Dated2010
(1) KARDAMYLA HOLDINGS LIMITED
– and –
(2) downing MANAGEMENT SERVICES limited
– and –
(3) downing corporate finance limited
LEASE
relating to third floor, 10 lower grosvenor place, londonsw1w 0en
Mishcon de Reya
Summit House
12 Red Lion Square
London WC1R 4QD
Tel: 020 7440 7000
Fax: 020 7404 5982
Ref: MDL.32384.2
E-mail:

MDR.6752837.61

1DEFINITIONS

2INTERPRETATION

3GRANT OF LEASE

3.1Demise

3.2Rights Granted

3.3No Implied Rights

3.4Subjections

4RENTS

4.1Principal Rent

4.2Insurance contribution

4.3Service charge

4.4VAT

4.5Rent Review

5TENANT'S OBLIGATIONS

5.1Rents

5.2Interest on late payments

5.3Outgoings

5.4Payment for services and supplies

5.5Repairs and other works

5.6Legislation and Statutory Consents

5.7Alterations and Signs

5.8Installations and Overloading

5.9Notice to carry out works

5.10Use of the Property

5.11Assignment and Underletting

5.12Rights of entry

5.13End of Term

5.14Reimbursement of Costs

5.15Damage or destruction

5.16Incumbrances

5.17Superior Lease

6LANDLORD'S OBLIGATIONS

6.1Quiet Enjoyment

6.2Superior Lease

6.3Insurance

6.4Landlord's Services

6.5No Implied Obligations

7MISCELLANEOUS

7.1Arbitration

7.2Interruption of Services

7.3Forfeiture

7.4Notices

7.5Law and Jurisdiction

7.6Landlord and Tenant Act 1954

7.7Tenant's Break Clause

8GUARANTOR'S COVENANT

SCHEDULE

(Incumbrances)

