become payable, Tenant shall make a single “catch-up” payment for amounts that became due prior to said date together with the regularly occurring instalments of Principal Rent. As used in this clause, the term “Practical Completion” shall mean:

certification by the Architect or, as the case may be, project manager selected by the Tenant and approved by Landlord that the relevant Tenant Improvements have been completed in accordance with the budget and construction documents approved by the Landlord, such approvals not to be unreasonably withheld, conditioned or delayed; and

receipt of evidence satisfactory to the Landlord that all authorisations required or desirable for the operation of the Premises following the Tenant’s Works have been received and permanent occupancy of the Premises has been approved by all relevant governmental agencies.

The increase in Principal Rent shall occur automatically and without the need to execute or deliver an amendment to this Lease. Notwithstanding the automatic effect of these provisions, promptly after the Close-Out Date, but no later than ten (10) Working Days after receipt from Landlord, the Landlord and the Tenant shall execute an amendment to this Lease memorialising the increase in Principal Rent.

Lease Coverage Ratio

Construction Industry Scheme

VAT

The parties agree that, in reliance on HMRC Business Brief 12/05, the Landlord’s Contribution is not consideration for a supply by the Tenant to the Landlord, such that no VAT will be payable on it.

In view of the uncertainty as to whether or not the payment is consideration for any supply for VAT purposes, the Landlord and Tenant have agreed to the procedure set out in this paragraph 8.

The Landlord will not pay any amount in respect of VAT under this Schedule save in the circumstances referred to in the paragraph 8 below.

The Tenant will apply to HM Revenue & Customs for a ruling as to whether the payment by the Landlord is consideration for a supply and, if so, whether the Tenant is obliged to account for VAT in respect of the supply. If HM Revenue & Customs given an unqualified written ruling that the payment is consideration for a supply and that the Tenant is obliged to account for VAT in respect of the supply or HM Revenue & Customs confirm in a publication that they would treat a payment of the type referred to in this Clause as consideration for a taxable supply, then on receipt of a valid VAT invoice in relation to the supply and, where applicable, a copy of HM Revenue & Customs’ ruling, the Landlord will pay an amount equal to the VAT to the Tenant together with an amount equal to any interest or penalties payable by the Tenant thereon .