MDR.6752837.61

LR1. Date of lease / : / 2010
LR2. Title number(s) / : / LR2.1 Landlord's title number(s)
NGL759248
: / LR2.2 Other title numbers
None
LR3. Parties to this lease / : / Landlord
KARDAMYLAHOLDINGS LIMITED (company reg. no. 51023) whose registered office is c/o Heritage Corporate Services Limited, Heritage Hall, PO Box 225, Le Marchant Street, St Peter Port, Guernsey
: / Tenant
downingMANAGEMENT SERVICESlimited (companyreg.no. 01961683)whose registered office is at Kings Scholars House, 230 Vauxhall Bridge Road, LondonSW1V 1AU
Guarantor
downingcorporate financelimited (companyreg.no.02053006)whose registered office is at Kings Scholars House, 230 Vauxhall Bridge Road, LondonSW1V 1AU
LR4. Property / : / In the case of a conflict between this clause and the remainder of this lease then, for the purposes of registration, this clause shall prevail.
Those parts of the Third Floor of the building known as 10 Lower Grosvenor Place, London SW1W 0EN as are shown edged red on the attached plans, as further described in clause 1.3.12
LR5. Prescribed statements etc / : / LR5.1 Statements prescribed under rules 179 (dispositions in favour of a charity), 180 (dispositions by a charity) or 196 (leases under the Leasehold Reform, Housing and Urban Development Act 1993) of the Land Registration Rules 2003
None
LR5.2 This lease is made under, or by reference to, provisions of:
None
LR6. Term for which the Property is leased / : / From and including 2010 to and including 2020
LR7. Premium / : / None
LR8. Prohibitions or restrictions on disposing of this lease / : / This lease contains a provision that prohibits or restricts dispositions.
LR9. Rights of acquisition etc. / : / LR9.1 Tenant's contractual rights to renew this lease, to acquire the reversion or another lease of the Property, or to acquire an interest in other land
None
: / LR9.2 Tenant's covenant to (or offer to) surrender this lease
None
: / LR9.3 Landlord's contractual rights to acquire this lease
None
LR10. Restrictive covenants given in this Lease by the Landlord in respect of land other than the Property / : / None
LR11. Easements / : / LR11.1 Easements granted by this lease for the benefit of the Property
See clause 3.2
: / LR11.2 Easements granted or reserved by this lease over the Property for the benefit of other property
See clauses 3.4 and 3.5
LR12. Estate rentcharge burdening the Property / : / None
LR13. Application for standard form of restriction / : / None
LR14. Declaration of trust where there is more than one person comprising the Tenant / : / Not applicable
A. Principal Rent / : / £67,488 (exclusive of Value Added Tax) from and including today’s date to and including 2011 and thereafter £134,976 per year (exclusive of Value Added Tax) subject to upwards review
B. Rent Commencement Date / : / 2010
C. Review Date / : / 2015
D. Permitted Use / : / Use as offices within Class B1(a) of the Schedule to the Town and Country Planning (Use Classes) Order 1987
E. Building / : / the land and building known as 10 Lower Grosvenor Place, LondonSW1W 0EN being the whole of the land in title number NGL759248 and each and every part of it
F. Break Date / : / Each of 2013 and 2016
G. Period / : / the period from and including 2013 to and including 2013
  1. DEFINITIONS
  2. The expressions Landlord, Tenant, Guarantor, Property andTerm have the meanings given to them in clauses LR3, LR4 and LR6.
  3. The expressions Principal Rent, Rent Commencement Date, Review Date, Permitted Use, Building, Break Date and Period have the meanings given to them in clauses A to G.
  4. These further definitions apply:
  5. Base Rate means the base lending rate for the time being of a London clearing bank selected by the Landlord;
  6. Common Parts means any entrances reception areas hallways passages staircases toilets lifts showers plant rooms equipment cable ductssignageand other parts of the Building intended to be available for use by the Tenant in common with other occupiers of the Building and (where appropriate) any private roads footpaths forecourts and yards belonging with the Building;
  7. Fair Proportion means 17.73 % or such other percentage as may be specified by the Landlord where reasonably necessary and/or in accordance with principles of good estate management such adjusted percentage to be conclusively decided from time to time by the Landlord's surveyor acting in good faith as an expert;
  8. Incumbrances means the matters affecting the Property referred to in the Schedule;
  9. "Index" means the "All Items" index figure of the Index of Retail Prices published by the Office of National Statistics or any successor ministry or department.
  10. Installations means plant, machinery or equipment of any kind, including without limitation lifts, air handling, heating boilers, cooling equipment, aerials, satellite dishes or other communications apparatus;
  11. Insured Risks means the risks against which the Superior Landlord insures pursuant to the Superior Lease and “Insured Risk” means any of the Insured Risks;
  12. Landlord includes the person for the time being entitled to the immediate reversion to the Term;
  13. Legislation means Acts of Parliament and the laws, regulations and directives of the European Union and in each case any subordinate legislation, and (except in respect of Use Classes) references to any specific Legislation include its existing or future amendments replacements and re-enactments;
  14. Open Market Rent means the annual rent that might reasonably be expected to be paid for the Property if it were let on the Review Date as a whole in the open market without a premium with vacant possession by a willing lessor to a willing lessee on a lease for a term of five yearscommencing on the Review Date on the same terms and conditions (except for the amount of rent and the provisions for rent review) as in this Lease and with the benefit of any licence approval or consent granted by the Landlord at the request of the Tenant and assuming:

(a)that the rent will be payable as from the expiry of a rent free period of such length (commencing on the Review Date) as the willing lessee would negotiate in the open market for (but only for) fitting out the Property;

(b)that all the covenants on the part of the Tenant contained in this Lease have been fully observed and performed at all times;

(c)that on the Review Date the Property is capable of immediate occupation and use for fitting out and that nothing has been done to the Property by the Tenant or any subtenant which has diminished the rental value of the Property;

(d)that in the event that the Property has been destroyed or damaged by an Insured Risk it has been fully restored by the Review Date;

(e)that on completion of the tenant’s fit-out works the Property has been newly carpeted at the Landlord’s cost with good quality carpet

but disregarding:

(i)any effect on rent of the fact that the Tenant or any permitted subtenant may have been in occupation of the Property;

(ii)any goodwill attached to the Property by reason of its use by the Tenant or any permitted subtenant;

(iii)any effect on rent of any improvement to the Property made by the Tenant or a permitted subtenant at its own expense with the written consent of the Landlord (where required) otherwisethan under any obligation to the Landlord.

1.3.11Outgoings means existing and future rates, taxes, assessments and outgoings, statutory or otherwise, national or local, recurring or non-recurring, and even if novel;

1.3.12Propertymeans each and every part of the Property (including the glass in any windows and doors within it) and all additions made in or to it at any time during the Term and all landlord's fixtures and fittings, but does not include any part (other than internal finishes) of the Structure or any Service Media which serve other parts of the Building;

1.3.13Rent Days means 25 March, 24 June, 29 September and 25 December in each year;

1.3.14Service Charge means the Fair Proportion of every amount (including professional fees, finance costs and any irrecoverable input VAT) from time to time properly incurred by the Landlord in managing the Building, performing its obligations under clauses 6.2.1 and 6.4 of this Lease, in complying with its obligations under any Legislation in respect of the Building, in paying any Outgoings relating to the Common Parts, and in providing any other services which, on principles of good estate management, the Landlord reasonably considers appropriate for the common benefit of the occupiers of the Building and including reasonable managing agents' fees (or, if the Landlord does not employ managing agents, a reasonable sum by way of a management charge);

1.3.15Service Media means ducts flues gutters pipes drains sewers cables conduits wires and other media for conducting water soil gas electricity telephone telex and other electrical impulses air smoke and fumes and other similar things;

1.3.16Specified Rate means three per cent per year above Base Rate;

1.3.17Structuremeans (as applicable to the Building) foundations, roofs, steel frame, concrete floor slabs, load-bearing columns, floor joists, roof supports, and load-bearing walls and external walls (whether or not load-bearing) and the window frames in the external walls;

1.3.18Superior Landlord means the person for the time being entitled to the reversion immediately expectant on the termination of the Superior Lease;

1.3.19Superior Landlord’s Covenants means the obligations, conditions and covenants in the Superior Lease to be complied with by the Superior Landlord

1.3.20Superior Lease means the lease dated 1 December 1997 made between (1) Grosvenor Estates Belgravia and (2) Grosvenor and Eaton Estates Development Company Limited and Redrow Commercial Developments Limited(and all documents supplemental or collateral thereto) and any leases superior to that

1.3.21Tenant includes the Tenant's successors in title including personal representatives;

1.3.22Uninsured Risk means any Insured Riskagainst which insurance cover is obtainable on normal commercial terms in the London Insurance market today but which in the future ceases to be so obtainable other than by reason of the occupation by the Tenant or any undertenant or anyone else claiming an interest under any of them and/or use of the Property but an Insured Risk does not become an Uninsured Risk for the purposes of this Lease by reason only of:

(a)Normal exclusion provisions in relation to a level of excess liability;

(b)Rejection by the insurer of liability, or some part of it, due to any act or default by either the Tenant or the Landlord.

1.3.23VAT means value added tax charged pursuant to the Value Added Tax Act 1994.

  1. interpretation
  2. Any non-load bearing walls separating the Property from another part of the Building shall be party walls and repairable as such.
  3. When any party comprises two or more persons, they are liable under their obligations jointly and individually.
  4. Each covenant by the Tenant not to do any act or thing includes a covenant that the Tenant shall not allow it to be done by any of the Tenant's subtenants, visitors, employees, independent contractors, or any other person under the Tenant's control.
  5. Whenever the consent or approval of the Landlord is required for any matter under or relating to this Lease, it shall only be effective when embodied in a document executed and delivered as a deed by the Landlord.
  6. The headings are only for convenience and are not to affect the interpretation of this Lease.
  7. Words given by way of example or inclusion do not imply any limitation.
  8. The parties to this agreement do not intend any of its terms to be enforceable by a third party (as defined in s.1 of the Contracts (Rights of Third Parties) Act 1999) other than the Landlord's and the Tenant's respective successors in title.
  9. While this Lease is an underlease or subservient to any superior lease:-
  10. where it is provided that the consent or approval of the Landlord is required, there shall be implied a requirement for the consent or approval of the superior landlords;
  11. any indemnity or reservation of a right in favour of the Landlord shall also be deemed to be in favour of the superior landlords;
  12. any obligation on the Tenant to pay any costs, fees and expenses incurred by the Landlord in relation to any matter are to be read as including an obligation also to pay all costs, fees and expenses reasonably and properly incurred in respect of that matter by the superior landlords
  13. GRANT OF LEASE
  14. Demise

The Landlord with full title guarantee demises the Property to the Tenant for the Term at the Principal Rent. .

3.2Rights Granted

The Tenant is granted the shared use of the Common Parts and the shared use of any Service Media which the Landlord owns or is entitled to use and which serve the Property, and the right to such shelter and support from other parts of the Building as the Property enjoys at the date of this Lease.

3.3No Implied Rights

Apart from the rights granted by clause 3.2, the Tenant is not granted, and shall not become entitled to, any right of any kind over or from any other part of the Building or any adjacent property.

3.4Subjections

The Property is demised subject to the Incumbrances and all rights of the owners and occupiers of any adjoining or neighbouring property.

3.5The Landlord reserves :

3.5.1for the benefit of other parts of the Building and any adjoining or neighbouring property, the right to use and make new connections into any Service Media in the Property which are capable of serving them, and

3.5.2the right where necessary to erect scaffolding on the outside of the Building for the purpose of exercising or carrying out the Landlord's rights and obligations under this Lease, but so that access to the Property shall not be prevented, and

3.5.3the right to build onto or alter parts of the Building other than the Property including the right to alter the Common Parts but without permanently making the access to the Property materially less commodious , and

3.5.4the rights of entry mentioned in other provisions of this Lease.

3.5.5The right to impose reasonable regulations in the interest of good estate management relating to the use of the Common Parts.

PROVIDED THAT in exercising any such rights the Landlord shall use reasonable endeavours to minimise inconvenience to the Tenant so far as reasonably practicable

  1. RENTS
  2. Principal Rent
  3. The Tenant shall pay the Principal Rent by equal payments in advance on the Rent Days, and proportionately for any part of a year. The Principal Rent is payable as from the Rent Commencement Date and the first payment is to be made on that date PROVIDED THAT no Principal Rent shall be payable for the Period.
  4. The amount of the Principal Rent will increase on the Review Date to the Open Market Rent (ascertained in accordance with clause 4.5) of the Property on that date if that is more than the Principal Rent payable before that date, but the amount of the Principal Rent will not decrease.
  5. Insurance contribution

The Tenant shall pay to the Landlord, as additional rent, within fourteen days of demand, an amount equal to (1) a Fair Proportion of the money payable by the Landlord under clause 6.2.1 which relates to the insurance of the Building, and (2) a Fair Proportion of any reasonable additional costs incurred by the Landlord in connection with the insurance of the Building.

4.3Service charge

4.3.1The Tenant shall pay to the Landlord, as additional rent, a Service Charge which shall be calculated and payable as set out in this clause;

4.3.2

(a)For the first twelve (12) months of the Term the Service Charge payable by the Tenant shall not exceed £35,100.00 (the "Initial Maximum Service Charge")

(b)For each subsequent period of twelve months throughout the Term the Service Charge payable by the Tenant shall not exceed the greater of (i) the amount payable in respect of the immediately preceding period of twelve months and (ii) the amount ascertained by applying the following formula:-

K x L

M

where:-

K – is the Initial Maximum Service Charge

L – is the index figure of the Index published immediately before the end of the relevant year of the Term

M – is the index figure of the Index published immediately before the date of this Lease

(c)In the event of any change after the date of this Lease in the reference base used to compile the Index the figure taken to be shown in the Index after such change shall be the figure which would have been shown in the Index if the reference base current at the date of this Lease had been retained.

(d)In the event of it becoming impossible by reason of any change after the date of this Lease in the methods used to compile the Index or for any other reason whatsoever to calculate the revised Service Charge by reference to the Index or if any dispute or question whatsoever shall arise between the Landlord and the Tenant with respect to the amount of the revised Service Charge or with respect to the construction or effect of this clause 4.3.3 the determination of the revised Service Charge or other matter at issue shall be determined by a single arbitrator pursuant to clause 7.2 who shall have full power to determine on such dates as he shall deem apposite what would have been the change in the Index had it continued on the basis current at the date hereof and given the information assumed to be available for the operation of this clause or (if that determination shall also be impossible) shall determine a reasonable revised Service Charge having regard to the purposes and intent of the provisions in the Lease for the review of the Service Charge.

4.3.3The Tenant shall pay to the Landlord on each of the Rent Days, on account of the Service Charge, one quarter of the total estimated amount of the Service Charge for the year in question as reasonably determined by the Landlord or the Landlord's surveyor in good faith (and whether before or after the Landlord incurs the relevant costs) and if at any time it appears to the Landlord acting reasonably that (whether due to the need arising to incur a cost which was not anticipated or to create a reserve fund or for any other reason whatsoever) the payment on account payable by the Tenant shall be insufficient to meet the Service Charge for that year, the Landlord shall be entitled to serve on the Tenant a demand for a supplemental payment on account of such amount as the Landlord may specify, accompanied by a written explanation of the reason for it, and the Tenant shall pay the amount demanded within twenty eight days of service of the demand and if there is any overpayment then credit shall be given to the Tenant against the next payment due